Author: Ramsi Woodcock

Categories
Antitrust Inframarginalism Monopolization

The Smallness of the Bigness Problem

The tendency to ascribe the problem of inequality that ails us to the bigness of firms is the great embarrassment of contemporary American progressivism. The notion that the solution to poverty is cartels for small business and the hammer for big business is so pre-modern, so mercantilist, that one wonders what poverty of intellect could have led American progressives into it.

Indeed, the contemporary progressive’s shame is all the greater because the original American progressives a century ago, whose name the contemporary progressive so freely appropriates, did not make the same mistake. The original progressives were more modern than progressives today, perhaps because the pre-modern age was not quite so distant from them. Robert Hale, the greatest lawyer-economist of the period, wrote that

[e]ven the classical economists realized . . . competition would not keep the price at a level with the cost of all the output, but would result in a price equal to the cost of the marginal portion of the output. Those who produce at lower costs because they own superior [capital] would reap a differential advantage which Ricardo, in his well-known analysis, designated “economic rent.”

Robert L. Hale, Freedom Through Law: Public Control of Private Governing Power 25-26 (1952).

I suspect that this is absolute Greek to the contemporary progressive. I will kindly explain it below.

But first, it should be noted that the American progressive’s failure to appreciate the smallness of the bigness problem is not shared by Piketty, whom American progressives celebrate without actually reading:

Yet pure and perfect competition cannot alter the inequality r > g, which is not the consequence of any market “imperfection.”

Thomas Piketty, Capital in the Twenty-First Century 573 (Arthur Goldhammer trans., 2017). (Italics mine.)

What does Piketty mean here?

He means what Hale meant, which is that the heart of inequality does not come from monopolists charging supracompetitive prices, however obnoxious we may feel that to be, but rather from the fact that the rich own assets that are more productive than the assets owned by the poor, and so they profit more than the poor even at efficient, competitive prices.

In other words, the rich get richer because their costs are lower and their costs are lower because they own all the best stuff.

No matter how competitive the market, prices will never be driven down to the lower costs faced by the rich, because other people own less-productive assets than do the rich and competition drives prices down to the level of the higher costs associated with producing things with less-productive assets.

(Why can’t price just keep going down, and simply drive the more expensive producers out of the market to the end of dissipating the profits of the less expensive producers? Because there is always a less expensive producer! Price can therefore never dissipate the profits of them all, and anyway demand puts a floor on price: consumers are always bidding prices up until supply satisfies demand.)

Graphically, American progressives have been sweating the “monopoly profit” box without seeming to realize that it’s tiny compared to what remains once you eliminate it, which is the “economic rent” box.

Picketty, the original American progressives, and kindergartners know the difference between big and small. Why don’t we?

Categories
Antitrust

Conspiracy or Incompetence?

Let’s get this straight. The New York Times criticizes The Epoch Times today for running infomercials attacking the Chinese Communist Party’s handling of the coronavirus pandemic while making “no mention of The Epoch Times’s ties to Falun Gong, or its two-decade-long campaign against Chinese communism.”

But last week the Times ran a long piece, titled “Big Tech’s Professional Opponents Strike at Google,” that purported to reveal to readers the forces behind the Google antitrust suit while making no mention of the campaign of the News Media Alliance, of which the Times is a member, for antitrust action against Google, or the threat posed by Google to the Times’ advertising business.

Since the Times seems to think poor little Epoch Times should be disclosing its death struggle with the CCP to readers, I would like to see the Times start disclosing, in each article it writes about Big Tech, its death struggle with those companies over advertising revenues. The paper can also slap a correction to the same effect on each of the hundreds of pieces it has published over the past three years trashing its tech adversaries.

Ben Smith, who knows better, contributed to the Epoch Times piece. Let’s see him show some courage in his next column about media and tech.

So which is it? Maybe both.

Categories
Miscellany

Chess as a Warning

Still not like life, but more like it. (Source.)

There is a tendency to view the great lesson of chess as being that math-like reasoning works: the systematic thinkers and pattern recognizers among us excel at the game because they can see seven moves ahead, spot traps, and so on.

But that’s the wrong conclusion.

