Not when the platform (a) benefits from network effects that make it immune from private sector free market competition (b) actively colludes with government officials
The law being observed here is not about giving platform users freedom of choice whiting the platform (that law doesn't even exist), the law here is about anti competition practices by monopolist companies.
- Companies that flagrantly violate the law while claiming that it's OK because they're offering benefits to users - meanwhile trying to develop a monopoly in a previously regulated space.
I think the main problem is that exploitative business-models and platform economies have not been fully analyzed/modeled yet by economists, so we can hardly expect governments to do something about the problem with new competition laws etc.
These companies spend a lot of money trying to optimise their profits. If the laws tightened up then they would simply try to exploit as much as possible within their legal limits. Mobile applications can make huge profits from exploiting human psychology and I don't see lawmakers being able to effectively curb this anytime soon.
This is an excellent point and one reason I think we'll inevitably have regulation preventing owners of platforms/marketplaces from competing in them. The incentives are completely out of whack.
Yes, exactly. The law needs to be updated to account for this new world of "platforms".
By platform, I mean an ecosystem a private entity creates which they monetize through content created/uploaded/deployed by external parties.
AWS and others fall under this definition too. The truth is, cloud computing should be a low margin industry in the long run. Yes, software has close to 0 marginal cost of production, but the same is true of your competitors. Basic economic principle implies that in a competitive market, the price to customers should be close to the cost of production.
In the old days, the economy was largely physical goods based, so it was very easy to simply buy a competing product if you don't like the one you have now. That by and large didn't entail becoming entrenched in a whole ecosystem.
Laws need to be updated to tackle the inherent monopolistic elements of platforms, social and so on. China is taking this path, so it will be interesting to see how that develops.
It's important to recognize too, that leveraging a monopolistic position to produce excess profit is effectively a direct transfer of wealth from the littler guys to the bigger guys.
e.g. Apple taking a 30% cut on the app store directly takes from app creators, who may raise prices 30%, which ultimately hits customers.
I agree, I've just heard enough people making arguments about situations like this that I thought I'd share the reasoning they offer, and then followed it up with why it's flawed.
For instance, I have a coworker who keeps insisting that Apple should have been hit with an anti-trust suit like MS since they only allowed the Safari browser on iOS (for a time). He was dead serious (for some reason he truly hates Apple and wants to see the corporation fail, still owns an iPhone though). It was based off a flawed understanding of the laws and the markets the laws apply to. A lot of people seem to jump to the legality of the actions of the group in charge of a particular platform without considering whether that platform is one of a larger marketplace.
Really this is a problem with any gigantic platform that hosts thousands of people's livelihoods. Apple, Google (not just the Play store; ads, etc.), YouTube (people who make a living off of their channels), Twitch, Uber, Amazon's store, the list goes on.
It's not that (most of) these companies are egregiously terrible at being fair, percentage-wise. It's that their scales are so incomprehensibly massive, and their business interests sufficiently high-level, that people will always fall through the cracks. Always. Entire lives comprise a rounding error. And then in most cases those small businesses have no alternative; they're simply shut down. This is a problem endemic to any sufficiently large platform monopoly (or duopoly, etc.).
I find it really hard to deny that platform lock-in is a powerful anti-competitive and anti-consumer force - I think you’re off base in denying its impacts and the merits of addressing it.
Perhaps you should reread my comments... This is exactly the claim that I'm describing. The claim rests on the premise that these companies are abusing their monopolistic or oligopolistic position over something posited as critical to society. Regulating viewpoint-based discrimination is one proposed remedy (another is removing "monopolies" by eg requiring federation). Nobody in this entire thread is saying that these platforms are legally in the wrong for inconsistently-applied viewpoint-based deplatforming. If they want to ban people for claiming the election was rigged or supporting single-payer healthcare or liking avocados, there's no legal issue at all. The topic under discussion is whether there should be, resting on the premise that these platforms are critical enough to public discourse that something like the utility model is appropriate.
Note that I'm speaking in the voice of those making this claim, not personally espousing the claim. My inclination is away from kneejerk regulation, and I don't think distribution on the Internet fits neatly into the existing categories we use to reason about market power. I'm just shocked at the degree to which so many HNers are gleefully misrepresenting the issue, presumably so they don't have to engage in any critical thinking.
I also believe that aggressive antitrust may address the concerns I raise.
But at the same time, I am sympathetic to arguments that aggregated platforms have efficiencies that are passed down to the everyday consumer, or network effects that make the platforms more competitive against similar platforms elsewhere in the world (e.g., data for training ML models).
I don't see it as a punishment. I actually see it as a fair practice ruling. So they can't ask a company to bear all the costs of raising and maintaining platform so huge and just "give it away" for free because some users think that's a better option for them and thus for the world as well. Why would they even run a business if that's the case?
Platforms/marketplaces should never be allowed to promote and sell their own products and compete with their own customers.
Period.
It invites way too much conflict of interest to ever be a long-term net positive for either the platform itself or the end-consumers. This is a matter of law, it's never going to be fixed by the "free market."
Let's imagine a hypothetical world where Company A owns 80% of the smartphone market and the rest is divided between the also-rans.
Now imagine that app developers can't profitably make a 1st rate app without getting the income from company A's app store (But can port the app to other OSes for extra income). If company A starts to use this situation to make it harder to port apps to other companies OSes via strongarm tactics, then company A is abusing its monopoly position of being the only profitable way to make an app.
Today's world is nothing like that, but it's an example of how near-total marketshare is not necessary for anti-trust to come into play. There is a certain point at which you have a large enough market share, that certain other players in the market must deal with you to get the volume needed to compete, particularly in high-volume, high-upfront cost industries (which many types of software qualify as).
The problem is that platforms enable this kind of behavior. Once it's the open, someone will take advantage of it, and then others would only put themselves at a disadvantage by not doing it too. The real question is, how did our infrastructure become so exploitable?
That's not to say there aren't companies that don't play this kind of game. But on a spectrum of care and don't care, most are in the middle.
With the raise of all these "platform" companies - basically some inbetween that solves some QA and paperwork issues, we see that (i) there are "natural" monopolies/monopsonies developing (e.g. people don't look further than Amazon marketplace, companies giving out all their work via upwork, people watching only Youtube videos) and then (ii) that these platform companies start behaving in abusive and/or arbitrarily damaging ways.
Does anyone else think that this should be an issue for targeted regulation? No one would accept a company taking over the road network and then randomly trashing people's cars for incomprehensible reason, yet people seem to be dreamy-eyed and naive about these new inbetween platform companies and seem to think that the market will solve itself. (Which is - as may be known - not the case with monopolies)
reply