Google, Facebook, Amazon And The Future Of Antitrust Laws

Google, Facebook, Amazon And The Future Of Antitrust Laws


In July 2019, the U.S. government targeted America’s
biggest tech companies. The Department of Justice and the FTC
appear to be looking at whether the leading tech platforms have used improper
means to acquire monopoly positions or to exclude promising rivals
from contesting their position. Translation – Are these
companies too big? And did they get that way illegally? These questions fall under a set of laws
that until recently had faded from the public spotlight. Antitrust has gone from being this
completely sleepy backwater discipline that was just a few people talked about to
being very much in the public news. We’ve really started to see a lot of
discussion about does there need to be more enforcement of antitrust? Are we really enforcing these laws and using
these tools in the way that they were intended to be? And it’s not just tech. Antitrust concerns have arisen around other
industries that are also dominated by a few huge companies
like domestic airlines, pharmaceuticals, telecommunications and beer. There’s always this kind of balance between
the desire for an efficient economy and this fear of what happens to to
society, to democracy, to the interests of consumers, the interest of labor. So we asked these experts to
explain what is antitrust anyway. The first federal antitrust law was passed
in 1890 and two more followed in 1914. The antitrust laws started out as being
against power and making it easier for little firms to get into the market and
survive, as well as to cater to consumers. They sought to prevent companies from getting
too big or engaging in unfair practices like colluding to fix prices. They also created an agency
to enforce those standards. So the antitrust laws were a reaction
to the industrialization of the late 19th century because of the perception that there
was too much economic power over specific industries being concentrated
in a few hands. People like John D Rockefeller and J.P. Morgan. Rockefeller and Morgan were part of
a movement that thought bigger businesses were better businesses and
monopolies were the best. Its followers believed in consolidating whole
industries into single firms or grouping firms into trusts. From just 1895 to 1984, thousands of
manufacturing firms merged into just 157 corporations. Morgan consolidated the steel, railroad,
shipping and electricity industries and inspired copycats in tobacco, rubber,
film production and more. But it was Rockefeller’s Standard Oil
Company that became the first blockbuster antitrust case. Rockefeller combined dozens of state-based
companies like Standard Oil Company of Ohio, of Nebraska, etc. into one. By 1984, Standard Oil controlled 91 percent
of oil production and 85 percent of sales. Following a searing exposé of
Standard Oil’s business practices by journalist Ida Tarbell, President Teddy
Roosevelt’s administration filed an antitrust suit against the
company in 1986. After a five year court battle, the
Supreme Court ordered the breakup of Standard Oil. Standard Oil was divested back into the
local companies that had formed Standard Oil in the first place. Over time, of course, we get these
companies beginning to compete with each other. We have new companies entering the
market and we get a much more competitive oil industry. But that took a long time to happen. Innovation boomed and the overall value
of the industry actually increased, as did Rockefeller stock in
the new companies. A flurry of antitrust activity followed. By the end of the 1910s. Most of the major trusts had been broken
up or regulated in some other way under antitrust law. But this aggressive approach ended
when World War One began And after the U.S. entered into the war, the view was,
boy, we just cannot afford to have antagonism between the federal
government and big business. This shift highlights a
key theme of U.S. antitrust law: How it’s enforced or
whether it’s enforced at all depends heavily on the political will of
the agencies, courts and president. The guidance in the laws is more than
any other area of federal law, exceedingly broad and in many instances vague. There is a difference between having a law
on the books and having a law actually be enforced. The regulatory agencies can do with
the law what they want. President Franklin D. Roosevelt briefly revived aggressive antitrust
enforcement to energize the struggling Depression era economy. But he, too, put it aside
when World War 2 began. This time, though, the end of the
war sparked the most aggressive period of antitrust enforcement to date. The stage had been
set in Hitler’s Germany. By 1933, when Hitler comes to
power, the German economy is extremely concentrated. We have these big monopolies
and chemicals and steel and electricity and coal and
other important industries. Then Secretary of War Kenneth Royall
put it bluntly in a report That “these monopolies soon got control of
Germany, brought Hitler to power and forced virtually the whole