What chess tells us is that if even with fixed rules and an eight-by-eight square board math cannot deliver a key to winning every game–and it looks like it can’t–then imagine how much less useful mechanical thinking would be on the infinity by infinity board with no fixed rules that is life.

Chess has always been an amalgam of systematic behavior that is quite alien to daily life, and strategies and concepts that are much more familiar to us, like daring, care, and luck.

In chess there are the moments when a great systematic mind can see checkmate seven moves ahead. But just as often there are the moments in which several possible moves would open up a near-infinity of possible outcomes and no one can say which is best, both because that depends on what the other player does and because the possible variations are almost too numerous to count.

Sometimes the game lands us on an end branch of the tree of possibilities, and it’s possible to see your way to the blossom on the end, but other times the game lands you on a trunk and the brambles are so dense that you can scarcely see the sky.

When we find ourselves on the end branches, systematic thinking looms large, and we tend to use this as chess’s great lesson for life: find the system! Find mate in seven moves!

But when we find ourselves in the brambles, we call upon the same tools we use in daily life. We think in terms of strategy. Dominate the center of the board. Take the initiative by putting the opponent’s King in check. Pin down important pieces. Defend. Attack. Trust your gut. Victory goes to the bold.

There is in human relationships nothing at all even remotely analogous to mate in seven moves. Sometimes we talk about the relations between great powers as “like a game of chess,” but in truth they never are. The statesman who thinks he can mate his opponent is a dangerous fool, because he will sacrifice sound, human strategy for a system that will inevitably fail.

The closest thing we have to mate in life is the law, which purports at times to be a set of fixed rules that govern all human interactions. But any practicing lawyer will tell you that a bit of politics, or an appeal to heart of a judge, can win a case, even if the letter of the law is against you.

The board of life is so vast, and the pieces so numerous, that we are always, always caught in the brambles, unable to see the sky.

The great success of machine learning in chess represented by AlphaZero, a simple learning algorithm slapped together by Google that went on to beat the best chess computers in the world in dashing style, makes this lesson clear.

The legacy chess computers that AlphaZero beat were systematic thinkers, combining hardcoded programming about the best opening moves with number crunching that would explore possible games emanating from different moves and try to pick the most promising of them.

But AlphaZero is machine learning. Google’s engineers fed it the rules of chess and it played tens of millions of games against itself, creating a map of the best moves in different situations based on whether they ultimately led to a win or a loss.

It takes an approach akin to the approach of the human mind to life: note what seems to work based on experience and then do it when you encounter similar situations in the future. Of course, AlphaZero has a lot more experience to work with, because no one can play forty-four million games with himself in two hours.

The important thing about AlphaZero is that no one, not AlphaZero, not the Google engineers, can identify a winning rule of decision that AlphaZero follows, other than the learning map itself, and that changes as AlphaZero learns. There’s no system in there, other than the learning process, which is really just a method of coping with the richness of experience.

The thing that astonished chess enthusiasts is that AlphaZero plays in a human fashion, making daring sacrifices to achieve positional advantages. Some say it hearkens back to the age of “romantic chess” in the 19th century, before human players became obsessed with systematic play and made the game boring.

The lesson here is not that we have found a mechanical solution to the game. We haven’t: AlphaZero can lose; it’s just better at strategy than anyone else, so it tends to win more often. The lesson is that most of chess is not finding mate in seven moves–otherwise the brute force chess computers would be unbeatable–but rather being very, very good at the the familiar strategies that we use to navigate life: learning from experience, noticing what seems to work.

There’s no doubt that being able to see a few moves ahead helps avoid traps–those mates in seven–and that is what stands out at first about the game to human players.

But it stands out precisely because life is not like that.

Categories
Civilization Despair Miscellany World

God Has Died a Thousand Times, and Once in Philadephia

In its most extreme form, the state to an American is ‘a bunch of people’, politicians and their officials whom he watches with critical and even distrustful eyes; he sees the state as a powerful instrument that belongs to and is operated by groups of people for their own ends. At the other extreme one finds in Europe the adoration of the state as something majestic, transcendent and even divine (in the tradition of the ‘divine’ emperors of Rome). Nobody expressed this feeling better than the famous philosopher Hegel, who was professor at the Prussian University of Berlin from 1818 to 1831 and wrote: ‘The march of God in the world, that is what the state is. In considering the Idea of the State we must not have our eyes on particular states . . . Instead we must consider the Idea, this actual God, by itself’.

