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Speaker 1: All Zone Media.

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Speaker 2: Hello and welcome to Better Offline. I'm your host ed Zetron.

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Speaker 2: Today we're talking monopolies, and I'm joined by Matt Stoler,

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Speaker 2: who covers market power and antitrust for The Big Newsletter

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Speaker 2: and is the director of research at the American Economic

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Speaker 2: Liberties Project. Matt, thank you for joining me.

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Speaker 1: Hey, thanks for having me.

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Speaker 2: So this is a very dumb place to start, but

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Speaker 2: I think it's necessary. What exactly is a monopoly.

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Speaker 1: Not a dumb place to start at all. There are

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Speaker 1: different definitions, but generally speaking, it is the control of

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Speaker 1: a recognized branch of trade or service, a unified control

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Speaker 1: of recognized trade or service. And that's a definition I'm

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Speaker 1: giving you from Lewis Brandeis, who was a Supreme Court justice,

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Speaker 1: but it's the same. I think Milton Friedman had a

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Speaker 1: kind of a similar definition. The essence of a monopoly

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Speaker 1: is control of a market or a recognized trade.

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Speaker 2: And what the most people not actually understand about them what.

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Speaker 1: I think most people characterize monopoly as kind of an

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Speaker 1: economic thing or you know, just a commercial thing, but

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Speaker 1: really a monopoly is a political institution. So when we're

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Speaker 1: talking about monopolies, we're talking about what is effectively a

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Speaker 1: private government over a market, over an industry. If you're

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Speaker 1: in that trade right, or that service, if you ply

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Speaker 1: your trade there. If you're operating in a market which

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Speaker 1: is monopolized, then you have a political boss who sets

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Speaker 1: the prices, the terms of trade, who can buy, who

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Speaker 1: can sell, and you're under their thumb and yeah, it's

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Speaker 1: your trade right. So it looks like the quote unquote economy,

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Speaker 1: but in fact it's really a person has or that

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Speaker 1: firm has political power over you. And if you have

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Speaker 1: enough monopolies in an economy, then at least in the

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Speaker 1: commercial sector, which is a big part of our lives,

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Speaker 1: we're not living in a democratic society. We're living in

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Speaker 1: a society of a of a bunch of of private governments,

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Speaker 1: authoritarian governments over markets.

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Speaker 2: So Son Dapashi of Google would be like the president

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Speaker 2: of his private monopoly, his little private I think that.

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Speaker 1: I think that's right if you if you think about

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Speaker 1: how people you know, there was a there's a good

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Speaker 1: quote that from a plumber actually in the in the

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Speaker 1: Wall Street Journal who said that, you know, the government

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Speaker 1: can find me, but Google can put me out of business, right,

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Speaker 1: because Google could take his business off Google Maps. They

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Speaker 1: could they could change his ranking in Google Search, and

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Speaker 1: so he was way more afraid of Google than than

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Speaker 1: the government. And that's that's because Google has governing power

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Speaker 1: over you know, over the Internet. You can see this,

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Speaker 1: like every publisher can tell you that the change in

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Speaker 1: Google's algorithm can be catastrophic or can be you know,

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Speaker 1: hugely important and pactful in some ways. So yeah, very much. So.

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Speaker 1: Google is the private government of the Internet, or at

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Speaker 1: least the gatekeeper of the Internet. And it is exactly

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Speaker 1: it's exactly what you're talking about. They also have political

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Speaker 1: power because they're a big company and they lobby and whatnot.

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Speaker 1: But just as infrastructure, they are governing that infrastructure.

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Speaker 2: Almost feels like Yelp is like a borough of the

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Speaker 2: larger Google country than Yelp controlling the reviews, and Yelp

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Speaker 2: has a weird little mob like thing they do where

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Speaker 2: you have to pay them to get rid of bad reviews. Now,

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Speaker 2: it's very never really thought about the governmental comparison.

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Speaker 1: Right, I mean, so what you have with something like

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Speaker 1: Yelp is because Yelp is under the control of Google, right,

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Speaker 1: And Google is doing all sorts of things to sort

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Speaker 1: of try to kill Yelp yelp, and Google has monopolized

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Speaker 1: to advertising, right, a company like it kind of has

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Speaker 1: no choice but to move towards a kind of sleazier

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Speaker 1: business model where they're extractive, because all of the other

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Speaker 1: areas where they could legit make more legitimate money have

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Speaker 1: been monopolized by Google or have been taken by Google. So,

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Speaker 1: in one sense, what happens when you have monopolies, you

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Speaker 1: have you know, higher prices and all the rest of it.

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Speaker 1: But another thing that happens is that businesses that are

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Speaker 1: operating often have a choice of continuing in existence or not.

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Speaker 1: And the choice of whether to continue in existence is

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Speaker 1: often to go down through a business model that can

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Speaker 1: look sleazier, can be problematic, or can be coercive. And

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Speaker 1: so it's like that's that's the choice. Do you go

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Speaker 1: out of business or do you this do this thing

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Speaker 1: that you know you don't like. Is there's a law,

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Speaker 1: there's a rule of thumb called Gresham's law about counterfeit money,

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Speaker 1: which is, you know, when somebody starts using counterfeit money,

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Speaker 1: then nobody wants to use real money. Because even if

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Speaker 1: you want to use real money, you know, you're like,

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Speaker 1: I'm not going to put real money out there if

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Speaker 1: it's all counterfeit.

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Speaker 2: So yeah, the drive with the counterfeit has the advantage,

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Speaker 2: right rules.

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Speaker 1: Good money drives out the bad. And so this is

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Speaker 1: one of the things you see. For example, when you

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Speaker 1: go to like a like a expeedyer or something like that,

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Speaker 1: and you're hotels dot com. You're looking for, you know,

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Speaker 1: to book something, they don't show the you know, resort fees,

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Speaker 1: the junk fees until you know, you get to the

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Speaker 1: last page where you're going to check out, or sometimes

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Speaker 1: even when you get to the hotel. And it's not

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Speaker 1: that every hotel wants to rip you off, but they

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Speaker 1: all know that you're going to be looking at the

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Speaker 1: price and comparing the sticker price that you see on

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Speaker 1: the on the results page, and if their rival is

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Speaker 1: not is not showing you that junk fee, then they're

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Speaker 1: at a competitive disadvantage if they don't lie.

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Speaker 3: So yeah, yeah, well so well it's it's it's just

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Speaker 3: that a market where you have rules that enable that

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Speaker 3: allow fraud is just a different market than one where

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Speaker 3: we don't allow fraud.

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Speaker 1: It's just there. You know, there's discussions about capitalism or

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Speaker 1: free markets or whatever. But the fact that you use

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Speaker 1: the term market doesn't mean anything because markets are politically structured,

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Speaker 1: like a farmer's market, a derivatives market, a slave market.

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Speaker 1: They all use the term market. They're very different institutions,

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Speaker 1: very different moral elements underpinning them, very different arrangements of power.

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Speaker 2: So you've said something you wrote and deep, well it's

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Speaker 2: also on your main page. Is America's in a monopoly crisis, right?

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Speaker 2: What you mean?

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Speaker 1: So what you haven't in a lot of areas and

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Speaker 1: in most I think monopoly or oligopoly, which is just

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Speaker 1: a small number of companies controlling a market is now

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Speaker 1: a systemic feature of the American economy, and it didn't

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Speaker 1: used to be. So there are different ways to measure it.

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Speaker 1: But you know, about seventy five percent of industries in

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Speaker 1: the last twenty five years have gotten more consolidated, and

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Speaker 1: so you see, you know, and this is largely through mergers.

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Speaker 1: So another statistic would be, you know, there's something called

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Speaker 1: the Wilshire Wilshire five thousand, which is an index of

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Speaker 1: public companies, and we don't have enough public companies for

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Speaker 1: the Wilshire five thousand. They're only about thirty four hundred

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Speaker 1: public companies. Now there used to be around nine thousand

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Speaker 1: in the nineties. Now we have around thirty five hundred.

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Speaker 1: It's largely because of mergers. Even the country per capitis,

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Speaker 1: you know that the decline is even more significant. So

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Speaker 1: just the number of big companies is smaller because companies

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Speaker 1: have gotten you know, they've merged and gotten much much bigger,

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Speaker 1: and this has a lot of consequences. What you see

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Speaker 1: is wages are much lower than they otherwise would be.

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Speaker 1: So the amount spent on employees with either increased wages

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Speaker 1: or healthcare or training is probably between fourteen and twenty

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Speaker 1: thousand dollars per American in the non in the non

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Speaker 1: financial corporate sectors eighty million Americans. You see things like

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Speaker 1: the cost of healthcare, which is largely driven by market power,

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Speaker 1: consolidation in hospitals, pharmaceutical companies, insurers. The price of an

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Speaker 1: insured family of four has gone from about ten to

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Speaker 1: fifteen thousand dollars a year in two thousand and eight

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Speaker 1: to about thirty thousand dollars a year today. So that's

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Speaker 1: you know, a lot of the you know, lack of

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Speaker 1: increase of compensation and wages. If you just take those

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Speaker 1: two facts of just how much lack of ability to

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Speaker 1: move to a new job because of consolidation. That's fifteen

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Speaker 1: to twenty thousand dollars plus the increase that we're paying

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Speaker 1: in healthcare. That's a lot of money. And that's you know,

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Speaker 1: every single year, it's basically almost a new car every

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Speaker 1: single year. That's just extracted from every family by this

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Speaker 1: increased amount of concentration.

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Speaker 2: And do you have less ability to move because there

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Speaker 2: are just less places to work?

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Speaker 1: Yeah, that's I mean, that's right. There's just like if

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Speaker 1: you it used to be that you had, say you

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Speaker 1: were in a town, you had ten stores, the you know,

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Speaker 1: a couple of dry goods stores and grocery stores, butcher

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Speaker 1: you know, like your you know, your standard main street,

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Speaker 1: and then that all got put under one roof Walmart,

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Speaker 1: and so you have one place to work and all

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Speaker 1: the stuff is sold there, and now you don't have

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Speaker 1: any place to bargain as if you're a worker or

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Speaker 1: if you want to set up a store, you can't

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Speaker 1: do that either because for you know, other reasons, because

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Speaker 1: that Walmart has more bargaining power with suppliers, and so

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Speaker 1: you can't compete. Even if you had a you could

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Speaker 1: do it more efficiently, you still couldn't compete because you

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Speaker 1: couldn't get the supplies that you needed, or you couldn't

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Speaker 1: get them at the best at the same price.

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Speaker 2: And that sounds like another manifestation of the political nature

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Speaker 2: of these companies because they just set the terms that

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Speaker 2: customers will expect and businesses have to operate with.

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Speaker 1: Yeah, I mean Walmart in the nineteen nineties and two

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Speaker 1: thousands as it was growing, and there are political reasons

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Speaker 1: that were there were just changes in pricing law and

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Speaker 1: anti trust laws. But Walmart would literally just go to

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Speaker 1: their suppliers and they would say, okay, you Levi Strauss,

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Speaker 1: you're not making your genes in China. We want you

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Speaker 1: to move production to China. That's if you want to

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Speaker 1: get into Walmart, and you need to get into Walmart

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Speaker 1: because we are eight nine percent of the retail dollar

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Speaker 1: and you need it, You're going to do this. And

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Speaker 1: they just did this across the board, and they literally

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Speaker 1: restructured how American production happens because.

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Speaker 2: Was that to lower prices? Was that too? Why did

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Speaker 2: they want them to move to China.

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Speaker 1: Lower prices usually? But also you know, they had they

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Speaker 1: had specific ways that they wanted to see their their

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Speaker 1: their business operate, so they just want control. I mean

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Speaker 1: there are other things that they did that are actually

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Speaker 1: really interesting to restructure how retail works. But yeah, it

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Speaker 1: was largely a price. It was a price element.

