Controversial genius/troll Curtis Yarvin had a brilliant solution to this problem: Force the big tech companies to publicize the source to their APIs so that competitors can build independent *client* apps to access their servers. (You can avoid the bulk of his megalomaniacal haterade by skipping down to "Encrypted Clients": https://graymirror.substack.com/p/tech-solutions-to-the-tech-problem )

That splits the monopoly efficiently without even having to break up the business - but to enforce this, it would still entail some really detailed and technical overhauling of anti-trust law to allow something so specific and tbh, invasive to trade secrets.

The real monopoly at the technical level is that all FB or G+ or Amz users can *only* access their servers through *their* clients. So the company can run whatever ad scheme they want and enforce that that's what shows on the app side, and because of this control, they can also be pressured by external forces into censoring or pushing whatever ads are hip that week, or banning products from the store, etc. (no, they aren't influenced by the gov't, nor other corporations, but by the *press,* stupid!). Once you get open access to FB's userbase and social connections, or Amazon's full shopping database, and you open up the *client* to competition, you break things like Amazon's "Buy Box" you referenced ( https://mattstoller.substack.com/p/amazon-primes-free-shipping-promise ) because the client developer doesn't need to include a feature like that and it kills all the abuses Amazon leverages from controlling both the front and back doors to it.

You may notice that this is exactly the opposite of what FB did to Vine in this article: Vine was going to create their own interface to FB's network, and FB straight up said "oh a competitor wants full API access? Yeah cut that shit out." Make THAT illegal, and the whole model falls apart.

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That's probably what the FTC remedy would have been. The problem isn't what to do, it's how to actually do it and who actually should have the authority to do it. Yarvin is answering the easy part because he doesn't believe in governance.

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Hahaha, omg "Yarvin is answering the easy part because he doesn't believe in governance" really hit the nail on the head! haha

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Yup. The hard part of politics is how to wield power without turning to tyranny. So just saying 'here's what should happen if the world were run by angels' is romantic silliness embraced by both the right and left.

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EDIT: I said "because of this control," I should've been more specific, "because of this *bottleneck* on control,"... etc.

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It seems that with a few of our more pressing concerns, like climate change and surveillance capitalism, we need to measure the actual price against a composite price index of negative externalities. Has any work been done to create such an index? As Matt suggests in the article, it does not seem impossible to specifically quantify how much exposure to ads and tracking software has increased, and therefore this hypothetical price index has increased, as the marketplace becomes less competitive.

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This is not where the FTC will go, but the work of Jean Twenge and Jonathan Haidt have done a lot of work in establishing that FB, in particular, has a positive cost—in terms of diminished health markers of its users—particularly younger users.


Your point on ads may also be good. Not in terms of ad load, per se, but in terms of the advertisers FB attracts (lots of drop shipping fraudsters). In fact, the FTC knows this better than anyone. https://www.searchenginejournal.com/facebook-ad-scams-ftc/385221/

Again, though, it’s doubtful that the FTC will use this information in its amended complaint. This is terribly relevant to market power (as lack of responsibility is a hallmark of it). Think: would NBC, or the Washington Post let you run your Covid cure to a bunch of antivaxers?

Finally, w/r/t externalities, you can look at inauthentic behavior (social manipulation tolerance) harms, as documented by NATO. https://stratcomcoe.org/publications/social-media-manipulation-report-2020/21?s=09 There are also the many settled and ongoing cases of ad fraud against FB.

In short, lots of evidence, but it’s questionable whether an antitrust court would be open to assessing non-direct-cost evidence of market power.

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"In short, lots of evidence, but it’s questionable whether an antitrust court would be open to assessing non-direct-cost evidence of market power. "

Judging from above the think the answer is almost certainly no. But it can't hurt to at least try. Have to start somewhere. It seems the real problem is taking what we all know to be intuitively true and proving it somehow. Understandable. Qanon-ers have the same problem ;-)

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Thanks for this. I am reading into it.

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The nub of the anti-trust issue is the “40 years of case law” and “list of Supreme Court and circuit court precedents” that have resulted in the twisted idea that “Monopolists… are allowed to monopolize. This is, as Stoller notes, an “ideological problem with how we do antitrust.”