R. C. van Caenegem, An Historical Introduction to Western Constitutional Law 168 (2000).
Categories
Monopolization

Chamberlin Against Trademark

The wastes of advertising, about which economists have so often complained, would be reduced, for no one could afford to build up goodwill by this means, only to see it vanish through the unimpeded entrance of competitors. There would be more nearly equal returns to all producers and the elimination of sustained monopoly profits. All in all, there would be a closer approach to those beneficent results ordinarily pictured as working themselves out under “free competition.”

Edward Hastings Chamberlin, The Theory of Monopolistic Competition: A Re-Orientation of the Theory of Value 274 (7th ed. 1956).

This view, by the father of the theory of monopolistic competition, is of course still radical today. The entirety of Appendix E of The Theory of Monopolistic Competition, which he devotes to this attack on trademark, did not deserve to be forgotten. You can read it all here.

Where I think I differ with Chamberlin on trademark is this passage:

The question is, where does identification leave off and differentiation begin? [Absent trademark, t]here would be mere identification, without further differentiation of product, in the case of two competing goods, identical in every respect, – as to color, shape and design, labels, marks and names, everything excepting only an inconspicuous identification mark or the name and address of the producer. Obviously “protection” which went no further than this would have no economic value to the producer, for it would mean no more to the buyer than does the slip found in a container (and which identifies perfectly), “Packed by No. 23.”

Edward Hastings Chamberlin, The Theory of Monopolistic Competition: A Re-Orientation of the Theory of Value 272 (7th ed. 1956).

Chamberlin’s claim that “Packed by No. 23” is all identification and no differentiation works intuitively for us because we know that the company that employs No. 23 already engages in a great deal of supervision of the quality of No. 23’s work. We have learned that within-brand product quality is pretty good (at least these days), and so we can ignore these little notes, which may be the legacy of an earlier stage in the industrial age in which within-firm quality standards were still something of a work in progress.

But I do think that we would be far more likely to pay attention to No. 23 were it used as a brand name, rather than an identifier of within-brand quality, for there is no great bureaucratic organization standing over all brands in our economy, making sure each meets quality requirements, and willing to “fire” any that shirks or underperforms. To analogize the Consumer Products Safety Commission to a boss to American’s producers would be funny.

And so we would pay attention to No. 23–just as we pay attention to Chanel No. 5–and paying attention is all it takes for identification to cross over into differentiation, as any marketer will tell you. Attention leads to familiarity which leads to irrational preference.

The only way out of differentiation and all the irrational loyalty that comes with it is not to identify. But to do that, without throwing the consumer into a hell of shoddy and fake goods, one must then build up that great bureaucratic organization standing over all brands in our economy, making sure each meets quality requirements, and willing to “fire” any firm that shirks or underperforms.

That is, we must put businesses in the position of poor, hardworking No. 23.

But even if we were to do that, I am not sure that the end would justify the means. For if the point were alone “the elimination of sustained monopoly profits” via the increased price competition that would follow the demise of trademark, as Chamberlin suggests that it would be, I have a better idea: just pass a law that says “charge lower prices.”

If the goal is, instead, to achieve better product quality standards than exist today, then of course the great economy-wide bureaucracy would be needed.

(I thank my colleague Brian Frye for triggering this line of thought.)

Categories
Antitrust Regulation

Antitrust as Price Regulation by Least Efficient Means

Any company that has $100 billion in cash and marketable securities on its books, as Apple does, is charging excessive prices for its products, in the sense of prices higher than necessary to make everyone at Apple ready, willing, and able to continue to do the excellent job that they are doing.

Is that a problem? Unfortunately, yes, for any society that’s supposed to be a thing of the people. It means that Apple is bilking the public: taking more from the people for their iPhones and Macbooks than is strictly necessary to give Apple an incentive to produce iPhones and Macbooks.

You don’t need the money to reward investors. Otherwise you would have paid the money out already.