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Speaker 2: And is the crisis that these there were just so

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Speaker 2: many of these little moving within America.

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Speaker 1: You mean that there's so many mononoply crisis, Yeah, I

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Speaker 1: mean the crisis is that we have you know, as

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Speaker 1: people get used to being bossed around, they lose their

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Speaker 1: respect for democracy itself, right, I mean, that's that's the ultimately,

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Speaker 1: like you see a ton of cynicism. And I think

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Speaker 1: the reason that there's all of the cynicism about the

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Speaker 1: rule of law, about the idea of living in a

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Speaker 1: society is because most people experience living in an authoritarian

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Speaker 1: part of their lives. I don't want to overstate it.

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Speaker 1: We're not living in a dictatorship or anything. This is

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Speaker 1: still a democracy. But you know, you get bossed around

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Speaker 1: and you get told you can't mean, the amount of

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Speaker 1: fear in commerce is overwhelming at this point. When you

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Speaker 1: when you talk to people in lots of different areas,

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Speaker 1: they're afraid to talk about what's going on in their industry.

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Speaker 1: Because the monopolists can can retaliate against them. And so

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Speaker 1: if you're living in fear, then you're not living, You're

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Speaker 1: you're not free, right. You may not be living in

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Speaker 1: a dictatorship, but you're not free.

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Speaker 2: That's interesting as well, because so much of what I've

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Speaker 2: talked about with the Valley is this without really framing

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Speaker 2: it like you are, which is people fear. Samultman of

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Speaker 2: Open Ai, he's grown big because people fear his existence,

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Speaker 2: what he may say about them read Hoffmann right, same deal,

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Speaker 2: And just the political nature of these institutions. I never

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Speaker 2: really considered is this how it got so bad that

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Speaker 2: the corporation's kind of got this level of power.

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Speaker 1: So it's interesting the story of why this happened is

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Speaker 1: actually not a story of big corporations seizing power, because

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Speaker 1: we didn't actually have this problem in the nineteen seventies

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Speaker 1: and before that. I mean, you know, there's always like

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Speaker 1: some big companies, and there's always some problems here but

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Speaker 1: here and there. But largely this is a story of

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Speaker 1: bad ideas taking over. So what happened in the we

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Speaker 1: had this populist tradition in America, right, which you can

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Speaker 1: you can find this you know, really the the original

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Speaker 1: Populace was a political party in the eighteen eighties and

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Speaker 1: eighteen nineties. They were farmers from the South and the Midwest.

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Speaker 1: They were upset about a number of different changes in

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Speaker 1: the economy, the dominance of railroads, dominance of large banks. Basically,

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Speaker 1: they were mad about Eastern capital controlling their business and

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Speaker 1: making it hard to make a living selling farm products.

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Speaker 1: And you control by processors, controlled by railroads. This is

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Speaker 1: very similar stuff that we're seeing today. So standard oil.

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Speaker 1: I didn't like that, But you could go back, you

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Speaker 1: could find this, you know, you go back in the

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Speaker 1: sixteen hundreds and find antecedents in England and so on

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Speaker 1: and so forth. There has always been this tradition of

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Speaker 1: let's not have too much. No one should have too

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Speaker 1: much power in America, right, that's the checks and balances things,

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Speaker 1: the federalist papers and whatnot. Also, no one should have

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Speaker 1: there we should try to avoid conflicts of interest. I mean,

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Speaker 1: that's in the Bible. No man may serve two masters. Right,

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Speaker 1: So you have this these two sort of basic themes,

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Speaker 1: checks and balances, no conflicts of interest. And we've we've

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Speaker 1: always kind of understood that that's the way that we

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Speaker 1: should arrange our society. Very bitter fights in the nineteenth

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Speaker 1: century over corporate chartering. We regulated our corporusiness idea that

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Speaker 1: we used to be less a fair and that's always nonsense.

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Speaker 2: Just corporate chaltering. What do you mean that?

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Speaker 1: So just the idea of being able to charter a

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Speaker 1: corporation create a pupka idea, you can form one, yeah,

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Speaker 1: being able to form one limited liability corporation where I,

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Speaker 1: if my corporation does something, it's liable, but me as

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Speaker 1: a human being that runs it is not right. An

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Speaker 1: eternal entity that like you, doesn't die, is not a

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Speaker 1: natural person, but can conduct business as if it is

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Speaker 1: a natural person. That wasn't That was an innovation in

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Speaker 1: the nineteenth century. It's not something that ever anybody could get.

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Speaker 1: There were all sorts of fights over who could charter

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Speaker 1: it for what reason. Originally it was academic institutions, municipalities.

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Speaker 1: They didn't allow anyone to just charter a corporation. And

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Speaker 1: because they were like this can be really dangerous. Corporations

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Speaker 1: were originally chartered to allow the pooling. You know, eventually

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Speaker 1: they started to charter them in business and they said

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Speaker 1: you can pool capital and men to build things of

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Speaker 1: public works and make a little profit, and we're going

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Speaker 1: to put very restrictive confidence in there. And it was

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Speaker 1: very restrictive until the eighteen eighties and eighteen nineties, and

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Speaker 1: that's when you started to see federal antitrust laws because

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Speaker 1: the state chartering didn't work as well, and so we

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Speaker 1: needed a new regulatory regime, and that was the that's

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Speaker 1: when we got into the federalization of it. But that's

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Speaker 1: the story. The story is we've always kept a tight

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Speaker 1: rain on commercial concentrations of power. In the nineteen seventies,

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Speaker 1: there were sort of two different political and intellectual movements

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Speaker 1: that came that won the debate. Each one within the

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Speaker 1: Republican Party, one within the Democratic Party, the Republican the debate.

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Speaker 1: The one on the right was the Chicago School. These

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Speaker 1: were the Libertarians, and their argument was power doesn't matter,

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Speaker 1: Concentrations of power doesn't matter, conflicts of interest don't matter.

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Speaker 1: Traditional things like usery caps, all that stuff is very silly.

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Speaker 1: The only thing that matters is efficiency. We need to

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Speaker 1: just think about what is most efficient. And to understand efficiency,

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Speaker 1: let's think. Let's ask economists. They are the scientists, right,

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Speaker 1: We're going to move this political question out of the

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Speaker 1: realm of the public and the citizen and move it

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Speaker 1: to the expert, the scientists, the economist. That's why these

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Speaker 1: political things become the economy. That's why we start using

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Speaker 1: terms like human capital instead of people, or infrastructure instead

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Speaker 1: of bridges. Like it's just a very you know, the

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Speaker 1: language got gets weird and sort of flat distant, yeah,

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Speaker 1: exactly distant alien right. I noticed this in the in

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Speaker 1: some of the documents that I was looking at the

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Speaker 1: government doctor in the seventy eight seventy nine, that like,

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Speaker 1: the language started getting weird and very technocratic, wonky. So

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Speaker 1: that was on the right. On the left, it was

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Speaker 1: sort of like some quasi socialists who made a similar argument.

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Speaker 1: And they they you know, they they were not they

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Speaker 1: didn't like small business right because they thought that like

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Speaker 1: small business people were like uh racist and and Rubby

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Speaker 1: and Andy. They preferred working with you know, the big

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Speaker 1: the big banks and the and the big chain stores.

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Speaker 1: And they thought, oh, they're cosmopolitans regardless.

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Speaker 2: Who knows how big corporations feel about race. Jesus.

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Speaker 1: I mean, I'm not I'm just telling.

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Speaker 2: You no, no, no, no, I'm not saying you're the one. He's

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Speaker 2: just like, oh god.

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Speaker 1: Right, I mean so so. So they didn't like car dealers, right,

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Speaker 1: That was they were like, car dealers are sleazy, we

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Speaker 1: don't like them. They were kind of more socialists, and

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Speaker 1: they said, you know what we should we should have

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Speaker 1: big planning, right, work with IBM, work with like the

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Speaker 1: big fancy companies to sort of plan things, and and

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Speaker 1: and that. They were like, we need experts to kind

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Speaker 1: of be planners in the economy. And that's actually not

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Speaker 1: very different than saying, let's just allow the economists to

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Speaker 1: run things, right, It's actually very similar. Both the right

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Speaker 1: and the left they kind of hated each other, but

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Speaker 1: they agreed that populism was bad, that small business was

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Speaker 1: sort of foolish and silly, and that what we really

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Speaker 1: should do is is have big institutions running things. And

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Speaker 1: those big institutions, you know, maybe the right thought, well,

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Speaker 1: they should just generate cash because that's more efficient, and

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Speaker 1: the left maybe thought, let's have them be more socialist

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Speaker 1: and look out for the public interest. But that was

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Speaker 1: the sort of the gist of what both and they won.

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Speaker 1: And then they changed antitrust laws in the nineteen seventies

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Speaker 1: and a whole bunch of regulatory laws in the nineteen eighties, like,

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Speaker 1: for example, deregulation of airlines, which happened in nineteen eighty.

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Speaker 1: The most aggressive proponent of deregulation of airlines was Ralph Nader. Okay,

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Speaker 1: wasn't a right wing thing. The airlines themselves didn't want it.

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Speaker 1: It was Ralph Nader pushing it very aggressively. He was

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Speaker 1: also very aggressive about pushing for deregulation in banking. You know,

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Speaker 1: I mean, it's a weird history here.

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Speaker 2: It's weird. How will like the two very different sides

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Speaker 2: both seem to kind of turn against workers almost.

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Speaker 1: Yeah, So Nata realized he made a mistake. But what

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Speaker 1: the basic idea there was, Oh, this is it's bad

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Speaker 1: for consumers that we have this regulatory scheme of for

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Speaker 1: banks or for or for or for truckers or for airlines.

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Speaker 1: It increases prices, it's not as efficient as it could be.

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Speaker 1: If we consolidate power, that's more efficient. Right, all these

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Speaker 1: grubby you.

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Speaker 2: Know, because scale, you'll be able to do.

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Speaker 1: Right. And so the Chicago schoolers or the right wingers

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Speaker 1: were like, absolutely, this is completely right. I mean they're

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Speaker 1: hippies and communists and we hate them, but they're not

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Speaker 1: wrong about the need to bring the experts in to

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Speaker 1: run things and move away from these you know, grubby,

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Speaker 1: dumb small business people. And you know, the there's a

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Speaker 1: lot of it is the consumer rights move movement was

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Speaker 1: part was the people on the left who got this

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Speaker 1: to happen. And you know, even if today if you

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Speaker 1: read like the biographies autobiographies of people who worked in

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Speaker 1: the Carter administration, though like invective, the anger they have

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Speaker 1: towards the teamsters is really weird. Like I've read like

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Speaker 1: multiple people from was his name, Alfred Kahn was kind

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Speaker 1: of the big one. He was like diregular, but he

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Speaker 1: used to talk about like how the goal of a

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Speaker 1: lot of the policies was to just destroy the teamsters

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Speaker 1: and reduce wages like for workers, and.

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Speaker 2: Did they did. Why was there such bipartisan descent for

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Speaker 2: small business? It just doesn't Maybe it makes sense just

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Speaker 2: looking back, like Hinslight's twenty twenty, but it just feels

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Speaker 2: so illogical almost on the left.

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Speaker 1: There's an elitism to it. Right, So you had this

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Speaker 1: is the first generation like in this it's the sixties

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Speaker 1: and seventies, and now you have finally like tens of

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Speaker 1: millions of people who are college educated. Right, it's right

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Speaker 1: after the GI Bill and this the World War two,

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Speaker 1: and they're they're trying to understand the economy and the

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Speaker 1: New Deal. The New Deal exists, right, the New Deal

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Speaker 1: framework is there. Things aren't basically prosperous, and they stop

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Speaker 1: caring about questions of political economy and concentrations of power

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Speaker 1: and inequality because there just isn't that much of it.

