Antitrust law is, I suspect, hopelessly outdated... both the laws and the understanding of monopolies/trusts that are baked into them.
These laws were based on 19th-century competition. The problems att were price fixing, predatory pricing (eg price low to kill competition then raise prices), supply chain bottlenecking (how you gonna sell your ore without my trains) ... industrial era trust stuff.
The precedents and laws are hair-splitting and specific. It's just not the kind of system that can "think" high level and apply abstract principles to totally new problems.
Google & Facebook mostly have no prices to fix. The ad markets where they make their money are competitive bid-based, ostensibly the opposite of a "monopolistic pricing" structure.
The economic/theory just doesn't match the pratices anymore. For example: Facebooks' revenue.
Imagine that tomorrow morning BMW's revenues are cut in half. BMW would need to produce fewer cars. Cars cost X to produce. Cut X in half, and you can expect half the volume.
What would happen if we did the same to FB. My guess is that they'd still make the same FB. If you take path dependency^ out of the mix (that it's hard to fire people and adjust downward), It's scary to think how big a company is required to make FB. Doesn't seem like a stretch to speculate that it can be done on a $5-$10bn budget... 1/10th of their current revenue. After all, Facebook was Facebook on that budget not long ago.
^By path dependency I mean imagine that FB's revenue had just never gotten to $80bn in the first place, the sahare price had never gotten so high. Etc.
IDK what exactly that implies about what antitrust laws should be, but it does mean that the theoretical foundation for the current ruleset is totally off. The way monopolistic power conerts to money in 2019 is fundamentally different from 1891... I mean genuinely fundamental, I'm not using it as a superlative. The definition of monopoly, benefits of owning one, the reasons why they're bad (or not).
> Facebook was Facebook on that budget not long ago.
Facebook was Facebook, but it wasn't Facebook+Whatsapp+Instagram, and "mergers and acquisitions that substantially reduce market competition" have been impermissible under the US anti-trust law for over 100 years, since the Clayton Act, and I'm not sure you need more than that.
To deal with that, the legal system needs to define market & dominance. The "markets" FB is dominating are far squishier and unstable than the markets of 100 years ago. The market for coal or steel or intercontinental shipping are easy to define. Photo sharing? Social Networking?
How do you define competitiveness. What effect does FB's dominance of photo sharing have on consumer prices? Barriers to entry? Anyone can launch a chat or photo sharing app. Substitutes? Plenty. Those are the types of questions the old laws and precedents will try to deal with. It's like an alien biologist trying to prod orifices that we don't have.
How does this harm consumers or the economy? The economics underlying the legal framework are just as outdated. They're looking for prices and outputs and stuff that FB doesn't have.
Breaking up a monopoly requires that said monopoly be bad for society, and it's adverse effects can't be fixed via markets due to reasons like size and reach.
Monopoly in its own is neither good nor bad.
Facebook has a monopoly in social network. Is that bad? What is the effect of the monopoly? Is Facebook's monopoly having an adverse effect, or is the adverse effect inherent in the way social networks work (and breaking the monopoly won't help).
Simply being a monopoly is an unreasonable reason to break it up.
You could say that monopolies are inherently bad because they stifle innovation even if they don't lead to higher prices. An unassailable monopolist has no reason to innovate because competitors are effectively locked out.
But it appears to me that there is a psychological bias towards an exceedingly narrow definition of substitution goods and therefore markets, especially in digital technologies.
For instance, Microsoft clearly has an extremely dominant position in PC operating systems. The market for PC operating systems used to be synonymous with personal computing, but that is no longer true. Mobile devices now dominate personal computing.
So Microsoft has lost most of its monopolistic power without ever losing its dominance in the market as it was originally defined by regulators and users.
Similarly, search used to be synonymous with using a web search engine and Google clearly has a monopoly there. But now we search Facebook, Amazon, Netflix, etc for various specific things in different contexts and Google has to pay billions to buy users from Apple.
So my point is that yes, monopolies are inherently bad, but they are also inherently unstable in ways that are not adequately reflected in the current thinking around anti-trust regulation.
Those are exactly the types of questions that I think we have outdated laws regarding.
Outdated laws and outdated economic theory embedded in them. There is only so far that you can extend a railroads, mining and foundries analogy.
I'm sure we could have lively back-and-forth about the impact of these monopolies, but the only legal and legislatively pertinent parts of that discussion are those that can be massaged into an analogy to the late industrial examples that the current legal framework (including, legislation, legal precedents and regulatory bodies) was designed around.
These laws were based on 19th-century competition. The problems att were price fixing, predatory pricing (eg price low to kill competition then raise prices), supply chain bottlenecking (how you gonna sell your ore without my trains) ... industrial era trust stuff.
The precedents and laws are hair-splitting and specific. It's just not the kind of system that can "think" high level and apply abstract principles to totally new problems.
Google & Facebook mostly have no prices to fix. The ad markets where they make their money are competitive bid-based, ostensibly the opposite of a "monopolistic pricing" structure.
The economic/theory just doesn't match the pratices anymore. For example: Facebooks' revenue.
Imagine that tomorrow morning BMW's revenues are cut in half. BMW would need to produce fewer cars. Cars cost X to produce. Cut X in half, and you can expect half the volume.
What would happen if we did the same to FB. My guess is that they'd still make the same FB. If you take path dependency^ out of the mix (that it's hard to fire people and adjust downward), It's scary to think how big a company is required to make FB. Doesn't seem like a stretch to speculate that it can be done on a $5-$10bn budget... 1/10th of their current revenue. After all, Facebook was Facebook on that budget not long ago.
^By path dependency I mean imagine that FB's revenue had just never gotten to $80bn in the first place, the sahare price had never gotten so high. Etc.
IDK what exactly that implies about what antitrust laws should be, but it does mean that the theoretical foundation for the current ruleset is totally off. The way monopolistic power conerts to money in 2019 is fundamentally different from 1891... I mean genuinely fundamental, I'm not using it as a superlative. The definition of monopoly, benefits of owning one, the reasons why they're bad (or not).