You don’t need the money to build more factories. Otherwise you would have built the factories already.

You don’t need the money to pay Tim Cook. Otherwise you would have upped his compensation already.

And with an AA+ credit rating, you don’t need the money for an emergency either, since it would cost you almost nothing to borrow cash in a pinch.

You just don’t need those billions, which is why they are what economists call “rents:” earnings in excess of what would be necessary to make the company, and all those who contribute to its success, ready, willing, and able to carry on.

Should government do something about these rents?

Yes. But not with the antitrust laws. Because Apple’s rents are not monopoly rents. Those are the excessive returns that come from making your products stand out by trashing your competitors’ products, rather than improving your own. Antitrust prohibits that sort of behavior.

But does anyone think Apple achieved the ability to charge $1,200 for an iPhone by making Samsung products worse?

Of course not.

Which is why there is no antitrust case against Apple.

Instead, Apple’s rents are Schumpeterian: excessive returns that come from making your products stand out by improving them, rather than by trashing the products of competitors. Antitrust does not prohibit such conduct.

Nor should it, because antitrust is a slayer, breaking up the firms that run afoul of its rules, saddling them with behavioral injunctions, and taxing them with trebled damages.

Those remedies make sense when the target is a firm that has gotten ahead by trashing competitors. That sort of firm doesn’t have a better product to offer, so smashing it is no great loss to society.

That’s not true for firms like Apple that have gotten ahead by being better. Smash Apple and you might well get Apple’s prices down. But you might also end up with poorer-quality products.

Why is it that Samsung keeps churning out gimmicky phones that are just a bit too ahead of their time to work properly, whereas, iteration after iteration, Apple phones continue to please?

Who knows?

By the same token, who knows whether Apple divided two ways, three ways or four ways will still have the same old magic? Organizations are mysterious things and we should break them only when they are already broken.

That doesn’t mean that something shouldn’t be done about Apple’s prices. As is so often the case, the right approach is the most direct: tell Apple to lower them.

There’s nothing novel about doing that. It’s the way America often has dealt with high-tech firms that get carried away with their own success. It happened with the landline telephone: the states regulated telephone rates for a century, and many retain the statutory authority to do so today. No vast cultural leap would be required to regulate the prices of iPhones or other Apple products.

Regulating prices runs much less of a risk of killing the golden goose, because it’s a scalpel to antitrust’s hammer, ordering prices down without smashing the firms that charge them.

But are prices really all that Apple’s antitrust adversaries care about? I think so.

The antitrust complaint brought by Fortnite-videogame-maker Epic is admirably transparent on this score, inveighing against what it calls Apple’s “30% tax” on paid App Store apps.

True, Epic spends a lot of time arguing that Apple should stop vetting the apps that can be installed on iPhones and should also stop requiring apps to accept payments via Apple’s own systems.

But it’s hard to believe Epic really cares whether consumers can run any app they want on the iPhone, or whether consumers can make in-app purchases with Paypal instead of Apple Pay.

The real reason Epic targets app vetting and payment systems lockdown is more likely because these two Apple policies prevent Epic from doing an end run around Apple’s 30% fee by connecting directly with users.

So to use antitrust to attack Apple’s prices, Epic ends up trying to thrust a stake through the streamlined, curated environment that iPhone users love. Needless to say, we know what a platform on which you can install anything and pay in any manner looks like: it’s called the PC, that bug-ridden, bloatware-filled, hackable free-for-all from which Apple users have been running screaming for decades now.

The beauty of price regulation is that you don’t need to redesign products to get what you want. Under price regulation, Apple would be able to continue to vet apps and manage payments, and thereby maintain the experience its customers love. All the company would need to do is lower its prices.

Epic isn’t the only organization out to exploit the antitrust laws for the sake of a bit of price regulation by least efficient means. Today’s Neo Brandeisians seem to share this goal.

That is the substance of an extraordinary piece by two affiliates of the Open Markets Institute that calls for using antitrust to smash big firms, but allowing small firms to form price-fixing cartels. The idea is to redistribute wealth by reducing the prices big firms can charge and increasing the prices that the little guy can charge.

That sounds great. But why not just regulate prices directly instead of smashing the country’s patrimony to get there?