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Speaker 1: I mean, yeah, there's like there's some like rich people.

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Speaker 1: There are rich people, but they're seen as kind of

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Speaker 1: like borish and tacky. They're not like considered powerful. Wall

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Speaker 1: Street doesn't really matter, you know, in the seventies, it's

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Speaker 1: just like a place with coupon clippings of like bonds.

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Speaker 1: It doesn't it's not you know, it's not a big deal.

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Speaker 1: And that's kind of the vibe that that most people have.

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Speaker 1: You know, it's in nineteen seventy nine, you could like

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Speaker 1: you could leave high school and you could just get it,

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Speaker 1: get a job making fifty bucks an hour in a factory.

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Speaker 1: Right that it was just a very different society. So

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Speaker 1: there just wasn't the concern over being able to make it.

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Speaker 2: In and not fifty dollars an hour. Job was not

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Speaker 2: I'm going to guess from mega corporation.

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Speaker 1: Or it was I mean, but it could be. It

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Speaker 1: could be but like it could be for Ford, or

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Speaker 1: it could be for a supplier of Ford or whatever.

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Speaker 1: But like it wasn't you know, there was a lot

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Speaker 1: of light manufacturing by smaller companies. But the point is

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Speaker 1: is that you had a lot There were a lot

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Speaker 1: of options, and it wasn't you know, it wasn't considered

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Speaker 1: weird or a bad thing, and inequality was fairly low,

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Speaker 1: and you could also start your own business. It wasn't

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Speaker 1: that hard to do that, right, But the political infrastructure

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Speaker 1: for that had kind of fallen apart. And when inflation

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Speaker 1: hit in the nineteen seventies, and inflation hit for a

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Speaker 1: variety of reasons, mostly having to do with changes in banking,

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Speaker 1: you know, some some oil shocks, those two movements spent

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Speaker 1: a lot of time convincing people that the American economy

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Speaker 1: was misshapen because there wasn't enough expertise running things. And

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Speaker 1: so in the nineteen seventies, when you started, when there

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Speaker 1: was inflation, when there were these when there were financial shocks,

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Speaker 1: the argument was we gotta we got to get rid

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Speaker 1: of these new deal rules. Now, there were legitimate reasons

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Speaker 1: to update those rules, like the train system was a mess,

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Speaker 1: and because you couldn't close down unprofitable routes. You know,

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Speaker 1: there was there were there was a lot of like

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Speaker 1: real problems with our with our transportation system. You know,

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Speaker 1: it was hard to update trucking rules. There were things

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Speaker 1: that needed to be updated. But they just said, you

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Speaker 1: know what, all of this stuff, just throw it out

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Speaker 1: and give freedom to capital, to to unionize, to do

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Speaker 1: whatever capital wants, because that's how to bring down costs.

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Speaker 1: You got to make things more efficient and that will

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Speaker 1: address pricing.

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Speaker 2: So was there a succession of legislation or was it

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Speaker 2: one big moment.

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Speaker 1: It was a bunch of different it was. It was

431
00:23:47,960 --> 00:23:50,240
Speaker 1: some legislation. A lot of it was through the courts,

432
00:23:50,480 --> 00:23:52,400
Speaker 1: so it wasn't you know, it's not like we ever

433
00:23:52,440 --> 00:23:54,439
Speaker 1: repealed any of these anti trust laws. It's just that

434
00:23:54,560 --> 00:23:59,119
Speaker 1: interpretations by enforcers and the courts changed. Oh yeah, and

435
00:23:59,119 --> 00:24:02,960
Speaker 1: that's actually the Reagan administration. You know. There's this document

436
00:24:03,000 --> 00:24:07,439
Speaker 1: that a colleague uncovered in nineteen eighty, the Transition, a

437
00:24:07,480 --> 00:24:12,320
Speaker 1: transition document from two important economists who said we're not

438
00:24:12,320 --> 00:24:14,240
Speaker 1: going to be able to convince Congress to get rid

439
00:24:14,320 --> 00:24:16,439
Speaker 1: of anti trust laws. So we're just going to have

440
00:24:16,440 --> 00:24:19,720
Speaker 1: to change it administratively by not enforcing the laws that

441
00:24:19,760 --> 00:24:22,560
Speaker 1: we don't like. So that's what Reagan did with mergers.

442
00:24:22,560 --> 00:24:24,760
Speaker 1: He said, we're no longer going to enforce merger anti

443
00:24:24,800 --> 00:24:27,920
Speaker 1: merger law. And so that's why, you know, you saw

444
00:24:27,920 --> 00:24:32,280
Speaker 1: a huge consolidation wave in the nineteen eighties. You know

445
00:24:32,359 --> 00:24:35,040
Speaker 1: the movie Wall Street, the nineteen eighty seven Oliver Spill. Yeah,

446
00:24:35,080 --> 00:24:38,919
Speaker 1: so that's about a merger, right, that is the moment, Like,

447
00:24:39,280 --> 00:24:42,440
Speaker 1: that's what happens, is that that change. You also saw

448
00:24:42,960 --> 00:24:45,879
Speaker 1: in terms of legislation. Yes, there was a tremendous amount

449
00:24:45,920 --> 00:24:50,000
Speaker 1: of deregulation of particularly of finance, but also of trade,

450
00:24:50,440 --> 00:24:54,679
Speaker 1: also of shipping, also of you know, railroads and trucking,

451
00:24:54,760 --> 00:24:58,800
Speaker 1: and there were a lot of legislative changes that fostered

452
00:24:58,800 --> 00:25:03,119
Speaker 1: the consolidation of economic power in the name of efficiency. So,

453
00:25:03,760 --> 00:25:06,520
Speaker 1: you know, one of the first laws that changed was

454
00:25:06,720 --> 00:25:09,960
Speaker 1: one that it was called the Consumer Pricing Goods Act

455
00:25:10,000 --> 00:25:13,000
Speaker 1: of nineteen seventy five. They said, we are going to

456
00:25:14,359 --> 00:25:19,760
Speaker 1: allow discounters to basically charge much less than an item

457
00:25:19,880 --> 00:25:23,679
Speaker 1: costs in order to kill their rivals. So you know

458
00:25:23,760 --> 00:25:26,520
Speaker 1: that the idea used to be that if I sold,

459
00:25:26,560 --> 00:25:29,320
Speaker 1: if I was a producer and I and I sold,

460
00:25:29,440 --> 00:25:33,879
Speaker 1: say Ingersol watches or something, I could tell the retailer

461
00:25:33,920 --> 00:25:38,040
Speaker 1: what price minimum price they could set, and that way

462
00:25:38,240 --> 00:25:42,000
Speaker 1: that retailer couldn't price below cost to draw people in

463
00:25:42,119 --> 00:25:44,240
Speaker 1: and kill their rivals. Let's say, like, you know, they

464
00:25:44,280 --> 00:25:45,840
Speaker 1: don't do that with Ingosole watches, but they did that

465
00:25:45,840 --> 00:25:48,239
Speaker 1: with milk, right, you know, price below cost to kill

466
00:25:48,280 --> 00:25:51,119
Speaker 1: your rivals. If you can price below cost, this is

467
00:25:51,160 --> 00:25:53,680
Speaker 1: what Amazon does, right, Like. The reason Amazon was able

468
00:25:53,680 --> 00:25:56,120
Speaker 1: to kill its rivals is because it could borrow from

469
00:25:56,119 --> 00:25:59,040
Speaker 1: Wall Street for as long as it took, whereas its

470
00:25:59,119 --> 00:26:04,040
Speaker 1: rivals couldn't. That's called predatory pricing. Uber did something similar

471
00:26:04,240 --> 00:26:06,800
Speaker 1: that used to be illegal, and one of the laws

472
00:26:06,800 --> 00:26:09,160
Speaker 1: that made it possible was the Consumer Pricing Goods Act

473
00:26:09,160 --> 00:26:11,240
Speaker 1: of nineteen seventy five that was put in place by

474
00:26:11,240 --> 00:26:14,879
Speaker 1: the Democrats who had just gotten elected reacting in a

475
00:26:14,920 --> 00:26:17,560
Speaker 1: reaction to Nixon, and they didn't know what to do

476
00:26:17,600 --> 00:26:20,200
Speaker 1: about inflation. So this is something that the Natorites told

477
00:26:20,240 --> 00:26:24,000
Speaker 1: them to do. They did it, and Walmart exploded as

478
00:26:24,000 --> 00:26:27,359
Speaker 1: a result, nineteen seventy, Walmart was about had about, I

479
00:26:27,359 --> 00:26:29,960
Speaker 1: don't know, twenty thirty million dollars in sales. By nineteen

480
00:26:30,000 --> 00:26:32,000
Speaker 1: eighty it had a billion dollars in sales by nineteen

481
00:26:32,040 --> 00:26:36,280
Speaker 1: eighty five. Sam Walton richest guy in the country. But

482
00:26:36,520 --> 00:26:38,400
Speaker 1: so a bunch of stuff, like a bunch of legal

483
00:26:38,480 --> 00:26:42,280
Speaker 1: changes happened, deregulation of finance, deregulation of all of these

484
00:26:42,320 --> 00:26:46,719
Speaker 1: different areas, and now so the relaxation, dramatic relaxation of

485
00:26:47,040 --> 00:26:51,720
Speaker 1: antitrust laws. And so when you make when you legalize monopoly,

486
00:26:51,760 --> 00:26:55,880
Speaker 1: which is effectively what happened, then you get a bunch

487
00:26:55,920 --> 00:26:58,600
Speaker 1: of monopolies. And this is to our earlier point. If

488
00:26:58,640 --> 00:27:02,239
Speaker 1: you don't monopolize, then you get eaten, right, and you

489
00:27:02,280 --> 00:27:04,960
Speaker 1: get destroyed. So you could say Mark Zuckerberg did what

490
00:27:05,040 --> 00:27:07,199
Speaker 1: he did, and that's bad by rolling up, you know,

491
00:27:07,240 --> 00:27:09,520
Speaker 1: the social media space. But if it hadn't been him,

492
00:27:09,520 --> 00:27:12,160
Speaker 1: it would have been somebody else, right, And same thing

493
00:27:12,160 --> 00:27:13,840
Speaker 1: with Google, same thing with all of these guys like

494
00:27:13,880 --> 00:27:16,760
Speaker 1: it was gonna When you create a legal environment like that,

495
00:27:16,760 --> 00:27:20,280
Speaker 1: that's what happens. So these big companies now they're big,

496
00:27:20,320 --> 00:27:23,119
Speaker 1: Now they're powerful, and they use lobbying, they use infrastructure,

497
00:27:23,119 --> 00:27:26,680
Speaker 1: and they're governing. But it didn't start out that way.

498
00:27:27,000 --> 00:27:31,120
Speaker 1: Now we have a political economy problem, but the ideas

499
00:27:31,160 --> 00:27:34,480
Speaker 1: have changed. So the intellectual framework they were operating on

500
00:27:35,119 --> 00:27:38,480
Speaker 1: of Google, we don't do evil, right, which is a

501
00:27:38,720 --> 00:27:42,240
Speaker 1: fundamentally a statement about governing. I think there's like a

502
00:27:42,359 --> 00:27:46,760
Speaker 1: general view that whatever you think about Google's business model,

503
00:27:46,960 --> 00:27:50,760
Speaker 1: it is inappropriate for a private entity to be used

504
00:27:50,800 --> 00:27:53,760
Speaker 1: to be wielding sovereign power. That's not it shouldn't be

505
00:27:53,920 --> 00:27:55,520
Speaker 1: up to them, right.