world into war.” The United States was very concerned
that our country could tip towards fascism or communism if we didn’t
have and nurture a competitive, diverse society. Congress passed another act in 1950
to strengthen the mandate against mergers. This, combined with an extremely liberal Supreme
Court, kicked off the era of peak antitrust, one where the FTC and
the courts became extremely skeptical of any mergers that resulted in a
larger market share for one company. Really, in the 50s and 60s, many, many
cases were brought to stop mergers, even mergers that today we think of
would not be problematic at all. The blockbuster case of
this era was AT&T. AT&T had been the sole supplier of
phone service in the US for decades. The Department of Justice filed
an antitrust suit in 1974. And ultimately in 1982, that case was
settled in the Reagan administration with a decree that broke up AT&T. And the idea was to create
a more competitive telecommunications market by infusing competition into those markets. That sounds like a success for
supporters of aggressive antitrust, right? Strictly speaking, it was. AT&T’s decades long monopoly
over phone service ended. But it also marked the end of the
aggressive antitrust era and the beginning of the standard we have today. Let’s back up a bit. A conservative backlash against extremely
aggressive antitrust enforcement had been brewing as early as the 1950s,
driven by scholars at the University of Chicago. They argued that big mergers could
provide better efficiency and innovation. So there was a big movement to
cut back the antitrust laws that would say firms need a lot of room
to do what they want to do. Instead, these scholars proposed that antitrust
suits only be brought against businesses if their actions
had caused consumer harm. For example, if two businesses merged and
caused products to get more expensive or worse, or if the new company
somehow stifled innovation in the industry, the Supreme Court adopted this
consumer welfare standard. In the 1979 case, Reiter vs. Sonotone. It fairly abruptly sort of announces
that it’s shifting its direction and accepting that this so-called consumer welfare
standard is the goal of antitrust law. And when Americans voted conservative Ronald
Reagan into office the following year, the fate of aggressive
antitrust enforcement was sealed. Reagan campaign was based on the fact
that government had become too intrusive into business. So this sentiment built up and
Reagan ran on the ticket to get government off
the back of business. And that won the day. That sentiment won the day. And the next few
decades of antitrust enforcement. The Department of Justice did bring
a size-based antitrust case against Microsoft in the late 1990s, which we’ll
explore in another video along with its effects on the current
antitrust investigations of Big Tech. But for the most part, antitrust enforcement
based on the size of companies has been essentially dormant for
the last 40 years. And I think you saw antitrust be consumed
with or be captured by a very fundamental free market ideology that caused regulators
to put a heavy thumb on the scales, in favor of business, in
favor of letting mergers go through, in favor of letting monopolies
do whatever they wanted. This is obvious if we zoom out and
look at some key data on the U.S. economy. Between 1982 and 2012, market
concentration across all of these industries increased sometimes by triple
digit percentages between 1996 and 2016. The number of companies on the
stock market fell by half also since 1996. The FTC has challenged fewer and
fewer proposed mergers that would leave only five or six major
firms in an industry. Which is why there are now only
four major domestic airlines, four major telecommunications carriers, three major drugstores
and two major beer retailers. What we had at the turn of the 19th
century and we have again now is companies that have a significant influence
over the entire economy. This has experts wondering, is this
another inflection point for antitrust law? Should these laws once again be skeptical
of business size or should they leave these businesses alone? It feels like this is the first time
in 40 years that antitrust has a real moment to decide what it’s going to
be for the next 40 years. At times, I think that antitrust is portrayed
as this place and magic bullet, so to speak, of that if we just break
up the companies, all these other problems that we’re concerned about
would go away. But there’s no guarantee of that. Antitrust has intervened at different times
to create possibilities for much greater innovation, much
more robust competition. I think there is a broad sense, even in
the US, that something has gone wrong in these markets that something
needs to change. One way to think about it
is between the ends. On one side that we have aggressive antitrust
from the other side that don’t have antitrust. There’s a big spectrum and we
probably want to find some point on the spectrum. You will never be the perfect point. But to be on the spectrum is better
than being when one of the ends.