Indeed, I’m mystified by the contempt in which this supposedly-radical movement seems to hold price regulation. The movement is all for returning to antitrust’s New Deal heyday. But it has nary a word to spare for price regulation, which was a much bigger part of the New Deal and the mid-century economic settlement that followed it, during which fully 25% of the American economy by GDP was price regulated.

One wonders whether the Neo Brandeisians share the Chicago School’s old concerns about “capture.” Something tells me they might.

Nevermind that we learned long ago that the notion that administrative agencies are captured by those they regulate is too simple by half.

And no one has been able to explain to me why the judges who apply the antitrust laws are any less susceptible to capture than are government price regulators.

But I do know that most Americans don’t seem to know that their gas, electricity, and insurance rates are regulated by government agencies, which says a lot about whether price regulation is the supreme evil that antitrusters of all stripes make it out to be.

The Neo Brandeisians’ mania for competition is really just run-of-the-mill American anti-statism, with a bit of progressive polish. Consider another example of intemperate fervor for competition, one that differs from the Neo Brandeisians’ campaign against big tech only in lacking that campaign’s radical pretensions: The Hatch-Waxman Act.

Rather than follow the rest of the world in regulating prescription drug prices directly, the United States has chosen to use competition from generic drugs to drive down drug prices after patents expire. The Hatch-Waxman Act of 1984 was meant to kickstart the plan by streamlining the generic drug approval process.

It’s important to understand how ridiculous using competition to reduce off-patent drug prices really is. Far and away the greatest virtue of competition is that it leads to innovation: firms must make better products or lose out to competitors.

But when it comes to generic drugs, competition cannot lead to innovation, because generic drugs are by definition copies of old drugs!

If a generic drug company were to innovate in order to get ahead of its competitors, its product would need to go through full-blown clinical trials in order to receive FDA approval and would also likely receive patent protection, instantaneously removing it from the competitive generic drug market and driving up its price. So the innovation rationale for competition just doesn’t exist in the context of generics.

But we decided to promote competition anyway, purely for the purpose of reducing off-patent drug prices.

It kind of worked.

Prices for many off-patent drugs fell. But not for all off-patent drugs. As scandals involving Daraprim (of pharma bro fame) and the Epipen show (the latter in the device context), it turned out that competition does not always come to the rescue once patents expire and regulatory hurdles are lowered.

More importantly, the cost of maintaining the system turned out to be immense. Firms responded by finding ways to prevent their drugs from going off-patent, leading to interminable patent and antitrust litigation. Just google “reverse payment patent settlements”–one of the mechanisms used by drug makers to undermine competition–and behold the flood of ink spilt on this avoidable disaster.

Worse, we have learned in recent years that generic drug quality is actually pretty terrible, even dangerous: competition is killing the golden goose.

Not, in this case, because Hatch-Waxman led to the break-up of big firms, but because when competition is just about getting prices down, firms will skimp on production costs. Ruinously low prices are, incidentally, supposed to be another of the great problems with price regulation–that regulators will dictate prices that are too low to cover costs–but it turns out that competition is at least as good at undershooting.

So what we could have gotten from a rate regulator in four little words–“lower your damn prices”–Hatch-Waxman accomplished in a patchwork way, at the cost of interminable litigation and sketchy pills.

Which leads me to ask: can Congress please do something about Apple’s $100 billion cash pile? How about putting aside $25 billion (just to make sure Apple has a nice cushion against shocks), and then rebating the other $75 billion to everyone who has ever bought an Apple product, pro rata? You can be sure Apple knows who they are.

And while Congress is at it, they can take a look at Microsoft and Alphabet, too.

For $100 billion is not actually the largest hoard in Silicon Valley.

Categories
Apocrypha Miscellany

Eternal Return

He chiseled at the upper left hand corner of the sealed doorway and it fell away. “Can you see anything?” asked C____. “Yes,” he replied.

“How old?”

He angled an elaborate golden headdress through the gap and held it up to the candle. At its center was an object, the size perhaps of a pear, jet black but shimmering somehow in the light, like a pencil lead, cut expertly into a thousand geometric faces.

“Forever,” he replied.