506
00:27:55,840 --> 00:27:58,680
Speaker 2: So what does it actually mean that the government said

507
00:27:58,800 --> 00:28:01,320
Speaker 2: they had a monopoly of search? What? What does that

508
00:28:01,520 --> 00:28:02,880
Speaker 2: actually the ramifications?

509
00:28:03,359 --> 00:28:06,440
Speaker 1: So this is getting to the search trial. We can

510
00:28:06,640 --> 00:28:08,960
Speaker 1: talk a little bit about that, but but a monopoly

511
00:28:09,040 --> 00:28:11,760
Speaker 1: means you know what the what? So they were just

512
00:28:12,080 --> 00:28:15,960
Speaker 1: deemed a monopolist by a judge judgment meta in in

513
00:28:16,080 --> 00:28:18,240
Speaker 1: DC District Court. It's actually their second loss. They were

514
00:28:18,440 --> 00:28:22,880
Speaker 1: also dubbed a monopolist in uh the Android app store.

515
00:28:23,040 --> 00:28:25,440
Speaker 2: Controls with the case with that pig.

516
00:28:25,880 --> 00:28:28,080
Speaker 1: Yeah, so this is their second and there's a third

517
00:28:28,119 --> 00:28:31,200
Speaker 1: case that's starting where it's about their control of software

518
00:28:31,720 --> 00:28:37,560
Speaker 1: that underpins advertise online advertising markets. That starts in a

519
00:28:37,600 --> 00:28:38,320
Speaker 1: couple of weeks.

520
00:28:38,560 --> 00:28:38,840
Speaker 2: Yeah.

521
00:28:38,920 --> 00:28:43,160
Speaker 1: Anyway, what what Metta said is that Google is a

522
00:28:43,200 --> 00:28:48,080
Speaker 1: monopolist because they control uh search right, general search services,

523
00:28:48,120 --> 00:28:51,560
Speaker 1: and then they control search advertising. And what they were

524
00:28:51,600 --> 00:28:55,400
Speaker 1: doing that was illegal is they were preventing rivals from

525
00:28:55,480 --> 00:28:59,240
Speaker 1: getting into the search market using contracts, and so it's

526
00:28:59,240 --> 00:29:02,240
Speaker 1: not just that they were monopolizing, it's that they were

527
00:29:02,280 --> 00:29:07,160
Speaker 1: thwarting rivals from challenging them, and then they were raising

528
00:29:07,280 --> 00:29:11,320
Speaker 1: ad prices as a result of their control of this market.

529
00:29:11,840 --> 00:29:15,560
Speaker 1: So the that's like the in anti trust law. It

530
00:29:15,560 --> 00:29:18,320
Speaker 1: didn't always used to be this way, but we interpret

531
00:29:18,360 --> 00:29:23,080
Speaker 1: it to really since the sixties to the eighties, depending

532
00:29:23,080 --> 00:29:25,440
Speaker 1: on what case you look at. If you are if

533
00:29:25,480 --> 00:29:29,920
Speaker 1: you are a monopoly and you and then you do

534
00:29:30,080 --> 00:29:33,720
Speaker 1: something to maintain that monopoly or to extend your monopoly,

535
00:29:35,560 --> 00:29:38,040
Speaker 1: that's what makes it illegal. Right, Like if I just

536
00:29:38,080 --> 00:29:40,880
Speaker 1: create a new product category, some widget that no one's

537
00:29:40,880 --> 00:29:43,360
Speaker 1: ever heard of before, and I start making it and

538
00:29:43,400 --> 00:29:46,280
Speaker 1: it's popular, I'm by definition going to have one hundred

539
00:29:46,280 --> 00:29:49,880
Speaker 1: percent of the market. That doesn't that's not illegal, right.

540
00:29:49,960 --> 00:29:51,640
Speaker 1: What it would be illegal as if I had one

541
00:29:51,680 --> 00:29:54,720
Speaker 1: hundred percent of the market and then I said to

542
00:29:54,760 --> 00:29:58,920
Speaker 1: my distributors. Hey, if you want my thing that everybody wants,

543
00:29:58,960 --> 00:30:02,520
Speaker 1: you can't distribute my rivals. Think that's what makes it.

544
00:30:03,120 --> 00:30:06,720
Speaker 1: That's what turns it into an illegal conspiracy, and that's

545
00:30:06,760 --> 00:30:10,120
Speaker 1: effective the argument about what Google was doing with search.

546
00:30:10,720 --> 00:30:11,960
Speaker 2: So, how do you feel it's going to go?

547
00:30:13,920 --> 00:30:19,680
Speaker 1: Why do you think, I mean the they're starting. So

548
00:30:20,280 --> 00:30:23,560
Speaker 1: the case started in twenty twenty. It was originally brought

549
00:30:23,560 --> 00:30:26,400
Speaker 1: by the Trump administration. The Biden administration has brought it forward,

550
00:30:27,000 --> 00:30:29,239
Speaker 1: and it took until twenty twenty four when it went

551
00:30:29,280 --> 00:30:32,240
Speaker 1: to trial and finally the judge ruled that Google's a monopolist.

552
00:30:32,920 --> 00:30:35,280
Speaker 1: Now is the second part of the trial, which is

553
00:30:35,280 --> 00:30:38,400
Speaker 1: called the remedy phase, where the government comes and says,

554
00:30:38,400 --> 00:30:42,200
Speaker 1: here's what we want to cure the monopoly, and Google

555
00:30:42,320 --> 00:30:44,280
Speaker 1: will say, no, I don't think that's right. This is

556
00:30:44,280 --> 00:30:46,440
Speaker 1: what you need to cure the monopoly. And there will

557
00:30:46,440 --> 00:30:49,600
Speaker 1: be another, effectively a trial, and then the judge will

558
00:30:49,680 --> 00:30:52,160
Speaker 1: rule and make a decision, and then it will go

559
00:30:52,440 --> 00:30:56,680
Speaker 1: on appeal, probably the Supreme Court, or depending on who

560
00:30:56,720 --> 00:31:01,719
Speaker 1: wins in you know, this election, they could settle it

561
00:31:01,840 --> 00:31:05,000
Speaker 1: as the Bush administration did with the Microsoft suit in

562
00:31:05,040 --> 00:31:08,120
Speaker 1: two thousand and one. So all of that being said,

563
00:31:08,600 --> 00:31:10,600
Speaker 1: we don't even know what the Justice Department is going

564
00:31:10,640 --> 00:31:13,760
Speaker 1: to ask for. So the Justice Department could ask for

565
00:31:13,840 --> 00:31:17,160
Speaker 1: something very small, in which case that's the most you're

566
00:31:17,160 --> 00:31:18,720
Speaker 1: going to get, or they could ask the end of it,

567
00:31:19,040 --> 00:31:20,680
Speaker 1: right well, I mean it's not the end. There's going

568
00:31:20,760 --> 00:31:23,160
Speaker 1: to be you know, yeah, that's the most you're going

569
00:31:23,240 --> 00:31:26,440
Speaker 1: to get. Or they could ask for you know, breaking

570
00:31:26,560 --> 00:31:29,280
Speaker 1: up the company and you know, opening up the data

571
00:31:29,320 --> 00:31:33,000
Speaker 1: vaults to let anybody use the data that that Google collected,

572
00:31:33,560 --> 00:31:36,360
Speaker 1: or you know, opening up their IP vaults and saying

573
00:31:36,400 --> 00:31:39,160
Speaker 1: anybody gets to use that, or you know, there's a

574
00:31:39,200 --> 00:31:40,960
Speaker 1: ton that the DJ could ask for. We're going to

575
00:31:41,000 --> 00:31:43,400
Speaker 1: sort of find out more about that in the next

576
00:31:43,520 --> 00:31:49,360
Speaker 1: month or two. The Remedy phase conference the have they're

577
00:31:49,440 --> 00:31:51,200
Speaker 1: they're just going to talk about the scheduling of the

578
00:31:51,240 --> 00:31:54,480
Speaker 1: remedy phase in I think September like sixth the ninth

579
00:31:54,560 --> 00:31:56,520
Speaker 1: or something like that. So, well, you know what we're

580
00:31:56,520 --> 00:31:58,320
Speaker 1: gonna be covering, mys be covering that. You're going to

581
00:31:58,400 --> 00:32:00,080
Speaker 1: hear about that if you if you want to see it.

582
00:32:00,120 --> 00:32:05,000
Speaker 1: But it's I know, it's very exciting. I mean, this

583
00:32:05,040 --> 00:32:09,000
Speaker 1: is the first big tech company that's been deemed to

584
00:32:09,000 --> 00:32:13,000
Speaker 1: be a monopolist and the anti trust law, you know,

585
00:32:13,080 --> 00:32:16,719
Speaker 1: a lot of anti trusts law is is just not

586
00:32:17,400 --> 00:32:20,120
Speaker 1: so much what the law says, but whether you use

587
00:32:20,240 --> 00:32:23,040
Speaker 1: the law. You know, the Department of Justice didn't bring

588
00:32:23,080 --> 00:32:28,400
Speaker 1: a monopolization case pretty much for twenty years since Microsoft,

589
00:32:28,440 --> 00:32:31,040
Speaker 1: like the Google case was the first one first, certainly

590
00:32:31,120 --> 00:32:33,960
Speaker 1: first big one. FDC brought a few. There have been

591
00:32:33,960 --> 00:32:36,200
Speaker 1: some private cases, but this is really the first big

592
00:32:36,240 --> 00:32:41,000
Speaker 1: one since since Microsoft. And what's gonna happen and what

593
00:32:41,080 --> 00:32:44,719
Speaker 1: is already happening is, you know, every big company is

594
00:32:45,640 --> 00:32:47,920
Speaker 1: we're you know, every CEO in a company that has

595
00:32:48,000 --> 00:32:52,920
Speaker 1: market power has to ask their general counselor could this

596
00:32:53,280 --> 00:32:55,560
Speaker 1: are we doing something that could get us into hot water?

597
00:32:56,640 --> 00:32:58,520
Speaker 1: They didn't have to ask that a few years ago,

598
00:32:58,840 --> 00:33:01,440
Speaker 1: because you could just the general counsel or their anti

599
00:33:01,480 --> 00:33:04,200
Speaker 1: trust council could say, eh, don't worry.

600
00:33:04,040 --> 00:33:06,880
Speaker 2: That dude gives a shit, it won't do anything.

601
00:33:06,880 --> 00:33:08,760
Speaker 1: No one would ever bring a case. Right But now

602
00:33:08,880 --> 00:33:10,959
Speaker 1: not only did the government bring a case, but they

603
00:33:11,000 --> 00:33:14,360
Speaker 1: won the case. So it's like, oh, okay, now we

604
00:33:14,400 --> 00:33:17,240
Speaker 1: got to be careful.

605
00:33:16,760 --> 00:33:19,200
Speaker 2: And just so you when you say they won the case.

606
00:33:19,240 --> 00:33:22,880
Speaker 2: So it was the government versus Google with a no.

607
00:33:23,000 --> 00:33:26,440
Speaker 2: This is very simple with the judge, Judge Meta saying

608
00:33:26,560 --> 00:33:28,600
Speaker 2: I agree with the government, right, Yeah.

609
00:33:28,440 --> 00:33:29,840
Speaker 1: It was the government, and then there were a bunch

610
00:33:29,840 --> 00:33:33,760
Speaker 1: of states as well, and the Meta didn't. He didn't

611
00:33:33,760 --> 00:33:36,320
Speaker 1: agree with everything the government said. So there were certain

612
00:33:36,360 --> 00:33:40,240
Speaker 1: things with like Google's advertising platform that he said that's

613
00:33:40,280 --> 00:33:44,520
Speaker 1: not a monopoly. But on the big stuff, the search stuff, yeah,

614
00:33:44,560 --> 00:33:46,840
Speaker 1: he agreed with the government.

