Antitrust is the Surest Way to Counter Big Tech

Antitrust laws were designed to prevent big businesses from acquiring enough market power to prevent competition in various markets and jacking up consumer prices to rapacious levels. Prior to the mid-1970s, these laws were used with a seemingly irrational frequency leading to the prosecution of business activity that benefited consumers as violations of price manipulation, collusion among competitors, or prevention of horizontal integration making business more efficient. The course correction leading to the application of antitrust laws only where there is no damage to the consumer welfare was part of the business boom that led the United States through the last two decades of the twentieth century. But like all things dealing with the government, the lax enforcement of these laws has led to unprecedented power of Big Tech companies, especially as it relates to how the individual engages in politics.

There is no doubt that Big Tech’s collusion to remove competitors like Gab from the servers that allow people to access these competitors’ webpages should have been a per se violation of the antitrust laws. Now we see something coming from Google that is also a blatant per se violation. According to the CEO of DuckDuckGo, Google has been employing techniques that led to the conviction of Microsoft for violating antitrust laws in first decade of this century. Google has been manipulating how one can customize Google’s web browser Chrome to use other search engines and making it difficult to set another search engine as that user’s default instead of Google. These were the same techniques that led to Microsoft being found in violation of antitrust laws and being broken up by the U.S. government.

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With a law degree, you are probably much more of an expert on anti-trust. Unlike most lawyers I know, you also seem able to think outside the box of the law - which over time without input from the legislature becomes both locked and often takes what ends up being an opposite setting to whatever the initial legislation was.

In my simple understanding, there are really two kinds of monopolies. One is the efficiency one, where you just have better systems to do what needs to be done, and the other is cornering the market, then gouging the customer because there is no where else to go. WalMart certainly came about with the former but morphed into the latter, and Amazon has done much the same now, creating convenience, good pricing, and ease of shopping. Standard Oil was like that way back when, having the best distribution system, so selling at the lowest price.

Interestingly when Standard Oil was broken up, competitors had already figured out the efficiency system and begun to effectively compete with Standard. WalMart has ceased to inexorably gobble up Ma-and-Pa stores and is attempting to find what its notch is in today’s market. Amazon is the big gorilla, and even it wouldn’t be so bad if it just stuck to selling. But the lure money has towards exercising power is constant and seemingly unabatable. Seems those who were lucky enough to figure out something in one field now think they’re geniuses and know everything. That’s why we need “anti-trust” - to remind them of their limits.

I think there is at least a third kind of monopoly, which may be called the “liquidity” or “network effect” monopoly. One example of this is a financial market. The market which initially attracts the most buyers and sellers will provide them the best execution of orders (smallest bid/ask spreads) and liquidity (ability to buy or sell without moving the price very much) and this market will therefore attract more buyers and sellers for that very reason, reinforcing its dominance. The network effect is similar: a network, whether a telegraph or telephone company or an online service, grows in value to the customer with the number of other customers connected to it. If doesn’t matter if a telephone company charges half as much if nobody you want to talk to is connected to it. This is why it is so difficult to compete with an established online network such as Facebook or Twitter: new entrants can’t deliver the audience the established leaders can, and potential customers go to where the eyeballs are.

Back during the battles over breaking up AT&T, lawyers for the telephone company argued it was a “natural monopoly” due to the network effect and that breaking it up would increase friction and would eventually result in higher costs to the customer. In fact, the break-up spurred a wave of innovation in products and services that ultimately dramatically cut costs.

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It is certainly true that the breakup of AT&T did result in new products & services. Some of those innovations, such as cell phones, depended on earlier research by Bell Labs. Arguably, while breaking up AT&T undoubtedly did good and created value, it also killed Bell Labs and interrupted the potential source of future innovations. Most regulatory actions involve trade-offs which can be difficult to recognize or quantify.

The alternative to anti-trust is to regulate the natural monopoly through something like a Public Utilities Commission. However, PUCs inevitably become politicized and incompetent – see, for example, California’s Woke failing electric supply. No easy answers!

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Far from being an expert, but I appreciate the compliment.

The dangers that our antitrust laws sought to diminish were market monopolies, collusion, and price fixing. The big threat posed by Big Tech in today’s environment stem from the collusion aspect because you can have market actors working in concert to prevent new entrants or kick out existing competition that is not in on the conspiracy (and “conspiracy” is the language used in the antitrust laws). When Gab was shut down by being denied access to Amazon’s AWS, thus effectively kicking Gab off of the internet, it did so with the full support of Twitter, Gab’s direct competition. Or when a CNN reporter urges Twitter, YouTube, and Facebook to ban Alex Jones, another source of information like CNN, there is collusion to harm a competitor. These are blatant violations of the black letter law in antitrust and Big Tech needs to be pimp slapped for violating them.

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John, I think you are talking about market power, which according to Judge Learned Hand (awesome name for a judge by the way) could be as little as 4 percent of the total market of a particular good or service.

Here is something that you might find enjoyable and useful.

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Also, with Facebook and Twitter, the trouble is defining what market they are operating in. Are they social media platforms or are they deliverers of eyes to advertisers? This was the question in the recent landmark SCOTUS case Ohio v. AMEX and the Court affirmed an appellate court’s holding that the credit card market was NOT a two-sided market because the credit card market only serves the card holder and not the merchants that have to process credit card payments at a cost from the credit card companies.

