On his show Last Week Tonight, John Oliver discussed how four companies (Apple, Google, Facebook, and Amazon) are each monopolies in one area and how that works against innovations and makes us unable to escape their clutches, and they use their power to suppress any new company that might hope to compete with them.
He argues that we need to invoke anti-trust legislation to break them up. Those companies warn us, as they always do, that they provide good products and services and forcibly breaking them up would harm consumers. Oliver reminds us that AT&T made that same argument when they were a telephone monopoly but that breaking it up resulted in a flood of innovations that we cannot imagine being without now. He makes the point that consumers may have been happy with AT&T because they had no idea what was out there in terms of possible innovations until the monopoly was broken up.
In what area does he allege Apple is a monopoly?
(I’ve never in my life used an Apple product or service, yet I’ve used all the products and services they provide. From cheaper, better vendors, of course)
I don’t know if a breakup is the answer. Consider the horrible results from breaking up the phone company in the US. I’d favor, instead, regulated monopolies, or government take-over and management of critical infrastructure. I.e.: if gmail is such an important public service why doesn’t the government offer a public service instead of letting capitalists run it and ruin it with ads?
John Morales:
You can find out what’s in the video in the obvious way.
It’s not just John Oliver’s allegation. In the first minute and a half, he’s already gotten to talking about what was reported in a big US House subcommittee report on antitrust issues, and by then it’s also made clear that Apple has a chokehold on smartphones and related services (and they’re obviously in tons of other shit too).
What’s essential is not some simplistic definition of what “monopoly” is, that you might want to rigidly insist on. (And indeed, there exist alternatives to all of those companies, not only Apple, but this is not relevant.) Instead, it’s about having sufficient power to engage in “anti-competitive behavior” and (as the report put it) to serve as a “gatekeeper” which allows such companies to “pick winners and losers throughout our economy.”
Marcus Ranum:
Like what, for example?
I mean, I agree in general that breaking them up can mean we’re still left playing regulatory whack-a-mole with a bunch of different exceedingly powerful corporations (who may still band together to do lobbying and whatnot), so by itself that doesn’t accomplish as much as we might want.
I don’t see nationalization happening for things like Amazon’s online shopping/distribution system, Apple’s phones, and so forth. But it’s more plausible with other stuff, and that would generally be a better way to go.
Or there is a “public option” type of approach, as you suggested. But that can lead straight to nationalization anyway (i.e., a public monopoly), since the government can easily shoulder out private-sector “competitors,” who don’t stand much chance of surviving unless we tried very hard to make sure of it. And doing that sounds like we’re effectively subsidizing such companies, merely to keep up the appearance of not entirely nationalizing whatever it is.
Still, you could consider that a good idea in some cases, if not so much for antitrust purposes. It always annoys me how much state/local governments deal with private contractors for things like roads, trash, energy, water, and so forth. (Or at a national level, think of military contractors for example.) Consider that there will never be a time when we won’t need roads, trash collection, etc. That’s not the kind of stuff that the state might have to purchase from some company (which specializes in doing some particular thing) just this once in order to do this one particular job.
So, the state should make its own shit and employ its own people for stuff like that. But this doesn’t mean that there won’t or can’t be any also be some private concrete companies or whatever — they’ll just be doing other kinds of (private) work involving concrete, which is not road-building since that’s a public thing.
It’s not worth the effort.
I didn’t come up with it. But fine, they’re part of a polypoly.
(Not at all a misleading title, nosiree!)
That’s competitive behaviour, in my book. It’s how the market is supposed to work.
But sure, regulate away, I have no problem with that.
Once a corp gets too big, split it up. No worries.
You evidently thought it was worth your effort to ask.
The phenomena we’re talking about are the kinds of problems which would also happen if it were a “monopoly” in the strictest sense (where mono- means “one” and we’re left with only what’s entailed by that but nothing else no matter how similar or related).
Whatever you think is “misleading” about it, it’s not the actual problems being reported on which people rightly want to solve, because they do comprehend what they’re hearing and aren’t confused by it.
And if you did try to make this about terminology and your prescriptivist notions about how you think a word has to be used (even though nobody has trouble understanding it, which is the only valid criticism you could’ve had), rather than making it about the important stuff going on in reality, then you would be the one misleading people about the situation we’re facing.
@2 Marcus Ranum: The Post Office has considered providing basic email to all Americans more then once. It never went anywhere because the Republican party doesn’t want the USPS doing anything useful and the Democrats are easily bribed into not letting the government do anything that might overlap with private business.
CR:
Very astute of you. I was kinda hoping for an answer other than “watch the damn thing yourself”.
If it were, which it’s not.
