ICYMI: Good Summer Reads On Tech & Antitrust
With the hustle and bustle of the midweek Fourth of July, here are a few good reads on tech, competition, and antitrust policy that you might’ve missed during the past couple of weeks.
Herbert Hovenkamp, “Is Antitrust’s Consumer Welfare Principle Imperiled?“
Key Takeaway: “The neo-Brandeis approach would trade off low prices and high output in favor of a set of goals defined as curbing excessive political power or large firm size, or perhaps values expressed by such things as loss of individual autonomy. The ‘Curse of Bigness,’ as Brandeis himself put it, is an independent value in antitrust policy, to be pursued even if it harms consumers by leading to higher prices. So far the Neo-Brandeis movement has been characterized by a great deal of ad hoc complaint of the nature that firms… are too big. Who the victims are, and exactly how they are injured, remains distressingly unclear.”
Catherine Tucker, “Why Network Effects Matter Less Than They Used To“
Key Takeaway: “Social networks, ride-hailing apps, or digital marketplaces do not depend on any one type of hardware, and as a consequence it costs very little for users to try new ones out. Having five different social media apps on my phone is not a problem at all. Having five different desktops with different operating systems, on the other hand, is clunky. (Something similar is true for the supplier side. It’s generally cheaper for a developer to write code for a new platform than to build and ship a new device.)
“The effect on competition is clear. … Network effects only really work as a source of competitive advantage if your product is also ‘sticky.’ Scale will not bring future competitive advantage through network effects if your customers can all leave tomorrow.”
Carl Szabo, “Don’t Damage Our Democracy By Breaking Up Big Tech“
Key Takeaway: “Anti-tech advocates claim that ‘big is bad,’ but for America’s small and mid-size businesses, the bigger the platform the better for small businesses trying to reach a big audience.
“Consider the local greeting card and stationery store. A decade ago this business could barely afford to place an ad in a local newspaper, let alone on TV or radio. But for less than $10 spent with online platforms, this small business can reach thousands of potential customers, and target them more accurately than ever too.
“Risking small businesses and giving government agencies new political powers are risks not justified by benefits promised by critics who want to break up big tech. Let’s retain our consumer welfare standard until anti-tech advocates can show the genuine benefits in their approach. Critics of big tech should put down their pitchforks — before all of us get hurt.”
Richard Sousa And Nicolas Petit, “‘Big Is Bad’ Narrative Is Simply Untrue In High-Tech Sector“
Key Takeaway: “The FAANG monopsonist naysayers have not brought proof that smaller tech firms would improve competitiveness in labor markets. What matters is the consumer welfare generated by firms, regardless of their size.
“If large tech companies make our lives better by putting people to work at good wages and by innovating and creating higher quality products, they should be acknowledged for their role in the economic recovery and their contributions to society’s well-being. They should not be vilified by unsupported claims that the grass could be greener.”