615
00:33:47,160 --> 00:33:49,240
Speaker 2: How do you break up a company like Google?

616
00:33:49,280 --> 00:33:52,680
Speaker 1: Though Wall Street does it all the time. I mean,

617
00:33:52,720 --> 00:33:56,440
Speaker 1: you just saw what I think. DuPont just broke itself

618
00:33:56,520 --> 00:33:59,800
Speaker 1: up into multiple division. You know, Google is not just

619
00:34:00,240 --> 00:34:02,720
Speaker 1: it's not like one jumbled together thing. You know, Google

620
00:34:02,760 --> 00:34:05,400
Speaker 1: has different divisions, and so, you know, and they buy

621
00:34:05,400 --> 00:34:07,680
Speaker 1: companies and they sell companies, and you just you've got

622
00:34:07,760 --> 00:34:10,600
Speaker 1: put an investment banker in there to sell the company,

623
00:34:10,600 --> 00:34:11,640
Speaker 1: you know, sell parts of the company.

624
00:34:11,640 --> 00:34:14,279
Speaker 2: It's not it would be selling off bits of the

625
00:34:14,320 --> 00:34:14,960
Speaker 2: company though.

626
00:34:15,239 --> 00:34:17,080
Speaker 1: Yeah, you could just I mean, depending on what they

627
00:34:17,480 --> 00:34:19,240
Speaker 1: you know, you could do it in lots of different ways.

628
00:34:19,280 --> 00:34:22,279
Speaker 1: But this is something that Wall Street knows how to do,

629
00:34:22,480 --> 00:34:24,680
Speaker 1: so you could just It's not it's not rocket science.

630
00:34:24,680 --> 00:34:28,680
Speaker 1: You know Google. You just go to Google has a

631
00:34:28,719 --> 00:34:31,080
Speaker 1: bunch of people who work in the YouTube you know,

632
00:34:31,160 --> 00:34:34,600
Speaker 1: at YouTube, and they have someone who's a CEO of YouTube.

633
00:34:35,040 --> 00:34:37,840
Speaker 1: You just say, okay, if you have a share of Google,

634
00:34:37,920 --> 00:34:39,560
Speaker 1: you now have a share of Google and you have

635
00:34:39,600 --> 00:34:40,520
Speaker 1: a share of YouTube.

636
00:34:40,600 --> 00:34:42,160
Speaker 2: Of a separate institution for.

637
00:34:42,239 --> 00:34:45,120
Speaker 1: Companies, right, I mean there are difficult things to break up.

638
00:34:45,160 --> 00:34:47,160
Speaker 1: Like let's say you want it to have a different

639
00:34:47,320 --> 00:34:50,799
Speaker 1: a separate search engine, right right, okay? There do you

640
00:34:50,840 --> 00:34:53,319
Speaker 1: clone it? Who gets the Google domain? Like who gets

641
00:34:53,360 --> 00:34:55,520
Speaker 1: the brand? You know? There are also questions all right,

642
00:34:55,560 --> 00:34:57,480
Speaker 1: like let's say you open up the data vault and

643
00:34:57,480 --> 00:35:00,000
Speaker 1: you say other entities can come in and use the data.

644
00:35:01,160 --> 00:35:03,919
Speaker 1: That's those are technical questions and you could you could.

645
00:35:04,160 --> 00:35:05,880
Speaker 1: Basically the way you would deal with that is you

646
00:35:05,920 --> 00:35:09,800
Speaker 1: would have Google pay for a like a special master

647
00:35:10,120 --> 00:35:13,160
Speaker 1: who would kind of like run who would run a

648
00:35:14,520 --> 00:35:17,239
Speaker 1: like a technical committee that would make a lot of decisions.

649
00:35:17,360 --> 00:35:20,279
Speaker 1: That's what Microsoft had to do after they lost There

650
00:35:20,320 --> 00:35:22,640
Speaker 1: was a technical committee that came in and basically was

651
00:35:22,680 --> 00:35:26,160
Speaker 1: a regulator for Microsoft's a couple hundred people something one

652
00:35:26,239 --> 00:35:29,439
Speaker 1: hundred to two hundred people who were just making sure

653
00:35:29,440 --> 00:35:34,640
Speaker 1: that Microsoft's software was compatible with other entity software, and

654
00:35:34,680 --> 00:35:38,040
Speaker 1: they had certain legal authority over Microsoft. You do that

655
00:35:38,120 --> 00:35:41,759
Speaker 1: for for parts of Google where you can't actually do

656
00:35:41,880 --> 00:35:45,239
Speaker 1: a breakup, and there you know, there you go. This

657
00:35:45,320 --> 00:35:49,680
Speaker 1: is a remedy is not that hard depending on what

658
00:35:49,719 --> 00:35:50,160
Speaker 1: you want to do.

659
00:35:50,200 --> 00:35:53,120
Speaker 2: It almost feels like they kind of want us to

660
00:35:53,160 --> 00:35:55,600
Speaker 2: think it's harder than it is because that benefits them.

661
00:35:56,200 --> 00:35:58,960
Speaker 2: It makes oh, it's impossible to do this. We couldn't possibly,

662
00:35:59,440 --> 00:36:01,279
Speaker 2: but I imagine and that that's the argument in the

663
00:36:01,280 --> 00:36:02,000
Speaker 2: remedies face.

664
00:36:02,280 --> 00:36:04,440
Speaker 1: Well, I mean I think that yes, they they in

665
00:36:04,480 --> 00:36:06,799
Speaker 1: the in the epic. We've seen the remedy argument in

666
00:36:06,840 --> 00:36:09,480
Speaker 1: the epic the Apple. And what Google has been saying is, oh,

667
00:36:09,520 --> 00:36:11,680
Speaker 1: all of this stuff is so hard, it's so expensive.

668
00:36:11,760 --> 00:36:14,640
Speaker 1: It's how could we do this? And also it's not fair.

669
00:36:15,160 --> 00:36:17,000
Speaker 1: And the judge is basically like, come on, your Google.

670
00:36:17,040 --> 00:36:18,960
Speaker 1: You've been saying how awesome you are for a long time.

671
00:36:19,040 --> 00:36:20,680
Speaker 1: You can do this. This is not that hard and

672
00:36:20,719 --> 00:36:22,719
Speaker 1: it's not going to take you ten years and eight

673
00:36:22,800 --> 00:36:23,800
Speaker 1: gazillion dollars.

674
00:36:35,239 --> 00:36:38,040
Speaker 2: So do you see any other monopolies within the tech industry?

675
00:36:38,640 --> 00:36:40,040
Speaker 1: Yeah, I mean I think there's a lot of there's

676
00:36:40,040 --> 00:36:44,360
Speaker 1: a lot of market power in all over the economy,

677
00:36:44,400 --> 00:36:48,200
Speaker 1: and you see it in you know, I mean the

678
00:36:48,520 --> 00:36:52,000
Speaker 1: probably the most obvious monopoly is VeriSign's control of the

679
00:36:52,040 --> 00:36:55,799
Speaker 1: dot com domain. Like I know, it's like a small Yeah,

680
00:36:55,840 --> 00:36:58,520
Speaker 1: it's just so obviously if you want to register a

681
00:36:58,600 --> 00:37:01,520
Speaker 1: domain name and you want a dot com or you

682
00:37:01,560 --> 00:37:04,319
Speaker 1: own a dot com and you need to reregister, you know,

683
00:37:04,360 --> 00:37:07,400
Speaker 1: you need to renew it, you're going to pay a

684
00:37:07,760 --> 00:37:10,959
Speaker 1: you know, you're gonna pay registration company and they're gonna

685
00:37:11,000 --> 00:37:15,200
Speaker 1: have to remit whatever whatever they charge. I think they

686
00:37:15,320 --> 00:37:18,680
Speaker 1: charge like nine dollars and fifty cents and it's it's

687
00:37:18,680 --> 00:37:23,600
Speaker 1: like seventy percent operating margins. And because they manage the

688
00:37:23,640 --> 00:37:26,239
Speaker 1: dot com domain name, because the government charters them told them,

689
00:37:26,280 --> 00:37:28,240
Speaker 1: you can you get to manage this. They have contract

690
00:37:28,280 --> 00:37:31,040
Speaker 1: government that lets them do it. Just a very clear

691
00:37:31,080 --> 00:37:33,600
Speaker 1: one hundred percent of the market for you know, renewing

692
00:37:33,719 --> 00:37:36,880
Speaker 1: dot com domain names, and just everybody that owns a

693
00:37:36,920 --> 00:37:40,839
Speaker 1: dot com domain gives them nine dollars and fifty cents

694
00:37:40,880 --> 00:37:44,879
Speaker 1: a year. They should give them probably ninety cents a year.

695
00:37:45,960 --> 00:37:49,520
Speaker 2: Right, So are you suggesting that'd be other chances or chanters?

696
00:37:50,160 --> 00:37:52,239
Speaker 1: Well, what they should do is either just put a

697
00:37:52,239 --> 00:37:53,959
Speaker 1: price cap on it and say you get to charge

698
00:37:54,000 --> 00:37:57,560
Speaker 1: two bucks and that's it, like a utility, or say

699
00:37:57,719 --> 00:38:00,280
Speaker 1: every three years just bid it out and say, Okay,

700
00:38:00,960 --> 00:38:03,920
Speaker 1: whoever gives, you know, the best price gets to manage

701
00:38:04,040 --> 00:38:06,839
Speaker 1: the you know, the dot com domains. They've done that

702
00:38:06,880 --> 00:38:10,399
Speaker 1: for other you know, for other domains, and it tends

703
00:38:10,480 --> 00:38:12,000
Speaker 1: to drop the price. Pretty dramatic.

704
00:38:12,080 --> 00:38:14,279
Speaker 2: This is a personal one. I'm going to ask, how

705
00:38:14,320 --> 00:38:17,359
Speaker 2: do you feel about the Madden franchise with electronic arts?

706
00:38:17,360 --> 00:38:20,080
Speaker 4: So the reason the house this is because it sucks.

707
00:38:20,239 --> 00:38:22,880
Speaker 1: It's something that I, you know, people have been telling

708
00:38:22,920 --> 00:38:25,000
Speaker 1: me about for a long time. So monopolies is not

709
00:38:25,239 --> 00:38:30,760
Speaker 1: It's not like always obvious. The moral arguments aren't always obvious.

710
00:38:30,760 --> 00:38:33,319
Speaker 1: Mad's a really good example where and I don't know

711
00:38:33,320 --> 00:38:34,800
Speaker 1: that much about this, but you used to have a

712
00:38:34,840 --> 00:38:37,640
Speaker 1: lot of different NFL sort of football games. You had

713
00:38:37,640 --> 00:38:40,520
Speaker 1: at least two, Yeah, and they were and they were innovative,

714
00:38:40,560 --> 00:38:43,320
Speaker 1: so you like, they had to innovate around like different features.

715
00:38:43,360 --> 00:38:45,879
Speaker 1: I don't play video games. I don't believe in fun.

