In the last year or so, I have discovered that Google Search refuses to recognize some of my posts from this blog. For example, in 2013, I wrote a post for this blog entitled Separating Legislative and Executive Power. If one puts in the title of the post, my last name, and Liberty Law Blog into Google, the post does not come up. By contrast, if one puts those same search terms into the Bing search engine, the post comes up at the top of the list. This is not merely true of this one blog post. It is true of…
In a prior post, I explored the question whether private monopolists, such as Facebook, Twitter, and Google should be subject to a nondiscrimination requirement. I argued that a strong case could be made (assuming they were monopolists) for the legitimacy of subjecting them to such a requirement on the ground that they can exercise coercion. One objection to applying such a nondiscrimination to Facebook, Twitter, and Google is that many of these services do not charge the consumer. Since the traditional limitations on common carriers, such as railroads and inns, involved entities that charged, the argument concludes that the nondiscrimination requirement…
Recently, there has been much talk about the power of private companies, such as Google, Twitter, or Cloudfare (the internet security company), over political speech. The decision by these companies to not provide their services to certain political viewpoints is extremely controversial.
It is not surprising that Left-liberals are calling for more government power to regulate and break up information technology companies, particularly when, like Franklin Foer, they worked in industries disrupted by those companies. But it is disheartening to find that the some on the Right are joining the interventionist chorus. To be sure, Silicon Valley leans left on everything but government regulation. It is not clear that this exception is just hypocrisy driven by self-interest or reflects the general political truth that people tend to be most conservative on matters on which they are most knowledgeable. But the Right should be grateful that Silicon Valley, unlike Hollywood and the mainstream media, is an ally on one issue.
Arguments that antitrust rules should be changed to apply to dominant tech firms and not just firms engaged in “monopolization”—the term actually used in the Sherman Act—would both weaken our economy and, even worse, allow government to harass firms based on a vague and manipulable standard. Even beyond the statutory language, there are very good reasons that the law requires the government, before it can apply sanctions, to show both that a firm exercises monopoly power and engages in exclusionary conduct unjustified by a substantial business practice.
First, the desire for a monopoly is not itself a bad thing.
Over at National Review, Nicole Gelinas is critical of James Damore’s memo to Google. It is disturbing that a conservative magazine like National Review should decide to publish a piece making the points that this one does. If Damore can’t get a fair hearing for his views at National Review, then things are pretty bad. Gelinas takes the view that Google was wrong to fire Damore, because Google says it encourages internal dissent. But Gelinas then criticizes Damore’s memo. I agree that Google is being hypocritical here. But Gelinas’s critique of the memo is unfair and weak. Gelinas appears to have two…
Google and our elite universities appear to inhabit the same ideological bubble and intone the same diversity mantras. And that is not surprising, because almost everyone at Google is a product of the modern university and those at its HR department the likely product of its more PC inflected half—the humanities or soft social sciences. And Google must live within the world of mainstream media and government regulation, and these two sectors are also dominated by elite university graduates of the last quarter century.
But nevertheless the institutions and their employees operate under different constraints. Google is the elite university without tenure and the elite university is Google without market discipline. You might think that tenure is the more important obstacle to enforcing an orthodoxy like modern diversity policy. After all, a professor at an elite university would not be fired for making the largely accurate factual claims about the average differences in temperament between women and men that the Googler did in the memo that got him sacked.
Uber is a company under attack by politicians and the media. Many politicians, like Bill De Blasio, want to restrain its growth to protect incumbent cab companies. Others want to undermine its business model by requiring that its drivers using its devices be employees rather than independent contractors. The New York Times recently ran a story clearly suggesting that the company is using unfair psychological tricks to keep drivers picking up customers.
These complaints lack merit. Protecting incumbents against new forms of competition is a classic harm to consumers. Uber drivers do not meet the traditional criteria for employees because, among other factors, the company does not control their hours or place of doing business. And as Geoffrey Manne shows, the management innovations Uber introduces through the understanding the psychology of workers have benefits to consumers and drivers alike.
But the assault on Uber also ignores a hugely important effect of company and similar services: they reduce inequality— which these same politicians and mainstream media argue is the most important issue of our time. Uber improves both the material condition of the middle-class consumer and the lower-middle-class driver. First, the consumer gets a service that starts looking more like having a chauffeur than a taxicab driver. For instance, he can summon a driver without previous notice and within minutes by pushing a button on his phone in the comfort of home rather than hail a taxi in a storm.
The New York Times publishes many silly opinion pieces on law and economics but a recent article by Jonathan Taplin, Isn’t it Time to Break Up Google, plumbs new depths of folly. The title understates the breadth of its ambition: the author wants to break up or regulate as public utilities Facebook and Amazon as well as Google.
His unproven premise for acting against these successful companies is that they are monopolies. For instance, he contends that Amazon has a monopoly in e-books. But it is not at all clear that Amazon has market power once the market is correctly defined: hardcovers and paperbacks provide substitutes that discipline prices for e-books. Google has a large market share in online search but its competitors are only a click away.
But, more importantly, it is great mistake to break up or bring under comprehensive regulation companies simply because they are monopolies. There is a reason that our antitrust laws attack only monopolization, not the mere possession of monopoly power. As Justice Antonin Scalia observed in Verizon Communications v. Trinko, one of his great but less well-known opinions: “monopoly is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.”
The desire for monopoly gives life to the economy no less than the desire to procreate gives life to the natural world.
In his column "Robber Baron Recessions" Paul Krugman argued this Monday that American companies have been investing less because of greater market concentration in their industries. Exhibit A for Krugman is Verizon: he contends that it has not sufficiently invested in Fios, a fiber optic system that would accelerate internet speeds. He thus wants more government intervention to police monopoly power and decrease economic concentration. Both Krugman’s claim and his remedy are dubious. Let’s begin with alternate explanations for low corporate investment. The most obvious is government regulation. The Obama administration has been one of the most aggressive regulators in history.…