It is thus important that we understand the past ¾ of a century effort to subvert the USA legal system with the neoliberal project of “Law and Economics” doctrine. The best place to start is the 2009 book co-edited by Philip Mirowski and Dieter Plehwe, The Road from Mont Pèlerin

The Making of the Neoliberal Thought Collective (Harvard University Press). Specifically, Chapter 6 by University of Rhode Island economics professor, Rob Van Horn, “Reinventing Monopoly and the Role of Corporations: The Roots of Chicago Law and Economics.” A to-paragraph excerpt from the beginning of this chapter:

“For MPS members, the issue of monopoly loomed so large primarily because of the way their opponents on the left had framed it. The left had been arguing that since the start of the twentieth century monopoly had been expanding apace throughout the United States and Western Europe, such that the bulk of the economy-owing to this inexorable growth-would inevitably soon be controlled by monopolies.2 The left predicted that the forces of competition would continue to prove ineffectual in the face of such growth. Consequently, they insisted that the only rational solution was socialist control of the economy. This tenor of the program of the left threatened the very cogency of liberal optimism and was one of the major motivations for the MPS liberalst o rethink liberal doctrine. However, efforts to reformulate liberalism did not only happen at MPS meetings; they also occurred at select institutions with related research objectives.

“This resulting division of effort conformed to the vision of Friedrich Hayek, who played a principal role in setting up two such research initiatives at the University of Chicago. In one such initiative, known as the Free Market Study (FMS) project, Hayek-through repeated sffoft5-5ecured the requisite funds and recruited the necessary individuals.3 He persuaded Aaron Director to head up the project. In addition to the aptly named Director, the FMS comprised six other steadfast liberals at Chicago: Edward Levi (a law professor), Frank Knight (an economics professor), Garfield Cox (dean of the Business School), Wilber Katz (dean of the Law School), Theodore W. Schultz (chair of the Economics Department), and Milton Friedman (an economics professor)—several of whom were also present at the premier MPS meeting. The FMS commenced meeting at the Chicago Law School in 1946 and was concluded around 1952. Though avowed to study and describe "a suitable legal and institutional framework of an effective competitive system" (Coase1998, 608), the FMS predominantly researched the issues of monopoly and corporations, transforming the fundamental economic approach to these issues and giving birth to a significant tenet of neoliberalism. In 1953, Director further deployed these nascent premises in structuring another focused research endeavor.”

Another paragraph from van Horn:

“As with other distinctively neoliberal projects, the Antitrust Project had its

fair share of MPS members (Aaron Director and John Jewkes) and future

members (Edward Levi, John McGee, and William Letwin). Headed by Director

and assisted by Levi, the Antitrust Project comprised both postdoctorate

and post-juris doctorate students and visiting professors: a Chicago Law

School graduate, Robert Bork, a Committee on Social Thought Ph.D. graduate,

William Letwin, a former Department of Justice employee, Ward S.

Bowman, a Ph.D. graduate from Vanderbilt University, John S. McGee,

and a visiting scholar from Britain, John Jewkes (Kitch 1983, 201-203).

From 1953 to 1957,c these individuals collaborated to produce a prodigious

number of articles and one book:

1. Letwin's articles, which included: Letwin (t954, 1955, t959a, r959b) and

covered the law of restraint of trade and the history of the Sherman Act

z. Director and Levi's (tg16) article on exclusionary practices

3. McGee's (r958) article on predatory pricing

4. Bowman's (1955) work on resale price maintenance

5. Bowman's (t957) article on rying arrangemenrs

6 .Jewkes et al.'s (rqlS) book on sources of innovation

7. Bork (rg1+) and Bowman's (r95y and ry57) articles on vertical integration

8. McGee's (1956) piece on price discrimination

9. Jewkes's (1953^ and 1958) articles on government regulation of businesses”

It should not be any surprise that Senator Mike Lee and his staff believe that “antitrust law is not fundamentally broken.” In their perspective, antitrust law is exactly what they want it to be at this point, following the “economic efficiency” models of the Chicago School, and—who we should not forget—Robert Bork and the (Anti)Federalist Society.