You reckon that if one were to buy a smartphone, it would have to be Apple or nothing?
(Phenomenal)
It was a pretty simple question. Still pending, after all your verbiage.
I gave you one. I guess you may not realize it, since you didn’t watch the damn thing yourself.
You can phrase it all in terms of “monopolistic practices” if you like. The point is things which are not “monopolies” in your sense engage in those practices too.
But you know, we don’t actually have to start with a term and then pretend that what follows from it is really what matters. There is in the first place a messy world that we want to try to characterize, and all we need to do is make sure others can understand. As long as we can do that, you shouldn’t be complaining.
No, as I already said. In fact, mine isn’t an Apple, so I know that perfectly well.
I reckon that they do have a huge amount of control over the entire market, including the parts which don’t get their actual sales. And they control what they regard as “their” app market. And because of that, even when musicians like me (along with many other kinds of artists, software developers, etc.) are trying to sell their own content to their audiences, Apple has a huge amount of control over that too and takes a huge cut for themselves. So it really affects many other industries too, not just smartphones or what you might imagine if you’re only thinking of stuff that’s very directly related to them.
On top of that, like other monopolistic companies, they do all sorts of things that involve privileging their software, their peripherals, their device repair/maintenance, and anything else they can think of, to trap consumers in that whole ecosystem that they’ve been allowed to create.
CR, fine, you think Apple Inc has a monopoly in some as-yet unspecified area, and you think you’ve told me what that area might be, and I will be enlightened if only I bypass the geoblock and watch the damn thing, and then I will know what it is it monopolises in a non-strict manner.
But I doubt that.
Okay. I don’t know if you’re just fucking with me or if you have a real question. It’s often hard to tell with you.
Assuming you didn’t just lose your ability to read, you could maybe still work with what I did write and try to ask something specific regarding whatever the hell it is that you wanted answered with more specificity. Until then, it’s not my problem.
I could hardly have been more specific, CR.
OP: “On his show Last Week Tonight, John Oliver discussed how four companies (Apple, Google, Facebook, and Amazon) are each monopolies in one area”
Me: “In what area does he allege Apple is a monopoly?”
—
In passing, Google is a subsidiary of Alphabet, and Facebook is now Meta.
It’s in the “area” of smartphones, in relation to what Oliver discusses on the show, along with others if you ask many people (including Oliver, presumably, but the segment’s not long enough to cover everything that those tech companies do).
That was in my first response. If that’s not an “area” as far as you’re concerned, then you”ll have to explain what is. Since the standard isn’t that we must use your “it would have to be Apple or nothing” formulation to talk about anything that could possibly constitute monopolistic practices, I figure you can connect most of the dots from there, whether or not you agree with the arguments.
That was noted in the video, in case you’re wondering.
I can connect the dots, alright… it’s called “poisoning the well”.
(Nassssty monopolistsesss!)
I note (https://www.counterpointresearch.com/us-market-smartphone-share/) Apple had a 50% share of the smartphone market in the USA in Q1 2022.
John Morales,
You really should watch the video to understand what it’s about.
Because you didn’t want to spend 20 minutes watching the video, you don’t know that what Oliver and CR are talking about is not the physical smartphones, but the far more important part of the phone, the apps. Maybe you don’t use apps, ok, no big deal. Well over 95% of smart phones use either Apple or Android software to run apps. And both Apple and Google act as gatekeepers for independent creators to let people purchase those apps. That is, Apple controls 100% of the marketplace for Apple phone apps and Google controls 100% of the marketplace for Android apps. This is true even though other app creators exist.
Because each of these companies have created a private market, they can command high fees for independent developers who want to reach customers with their apps through that market. Further, there are no other ways to reach customers. If an app isn’t available in the Apple app store, it will not be available for anyone with an iPhone, no matter who makes the physical device (phone, tablet, desktop). Conversely, if the app isn’t available on Google Play, it is not available to anyone who runs the Android OS, including phones, tablets, chromebooks, televisions, etc. Each company has a monopoly on their private marketplace.
Just having monopolies is not a problem, the problem occurs when the owners of a monopoly use their monopoly power to stifle possible competitors. And that is what is happening. Both Apple and Google require independent app developers to give them a high percentage of their revenue simply for allowing them into the marketplace. As high as 30%. Both Apple and Google run the search engines which suggest apps for people for functions, and not surprisingly the apps written by Apple and Google are favored in their search results. Both Apple and Google have been known to notice an app which is successful and copy it, adjusting their searches to put their copied app at the top of the results, and thus getting 100% of the revenue not 30%. These are non-competitive practices which are only possible because Apple and Google have monopolistic power within the marketplaces they created.
