24 July 2018

The Verge: “The anti-monopoly case against Google”

These are monopoly networks, or networks that have many monopoly characteristics. So we looked to the past, trying to figure out what principles people used to regulate the railroads, the utilities, and other monopoly networks. And there were two primary principles people brought to bear on the transport monopolies.

One was non-discrimination, which is most important from the side of the producer. Every single customer has been trying to use these platforms, these transport systems, to get to market, has to be treated the exact same. You get the same service, you get the same pricing, and you all get in the same line. No discrimination, no playing favorites, no giving someone a better rate.

The second principle was no vertical integration. If you own a necessary monopoly that other people depend on, you cannot deal in products that compete with other companies that depend on you to get to market. If I am growing grain on my farm and I need to get on your railroad to get to the city where my grain’s going to be consumed, I do not want the railroad to buy the farm next to me. That’s because when I go to the depot, I know that every day when I try to take my grain into town, the railroad grain will be loaded before mine is.

Barry Lynn

From last year, but just as relevant today as back then – and fitting after the conclusion of another antitrust case against Google in the European Union. I found it amusing that most of the examples in the article involve Amazon and their distribution network, but Google breaks the same principles in the digital space. In the Android case for example, Google compels hardware manufacturers to include its own digital services, thereby hurting the chances of competing online services to gain and retain customers. The ideal situation would be to have several competing platforms on every distribution market, but digital network effects appear to favor a single big platform; baring that, platforms should be closely scrutinized to prevent anticompetitive behavior.

A similar case could be made against Apple as well, though not mentioned in the article. I’m reasonably sure complaints will start coming in, as Apple switches focus to digital services to drive long-term revenues. One of the high profile antitrust disputes in the coming years will likely be Spotify against Apple, for bundling and promoting Apple Music to iOS users. If Apple decides to add video content to the mix, Netflix may join the action as well.

Interestingly, the author argues the same fairness principles could be applied even further to Facebook and any other algorithmic timeline. In light of the continuous scandals caused by Facebook’s mishandling of data, some form of regulation here is sorely needed and long overdue.

The other question with Facebook: is there a public harm in the way they manipulate information between the author of an idea and the reader of that idea? I was talking about the way Amazon manipulates the flow of books between an author and a reader. We have much the same problem with Facebook. They’re manipulating the flow of information between citizen and citizen, and they’re doing it in ways that maximize their own revenue but warp the public perception of events.

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