Categories
Antitrust Monopolization

The Original and Purest Form of Anticompetitive Conduct

Still in those early days trade depended not upon the quality of the goods but upon the military force to control the markets. The Dutch consequently valued the island chiefly on account of its strategical position. From Formosa the Spanish commerce between Manila and China, and the Portuguese commerce between Macau and Japan could by constant attacks be made so precarious that much of it would be thrown into the hands of the Dutch, while the latter’s dealings with China and Japan would be subject to no interruptions.

James W. Davidson, The Island of Formosa, Past and Present (1903).

Here Davidson nicely contrasts monopolies based on product quality with monopolies based on force, capitalism with mercantilism. I do not think it is too much to say that democracy, or at least a genuine republicanism, even if autocratic in administration, is the principal bulwark between the two, and that antitrust, when used properly, is meant to round off any remaining mercantilist edges.

When used improperly, antitrust is of course a gunboat all of its own.

Categories
Antitrust

Forbidden Fruit

As if to remind those who might still be confused about what the antitrust movement against the tech giants is really about, newspapers are now making common cause with app developers to force Apple to delay new privacy protections that would have allowed app users to opt out of targeted advertising.

That’s right, the same newspapers that have been savaging the tech giants for years as evil privacy foes are fighting to stop Apple from making it harder for app developers to exploit your data.

Why? Because newspapers make money from advertising, of course. They are some of the app developers who want to continue to spy on you.

Does newspapers’ double-dealing on privacy suggest that their position on the tech giants more generally is driven by their bottom line rather than the goodness of their hearts?

You bet.

It is an interesting coincidence that newspapers have been busy trashing the tech giants—running articles accusing them not just of privacy violations but everything from monopolization to the addiction of children—just as the tech giants have out-competed them in their principal business line: the distribution of advertising.

Google and Facebook distribute advertising far more effectively than do newspapers because, as the Times itself recently explained:

consumers interact with [Google parent Alphabet] nearly every time they search for information, watch a video, hail a ride, order delivery in an app or see an ad online. Alphabet then improves its products based on the information it gleans from every user interaction, making its technology even more dominant.

Katie Benner & Cecilia Kang, Justice Dept. Plans to File Antitrust Charges Against Google in Coming Week, N.Y. Times, Sept. 3, 2020.

Consumers never will interact with news websites as much as they interact with these platforms, and so the product that newspapers offer to advertisers—ad distribution—will never be as effective as the product that Google and Facebook offer to advertisers. The result has been an exodus of advertising dollars from newspapers—which, along with television, were once almost the only game in ad distribution town—to the tech giants.

What newspapers should have done in response to this tech-driven decline in their ad-based business model was to cut the cord with advertising. For advertising, which is all about manipulating readers into buying products they don’t really want to buy, was always a bad fit for a news industry devoted to providing consumers with the information they need to engage in independent decisionmaking.

Newspapers should therefore have seized the opportunity presented by the decline in their advertising revenues to seek out public funding à la the BBC for what is, after all, a sacred public function.

Instead, the industry has appeared to embark on a campaign to scare the tech giants into paying them a share of their advertising revenues. Consider:

  • The “tech-lash” splashed across newspaper front pages over the past decade. That looks an awful lot like a message from media to big tech: pay up, or we’ll wreck your reputation. Of course, that could just have been driven by newspapers’ concerns about privacy. But newspapers’ opposition to Apple’s privacy safeguards today gives us the answer: not likely.
  • The drumbeat of articles about courageous antitrust scholars daring to take on big tech. (Nevermind that few of them actually are antitrust scholars.) That looks an awful lot like a message from media to big tech too: pay up, or we’ll get the law to break you into pieces. Of course, that could have been driven instead by newspapers’ concerns that there’s too much concentration in America. But the News Media Alliance’s multi-year campaign for an antitrust exemption that would allow newspapers to cartelize gives us the same answer: not likely.
  • The House antitrust investigation into big tech, led by a congressman who has been doing the bidding of the News Media Alliance. That too looks an awful lot like a message.
  • The fawning story in the Times about Tim Sweeney, CEO of Epic games, maker of Fortnite, who is leading an antitrust “crusade” against Apple in search of lower fees. That does look like a message to Apple. (And while I’m on this subject—funny how the article doesn’t mention the Times’ massive conflict of interest in reporting the story. For the Times is publicly supporting Epic, and demanding lower fees for their apps too. But a reader of that article wouldn’t know it.)