716
00:38:46,080 --> 00:38:49,319
Speaker 1: I don't like, you know, I don't think there should

717
00:38:49,320 --> 00:38:54,440
Speaker 1: be any joy. But I lost that, so, uh, but

718
00:38:54,480 --> 00:38:56,880
Speaker 1: as long as you're not going outside, that's my main concern,

719
00:38:57,239 --> 00:39:02,120
Speaker 1: not a problem. Okay, good. So you know, the these

720
00:39:02,239 --> 00:39:08,279
Speaker 1: long term monopoly arrangements are like are I think there's

721
00:39:08,280 --> 00:39:12,440
Speaker 1: something really problematic about it, But I don't exactly know

722
00:39:12,480 --> 00:39:15,680
Speaker 1: what to do about the But but the you know

723
00:39:15,840 --> 00:39:18,480
Speaker 1: Madden has gotten is it's not that it's gotten worse,

724
00:39:18,520 --> 00:39:21,839
Speaker 1: it just hasn't improved, right, And and they're there there's

725
00:39:21,880 --> 00:39:24,080
Speaker 1: also some of the other sports games they're like extracting

726
00:39:24,080 --> 00:39:26,600
Speaker 1: more and more money. But did you see this with

727
00:39:26,680 --> 00:39:33,239
Speaker 1: fanatics too? They've made the experience in sports worse. So

728
00:39:33,320 --> 00:39:35,799
Speaker 1: it's what we need to look at is these kind

729
00:39:35,840 --> 00:39:42,920
Speaker 1: of long term exclusive contracts. And there are some there

730
00:39:42,960 --> 00:39:46,120
Speaker 1: are some questions like should the NFL be able to

731
00:39:47,440 --> 00:39:54,080
Speaker 1: leverage its brands to create you know, obviously they have

732
00:39:55,200 --> 00:39:58,360
Speaker 1: obviously they have a right to profit from their brand,

733
00:39:58,800 --> 00:40:02,239
Speaker 1: right and obviously the players and they all have right

734
00:40:02,280 --> 00:40:05,400
Speaker 1: to profit from their brand, just as movie company. You know,

735
00:40:05,400 --> 00:40:08,759
Speaker 1: they get a copyright of the movies they make. But

736
00:40:09,560 --> 00:40:12,520
Speaker 1: the question is should you able should you be allowed

737
00:40:12,560 --> 00:40:17,400
Speaker 1: to take that brand that is a government granted monopoly,

738
00:40:17,440 --> 00:40:19,920
Speaker 1: which is fair because you are generating you know, you're

739
00:40:19,960 --> 00:40:23,920
Speaker 1: making the product, right, but should you be able to

740
00:40:23,920 --> 00:40:26,360
Speaker 1: turn that into another monopoly? Should be you able to

741
00:40:26,560 --> 00:40:31,200
Speaker 1: leverage that you know, or should you have to say, okay,

742
00:40:31,200 --> 00:40:33,600
Speaker 1: well we will. I'm in a profit from it. Anybody

743
00:40:33,600 --> 00:40:36,040
Speaker 1: that uses the NFL in a game has to pay me.

744
00:40:36,400 --> 00:40:39,600
Speaker 1: But I can't restrict who gets to use that in

745
00:40:39,680 --> 00:40:43,200
Speaker 1: a game, right. That was a little bit like there

746
00:40:43,239 --> 00:40:45,600
Speaker 1: have been anti trust cases on that. There was one

747
00:40:45,760 --> 00:40:50,239
Speaker 1: in the forties that restructured Hollywood. So there were a

748
00:40:50,280 --> 00:40:54,680
Speaker 1: bunch of movie studios and they owned or they controlled

749
00:40:55,040 --> 00:40:59,800
Speaker 1: theater chains, and they wouldn't let rival movies into the theaters.

750
00:41:00,280 --> 00:41:02,719
Speaker 1: So it'd be like, if you want to get you know,

751
00:41:02,840 --> 00:41:05,359
Speaker 1: like Gone with the Wind, which everyone wants to see,

752
00:41:05,360 --> 00:41:07,120
Speaker 1: then you have to take our other movies and you

753
00:41:07,200 --> 00:41:09,279
Speaker 1: have to keep rivals out of your theater. And it

754
00:41:09,320 --> 00:41:11,960
Speaker 1: was just a way of controlling the commons. It was

755
00:41:11,960 --> 00:41:17,360
Speaker 1: a way of tran of turning their monopoly over legitimate

756
00:41:17,600 --> 00:41:20,239
Speaker 1: copyright monopoly over Gone with the Win, which they had made,

757
00:41:20,400 --> 00:41:24,080
Speaker 1: into a monopoly over distribution of movies in general. And

758
00:41:24,560 --> 00:41:26,880
Speaker 1: this feels the Madden thing feels a little bit like

759
00:41:27,440 --> 00:41:33,880
Speaker 1: it's turning their brand into control over over, just like

760
00:41:33,960 --> 00:41:37,880
Speaker 1: football related video games, and that that doesn't feel it's

761
00:41:37,960 --> 00:41:41,520
Speaker 1: had the consequences that we don't like higher prices worse quality.

762
00:41:42,480 --> 00:41:45,160
Speaker 2: And you're right about Madden. I think it's a great

763
00:41:45,200 --> 00:41:47,840
Speaker 2: example of how of a problem of this kind of

764
00:41:47,840 --> 00:41:52,600
Speaker 2: long term licensing agreement because it's it is. I would

765
00:41:52,760 --> 00:41:54,759
Speaker 2: argue with people about whether it's good or bad. I

766
00:41:54,800 --> 00:41:57,600
Speaker 2: think it's a certain kind of mediocre. But you're right,

767
00:41:57,760 --> 00:42:00,440
Speaker 2: is it keeps things kind of trapped in amba it

768
00:42:00,480 --> 00:42:02,840
Speaker 2: only gets as good as the monopolist decides.

769
00:42:03,600 --> 00:42:07,759
Speaker 1: Yeah, that's right. And EA Sports will overpay, right, like,

770
00:42:08,640 --> 00:42:11,839
Speaker 1: they will pay more just to just to be the monopolist. Right,

771
00:42:11,880 --> 00:42:14,840
Speaker 1: They're not paying for the license, they're paying for the

772
00:42:14,920 --> 00:42:18,920
Speaker 1: license and to exclude someone else from getting into.

773
00:42:18,760 --> 00:42:21,480
Speaker 2: The space, kind of like Apple with Google.

774
00:42:22,120 --> 00:42:24,000
Speaker 1: Yeah, that's right. I mean, that's the thing is you

775
00:42:24,040 --> 00:42:26,960
Speaker 1: don't want so the original the Sherman At Anti Trust

776
00:42:27,040 --> 00:42:31,239
Speaker 1: acts bars monopolization and restraints of trade. So if you

777
00:42:31,320 --> 00:42:34,560
Speaker 1: think about the term restraints of trade, it is about

778
00:42:34,680 --> 00:42:39,920
Speaker 1: saying someone shouldn't be able to restrain trade to to

779
00:42:40,160 --> 00:42:43,480
Speaker 1: It's not a critique of big business. It's a critique

780
00:42:43,800 --> 00:42:47,480
Speaker 1: of not allowing business to get big right, And this

781
00:42:47,680 --> 00:42:51,640
Speaker 1: is a case where they are preventing more business from

782
00:42:51,640 --> 00:42:55,279
Speaker 1: being done by paying explicitly so others won't get that

783
00:42:56,320 --> 00:42:58,680
Speaker 1: that NFL licensing brand.

784
00:42:59,080 --> 00:43:02,720
Speaker 2: It almost feels like monopolies are just like distinctly on American.

785
00:43:03,040 --> 00:43:05,839
Speaker 1: Well, you know they they you know, let me get

786
00:43:05,840 --> 00:43:09,040
Speaker 1: this quote from Woodrow Wilson because it's it's a really

787
00:43:09,040 --> 00:43:12,080
Speaker 1: good quote. I know he's you know, it was virulently

788
00:43:12,160 --> 00:43:14,719
Speaker 1: racist and everything, but you know, take the good with

789
00:43:14,760 --> 00:43:18,560
Speaker 1: the bad. So America was created to break every kind

790
00:43:18,560 --> 00:43:21,160
Speaker 1: of monopoly and to set men free upon a footing

791
00:43:21,200 --> 00:43:23,799
Speaker 1: of equality, upon a footing of opportunity, to match their

792
00:43:23,840 --> 00:43:29,600
Speaker 1: brains and their energies. So he actually appointed Lewis Brandeis

793
00:43:29,640 --> 00:43:33,600
Speaker 1: to the Supreme Court. And you know there is a

794
00:43:33,960 --> 00:43:36,240
Speaker 1: you know, Thomas Jefferson wanted to put an antime monopoly

795
00:43:36,280 --> 00:43:39,239
Speaker 1: plank in the Constitution. That was his one of his critiques.

796
00:43:40,120 --> 00:43:44,120
Speaker 1: You know. You see, like historically, the anti monopoly lens

797
00:43:44,719 --> 00:43:49,320
Speaker 1: is kind of a critical way to understand American history.

798
00:43:50,560 --> 00:43:52,919
Speaker 1: And you can see this like over and over and over.

799
00:43:53,360 --> 00:43:58,840
Speaker 1: There is this fear of monopoly power and it comes

800
00:43:58,880 --> 00:44:04,879
Speaker 1: from the the the recognition that we do not want

801
00:44:04,880 --> 00:44:08,880
Speaker 1: to be run by a king. Right, So John Sherman,

802
00:44:08,920 --> 00:44:12,920
Speaker 1: Sherman Anti Trust Act, said that, you know, if we

803
00:44:12,920 --> 00:44:14,840
Speaker 1: wouldn't be will not be ruled by a monarch, we

804
00:44:14,840 --> 00:44:17,960
Speaker 1: should not be ruled by an autocratic trade. Right, very

805
00:44:17,960 --> 00:44:25,239
Speaker 1: explicit about the link between monarchy and authoritarianism and monopoly.

806
00:44:25,280 --> 00:44:29,360
Speaker 1: And they were using the term monarchy because fascism hadn't

807
00:44:29,400 --> 00:44:33,120
Speaker 1: happened yet, right, so, but monarchy did exist, right then

808
00:44:33,160 --> 00:44:35,439
Speaker 1: in the nineteenth century, Americans were looking across the ocean

809
00:44:35,480 --> 00:44:37,239
Speaker 1: and they were seeing a bunch of kingdoms. There was

810
00:44:37,239 --> 00:44:38,839
Speaker 1: a little bit of democracy, but that's what they were

811
00:44:38,840 --> 00:44:40,879
Speaker 1: really looking at, and they were like, we don't want that.

812
00:44:41,440 --> 00:44:45,799
Speaker 1: And today we would just say fascism, right, but like you,

813
00:44:45,800 --> 00:44:49,759
Speaker 1: you know that we did analogize monopoly to fascism in

814
00:44:49,760 --> 00:44:52,960
Speaker 1: the nineteen twenties, thirties, forties. But it has always been

815
00:44:53,080 --> 00:44:59,400
Speaker 1: foundational in America that concentrations of power are what we

816
00:45:00,080 --> 00:45:02,600
Speaker 1: escaped and they are not what we want here. And

817
00:45:02,640 --> 00:45:06,880
Speaker 1: there's always been this tension because you do need to

818
00:45:07,000 --> 00:45:11,279
Speaker 1: consolidate capital and effort to do great public works and

819
00:45:11,320 --> 00:45:13,239
Speaker 1: to do great works in general, like you often do

820
00:45:13,320 --> 00:45:16,319
Speaker 1: need to do that, But how do you control the

821
00:45:16,400 --> 00:45:19,600
Speaker 1: power of that. How do you control the power of industry?

822
00:45:19,719 --> 00:45:21,960
Speaker 1: If you're going to put a billion dollars together to

823
00:45:22,000 --> 00:45:26,120
Speaker 1: build a railroad across the country, you know, that's awesome.