Comments

  1. Post
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    Mr Peco

    u.s. isn't into manufacturing, they buy everything from china and asia
    if a company was losing money because of the consequences of anti-trust, or could gain money
    they would be using those laws more

    the laws are there, but the loss of money or the potential gain in using those laws
    isn't there so no one cares

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    Charles Quinn

    Antitrust action has been mostly dormant in recent years until just now? Lol CNBC is falling apart at the hands of know-nothing millenial interns

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    Go MGTOW

    An antitrust lawsuit / breakup should automatically apply when any 'one' company exceeds 50% of the overall market. It should never pass 50% domination.

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    Tom Buttons

    Why is beer mentioned here? That's an international product and there's loads of foreign competitors at decent prices.

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    Trevor Doge

    Anti trust doesn't even work. Rockefeller just created a bunch of subsidiaries and continued his monopoly under several names.

    The reason the Nazis came into power was due to a bunch of crazed socialists (National Socialist = Nazi).

    This was a great attempt at getting people to vote left of centre though 👍 better luck next time

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    Johnny Schmegma

    In some markets there is global competition, like with smartphones or software or jumbo jets. Maybe our companies have to be large to compete globally

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    Adam Jagger

    Idk about the other industries but more airline competition probably won’t do much as fares are really low and profits while high are only about 10%. That’s not that much

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    njack1994

    Can we also include any company that has accumulated so many brands that they essentially create a false sense of fair and honest competition. Coffee and chocolate industry is also a problem. I mean nestle basically owns the ivory coast. If we are being honest though, capitalism will not create a responsible and moral society if it is opportunistic to live beyond what is sustainable.We are told that if we have enough money will can consume what we please and clearly and evidently that has not been nice to the planet.

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    Black cat photography

    You can't be that big without dirty tricks. And I agree they are way to big and annoying. You can't avoid them. They abuse people's data. Look at Facebook I think it's quite clear.

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    Black cat photography

    Ahhhh finally à big media says it. And if also the médias start telling the true they would killed slowly the fake news

  23. Post
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    Darryl Cheese

    I think anti trust laws should take effect when any business gets too big and powerful (Google, Amazon) that no other companies can form and complete.

  24. Post
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    Micheal O Flaherty

    The Boeing-Airbus duopoly is a case in point. Boeing released a flawed aircraft, the 737 max 8, but will survive because Airbus is at capacity and can't take much more market share. Boeing also could afford to squeeze more out of an old design instead of innovating with a new one.

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    Pedro Zurita

    "The Government" should really stop worrying about "protecting the people" and start worrying about the companies that operate on a global scale large enough to contest their sovereign status. Companies now exist with enough social power to sway the ideology of their users and whose mindset is not always in sync with the goverment that "controls" them. Antitrust has a new meaning in this context.

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    Diego Romero

    Andrew Yang said something like, “A Humane Capitalism is the spectrum we are referring to today, a UBI should be in our lifetime given how long we’ve turned a blind eye to tech innovation removing a need for humans.”

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    Colma B

    I would rather Google have a complete monopoly on all Media for the next 100 years than for Comcast to exist another day.

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    tcbobb16

    can someone explained to me if a major tech company like say Amazon gets break up, how would the USA government or the FTC pick the executives of the new company? let's say AWS Amazon Web Services gets taken away from amazon. let's say forever reason AWS fails and needs to sell then what would happen. I can just see amazon being banned from buying back parts. it would just be Microsoft, google, facebook. trying to buy AWS.

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    Journeyman

    I make money from Google!
    BTW over the years I have been forced to purchase software from Microsoft many, many times?
    Never made any money from Microsoft?
    THEY NEED TO GO AFTER MICROSOFT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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    Gerson

    "in the early 1990s, the auto industry created the US Auto Battery Consortium (USABC) to stifle the development of electric vehicle technology" – copped a patent and limited the techs use … so much for large companies having an interest in innovation. https://en.wikipedia.org/wiki/Patent_encumbrance_of_large_automotive_NiMH_batteries

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    Y T

    AntiTrust worked because they were in control of one product/services. Amazon is actually competing with multiple different companies, and targeting Amazon will only hurt consumers. Whole Foods price will go up, shipping cost will go up, cost of starting business will go up.

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    Hindu Goat

    bring back anti-trust…
    except those big monopoly companies like google pay for the politicians election campaigns
    allowing big anonymous donations to political parties and campaigns is what corrupts the system

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    somethingsomethingsomething

    anti-trust doesnt work in an era of globalization. cina isn't going to break up the biggest banks, the biggest tech, the biggest infrastructure companies – and then those can just buy the broken up pieces of the US behemoths because they cant compete or fend off the takeovers. Anti-trust is great but only in a vacuum

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    David barnes stuff 2

    They won when they figured out how to get voters to vote against their own best interest. They basically figured out how to get poor people to blame other poor people for the problems that poor people have such as low wages.

