Government needs to take care of a) infrastructure and b) well-functioning markets. Only after it does this, should it c) even think about taking on other tasks.
Which illustrates why Europe is such a mess. The Italians for instance don't believe in markets, and the Germans don't believe in infrastructure (unless it's for internal-combustion vehicles and waterways). The only folks that follow rule a), b) and c) are the Swiss.
Its a difficult balance. In most markets Government intervention reduces competition and re-enforces the ability of Big Business to dominate. Simply because every new rule or intervention introduces another barrier to entry.
On this particular subject - IF Microsoft were to genuinely dominate their market to the detriment of the PUBLIC, then most would vote with their feet for a new provider, HOWEVER, that's not happening because Microsoft have been doing an excellent job for years. Personally, the only complaints I hear about MS Products are in regard to authentication protocols, something the regulators regularly try to "fix". Surely you can see that Microsoft are dominating because they are delivering EXACTLY what their customer wants. Why mess with that??
I do agree that government regulation leads to inefficiencies, but this is not what I am talking about here. I am talking about governments intervening to break up monopolies or market control. No new regulation, just an effort to increase competition in order to make it easier for consumers to switch.
Take for instance social media. Arguably, the large social media platforms (Facebook, TikTok, Twitter) have developed an oligopoly and it is near impossible for other priovider to break into this market. The reason is twofold. First, social media benefits from scale effects. You become more popular, the more users are on your network. So smaller networks seem less attractive even if the product is better. The only way these disruptors can gain market share is by being massively better than the existing providers or the existing providers effing up their own market (see the decline of Twitter or the decline of Microsoft OS after 2000). Second, if there is a disruptor that is significantly better than the incumbents, the incumbents have so mauch cash that they simply buy the disruptor or copy its services in order to take them out of business (see Facebook etc. creating a kill zone around their businesses: https://klementoninvesting.substack.com/p/how-facebook-and-google-create-a). Both are bad for consumers.
And finally, if you want to talk to someone who thinks Microsoft has a terrible product, talk to me or anyone working in IT :-)
I’ve always wondered why corporate owned media seems exempt from anti-trust, it seems like a cartel which seriously affects the quality of news/ propaganda we get in the US. Asking for a friend...😉
Well, in the US, there is much regulation around who owns media and PBS/NPR is much less widely watched. In Europe public broadcasters like the BBC are much more popular and there is regulation that media companies cannot hold too much market share in order to provide diversity of opinion.
Ah, thanks , didn’t know about the regulation. Since Reagan ripped up the FCC’s fairness doctrine (equal time for opposing views) it seems like a free for all. I’ve never seen a market analysis of US media but it seems like a classic oligopoly-only a handful of companies control the market. And the digital dictators seem even more oligopolistic. As an American living in Britain it seems like a totally dysfunctional market, but what do I know? Very interesting article, thanks.
'Unfortunately the signs are that incumbent firms are becoming more entrenched, not less. Microsoft is making double the profits it did when antitrust regulators targeted the software firm in 2000. Our analysis of census data suggests that two-thirds of the economy’s 900-odd industries have become more concentrated since 1997. A tenth of the economy is at the mercy of a handful of firms—from dog food and batteries to airlines, telecoms and credit cards. A $10 trillion wave of mergers since 2008 has raised levels of concentration further. American firms involved in such deals have promised to cut costs by $150 billion or more, which would add a tenth to overall profits. Few plan to pass the gains on to consumers.'
I have a recent study somewhere - but i can't find it. It showed the waning power of smb's vs US enterprises: smb profits have on average declined from about 8 to 4% while enterprise profits went the other way to 12 or 16%.
Yes and no. I get your point, but I would argue that most of the time consumers don’t know what they want and certainly don’t know if there is a better product out there that hasn’t been indented due to a monopoly preventing progress.
I think you should have a lesson or two in English. The De- prefix usually indicates removing something, not adding something. Government attempts to manage markets have been universally catastrophic over human history. Markets are massively diverse and fragmented, only thriving because both sides benefit. Leave them alone and they find their own completely arbitrary and unpredictable balance.
Interesting article. The authors are not coincidentally working at Columbia. It's the same university where Denise Hearn does research on antitrust. Hearn has written, together with Jonathan Tepper, a brilliant book, The Myth of Capitalism, which was chosen Book of the Year in 2018 by the Financial Times.
Another interesting read is Brendon Ballou's Plunder, How Private Equity is pillaging America.
Exactly.
Government needs to take care of a) infrastructure and b) well-functioning markets. Only after it does this, should it c) even think about taking on other tasks.
Which illustrates why Europe is such a mess. The Italians for instance don't believe in markets, and the Germans don't believe in infrastructure (unless it's for internal-combustion vehicles and waterways). The only folks that follow rule a), b) and c) are the Swiss.