Historically, little of this makes any sense if you do not understand that the “Law and Economics doctrines promoted by the (Anti)Federalist Society are a rejection of the Enlightenment and the classic civic republicanism on which USA was founded. (It is important to note that the history becomes almost hopelessly muddled because of the compromises made to attract the support of slaveholders at the time of the founding.) According to the ideas of civic republicanism, human nature has a dual capacity for good and evil. The evil part is that power tends to always corrupt. The good part is that human rationality can account for the evil part of human nature and design institutions of governance which incorporate checks and balances.

What most people miss is that civic republicanism also includes the desideratum that government actively promote the good. Thus, in the USA republic, the Constitutional mandate to Promote the General Welfare, and Hamilton’s program to promote and aid manufactures, which developed into the panoply of government programs that aided and advanced science and technology, and birthed entire new industries, such as the Coast Survey; the Geodetic Survey; the railroad surveys; detailing Army officers trained in civil engineering and topography to help build and manage canal and railroad construction; the Weather Bureau; the hundreds of agricultural research programs such as responding to the Hessian fly in the early 1800s, introducing winter wheats in the 1890s and solving the problems of frozen foods in the 1950s; aviation research programs and government support through the air mail, and the creation of computers during World War Two and the deliberate dissemination of that new technology into the economy after the war.

How is the “Law and Economics doctrines promoted by the (Anti)Federalist Society a rejection of the Enlightenment and civic republicanism? According to the ideas developed by von Mises and von Hayek, promoted by the MPS, humanity does not actually have the rational capacity to plan to do good, and the instinct toward self-interest means that politics will always be corrupted. However, according to von Mises and von Hayek and their disciples, economic markets based on pure price signals cannot be corrupted, except by the power of government intrusion. Mirowski is invaluable in explaining the neoliberal / conservative idea of the markets as a “super calculator” of the sum total of human wants and desires in a society, and how this concept makes neoliberalism / conservativism philosophically impervious to the attacks and critiques of the left.

It is no coincidence that when the slave holders decided to destroy the Union and create their own government, one of the changes they made in their constitution was to delete the mandate to Promote the General Welfare. This is the tradition that Sen. Lee is coming out of.

The case made by civic republicanism is simple and compelling: any and all concentrations of power, whether economic or political, are always a danger to the General Welfare, and in a republic ((Latin: res publica, meaning "public affair"), any and all concentrations of power must be subjected to careful scrutiny and subjected to the will of the people through their instruments of governance.

For example, in The Second Report to Congress on the Public Credit (December 14, 1790; also referred to as The Report on a National Bank), Secretary of the Treasury Hamilton wrote

pointed at the problem that a bank’s Directors, or Stockholders would fear “an extension of capital” to new enterprises because it might cause “a diminution of profits.” In other words, bankers would prefer to engage in rent-seeking behavior, rather than investing in new and riskier technologies, industries, and companies. A review of how most of the leading corporations of today originally struggled to find financing, and the development of the role of “venture capital” as compared to Wall Street, bears this out. Hamilton wrote that “from this circumstance, the interest and accommodation of the public… are made more subordinate to the interest, real or imagined, of the Stockholders, than they ought to be.” This must be guarded against and corrected by government supervision, because “Public utility is more truly the object of public Banks, than private profit. And it is the business of Government, to constitute them on such principles, that while the latter will result, in a sufficient degree, to afford competent motives to engage in them, the former be not made subservient to it.”

This is followed by what can only be considered a broadside against the idea of shareholder value, in which Hamilton proposed that no single shareholder should ever have more than 30 votes, no matter how many shares they owned. Imagine what this restriction would have done to cripple and eliminate the vexes and ill effects of mergers and acquisitions, leveraged buyouts, and private equity.

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Awesome write-up. I think Matt and most commenters here are definitely on the side of civic republicanism :-) I am also stealing the term (Anti)Federalist Society!

I am not even saying that I totally believe this quote to be wrong. Earlier in life before experience and wisdom intervened I would even have said it WAS true

"However, according to von Mises and von Hayek and their disciples, economic markets based on pure price signals cannot be corrupted, except by the power of government intrusion."

But now I think it should be adjusted to

Economic markets based on pure price signals cannot be corrupted, except by the power of government intrusion AND/OR monopoly.

In this day and age there quite clearly has to be a push and pull between the two. It has simply gone to far onto the side of monopoly b/c of the newness and speed of tech. Hopefully we can reign it back in. I am not as optimistic as Matt but I certainly enjoy watching the show!

