Reply to post: Re: Isn't it time for Google to face the Anti-trust strongarm squad?

Re: Isn't it time for Google to face the Anti-trust strongarm squad?

I've mentioned this before, but it's worth repeating. In the US, anti-trust is fundamentally a political matter.

In order to get the attention of the anti-trust authorities, you have to get into a position that you dominate a market. The authorities then have to determine that you are operating the monopoly "in restraint of trade"--that is, "abusing" your monopoly for some definition or the other. BUT--our constitution provides for monopolies! Specifically, inventors are guaranteed some sort of limited-time monopolies on their inventions. (This is a REALLY good thing, by the way, just subject to abuse.)

However, by the time you get to the point that an industry is important enough to the economy that a monopoly in it can be "in restraint of trade", the economic implications of actually doing anything about the situation can be even worse than what the monopolist is doing. The decision to proceed, therefore, is fundamentally a political one.

So...AT&T operated a monopoly on telephone services for generations. And while they were not popular, it was hard to see that there was any gain to be had by doing anything about it. The cost of the poles & wires was super high, and you would never have two competing networks that came close to the efficiency of a single network outside the densest urban areas, and it was far from clear that even there, gain was possible.

Then came the Internet. When AT&T started looking to expand into the Internet, their dominant position at the physical layer became a huge concern, and they were broken up. Remind me, how did that go?

Of course, IBM operated a monopoly (think Apple in the absence of Microsoft or Linux) for decades. The suit started, but the Reagan administration decided to slow-walk it until IBM was no longer a monopoly.

Or you could go back to the original trust-busting. Breaking up Standard Oil? Seems to have been a good thing. Breaking up the banks? That went okay--until the Depression, a few years later. Then they had to walk almost all of it back.

Or you could look at professional sports. Basketball, football, baseball--all run by monopoly organizations. But in the end, it's just entertainment, so--as a political decision--they are excluded from monopoly legislation.

There are no good answers.

Now, lets consider Google, Facebook, and Amazon. Each of these companies are hugely dependent upon the network effect for their success. Suppose we break Facebook into two companies, BookFace, and BaceFook. Suppose that we also split the users between them. What happens next? If 80% of someone's contacts are on BookFace, then that is where they will spend almost all of their time. If that means creating a new account, they will do that. And what about the other 20% of contacts? What if THEY want to talk to that person?

There is a real social benefit for keeping these companies together. The "obvious" solution is to highly regulate them. Except--let's talk about regulatory capture.

There. Are. No. Good. Answers.