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Comment by kyrra | Hacker News Reader

This is actually the difference between the US and the EU when it comes to monopoly lawsuits. The US has to prove that the behavior of a monopoly was harmful to customers/consumers. The EU has no burden of proof and can just take market size as a way to go after them.

The general problem I see here is how you slice the market to say a given company has a monopoly. It sometimes feels like those going after large companies try to slice the market in such as way to say they are monopolies, when other slice it in another way to show that it's not. Which slicing is "correct" is really hard, especially when markets shift relatively quickly.

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Monopolies are inherently harmful to the customer. A monopoly implies lack of competition. If lack of competition is not harmful to the customer, then competition is not beneficial. If competition is not beneficial in a given market, there is no reason for it to be a market to begin with and the monopoly should be expropriated.

> Monopolies are inherently harmful to the customer. A monopoly implies lack of competition.

I disagree. When you look at a company that is dominant in some part of the marketplace at a given point it time, you need to understand how they got there. The monopoly poster child Standard Oil rose-up when there used to be many more oil processing companies, but Standard Oil was able to do things for cheaper because they used more byproducts from the oil to create different products (which let them sell things like lamp oil for less). So sometimes monopolies rise-up because that one company is able to fill a market segment better than the competition.

The question then becomes, once they have a monopoly and others see this, how can potential competitors react. Can others copy (and improve) the same processing system that the monopoly has to produce a similar product for a similar price (maybe even less)? If so, then they can rise up and the original company will no longer be a monopoly. But if that original company takes steps to squelch the competition, you start getting into what the US has defined as "anti competitive" practices. These were developed because the past showed us that this leads to harming consumers.

We also have a lot of government granted monopolies. Copyright and IP law are time-limited monopolies on a given product. We have private business that operate on federal land (like national parks) that may be given a local monopoly within that region. Sometimes we make tradeoffs and grant monopolies.

There's usually some market reason for a monopoly to exist. Often, it's a temporary reason. That doesn't mean it isn't harmful to consumers, unless you think that market dynamics are inevitably beneficial.

Google, has several market reasons for their monopoly.

(1) The biggest reason is like economies of scale and network effects, but not quite. Online ad markets need to be huge to be good. Bigger market means tighter targeting segments, which is everything. This is why FB & Google make >10X more per customer than their no. 2s and 3s. Data aggregation is like this too. Some data on some users is not proportionally valuable to all data on all users.

(2) Software's infinite economies of scale. Economists like to point to this reason (0 marginal costs) as primary, but FWIW, I don't think it's why google is a monopoly. It probably is why software is monopoly-prone. It does explain the OS/Browser centralisation pretty well.

(3)Normal economies of scale and network effects.

(4)Path dependencies.

Does that mean that Google's monopoly benefits consumers? Who are consumers anyway? Formally, it's advertisers. If monopolies aren't assumed harmful, why do we even need to curb anti-competitive practices in the first place?

>> government granted monopolies; Copyright and IP; federal land, etc

Agreed. I'm not talking about "monopoly," the dictionary definition. I'm talking about the phenomenon in 2021, a handful of companies, most with a tell-tale >30% profit margin. I'm not talking about the exclusive cafe inside on IKEA.

> Monopolies are inherently harmful to the customer. A monopoly implies lack of competition.

Depends why there is a lack of competition. Are there barriers of entry to the market? Were they put up by the company? Or do they just have such an awesome product at a great price they no one can offer a better / commutative alternative?

There are always barriers of entry. I don't know of any monopoly that exists where those barriers are low.

Antitrust law is weird, so I can't comment on this definitively. That said, in the EU-Adwords case, the focus was on "abuses," primarily in the contract with search partners. Adwords is their buyer, rather than seller. Technically, Google is the monopoly, adwords is the monopsony.

In any case, prosecutors needed to prove harm/abuse affected search partners, and the fine was presumably based around that.

There is a problem defining the market sometimes, but that wasn't a problem here. It's a "crack for economists" type of problem, with a lot more theory than needed for practical purposes.

The problem is/was that these courts aren't a tool that can do the job. Courts can keep monopolies from doing certain things, with varying degrees of effectiveness. They can't prevent a monopoly from being a monopoly.

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