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Interesting context

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"In other words, the government couldn’t find a competitor in social media so therefore it can’t go forward with this complaint about a monopoly."

I'm confused, or the judge is. How can he say that Facebook isn't a monopoly because it has no competitor? Isn't that a definition of a monopoly? It has no competition, it's the only one. Seems to me, that without competition, market power is almost unlimited. And, Facebook does have almost unlimited market power.

Can someone help me figure this out?

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It doesn't really make any sense. The judge is passive aggressively saying the FTC was being sloppy. The FTC said 'there are no competitors to Facebook, which has 60%+ of the market.' The judge is like 'well if there are no competitors why doesn't it have a 100% share?!?'

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Thank you. So, I'm not getting senile. That's good news.

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"My critique of the bills passed last week is that they are written too vaguely, and that judges will interpret them in ways favorable to monopolists. I’m happy that Judge Boasberg decided to validate my observation with this opinion. "

Zing, haha :-)

I am with you Matt. Congress needs to fix this. We shouldn't expect the judiciary to do this for us. Use the experts and make better defined law. The easy way out of making it general non specific and hoping judges define it the way you want seems to have been fully exploited and not working. Back to the drawing (writing) board.

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What people forget is that investors can make plenty of money from corporate breakups. One of my first investment bets was on the AT&T breakup; it paid off nicely. With credit loose, I'm wondering why no investor is pushing an Apple or Google buy out with plans to break up the company. I know the sums involved will sound immense, but so did the sums in the 1980s. One difference is that companies can compete with outside investors by directly buying their own stock, something they couldn't do in the past. Still, there's a shortage of investment opportunities, and a well structured deal could release a lot of share holder "value" i.e. loot. If nothing else, one could set up a take and break company, promote it as a golden opportunity and a civic necessity and then start filing for injunctive relief when management starts doing defensive buy backs. It would have to take the long term view. MCI was a lawsuit with shareholders for decades before the AT&T breakup, but there's a ton of money to be made.

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This is a nice attempt to put lipstick on a pig, but I think your optimism on several issues is misplaced and overstates what is "good" about this decision. First, while the judge said the FTC can challenge consummated deals (which I think almost every antitrust lawyer agrees is an uncontroversial and correct reading of the law/precedent), the court also hinted fairly strongly the FTC would likely have a hard time getting the types of remedies it may desire due to the long delay in bringing these cases. See pg. 53 of the decision and read the language in the separate opinion dismissing the states case re: the policy reasons supporting the laches doctrine. Second, your belief that the judge is ready and willing to accept the proposition that FB has a monopoly or market power once the FTC fixes the lazy deficiencies in its complaint with more details/evidence to support this contention is quite a stretch/leap of faith. Adding some allegations that FB is putting more ads in the feed or is reducing privacy will not suddenly make it crystal clear to an objective fact finder that FB has market power in an economic sense. You and others pushing these cases don't offer any good solutions/ideas on how the FTC can coherently explain the rough metes and bounds of a relevant service/economic market that FB operates in or explain how to show FB's share of such a market that won't be incredibly easy to pick apart and destroy by showing how it uses artificial distinctions to determine which firms are competing with FB in said market. You continue to expect, as the judge said, everyone to just nod and accept your view that this market power is obvious from FB's size when the market realities are way more complex and dynamic than you characterize them to be. The only hope you have here is that the FTC pivots and brings this case under its Section 5 administrative process and that the new group of populists commissioners creates/invents new standards about what is "unfair" competition that it can use to declare FB's conduct illegal. The Senate is waking up to the fact that no good will come from legislation that brings together unliked populists on the right (Matt Gaetz, Josh Hawley and Ted Cruz) with those on the extreme left who want to reduce incentives to innovate (the main driver of benefits to all people from a dynamic economy) and instill a European or Chinese approach to antitrust law that gives more power/autonomy to "expert" administrative agencies to manage a slow growing/less innovative economy. While the agencies will likely get more money and ability to raise merger filing fees, the prospects of the House bills passing will continue to diminish as Mike Lee and centrist/moderate members of both parties begin to recognize that they don't want to be on the same side of such a strange group of bedfellows who want to create unprincipled and artificial standards based on their personal views of what is fair and right/just.

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