From Christopher Mims’ “How the FTC Is Reshaping the Antitrust Argument Against Tech Giants” in Saturday’s Wall Street Journal:
Since mid-1980s Reagan-era reforms of antitrust law, the test for whether a company is a monopolist has been whether its dominance harms consumers—usually through higher prices or shoddy goods. It has been hard to make that charge stick against companies that offer many of their services free, like Google and Meta Platforms (née Facebook), or at (usually) competitive prices, like Amazon; or that take a cut of what seems to be a big, competitive market, like Apple does with apps.
The FTC, under its Biden-appointed chairwoman, Lina Khan, has been shifting the terms of the argument, focusing less on harm to consumers or even rivals, and more on how the bigness of Big Tech harms companies that are, in essence, its partners.
To understand, we have to look at an unusual word the FTC has used of late: “monopsony.” If a monopoly is a market with one dominant seller, a monopsony is its inverse, a market where one buyer is pre-eminent. Monopolists can gouge consumers. A monopsonist has the same power over sellers.
My take: The article goes on to ask whether Khan has the tools or the staff to enforce her antitrust doctrine. It’s ironic that it came out of a thesis she wrote about Amazon and the Apple books case.
Apple took success from somewhere that didn’t exist … and created the App Store!
I can’t believe how all these ingrates are whining.
I’ll add that this is not a monopsony: anyone can sell on the App Store (within the rules -and the rules are the same for everyone).
Simple: A market situation in which there is only one buyer.
More detailed: The three key characteristics of monopsony are: (1) a single firm buying all output in a market, (2) no alternative buyers, and (3) restrictions on entry into the industry. Single Buyer: First and foremost, a monopsony is a monopsony because it is the only buyer in the market.
Since the consumer is the buyer ( NOT Apple) , I miss how this would apply.Also, Android vs IOS marketplaces are the 2 entries into the industry.
Another interesting term: Oligopsony
The fast-food industry is a good example of an oligopsony. A small number of large buyers including McDonald’s, Burger King, and Wendy’s buys a huge amount of the meat produced by American ranchers. That gives the industry the ability to dictate the price they are willing to pay. And that’s not illegal.
“Ms. Khan, then a legal scholar, weighed in on the decision at the time, writing that it showed “stunning disregard for traditional antitrust principles.”
Writing a term paper in law school doesn’t equate with the title: “Legal Scholar.” I can only imagine the discussions around the water cooler by those career members of the rank and file at the FTC about her utter lack of credentials to be named the head of their agency. She’s ill equipped for trying to put her grandiose “legal scholar” principles into action inside of a Federal Courtroom. A place she has only seen while on a field trip from school.
In academia, one can associate with ‘schools’ of thought, not real school. In other words, group think. In group think, those that don’t conform usually leave or are eased out. It is highly unlikely that Lina picked a viewpoint that refuted years of publications by her thesis advisor. In courts the challenges are much tougher, ultimately to the supreme court.
In short and being harsh, we have a student, not a thinker.
I’m not certain what the FTC has in place for their trial attorneys, but anyone working there who has a modicum of actual legal courtroom front line experience will tell Lina that taking on Apple without a well thought out legal strategy will not end well. This is where a novice, or in her case idealist, will find out instantly that writing term papers doesn’t prepare you for courtroom litigation. Her theoretical ideas on antitrust fall well short of the mark for the standard set forth in the US Code.
While she will never actually do any litigation, her lofty ideas will be sending her legal team into the breach with IMO, not much of a legal case from the factual perspective. Like Don Quixote tilting at windmills.
And the DoD, or other .gov’s, can’t really boot Oracle, or HP or Cisco who basically own the databases or data networks.
Her appointment reminds me of an old movie called: “The Flight of the Phoenix.” If you haven’t seen it is a great watch with a tremendous cast. I don’t want to ruin the movie by giving away anything in this post, but the principle at play in that movie is analogous to her being appointed to head the FTC with the skill set of a toddler in the world of real life legal litigation.
Getting hot and bothered over an issue that may or may not happen seems a bit overdone to me. Seems almost like there’s an ulterior motive….
Years later, the case may get adjudicated but this administration doesn’t appear to have years to push forward a case against Apple. That’s only if DoJ lawyers get upgraded to the latest Apple MacBooks.
Look how long the xx86 CPU case took the EU. A decade before getting tossed in 2021. Standard Oil Co. of New Jersey controlled 91% of oil refineries. 3 families owned most Standard Oil shares. Ohio sued Standard Oil in 1890 and won, so Standard shaved off Standard Oil of Ohio. Problem solved. DoJ didn’t start until 1909 and finally succeeded in 1911. Once broken into pieces, Standard Oil of NJ stock holders ended up with shares in many valuable companies still in existence today.
In the extreme Apple shareholders would end up with shares of Apple App Store, Inc, Apple Mac Inc, Apple Health Inc. Apple Cars, Inc, Apple Wearables, Inc., etc.
This will not happen because Attorney Khan does not have the luxury of a long game and Apple & Google will never run out of money to hire the best lawyers willing to file appeals.
Ms Khan needs to redirect her wrath into collaborative efforts at reform, whatever that looks like to her. She is no Kenesaw Mountain Landis.
Every politician should be required to spend a day with classes of high school juniors or seniors, just listening and learning, not asking canned questions to support a desired position. Next they regularly need to sit with tech company employees, not Tim Cook but the actual people developing new products. Few leaders take the time to listen to the future taking shape around them now. I think leadership’s absence from public spaces in many cases is an indication of the weakness of their positions.