It has been a successful campaign so far. If the pen is mightier than the sword, it is perforce mightier than the microchip. The tech giants have already started to open their pocketbooks. It will be interesting to see how badly they cave.

Of course, there are limits to the amount of sympathy one can feel for Google or Facebook. Those companies may be better at what they do than newspapers, but they are better at doing something antisocial: the spying and manipulation that constitute modern commercial advertising. The newspapers’ fight to get cut in on the spoils is ugly, but one set of rogues deserves another.

But Apple is different. The company makes most of its money selling products that genuinely make life easier. And as the company has not tired of reminding us, the fact that its business is not mainly advertising means that its interests are more closely aligned with those of consumers when it comes to privacy than are the interests of any other player in this fight.

Which is why the newspapers’ attacks on Apple are a new low.

For a time, not competing with newspapers for advertising seemed to buy Apple some safety from the media’s antitrust crusade. But when the antitrust shakedown seems to be working against companies that wiped out your old-economy advertising business, why not extend it to one that wants to put the screws on your new-economy advertising business, and see if you can extract lower app store fees while you are at it?

Today’s antitrust movement against big tech may be many things to many people, but one thing it’s not is a progressive movement, even if some of its proponents delight in wrapping themselves in the progressive banner.

That should have been obvious to anyone watching the movement attract Trump Administration backing in assaulting what are probably the most progressive corporations ever. (It’s not normal for corporate employees to block management from accepting lucrative military contracts, and then not get fired.)

But at least now it is completely clear. For “when they tasted of the apple their shame was manifest.”

Categories
Antitrust

You Furnish the Briefs

No court has ever, in 130 years of antitrust practice in the United States, taken the position that dominance in and of itself, absent bad conduct, is illegal. But if you were a reader of The New York Times, you could be forgiven for thinking that as a matter of American law big is bad:

Alphabet was an obvious antitrust target. Through YouTube, Google search, Google Maps and a suite of online advertising products, consumers interact with the company nearly every time they search for information, watch a video, hail a ride, order delivery in an app or see an ad online. Alphabet then improves its products based on the information it gleans from every user interaction, making its technology even more dominant.

Katie Benner & Cecilia Kang, Justice Dept. Plans to File Antitrust Charges Against Google in Coming Week, N.Y. Times, Sept. 3, 2020.

Google is an obvious target for the Times, of course, because Google has eaten its lunch in the competition for advertising dollars. But it’s not an obvious target for anyone who knows something about antitrust, which isn’t in the business of smashing firms that win by being better.

But The New York Journal got its war by whipping Americans into a frenzy against an enemy of its choice. Why shouldn’t The New York Times get its antitrust case against Google?

Unlike in 1898, however, the only Americans who have actually been whipped into a frenzy are the elites: surveys show that Americans still love Google and the other tech giants, at least when they’re not being asked leading questions like: should the government “break up tech companies if they control too much of the economy?” (Actually, the best thing about the surveys is that the tech company Americans like least is the one that elites probably like most: Twitter.)

I suppose that it’s only the elites who matter, however, even those who might pretend not to read the Times. AG Barr is so intent on rushing out a case against Google, presumably because he’s been blinkered into thinking it will clinch a win in November for President Trump, that his line attorneys are in open revolt:

Justice Department officials told lawyers involved in the antitrust inquiry into Alphabet . . . to wrap up their work by the end of September[.] Most of the 40-odd lawyers who had been working on the investigation opposed the deadline. Some said they would not sign the complaint, and several of them left the case this summer.

Katie Benner & Cecilia Kang, Justice Dept. Plans to File Antitrust Charges Against Google in Coming Week, N.Y. Times, Sept. 3, 2020.

As PBS tells it: “Remington, who had been sent to Cuba to cover the insurrection, cabled to Hearst that there was no war to cover.” Hearst replied: “You furnish the pictures. I’ll furnish the war.”