824
00:45:26,160 --> 00:45:30,680
Speaker 1: Now you have a transcontinental railroad, but who runs that

825
00:45:30,840 --> 00:45:34,920
Speaker 1: railroad and the prices they charge, the ability for them

826
00:45:34,960 --> 00:45:38,240
Speaker 1: to charge different prices to different classes of people based

827
00:45:38,280 --> 00:45:42,000
Speaker 1: on who they want to succeed. Now, all of a sudden,

828
00:45:42,000 --> 00:45:44,600
Speaker 1: you're talking about a political problem. Well, of course you

829
00:45:44,600 --> 00:45:47,120
Speaker 1: don't want to say you can't have a railroad, but

830
00:45:47,640 --> 00:45:50,480
Speaker 1: you do have to deal with the political power that's concentrated.

831
00:45:50,520 --> 00:45:52,160
Speaker 1: And it's true with telegraphs, it's true, you know, the

832
00:45:52,200 --> 00:45:54,640
Speaker 1: Internet going all of these things. So this has always

833
00:45:54,680 --> 00:45:59,440
Speaker 1: been a problem, a political problem that we've tried to address.

834
00:45:59,520 --> 00:46:01,840
Speaker 1: And I think what happened in the seventies and eighties,

835
00:46:01,880 --> 00:46:04,359
Speaker 1: and this has happened the last forty years, is we

836
00:46:04,440 --> 00:46:06,319
Speaker 1: just kind of forgot about it, and then all this

837
00:46:06,400 --> 00:46:09,200
Speaker 1: consolidation happened, and now we're trying to get a handle

838
00:46:09,200 --> 00:46:09,719
Speaker 1: on it again.

839
00:46:10,320 --> 00:46:12,640
Speaker 2: And is this what you were referring to you mentioned

840
00:46:13,080 --> 00:46:16,160
Speaker 2: previous previous quote of your authoritarianism is coming for the

841
00:46:16,200 --> 00:46:18,879
Speaker 2: private from the private sector. Is this what you mean?

842
00:46:19,480 --> 00:46:19,920
Speaker 1: That's right?

843
00:46:20,520 --> 00:46:24,160
Speaker 2: These It's It's fascinating as well because I've been running

844
00:46:24,160 --> 00:46:27,880
Speaker 2: business fifteen years and felt pretty well learned about this stuff,

845
00:46:28,080 --> 00:46:30,960
Speaker 2: but never really thought about these companies as political entities.

846
00:46:31,280 --> 00:46:35,600
Speaker 2: Which leads me to a cloud compute question. So do

847
00:46:35,680 --> 00:46:38,319
Speaker 2: all police basically have the same problem because right now

848
00:46:38,400 --> 00:46:42,239
Speaker 2: in tech you have basically three or four, maybe five

849
00:46:42,280 --> 00:46:46,920
Speaker 2: companies that control all cloud compute? Is that something we

850
00:46:46,960 --> 00:46:49,359
Speaker 2: should let stand it? Like do we need to see

851
00:46:49,400 --> 00:46:51,760
Speaker 2: signs of price fixing? What are the bad signs?

852
00:46:53,200 --> 00:46:59,480
Speaker 1: So really good question. Every market is its own special snowflake. Right.

853
00:46:59,560 --> 00:47:03,319
Speaker 1: You can't. You can't make you know, some markets, right,

854
00:47:03,840 --> 00:47:07,520
Speaker 1: you can? You could. You could structure a market to

855
00:47:07,520 --> 00:47:10,319
Speaker 1: have a lot of a lot of different entrants like farming. Right,

856
00:47:11,320 --> 00:47:14,360
Speaker 1: you can have a lot of people growing corn depending

857
00:47:14,360 --> 00:47:17,440
Speaker 1: on how you split up the land. You can have

858
00:47:17,480 --> 00:47:21,160
Speaker 1: a lot of banks, right. Not totally clear to me

859
00:47:21,200 --> 00:47:25,239
Speaker 1: that you could have a lot of say, auto producers, right,

860
00:47:25,440 --> 00:47:28,040
Speaker 1: not going to have a family, you know, artisanal auto

861
00:47:28,120 --> 00:47:35,919
Speaker 1: producer that makes a lot of cars, right, So same

862
00:47:35,960 --> 00:47:37,680
Speaker 1: with chemicals, same with lots of different I mean you

863
00:47:37,760 --> 00:47:41,160
Speaker 1: can like there's there's just there are some industries where

864
00:47:41,320 --> 00:47:45,200
Speaker 1: you're going to have a small number of producers semiconductors,

865
00:47:45,200 --> 00:47:47,400
Speaker 1: there's you know, they're not going to have like so

866
00:47:49,120 --> 00:47:52,759
Speaker 1: cloud computing. When I look at it, to me, it's

867
00:47:52,800 --> 00:47:55,880
Speaker 1: just a it's a capital story, right, Who has the

868
00:47:55,920 --> 00:48:00,160
Speaker 1: capital to put to build out the data centers to

869
00:48:00,200 --> 00:48:03,520
Speaker 1: get the power that you need to design the compute

870
00:48:03,600 --> 00:48:07,440
Speaker 1: that you need. And it might be the case that

871
00:48:07,480 --> 00:48:10,319
Speaker 1: you really can only have three or four of them,

872
00:48:10,400 --> 00:48:13,440
Speaker 1: maybe have some specialty cloud computing. I don't know. This

873
00:48:13,480 --> 00:48:17,640
Speaker 1: isn't an area I've studied extensionly. But typically when you

874
00:48:17,680 --> 00:48:20,759
Speaker 1: do have an entity where entity is where you have

875
00:48:20,920 --> 00:48:26,319
Speaker 1: like a huge capital investment and you can't have you

876
00:48:26,360 --> 00:48:29,680
Speaker 1: have their natural limits on the number of competitors, you

877
00:48:29,719 --> 00:48:34,280
Speaker 1: have some form of public utility regulation, which usually takes

878
00:48:34,360 --> 00:48:40,359
Speaker 1: the form of saying you can't engage in price discrimination,

879
00:48:40,640 --> 00:48:43,440
Speaker 1: like you can raise your prices, but you can't charge

880
00:48:43,480 --> 00:48:46,440
Speaker 1: more to that entity for the same service than you

881
00:48:46,560 --> 00:48:49,480
Speaker 1: charge to this other entity. And you can't you know,

882
00:48:49,560 --> 00:48:54,480
Speaker 1: and you can't say, engage in like surveillance of your

883
00:48:54,480 --> 00:48:58,200
Speaker 1: clients to give yourself an advantage that would be or

884
00:48:58,280 --> 00:49:01,560
Speaker 1: you know, there's certain like you can't pick winners and losers.

885
00:49:01,600 --> 00:49:04,520
Speaker 1: You have to you have to be a public utility.

886
00:49:04,520 --> 00:49:06,880
Speaker 1: It's a little bit like it was a little bit

887
00:49:06,920 --> 00:49:09,359
Speaker 1: like a railroad or a granary or something which is

888
00:49:09,680 --> 00:49:15,960
Speaker 1: clothed with public interest but is owned by a private entity. There.

889
00:49:16,360 --> 00:49:18,440
Speaker 1: You know, it gets a little tricky with things, you know,

890
00:49:18,480 --> 00:49:23,719
Speaker 1: with companies that make open source tools on top of

891
00:49:23,719 --> 00:49:27,520
Speaker 1: of uh you know, for cloud computing entities, do those

892
00:49:27,600 --> 00:49:30,920
Speaker 1: cloud computing anties just like absorb those tools make their

893
00:49:30,920 --> 00:49:33,880
Speaker 1: own version of it like there are you know, I

894
00:49:33,920 --> 00:49:37,000
Speaker 1: don't have an answer to all of the questions about

895
00:49:37,040 --> 00:49:43,040
Speaker 1: how to run a cloud computing infrastructure, but generally what

896
00:49:43,080 --> 00:49:45,160
Speaker 1: you want to do is you you want to say,

897
00:49:45,239 --> 00:49:49,000
Speaker 1: all right, we're gonna we're going to try to pull

898
00:49:49,040 --> 00:49:52,880
Speaker 1: the power out of we want the economies of scale,

899
00:49:53,200 --> 00:49:55,319
Speaker 1: but we're going to try to pull the ability to

900
00:49:55,400 --> 00:49:59,279
Speaker 1: be arbitrary and coercive out of the business model through

901
00:50:00,000 --> 00:50:05,319
Speaker 1: antitrust law or regulations or whatever we can do, or

902
00:50:05,440 --> 00:50:09,520
Speaker 1: just you know, transparency of pricing. You know, I know

903
00:50:09,560 --> 00:50:12,560
Speaker 1: there's some egress pricing. I mean that's you know, being

904
00:50:12,560 --> 00:50:16,280
Speaker 1: able allowing people to get out of the cloud computing

905
00:50:16,480 --> 00:50:19,880
Speaker 1: pull their data out if they want so. There are

906
00:50:19,960 --> 00:50:24,040
Speaker 1: different techniques, but the basic idea is to recognize that

907
00:50:24,640 --> 00:50:28,600
Speaker 1: there is a there is a public interest in this

908
00:50:28,800 --> 00:50:33,520
Speaker 1: private in these in these these in this private infrastructure,

909
00:50:34,239 --> 00:50:37,600
Speaker 1: and so the public has some right, not total right,

910
00:50:37,680 --> 00:50:41,800
Speaker 1: but some right to control how these entities are are operating.

911
00:50:41,480 --> 00:50:43,640
Speaker 2: And that they could that they must be free trade

912
00:50:43,680 --> 00:50:45,480
Speaker 2: in the sense that someone can easily leave and go

913
00:50:45,560 --> 00:50:48,560
Speaker 2: to a competitor right within reason.

914
00:50:48,719 --> 00:50:49,799
Speaker 1: In reason, Yeah, that's right.

915
00:50:50,719 --> 00:50:52,759
Speaker 2: Another question I think we can wrap up with this

916
00:50:52,800 --> 00:50:56,479
Speaker 2: one is Meta a monopoly? Because Meta is the only

917
00:50:56,560 --> 00:51:01,040
Speaker 2: provider of advertising on metas products and they have there

918
00:51:01,120 --> 00:51:04,920
Speaker 2: is no way that someone realistically compete with Facebook. It

919
00:51:05,000 --> 00:51:07,200
Speaker 2: is too big at this point, and same with Instagram

920
00:51:07,520 --> 00:51:11,440
Speaker 2: kind of is it a monopoly? I'm trying to understand

921
00:51:11,440 --> 00:51:12,759
Speaker 2: these concepts in real time.

922
00:51:13,440 --> 00:51:15,319
Speaker 1: Yeah, I mean I think you you know there are

923
00:51:15,320 --> 00:51:18,200
Speaker 1: different markets, right, So I think an easier way to

924
00:51:18,200 --> 00:51:21,400
Speaker 1: conceptualize this would be to look at Apple, right, Apple

925
00:51:21,400 --> 00:51:24,560
Speaker 1: and Google, and you would say, well, Apple's not a monopoly.

926
00:51:24,600 --> 00:51:27,920
Speaker 1: I mean, I can I can buy an Android phone, right, right,

927
00:51:27,960 --> 00:51:30,480
Speaker 1: I don't need to buy an Apple an iPhone, right?

928
00:51:30,520 --> 00:51:32,200
Speaker 1: And that's true if you're looking at it from a

929
00:51:32,239 --> 00:51:35,160
Speaker 1: perspective of somebody who's buying a phone. It's a duopoly.

930
00:51:35,239 --> 00:51:36,920
Speaker 1: There's a lot of market power there, but it's not

931
00:51:36,960 --> 00:51:40,759
Speaker 1: a monopoly. However, what if you've bought the phone now,

932
00:51:40,800 --> 00:51:43,319
Speaker 1: all of a sudden, you you know, you can't it's

933
00:51:43,360 --> 00:51:47,040
Speaker 1: not easy to switch, right, so you're kind of locked in.

