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(1/) A thread on the FTC lawsuit against Facebook, and the DOJ's lawsuit against Google.
First, it is long overdue. Second, it's a good thing that it starts under a Republican administration and continues under a democratic one.
https://www.wsj.com/articles/facebook-hit-with-antitrust-lawsuit-by-federal-trade-commission-state-attorneys-general-11607543139?reflink=desktopwebshare_twitter via @WSJ
First, it is long overdue. Second, it's a good thing that it starts under a Republican administration and continues under a democratic one.
https://www.wsj.com/articles/facebook-hit-with-antitrust-lawsuit-by-federal-trade-commission-state-attorneys-general-11607543139?reflink=desktopwebshare_twitter via @WSJ
(2/) There used to be some bi-partisan consensus on antitrust, which made the process fairer and more efficient.
The political economy of partisan antitrust over the past 20 years has not been pretty, and lobbyists have had a field day.
Hopefully that is changing.
The political economy of partisan antitrust over the past 20 years has not been pretty, and lobbyists have had a field day.
Hopefully that is changing.
(3/) While we cannot judge the merit of the cases before we know all the details, we can already debunk some fallacies.
The defense of FB and GGL is usually based on:
1. We are different. Old rules don't apply.
2. Our products are free.
3. People freely choose our products.
The defense of FB and GGL is usually based on:
1. We are different. Old rules don't apply.
2. Our products are free.
3. People freely choose our products.
(4/) Are they different?
No. Really, they are not. They are not more innovative than dominant firms of the past. They do not generate more growth. In fact, they generate less growth than the stars of the past. https://www.nber.org/papers/w27985
No. Really, they are not. They are not more innovative than dominant firms of the past. They do not generate more growth. In fact, they generate less growth than the stars of the past. https://www.nber.org/papers/w27985
(5/) Are their products free?
No. They are 2-sided products. They choose to set the nominal fee to zero on one side (consumers) and to a high price on the other side (advertisers) because that is the way to maximize profits. This is neither new, nor surprising.
No. They are 2-sided products. They choose to set the nominal fee to zero on one side (consumers) and to a high price on the other side (advertisers) because that is the way to maximize profits. This is neither new, nor surprising.
(6/) People choose their products freely?
In the case of GGL, one issue is pre-installed Apps. Kent Walker, Google’s chief legal officer, said "we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products on a shelf at eye level.”
In the case of GGL, one issue is pre-installed Apps. Kent Walker, Google’s chief legal officer, said "we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products on a shelf at eye level.”
(7/) I am glad he used that metaphor because it's easy to see how misleading it is.
What Google does is to pay the supermarket so that when you pick up a cart it already has a big box of cereal in it and you cannot return it.
What Google does is to pay the supermarket so that when you pick up a cart it already has a big box of cereal in it and you cannot return it.
(8/). In addition, the cover of the box contains the map of the aisles of the supermarket so you cannot find the milk or the cheese without that cereal box. Milk and cheese producers have to pay GGL to print their location on the cereal box.
That's more like it!
That's more like it!