Similarly, Amazon and Facebook have created private marketplaces for certain types of products. Amazon for physical goods and Facebook for social interactions. And both Amazon and Facebook use their monopoly power in their private marketplace to stifle competition. Google gets hit a second time because it controls the majority of internet searches and has been slowly prioritizing it’s own products and paid sponsors of products to the top of the search results even if there are better matches for the search request. The Google search engine doesn’t control 100% of the internet search market, but enough of it so that if Google puts a company on page two of their search engine results it can bankrupt the company.
Whether you care all that much about this stuff or not, you now know what the video was about.
Amazon, Google, Apple, and Facebook have the power to interfere with their competition beyond simply providing a better product, they control the access potential customers have to their competition. This severely distorts the competitive market model (demonstrating one limitation of laissez faire economics) and suggests that additional regulation is needed to restore the market to a competitive one.
One point which was not mentioned in Oliver’s piece was one I expect will be used as an excuse for defenders of these companies. These companies did create these marketplaces, so since they created them and own them, they should be allowed to do whatever they want within them. This argument falls apart for the same reason that we think company stores are a bad idea. We can acknowledge that Amazon, Google, Apple, and Facebook have created these on-line marketplaces. But at the same time we must notice that if these on-line marketplaces are where >90% of people go for their needs, the owners of these marketplaces have tremendous power to shape the economy we all live in. The owners can pick which vendors succeed and which will fail. The owners can shape public policy by managing information flow. The owners can even arbitrarily refuse (or make the barriers to entry too high) to allow competition or allow complaints. If there is a problem, the only recourse is to complain to the owners, who may not do anything or may kick you out of their marketplace. There is no independent system for arbitration or justice.
There are a number of possible solutions. Regulation and oversight is the one being tried. Creating a publicly funded marketplace is a possible solution. Requiring that the operators of a market cannot also sell their products in that market would also work (i.e. the divisions which run the app stores at Google or Apple need to become independent companies). Having the government take over the market would work. What isn’t working is to allow these companies to police themselves, to expect that they will not use their power of control over the marketplaces to promote their own products and stifle competition. We should never have expected it to, that’s not how corporations think.
Like what, for example?
Regional monopolies devoted to extracting as much money from the customers as they could. Service got worse, prices went all over the map, and the regional monopolies only invested in high population areas where they could make the most. The attempt to bring rural broadband actually set back rural broadband by a decade.
I must say, while I can think of a lot of innovation, etc., that breaking up AT&T brought, I still miss what it was. The service and simplicity was something we can only dream about today, and I don’t recall prices being too outrageous.
But, wasn’t it a government-regulated monopoly? You can’t achieve the same with unregulated ones like the tech companies, they bring only the negative effects.
A similar thing with the airlines, although I think that prices were significantly higher when they were government-regulated.
AT&T was a government regulated monopoly that thought it was the regulator, not the other way around.
I had friends in the UNIX Room at Bell Labs and hung out there for a week. Bell Labs was the crown jewel of corporate research. Down the hall from the UNIX Room was the office of the guy who invented “lasers” and Penzias and Wilson’s goofy crackling antenna was at the Lab facility up the road. Claude Shannon’s office had been re-allocated, etc. the place was a museum of great science that spawned many nobels and practical results. When the breakup advanced the labs were sold to Lucent (a massive stock scam) and now Nokia owns the empty husk of what was once a haven of brilliance.
@flex, 15:
Who else makes physical devices that run iOS?
And that’s just wrong. https://www.maketecheasier.com/android-apps-not-google-play/
Again, just not true.
First of all, Amazon’s product is, er, “products”, so it’s not exactly a private marketplace given that they sell things available elsewhere, just, y’know, cheaper, because economies of scale, treating workers badly, etc.
Second, Facebooks “product” is NOT social interactions. Facebooks “product” is advertising, which is also Google’s product. That’s how they make their actual money. If you’re not paying to use a service, you’re not a customer, YOU ARE THE PRODUCT, i.e. your attention is what they’re selling to other people.
And yes, the advertising industry is in a freefall crisis, but sorry, cry me a fucking river for those bastards.
Speaking as someone who has worked on equipment that had to interface with Apple devices, where getting that ‘Apple Certified’ check meant using a black-box ASIC from Apple with their own encryption setup over Bluetooth, and modifying our firmware to negotiate Apple’s custom recognition protocol… I have absolutely no problem in saying that Apple damn well acts like a monopoly. They have a large enough market of people who have bought entirely into the ecosystem that they feel fine with saying ‘you play by our rules or we kick you out of the sandbox’.
Heck, just take a look at how long they were the last holdouts on having their own custom charging cables and connectors, after every other cellphone manufacturer had responded to lawsuits and regulations by shifting to micro-USB and later USB-C.
