This book asks a simple question: are the tech giants monopolies? In the current environment of suspicion towards the major technology companies as a result of concerns about their power and influence, it has become commonplace to talk of Google, Facebook, Amazon, Apple, Microsoft, or Netflix
as the modern day version of the 19th century trusts. In turn, the tech giants are vilified for a whole range of monopoly harms towards consumers, workers and even the democratic process. In the US and the EU, antitrust, and regulatory reform is on the way.
Using economics, business and management science as well legal reasoning, this book offers a new perspective on big tech. It builds a theory of "moligopoly". The theory advances that the tech giants, or at least some of them, coexist both as monopolies and oligopoly firms that compete against each
other in an environment of substantial uncertainty and economic dynamism.
With this, the book assesses ongoing antitrust and regulatory policy efforts. It demonstrates that it is counterproductive to pursue policies that introduce more rivalry in moligopoly markets subject to technological discontinuities. And that non-economic harms like privacy violations, fake news, or
hate speech are difficult issues that belong to the realm of regulation, not antimonopoly remediation.
Author(s): Nicolas Petit
Publisher: Oxford University Press
Year: 2020
Language: English
Pages: 320
City: Oxford
cover
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Acknowledgments
Table of Contents
Table of Cases xi
Table of Legislation xv
Introduction 1
I. Policy Conversation on Big Tech 6
A. Neo- Structuralism 7
1. Origins 7
2. Claims against Big Tech 10
3. Policy Proposals 16
4. Summation 18
B. Consumer Welfarism 19
1. Origins 19
2. Implications for Big Tech 20
3. A New Consensus? 24
C. Neo- Structuralism or Consumer Welfarism? 25
1. Methodological Issues 25
2. Overcoming Bias 27
II. The “Moligopoly” Hypothesis 29
A. Study Design 29
1. Research Question 29
2. Hypothesis 33
3. Test 35
4. Data and Observable Indicators 36
B. SEC 10- K Filings 36
1. Why 10- Ks are Helpful 36
2. Sample and Tests 38
3. Descriptive Statistics and Discussion 43
4. Summation 51
C. Market Research, Business Analysis, and Competitive Intelligence 51
1. Sample and Tests 51
2. Descriptive Statistics 53
3. Analysis 60
D. Conclusion: Unaccounted Big Tech Competition? 62
III. Economics of Big Tech: Monopoly v Uncertainty 64
A. Introduction 64
B. Big Tech and the Textbook Monopoly Model 65
1. Standard Monopoly Model 66
2. Are Big Tech Firms Decision- Making Monopolists? 69
C. Increasing Returns to Adoption, Network Effects, and Uncertainty 74
1. Competition in Network Effects Markets 74
2. Uncertainty 87
D. Conclusion 92
IV. A Concrete Theory of Moligopoly 93
A. Meet Big Tech 93
1. Beyond Airport Books 93
2. Facebook 94
3. Amazon 97
4. Apple 99
5. Netflix 102
6. Google 105
7. Microsoft 110
B. Common Properties of Big Tech 114
1. Method 114
2. Diversification 115
3. Discontinuity 121
4. Long Termism 129
5. Growth 134
6. Exploration and Discovery 138
7. Flexibility 147
8. Summation 152
C. Moligopoly Competition 153
1. Oligopoly Competition with Monopoly Positions 153
2. Big Tech Cooperation or Competition? 154
3. Implications 167
D. Conclusion: Voodoo Economics or Neoclassical Redux? 169
V. Antitrust in Moligopoly Markets 172
A. Limits and Possibilities under Existing Antitrust Doctrine 172
1. Antitrust’s Function: Rivalry 173
2. Antitrust Flexibility? 179
B. Defining Antitrust Doctrine for Digital Markets 187
C. Essential Role of Antitrust in Tipped Markets 190
1. Direct Antitrust Control on Exercise of Monopoly Power? 190
2. Indirect Antitrust Control on Exercise of Monopoly Power? 193
3. Presumption against Horizontal Mergers 201
4. Beyond Antitrust? 205
D. Residual Role of Antitrust in Untipped Markets 209
1. Elaboration 209
2. Example: Microsoft (US) 213
3. Counter- Example: Google Android (EU) 217
4. Applications to Contemporary Concerns in Digital Markets 222
E. Market Definition and Market Power Analysis in Digital Markets 227
1. Contemporary Antitrust: Inferring Rivalry from Structure 227
2. Improvements to Antitrust: Assessing Tipping from Pressure 229
3. Measurement of Competitive Pressure: Methods 232
F. Conclusion 236
VI. Big Tech’s Novel Harms: Antitrust or Regulation? 238
A. Preliminary Remarks 238
B. Privacy 241
C. Fake News 246
D. Hate Speech 250
E. Models of Regulation 252
F. Conclusion 256
Conclusion 257
Appendix 1 Full List of Firms Covered in Dataset 259
Appendix 2 Firm Level Accounting Data: MB, MC, and MP 271
Appendix 3 Accounting Data: Alternative Allocation for Google 273
Appendix 4 Discontinuous Demand Curve in Network Effects Market 275
Author Index 277
Subject Index 281