  52. Post
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    Thanatad Ruengsuksilp

    People talk about Big Tech monopolies/duopolies/other oligopolies all the time…
    But not enough people talk about the biggest duopoly of them all- the US Republican and US Democrats

  53. Post
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    Admiral Moses

    Blame democracy and a largely apathetic and ignorant voter base. We've been spoon fed this information for years now in one way shape or another but ppl would rather enjoy convenience than competition.

  54. Post
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    sportlol

    This video finally addresses the n#1 problem of our Western society and of capitalism. Neoliberalism only creates oligopolies so huge that they steal our freedom and all possibilty of progress, as they keep destroying the Earth, in other terms, our future. This needs to stop right now.

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    Preoximerias

    Man, the more I look at it, many of our current day problems stem from around the time of Reagan being President.

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    habibbi alikafe

    I'm no expert but this may not say the whole story. For example, Bayer recently merged with Monsanto but to do so they had to invest more in r & d and show they had innovative projects underway and sell billions of dollars of assets to competitors. So while there may be consolidation, they are, by the courts decision, doing so in a way that justifies antitrust laws to be ignored

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    Nhan Bui

    Mergers are neither bad nor good. It depends on the reasons for the merger. On the positive note, sometimes mergers happen because company a and b have technologies or services that compliment each other to make a better product. On the negative side, larger companies , say company a, can take advantage of mergers to stifle competition if they find out that company b who has a similar but better product is a threat to their obsolete product.

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    zok310

    lol, 13 companies rule over 300 million Americans. Add in about 4 automakers and its 17 companies that we have to interact with at some point as an adult.

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    Mike Chen

    Antitrust definitely worked in the past, but it isn't going to be a solution for the 21st century. Breaking Facebook into 2 Facebooks just means 1 will become the new Facebook.

    Most people won't even use Bing or Yahoo to look up things today. We refer looking up things online "Google it", not "Bing it" or "Yahoo it".

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    Mephisto

    This video is pretty stupid. It falsely characterizes the switch in antitrust enforcement philosophy as barely submerged political ideology. But this isn't true. The reality is that, contrary to this highfalutin rhetoric about "democracy" and other such things, antitrust enforcement was always primarily driven by economic considerations. In this sense, the victory of the Chicago School was an intellectual victory, and many of the experts quoted in this video would probably agree that, as an intellectual matter, the consumer welfare standard ought still to be the lodestar of antitrust regulators (I know that this is generally Daniel Crane's view, anyway).

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    MrManifolder

    Unregulated competition always inevitably leads to a small handful of dominant firms (or single dominant firm) who will seek to structurally cement their dominant position.

    Unless we reform our governments into systems which can effectively regulate markets and enforce competition, then the long-term stability of capitalism is doubtful. We either fix it or say goodbye.

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    Gerardo Rivera

    The reason Amazon doesn't make any profits on retail is because they are engaged in predatory pricing. They subsidize retail with their cloud business. We are enjoying the low prices until they finish every considerable competition in every market they are targeting. Then, I don't have to tell you what's going to happen.

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    William Miller

    Facebook is the biggest violator. My hope is they really hit Darth Vader (otherwise known as Mark Zuckerberg) really hard!
    Facebook has broken more laws and violated more people's rights than any tech company out there! They are trying to dominate everything now, including money, with their introduction of Libra.

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    Terry Thompson

    This is why the investor class should be abolished. It shouldn't exist. It is only because of investors, and their psychotic desire to dominate in the most merciless, brutal, and sinister ways possible that we continue to have these inescapable conflicts.. end the conflict by ending the investor class.

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    Casius CBU

    shape — corresponding attribute an after thought of concern in/ by design a sum of everything empowered by everyone and for everyone. unless

    googlediscovery: The difference between Quasar, Radio Galaxy and a Blazar is the angle of the stream. If the stream is straight up, it is a radio galaxy and we are not in the firing line. If the stream is angled slightly towards us, then its a Quasar and if the stream is angle directly towards us, its a Blazar.

    what are the symbiote?
    …. it has been and always be for as long as the existence of universe itself.

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