Its a difficult balance. In most markets Government intervention reduces competition and re-enforces the ability of Big Business to dominate. Simply because every new rule or intervention introduces another barrier to entry.
On this particular subject - IF Microsoft were to genuinely dominate their market to the detriment of the PUBLIC, then most would vote with their feet for a new provider, HOWEVER, that's not happening because Microsoft have been doing an excellent job for years. Personally, the only complaints I hear about MS Products are in regard to authentication protocols, something the regulators regularly try to "fix". Surely you can see that Microsoft are dominating because they are delivering EXACTLY what their customer wants. Why mess with that??
I don't necessarily agree with that.
I do agree that government regulation leads to inefficiencies, but this is not what I am talking about here. I am talking about governments intervening to break up monopolies or market control. No new regulation, just an effort to increase competition in order to make it easier for consumers to switch.
Take for instance social media. Arguably, the large social media platforms (Facebook, TikTok, Twitter) have developed an oligopoly and it is near impossible for other priovider to break into this market. The reason is twofold. First, social media benefits from scale effects. You become more popular, the more users are on your network. So smaller networks seem less attractive even if the product is better. The only way these disruptors can gain market share is by being massively better than the existing providers or the existing providers effing up their own market (see the decline of Twitter or the decline of Microsoft OS after 2000). Second, if there is a disruptor that is significantly better than the incumbents, the incumbents have so mauch cash that they simply buy the disruptor or copy its services in order to take them out of business (see Facebook etc. creating a kill zone around their businesses: https://klementoninvesting.substack.com/p/how-facebook-and-google-create-a). Both are bad for consumers.
And finally, if you want to talk to someone who thinks Microsoft has a terrible product, talk to me or anyone working in IT :-)
I’ve always wondered why corporate owned media seems exempt from anti-trust, it seems like a cartel which seriously affects the quality of news/ propaganda we get in the US. Asking for a friend...😉
Well, in the US, there is much regulation around who owns media and PBS/NPR is much less widely watched. In Europe public broadcasters like the BBC are much more popular and there is regulation that media companies cannot hold too much market share in order to provide diversity of opinion.
Ah, thanks , didn’t know about the regulation. Since Reagan ripped up the FCC’s fairness doctrine (equal time for opposing views) it seems like a free for all. I’ve never seen a market analysis of US media but it seems like a classic oligopoly-only a handful of companies control the market. And the digital dictators seem even more oligopolistic. As an American living in Britain it seems like a totally dysfunctional market, but what do I know? Very interesting article, thanks.
'Why we should enforce antitrust laws more'
Indeed:
'Unfortunately the signs are that incumbent firms are becoming more entrenched, not less. Microsoft is making double the profits it did when antitrust regulators targeted the software firm in 2000. Our analysis of census data suggests that two-thirds of the economy’s 900-odd industries have become more concentrated since 1997. A tenth of the economy is at the mercy of a handful of firms—from dog food and batteries to airlines, telecoms and credit cards. A $10 trillion wave of mergers since 2008 has raised levels of concentration further. American firms involved in such deals have promised to cut costs by $150 billion or more, which would add a tenth to overall profits. Few plan to pass the gains on to consumers.'
https://www.economist.com/leaders/2016/03/26/the-problem-with-profits
I have a recent study somewhere - but i can't find it. It showed the waning power of smb's vs US enterprises: smb profits have on average declined from about 8 to 4% while enterprise profits went the other way to 12 or 16%.
You missed my point. Its not the consumers who object to the big tech oligopolies. Its the regulators. Most consumers have no real issue with it.
Yes and no. I get your point, but I would argue that most of the time consumers don’t know what they want and certainly don’t know if there is a better product out there that hasn’t been indented due to a monopoly preventing progress.
......governments intervening to break up monopolies or market control....Joachim - This is new regulation.
See, I think this is where we disagree. I think breaking up monopolies is deregulation.
I think you should have a lesson or two in English. The De- prefix usually indicates removing something, not adding something. Government attempts to manage markets have been universally catastrophic over human history. Markets are massively diverse and fragmented, only thriving because both sides benefit. Leave them alone and they find their own completely arbitrary and unpredictable balance.
Trying to second guess or control markets is doomed to failure. But....Thanks for the exchanges. Most amusing....
Interesting article. The authors are not coincidentally working at Columbia. It's the same university where Denise Hearn does research on antitrust. Hearn has written, together with Jonathan Tepper, a brilliant book, The Myth of Capitalism, which was chosen Book of the Year in 2018 by the Financial Times.
Another interesting read is Brendon Ballou's Plunder, How Private Equity is pillaging America.