934
00:51:48,080 --> 00:51:51,719
Speaker 1: Is Apple a monopoly? Kind of kind of? Okay, Well,

935
00:51:51,719 --> 00:51:53,879
Speaker 1: you can look at it from a different point of view,

936
00:51:53,880 --> 00:51:58,320
Speaker 1: which is what if you're an app developer right now,

937
00:51:58,400 --> 00:52:01,480
Speaker 1: you have to get on the I phone because some

938
00:52:01,520 --> 00:52:04,640
Speaker 1: of your customers are there and you can't not be

939
00:52:04,840 --> 00:52:09,480
Speaker 1: on the iPhone. So getting into the app store for Apple,

940
00:52:09,920 --> 00:52:12,040
Speaker 1: that's a monopoly question. And the same thing is true

941
00:52:12,080 --> 00:52:15,800
Speaker 1: for Getting So it's a little bit like you're you know, sure,

942
00:52:16,280 --> 00:52:19,160
Speaker 1: maybe you can. There's a lot of railroad options, but

943
00:52:19,200 --> 00:52:22,680
Speaker 1: there's only one railroad that goes from one town to another.

944
00:52:22,880 --> 00:52:25,279
Speaker 1: So there might be a bunch of different railroads, but

945
00:52:25,880 --> 00:52:28,240
Speaker 1: for what you need, there's only one option.

946
00:52:28,600 --> 00:52:30,120
Speaker 2: So it's access to the customer.

947
00:52:30,440 --> 00:52:32,879
Speaker 1: Well, right, just there's lots of different markets, there's lots

948
00:52:32,880 --> 00:52:36,600
Speaker 1: of ways to understand, you know, what what market power means.

949
00:52:36,880 --> 00:52:39,120
Speaker 1: So if you take that back to Facebook, which is

950
00:52:39,160 --> 00:52:44,879
Speaker 1: really like a conglomerate of Facebook, Instagram and WhatsApp. Do

951
00:52:44,920 --> 00:52:46,920
Speaker 1: they have market power and where do they have market

952
00:52:46,960 --> 00:52:52,120
Speaker 1: power over? I think you'd look at the ability to

953
00:52:52,160 --> 00:52:56,120
Speaker 1: buy certain kinds of advertising, right if do you need

954
00:52:56,200 --> 00:52:59,320
Speaker 1: if you're running advertising campaigns, do you need to buy

955
00:52:59,600 --> 00:53:03,880
Speaker 1: on Facebook? Or can you just avoid Facebook entirely? This

956
00:53:04,040 --> 00:53:07,200
Speaker 1: is one of the questions in the Google case, and

957
00:53:07,200 --> 00:53:10,040
Speaker 1: this is the question in actually multiple Google cases, And

958
00:53:10,080 --> 00:53:14,279
Speaker 1: it's been a question in a different case involving medical advertising,

959
00:53:14,280 --> 00:53:17,040
Speaker 1: which had to involve a company called IQBA, and the

960
00:53:17,080 --> 00:53:20,800
Speaker 1: court found that in fact, yes, if you are doing

961
00:53:20,840 --> 00:53:28,080
Speaker 1: specifically pharmaceutical marketing, IQB is is there is market power

962
00:53:28,160 --> 00:53:32,120
Speaker 1: involved in these very narrow places where you have to buy.

963
00:53:32,160 --> 00:53:34,880
Speaker 1: It's kind of like that smaller railroad, that one place

964
00:53:34,920 --> 00:53:36,480
Speaker 1: you put at the one the only one that goes

965
00:53:36,480 --> 00:53:38,359
Speaker 1: to the place that you need to go, the jack

966
00:53:38,440 --> 00:53:42,399
Speaker 1: up prices and control who gets to use it. So

967
00:53:42,520 --> 00:53:44,880
Speaker 1: the question, I think the question I would ask is,

968
00:53:45,280 --> 00:53:47,759
Speaker 1: if you're an advertiser, do you have to buy on

969
00:53:48,400 --> 00:53:53,400
Speaker 1: Facebook's products? If you are, you know, a company, do

970
00:53:53,480 --> 00:53:56,960
Speaker 1: you have to communicate through Facebook's tools? Right? I know

971
00:53:57,000 --> 00:54:01,160
Speaker 1: WhatsApp is really embedded in a lot of different business

972
00:54:01,239 --> 00:54:04,719
Speaker 1: arrangements at this point. So that's where that's kind of

973
00:54:04,760 --> 00:54:07,040
Speaker 1: how I would I would look at it, and I

974
00:54:07,080 --> 00:54:11,640
Speaker 1: think you could make a pretty good argument that Facebook

975
00:54:11,719 --> 00:54:16,040
Speaker 1: has immense market power in social networking in general. You

976
00:54:16,080 --> 00:54:19,600
Speaker 1: know the definition. There's different ways to test for monopoly.

977
00:54:19,640 --> 00:54:21,840
Speaker 1: You could just say, well, can they raise prices without

978
00:54:22,239 --> 00:54:26,440
Speaker 1: really losing very much? It's been, which they have been,

979
00:54:26,480 --> 00:54:28,719
Speaker 1: and I think it's pretty clear that they can. And

980
00:54:29,640 --> 00:54:33,640
Speaker 1: if there were another option, right, you could you probably would.

981
00:54:33,680 --> 00:54:38,000
Speaker 1: They would they would see loss of customers bleeding going

982
00:54:38,080 --> 00:54:40,759
Speaker 1: somewhere else, and they don't see that. Another way to

983
00:54:40,880 --> 00:54:45,360
Speaker 1: understand it is, after some of the scandals that they've had,

984
00:54:45,680 --> 00:54:48,279
Speaker 1: do they lose customers because of it? Do they lose

985
00:54:48,360 --> 00:54:50,839
Speaker 1: users because of it? And the answer is no. Right,

986
00:54:51,080 --> 00:54:54,400
Speaker 1: So there doesn't really seem to be an effect of

987
00:54:54,960 --> 00:54:58,400
Speaker 1: the quality of the product. It doesn't seem to affect

988
00:54:59,160 --> 00:55:00,560
Speaker 1: whether people you it or not.

989
00:55:00,920 --> 00:55:03,799
Speaker 2: Oh, actually, I might push back at that a little bit,

990
00:55:03,800 --> 00:55:07,320
Speaker 2: and perhaps I'm misunderstanding your point. But Facebook's advertising product

991
00:55:07,360 --> 00:55:10,359
Speaker 2: is decaying to the point that it's actually unreliable how

992
00:55:10,440 --> 00:55:13,839
Speaker 2: much comes out of it, And also they approve there's

993
00:55:13,880 --> 00:55:16,439
Speaker 2: a big thing where they approve fake ads for fake

994
00:55:16,880 --> 00:55:21,960
Speaker 2: for other companies. So it's interesting as well because it

995
00:55:22,080 --> 00:55:26,320
Speaker 2: almost feels as if we need a full consumer awakening

996
00:55:26,400 --> 00:55:28,719
Speaker 2: just to the concept of monopolies writ large, so that

997
00:55:28,760 --> 00:55:31,600
Speaker 2: people can start looking at these companies and acting and

998
00:55:31,680 --> 00:55:33,240
Speaker 2: even just discussing them differently.

999
00:55:34,040 --> 00:55:38,040
Speaker 1: Right, So, to Facebook, the product quality is decaying, the

1000
00:55:38,120 --> 00:55:42,400
Speaker 1: advertising quality is decaying. Are they losing business because of it.

1001
00:55:42,800 --> 00:55:45,560
Speaker 2: As in they being meta or they be right?

1002
00:55:46,239 --> 00:55:50,560
Speaker 1: Because if they're not, then what that's proof of monopoly power?

1003
00:55:50,640 --> 00:55:53,360
Speaker 1: Because what's right gowing is the quality is declining, but

1004
00:55:53,400 --> 00:55:56,319
Speaker 1: they're not getting Like if it were if there were

1005
00:55:56,320 --> 00:55:59,640
Speaker 1: a competitive market and the quality of a product went down,

1006
00:56:00,000 --> 00:56:01,960
Speaker 1: people would say, I'm not going to buy that product anymore,

1007
00:56:02,200 --> 00:56:04,719
Speaker 1: the shirts fall apart, I'll go buy somewhere else. But

1008
00:56:04,920 --> 00:56:06,839
Speaker 1: because but it's like, if that's the only place where

1009
00:56:06,880 --> 00:56:09,320
Speaker 1: you can get the product, you can't. You have no choice.

1010
00:56:09,360 --> 00:56:10,880
Speaker 1: You have to keep buying from them.

1011
00:56:10,960 --> 00:56:16,400
Speaker 2: Right right, that makes sense? So Matt, Yeah, this has

1012
00:56:16,440 --> 00:56:18,560
Speaker 2: been such a pleasure. Thank you so much for joining

1013
00:56:18,600 --> 00:56:19,840
Speaker 2: me today. Where can people find you?

1014
00:56:20,480 --> 00:56:24,560
Speaker 1: So? I write a newsletter called The Big Newsletter dot com,

1015
00:56:24,560 --> 00:56:29,320
Speaker 1: which is about monopoly, power and finance. And I also

1016
00:56:29,800 --> 00:56:32,760
Speaker 1: am the research director of a nonprofit called the American

1017
00:56:32,760 --> 00:56:36,919
Speaker 1: Economic Liberties Project. And then I rant on Twitter way

1018
00:56:36,920 --> 00:56:41,040
Speaker 1: too often. That's my you know, that's my madden post.

1019
00:56:41,040 --> 00:56:44,080
Speaker 2: This mindset, it's the greatest. You've all been listening to

1020
00:56:44,120 --> 00:56:46,560
Speaker 2: Better Offline. Thank you for listening so much, and of

1021
00:56:46,560 --> 00:56:49,200
Speaker 2: course the regular places to find me in the show

1022
00:56:49,280 --> 00:56:50,040
Speaker 2: follow after this.

1023
00:56:59,160 --> 00:57:00,880
Speaker 4: Thank you for listening to Better Offline.

1024
00:57:01,000 --> 00:57:03,399
Speaker 2: The editor and composer of the Better Offline theme song

1025
00:57:03,480 --> 00:57:06,160
Speaker 2: is Matasowski. You can check out more of his music

1026
00:57:06,160 --> 00:57:09,799
Speaker 2: and audio projects at Matasowski dot com, M A T

1027
00:57:09,800 --> 00:57:14,279
Speaker 2: T O S O W s KI dot com. You

1028
00:57:14,280 --> 00:57:16,800
Speaker 2: can email me at easy at Better Offline dot com,

1029
00:57:16,920 --> 00:57:19,240
Speaker 2: or visit Better Offline dot com to find more podcast

1030
00:57:19,280 --> 00:57:22,640
Speaker 2: links and of course my newsletter. I also really recommend

1031
00:57:22,640 --> 00:57:24,560
Speaker 2: you go to chat dot Where's Youreed dot ad to

1032
00:57:24,640 --> 00:57:27,440
Speaker 2: visit the discord, and go to our slash Better Offline

1033
00:57:27,480 --> 00:57:30,680
Speaker 2: to check out our reddit. Thank you so much for listening.

1034
00:57:31,520 --> 00:57:34,240
Speaker 4: Better Offline is a production of cool Zone Media. For

1035
00:57:34,360 --> 00:57:35,360
Speaker 4: more from cool Zone.

1036
00:57:35,200 --> 00:57:38,800
Speaker 2: Media, visit our website cool Zonemedia dot com or check

1037
00:57:38,880 --> 00:57:39,360
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1038
00:57:39,360 --> 00:57:42,320
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1039
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