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Comment by kuschku | Hacker News Reader

And this is horrible for the market.

A company gaining a huge advantage by getting a total monopoly over another market, which they can enforce due to having patents.

That’s not what patents were supposed to create, and what Antitrust regulations were supposed to prevent.

If this is the future, it’s quite a dystopia: Monopolies everywhere.

Sure, I get that the Silicon Valley business model is to destroy regulation, get a monopoly (ideally in a new market niche, but destroying existing competition with illegal predatory pricing is also common), and then to abuse the monopoly, but is no one thinking that for the average consumer a free, competitive market might be better?

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A monopoly is a specific thing, not just an insult to a company you don't like.

Most monopolies can only be sustained through state intervention, which is why large government is more of a problem than large companies like Amazon.

This situation is fantastic for the consumer - companies competing to lower prices and increase service.

As the story says the market has responded quickly and the industry is growing, precisely how things are supposed to work.

Monopoly is the natural end state of capitalism. Once a company is big enough it's easy to destroy or buy out all competition. It's only regulation that prevents all industries becoming monopolies over time.

You're confusing monopolies coopting government to maintain control with large government causing and maintaining monopolies.

Sorry, but no. Creative destruction is the end state of capitalism as has been proven time and time again. There are no examples of monopolies lasting more than a few years unless they have overt support from the state.

Large governments cause monopolies to happen. You said the same thing. Business co-opting a government to creat a monopoly is only possible when the large government exists. You could argue that water and dirt don't cause trees to grow, but without either there is no tree. The language definition is immaterial.

Increases in government size can only occur by taking over parts of the economy into state monopolies. The ultimate large government is a totalitarian communist government, which has a monopoly on everything.

The ultimate cure for monopoly behaviour is a smaller government and more competition by avoiding regulations that favour larger operations over smaller ones.

Standard oil? Microsoft? At a high level government and big business are very similar in scope. It's not a matter of one or the other - your analysis is too simple. Government created the baby bells, not creative destruction. Government circumscribed ms.

Standard Oil was never a monopoly, and even its 90% market share had already dropped to 70% two years later when the government even filed charged, and even more when the case was decided.

Microsoft's market position is inseparable from its support by government in the form of software patents. When their rent on Android phones is larger than their income from their own phones, and that rent is purely based on having a patent on an obsolete filesystem which is only useful because it was previously "the standard" (ie., imposed by them), the government is directly helping Microsoft take advantage from their dominant market position in other markets - exactly what they purpose to ban.

Microsoft was monopolistic in the 1990's, where they exploited their Windows monopoly to the expense of Netscape. That wasn't patents, it was market dominance.

(Not a fan of patents, but that wasn't the problem back then).

The claim I was supporting was "there are no examples of monopolies lasting more than a few years unless they have overt support from the state", not that no company ever gains an overwhelming market share. Yes, IE was once at the very top. And a few years later, it wasn't, thanks to competition.

Meanwhile, the government lawsuit not only did nothing to curb their position (IE kept rising at the same rate), as it gave Microsoft "a special antitrust immunity to license Windows and other 'platform software' under contractual terms that destroy freedom of competition."[1]

[1] http://www.unclaw.com/chin/scholarship/nando.pdf

> The ultimate cure for monopoly behaviour is a smaller government and more competition by avoiding regulations that favour larger operations over smaller ones.

That would be the libertarian fantasy, but no, unfortunately that is entirely incorrect.

The "regulations" that you assume make monopolies possible is really unrestricted capitalism in itself, which leads to accumulation of capital in the hands of one or few, often colluding entities.

Capitalism favors larger operations over smaller ones through efficiencies of scale. There is no human-created regulations that do this.

Once a company is big enough it's easy to destroy or buy out all competition.

Can you provide one single example of this having happened? I'm willing to believe it, I just haven't found one. Typical examples provided fall short of that claim.

Standard Oil

"In 1904, Standard controlled 91 percent of production and 85 percent of final sales." https://en.wikipedia.org/wiki/Standard_Oil

Yes, and a few sentences later for context:

"Due to competition from other firms, their market share had gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard, and down to 64 percent by 1911 when Standard was ordered broken up"

Yes, Standard Oil is the typical example, which is why I remain unconvinced. They didn't "destroy or buy out all competition" (they had more than a hundred competitors), which is why - as joslin01 points out - their position of dominance was very short lived. And did they abuse that position by charging exorbitant prices? No, the evidence was that they had generally lowered them.

And finally, this little tidbit: "The dissolution had actually propelled Rockefeller's personal wealth." Hurray for the Sherman Act..?

Ehhh Kiva being the only company isn't a healthy market. Even if they're selling to everyone.

To be honest Amazon buying Kiva is probably the best thing that could happen. They broadcast to the world that such a company is worth almost a billion dollars. Now the market is filling with competitors and investment. That's exactly what you want.

This is my theory as to why Europe can't compete with silicon valley. It turns out, what they're "competing" on is willingness to turn a blind eye to monopolies and their negative economic effects.

Are these effects really negative then?

For a fixed level of technology, a competitive industry is better for customers than a monopoly industry. But an innovative monopoly may be better than a stagnant competitive industry, and the prospect of monopoly rents encourages innovation. The patent system is supposed to be the compromise here: if you innovate you get 20 years of monopoly, after that your innovation is commoditised.

Of course in reality, patents are filed in large numbers by monopolies, and potential competitors are threatened with nuisance lawsuits, into either avoiding competition with incumbents entirely, or paying fees to them. Another area where the US seems happy to let monopolies flourish at the expense of progress and competition.

But even when with regards to innovative monopolies, the monopoly can lead in the wrong direction. On example is that today because Google monopolizes search, you cannot find a decent forum search engine, which seems terrible from the Democratic perspective.

It's not really a competition if the companies don't try to innovate.

Patents over physical mechanisms are somewhat defensible IMHO. Generally they really do need to be innovative because physical processes are easier to understand (unlike software) and so they are harder to defend in court.

Additionally, from the article it looks like patents were only one reason no one else is as good - it seems more like no one else had tried to build anything like them.

Also, Amazon is generally seen as good for consumers - they force down prices like no one else. They might not be that great for warehouse employees though.

You do know Amazon is now using your history to find out which products you want, and increase the price shown to you for them, or even lock them behind a Prime requirement?

And for the suppliers, it’s also problematic.

That’s why usually the solution is a free market.

Properly regulated monopolies are the most efficient form of a market.

In fact it is quite the opposite of what you're imagining.

I agree.

That’s why I usually consider government monopolies as better than for profit companies, as better than private monopolies.

(Considering the correlation between government monopolies being usually regulated better).

Sadly, in the past decades, we haven’t seen those in many places anymore.

The UK has mismanaged the NHS for many years, and is now considering to privatize it into a private monopoly.

Look at Comcast, TWC, etc, who have regional monopolies, and how well they work.

And considering how easy politicians are to bribe, I am not sure we can get properly regulated monopolies at all anymore.

Until we can ensure the proper regulation, we might want to prevent monopolies from even occuring.

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