Tim Harford: The case for ending Amazon’s dominance

Two economists, Germán Gutiérrez and Thomas Philippon, have argued that corporate America is underinvesting. One reason is that companies are impatiently funnelling cash to investors and executives rather than take a long-term view.

If that is a worrisome state of affairs — and it should be — then Amazon is the shining counterexample. The online retailer’s strategy is driven not by short-term profit but by investment, innovation and growth. If only there were a few more companies like Amazon, capitalism would be in a happier spot.

.. Marc Levinson’s history of container shipping, The Box (UK) (US), describes Malcom McLean — the entrepreneur behind containerisation, a risk-taking visionary reminiscent of Amazon’s founder Jeff Bezos. When McLean tried to expand his operations, one of his largest obstacles was the Interstate Commerce Commission in the US, which regulated US railways from 1887 and interstate trucking from 1935.

The ICC, writes Mr Levinson, had to approve each new route, every new commodity and any new price schedule. When McLean wanted to start a trucking route at a low price, he had to hire lawyers and argue his case at the ICC, while his competitors protested bitterly — “unfair and destructive”, said the railways. He did not always get his way.

..

There are two schools of thought. One is to focus on consumers’ interest in quality, variety and price. This has been the standard approach in US antitrust policy for several decades. Since Amazon makes slim profits and charges low prices, it raises few antitrust questions.

The alternative view — which harks back to an earlier era of antitrust during which Standard Oil and later AT&T were broken up — argues that competition is inherently good even if it is hard to quantify a benefit to consumers and that society should be wary of large or dominant companies even if their behaviour seems benign

..  Donald Trump’s history of publicly attacking Mr Bezos is worth pondering too: do we really want the US government to have more discretion as to who is targeted, and why? We should not wish to return to a world in which a plucky new competitor must beg regulators — over the objections of incumbents — for permission to cut prices.

Third-highest ranking official at the Justice Department stepping down

Brand, 44, who has only been in her Senate-confirmed position for nine months, would have been in line to take over the supervision of special counsel Robert S. Mueller III’s Russia investigation if Deputy Attorney General Rod J. Rosenstein, the department’s No. 2 official, was fired by Trump or recused himself from the matter.

.. Brand is leaving the Justice Department for a top legal job at Walmart

.. When Trump was asked by a reporter whether he was then more likely to fire Rosenstein and whether he had confidence in him, Trump replied, “You figure that one out.”

.. With Brand’s departure, Solicitor General Noel Francisco is next in line at the Justice Department to oversee the Russia investigation after Rosenstein.

.. The news that Brand is leaving came as a surprise to many people who know her. The Federalist Society just announced Friday that Brand is scheduled to speak next week at a Washington chapter lunch.

.. Brand has one of the department’s more politically challenging jobs, managing the lawyers who litigate civil issues, including Trump’s travel ban as well as civil rights, environmental and antitrust cases.

How two decisions in Washington could turn AT&T into a uniquely powerful company

The future of AT&T could be shaped by two big decisions in Washington this week, with the Justice Department suing the telecom giant on Monday to block its $85 billion purchase of Time Warner and the Federal Communications Commission announcing a plan Tuesday to roll back net neutrality rules, handing a big win to Internet providers.

.. If it wins its antitrust case against the DOJ, AT&T could buy Time Warner without offering any concessions to the government. It could then benefit from the repeal of the government’s net neutrality rules, allowing it to leverage Time Warner’s massive library of shows, television stations and films like few other companies.

  • Some, such as May, argued that the loosened regulations would allow AT&T to market Time Warner’s content in new and different ways that could theoretically help Americans.
  • Others argue that the combination of a bigger AT&T with a more relaxed regulatory environment could simply increase the firm’s incentives to harm competitors in the marketplace.

.. “One can’t imagine that there are any broadband providers who would be eager to test the limits of what is now allowable under this regulatory regime, given the enormous risk of popular and/or regulatory or legislative backlash,” said Moffett.

.. the combined company could use its newfound control over HBO, CNN and TNT

.. AT&T’s chief executive Randall Stephenson has said that the goal of purchasing Time Warner is to build an advertising behemoth that can compete with Google and Facebook.

.. “The problem from the point of view of DOJ is that if the deal is approved, it will be very hard to police any commitment

.. “The record of such commitments is very poor. The companies do whatever they want. And that’s well understood by everybody.”

 

I criticized Google. It got me fired. That’s how corporate power works.

Antimonopoly law, I learned, dates to the founding of our nation. It is, in essence, an extension of the concept of checks and balances into the political economy. One goal of antimonopoly law is to ensure that every American has liberty, to change jobs when they want, to create a small business or small farm if they want, to get access to the information they want. Another goal of antimonopoly is to ensure that our democratic institutions are not overwhelmed by wealth and power concentrated in the hands of the few.

.. since the early days of the Reagan Administration, power over almost all forms of economic activity in America has been steadily concentrated in fewer and fewer hands.

.. As hospitals continue to merge into giant chains, for example, they are able to pass along ever higher prices without having to worry about losing business to competitors. And anyone who flies these days can attest to what happens when just four airlines control 80 percent of the market.

..It means that fewer and fewer companies are competing for our labor, allowing employers to gain more and more power not only over how we do business, but also how over we speak, think and act.

.. his last June 27, my group published a statement praising the European Union for fining Google for violating antitrust law. Later that day I was told that Google — which provides substantial support to other programs at New America — said they wanted to sever all ties with the organization. Two days later I was told that the entire team of my Open Markets Program had to leave New America by September 1.

.. No think tank wants to appear beholden to the demands of its corporate donors. But in this instance, that’s exactly the case. I — and my entire team of journalists and researchers  at Open Markets — were let go because the leaders of my think tank chose not to stand up to Google’s threats.

.. But today we are failing. Not only are we not preventing concentration of power over our economy and our media. We are not protecting the groups that are working to prevent and reverse that concentration of power.