Thanks, flex. That was an excellent summary.
@sonofrojblake, 19,
I’m not going to quibble.
I don’t use Apple products, so I don’t know if anyone other than Apple sells a phone using the iPhone OS. I do know that multiple companies make phones which run Android. That doesn’t change the point.
The comment about Google Play not being the only source for Android apps is technically correct, but that doesn’t mean that Google doesn’t exercise monopoly power over their device. Even if only 90% of the apps are on Google Play, the 10% of those which are not on Google Play are unlikely to reach more than 1% of the market. Again, that offers Google monopolistic power.
I’ll concede that the product for Facebook and Google are the users. But that is not how the users of Facebook and Google perceive it. The users (who are the product from the company’s standpoint), perceive Facebook and Google as providing a service. For the users of Facebook they are getting the service of social interaction, for the users of Google they are getting the service of searching the internet. In either case, Facebook and Google both have commanding market share for these services, and have the power to stifle competition or otherwise skew the results of the information presented. Making a distinction between calling the users of Facebook and Google customers or products does not change the point.
As for Amazon, when they were only a distributor of products they had purchased for re-sale (like many retailers), they had a commanding lead in internet sales but not monopolistic power. That changed when they started offering their platform to 3rd party retailers. Now that they are selling space on their website to 3rd party retailers they have expanded their internet presence to the point where people start shopping by going to Amazon. Amazon absolutely controls 100% the marketplace they provide, and now that their marketplace commands a majority of product sales on the internet their ability to manage that market to their own advantage allows them to choose which companies succeed and which will fail. As for Amazon offering a lower cost, that’s easy to debunk, not only does Amazon often have higher prices than Granger or Newegg, as Oliver points out Amazon’s own Buy Now button often doesn’t offer the lowest cost for the same good even from other retailers on Amazon. Which suggests that Amazon’s Buy Now button is configured to give the best value for Amazon rather than the 3rd party retailers or the ultimate purchaser. Which should surprise absolutely no one, but it does distort the competitive market to the detriment of the consumer and other on-line retailers. Saying Caveat Emptor is all well and good, but we can also regulate the market enough so that 3rd party retailers don’t have to offer the owner of the marketplace a large cut of their revenue just to point out to people that their company exists.
Granting the truth of all your notes of simplifications or mistakes in my previous comment, those notes do not change the point of Oliver’s show. That a few companies control an overwhelming majority of market share, or control the market directly, and they use that control to distort the market in their favor. Again, this is not a surprise to anyone. However, this hamstrings the most commonly touted benefits of a free-market system. To wit; as all the free-market gurus will tell you; increased innovation and reduced customer costs. A captured market, either through a monopoly or through owning the marketplace outright, will stifle innovation and increase customer costs.
I, personally, am not convinced that a completely free market necessarily creates those advantages. I believe that a well-regulated market does. A completely free market will destroy itself as one company will; through luck, skill, or chicanery; be more successful. That company will then use it’s success to manipulate the market to their advantage. Rather than a free market, we should be aiming for a well-regulated market which stimulates competition without allowing any individual company to command the marketplace. This is not easy because not only does every product need differing levels of regulation based on factors like natural monopolies, barriers to entry, regulatory requirements (to name only a few), but many products span more than one market or their primary market changes over time. Who would have expected that the phone market and the personal computer market would merge as completely as it has done way back in 1980?
flex:
Hm. You write that as if it were an established fact, in every circumstance ever.
(Also, you do know that an either/or is supposed to be about two different things; how is not owning the marketplace outright the very definition of a monopoly?)
Seems to me these companies became the behemoths they are because they innovated. Consider that they may just possibly buy out potential competitors to acquire their innovative stuff and use it for themselves.
Is that stifling innovation?
@flex, 22:
Mostly, OK.
But:
You do realise that one of the apps on the list I linked is Fortnite. You think only 1% of Android phones are running Fortnite, the most popular video game in the world?
And additional point adjunct to that: in order to play the most popular video game in the world, literally millions of gamers had to find out that hey, y’know what? You can get apps from places other than Google’s app store. I wouldn’t underestimate the effect that has on steering people to other places to get their apps. Note that all of this is much less possible with Apple. I know it used to be possible to jailbreak iPhones and install unapproved apps, but the impression I get is that they’ve clamped down on this. ( I skipped out of the Apple ecosystem around the time they dropped the 3.5mm audio jack, demonstrating that they actively didn’t want my money, so I’m speaking without knowledge and have no motivation to find out if jailbreaking is still a thing, since I have no need to jailbreak my Android to e.g. run a version of Youtube app that block all ads. )