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No the alternate to antitrust is to have a completely free market where there is zero government intrusion. A monopoly would only have as much power as the market would be willing to tolerate, meaning if there was only one actor, as long as that actor’s prices were tolerable by the market there would be no need or desire to seek alternatives. But once the monopoly power became oppressive to the consumer, a new entrant into that market would emerge and provide the good or service at a price just below the monopoly power. This was the whole point to Judge Bork’s 1976 book The Antitrust Paradox. The only mechanism that creates closed markets necessitating antitrust laws is government intervention into that market making entry too costly for startups. But of course the government has to act to calm the consumer, so it “attacks” the monopoly. Look what the government did to Microsoft. Microsoft was broken up into two separate entities–it eventually became three–but did that actually affect the market power of Microsoft? No, not at all because Microsoft has lucrative contracts with entities like the U.S. government and other large private sector companies. Microsoft’s market power was diminished by the competition brought by Apple, the rise of smart phones, and people building their own computers.

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L. Neil Smith argued that the growth of huge companies with monopoly power was largely the consequence of big government creating anti-competitive mechanisms such as patents, regulation that acts as a barrier of entry to competitors, complex taxation and compliance costs that are more easily borne by larger firms, grants of right of way through eminent domain, and limited liability, which allows financialisation of assets and creates “owners” decoupled from the actions of the business.

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This is pretty much the story of the Progressive Era in the late 19th and early 20th centuries. For example, the biggest proponents of entities like the FDA were the big meat packing giants, Swift, Tysons, Purdue, etc. It is a huge myth that “The Jungle” brought about the FDA. No, it was large meat companies that didn’t want any competition.

Now you look around and you will find that the companies that are supposedly in competition with one another are actually subsidiaries of massive multi-national conglomerates.

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That is the theory. But how could it work in practice?

Take Amazon today, which has built over a substantial period of time an on-line shopping system which covers the full range of products and even now has its own delivery vans. Personally, I don’t like the near-monopoly system which has evolved, even though there are no indications of price gouging – the reverse, in fact. But suppose someone wanted to set up a competitor to Amazon? How would that competitor be able to compete? Even Walmart, which should in principle be well placed to compete with Amazon, has struggled with on-line marketing.

In the real world, building a competitor to an effective monopoly would require a very large commitment of resources and time. Tough to do!

But on the other hand, government involvement usually backfires because of incompetence, corruption, and unintended consequences. Tough problem!

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Yeah it is a tough problem, and honestly I don’t have an answer for you. I do know this: a truly free market with zero government interference has never been tried to my knowledge.

Your example of Wal-Mart is missing some key facts though. First and foremost, Wal-Mart went through about ten years of terrible press from the leftwing dominated political and business news networks. Second, Wal-Mart spent most of its resources suing and lobbying to stop Amazon from purchasing those vans and such instead of seeing where the winds the taking consumerism and building the tech infrastructure necessary to compete with Amazon. What would have happened had Wal-Mart invested in developing an on-line merchant presence instead of running to mommy government to stop the big bad Amazon?

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The world is a better place without monopolies. In the West, at the time of this writing, we still have a choice – we can still persuade our spheres of influence to use open-source standards and alternative tech that bypasses proprietary multinational big tech idiots.
• DUCKDUCKGO for search,
• PROTONMAIL for email,
• LINUX for OS,
• RUMBLE or ODYSEE for video,
• LOCALS.COM for social network,
• ENCYLOSPHERE.ORG for blog/encyclopedia,
And the list goes on.

IT IS HARDER AND MORE EXPENSIVE, BUT THAT IS THE PRICE OF FREEDOM.

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This is certainly true and you have a good list of alternative tech entities that we could start using. My only concern is that the Big Guys can collude to have these entities denied access to the internet, just like what was done to Gab. They were denied access to the internet by Amazon kicking them off of its AWS and then Google and Apple both removed it from their app stores. That is blatant collusion because we all know that the upper tier of the leadership of these entities hang out with each other and have the same political aims. It’s one thing to have to spend more in 2022 to build the architecture for an on-line service, but it’s something completely different to have the major players in the Tech world prevent you from using any architecture when you allow that same architecture to be used by competitors.

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Yes, a company that denies access, is denying constitutional rights – so it is actually WORSE than just anti-trust!

Therefore, could the Lobbyists in the U.S.A. benefit from dividing Big Tech similar to Standard Oil, or AT&T? Lobbyists would benefit by obtaining board seats on these Baby Techs, and benefit from other sweetheart deals.

Therefore Big Tech divided into 77 independent mostly United States and European corporations (ie Baby Techs) would benefit customers and many Lobbyists too – so with every new clear injustice, it is becoming more and more likely.

Also, one judge broke up AT&T (judge Harold H. Greene), so Big Tech could be one case away from from becoming baby techs.

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Economic monopolies like Amazon are much like Standard Oul - they’ve figured out how to be efficient. For all the bad things we can say about them, mostly what they’ve done is build a better mousetrap. There IS an investment there but there are also profits. Notice that Amazon does not *exclude * other companies; what they often do is offer alternatives.

As happened with Standard Oil, others will figure out the efficiencies and copy them. This usually starts relatively locally and spreads. It’s what was already happening when they broke up SO. It will happen to Amazon too.

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