ICYMI: AEI’s Jamison – “When Did Making Customers Happy Become A Reason For Regulation Or Breakup?”
On Friday, AEI scholar Dr. Mark Jamison asked, “When did making customers happy become a reason for regulation or breakup?” A response to Christopher Mims’ Wall Street Journal column from earlier, Jamison argued tech is defined by consumer choice and said, “Whether this freedom of choice results in market share growth or market share declines, it should be cause for celebration, not alarm, regulation, and breakups.”
Below are a few points from both Jamison and Mims’ columns.
AEI’s Jamison points out consumer choice drives market outcomes, not tech companies. “Before addressing the substance of the arguments, let’s clean up some facts. Google is chosen somewhere between 75 percent and 90 percent of the time worldwide by people using organic search. It doesn’t “drive” those searches. And this is only organic search — apps such as Yelp and Travelocity provide specialized search services.” (Mark Jamison, “When Did Making Customers Happy Become A Reason For Regulation Or Breakup?” AEI, 6/8/18)
— “Customers continue to exercise this freedom: Facebook lost about 2.8 million US users under 25 years old in 2017. Customers are finding things they like better than those they consumed last year. Whether this freedom of choice results in market share growth or market share declines, it should be cause for celebration, not alarm, regulation, and breakups.” (Mark Jamison, “When Did Making Customers Happy Become A Reason For Regulation Or Breakup?” AEI, 6/8/18)
Jamison argues analogies to Standard Oil and AT&T miss the mark, as government-granted advantages restricted competition and created those monopolies. “In both of yesteryear’s cases, government regulation played an important role in restricting competition. Today’s tech companies have no such government-granted advantages — at least not yet. Europe’s recent moves in privacy regulation are giving tech incumbents an economic advantage over smaller rivals. If the US follows a similar path, government regulation may create true tech monopolies. But for now, large tech companies have become successful by customer choice.” (Mark Jamison, “When Did Making Customers Happy Become A Reason For Regulation Or Breakup?” AEI, 6/8/18)
WSJ’s Christopher Mims flags preliminary evidence that Google and Facebook are losing share of the digital advertising space. “There is preliminary evidence that the size of the digital advertising pie could grow faster than Google’s and Facebook’s share of it. Research company eMarketer projected in March that their combined share of the ad market will fall for the first time ever.” (Christopher Mims, “Tech’s Titans Tiptoe Toward Monopoly,” The Wall Street Journal, 5/31/18)
Mims also highlights research from MIT’s Dr. Catherine Tucker that finds network effects are “just as likely to empower upstarts to disrupt incumbents” as they are to help industry leaders. “But we’ve got network effects all wrong, argues Dr. Tucker, and we failed to realize that they’re just as likely to empower upstarts to disrupt incumbents like Microsoft. Network effects helped smartphones like the iPhone quickly gain popularity, which marginalized Microsoft’s Office and Windows platforms. Even Apple’s own iTunes takeover of the music industry proved to be a passing trend, as Spotify and other streaming services moved in.” (Christopher Mims, “Tech’s Titans Tiptoe Toward Monopoly,” The Wall Street Journal, 5/31/18)