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Comment by huitzitziltzin | Hacker News Reader

Vertical integration in steel production could as easily involve intellectual property as it does here.

As a hypothetical example, imagine if Apple had sourced the M1 chip from a third party which it now proposed to buy. There would be intellectual property at stake there too. This case is no different.

And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup.

I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers.

The copyright issues do not make the case relevantly different.

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> Vertical integration in steel production could as easily involve intellectual property as it does here.

I didn't say Intellectual Property, I said Copyright. Copyright—much more than other forms of IP—has a significant impact on our shared culture and cultural transmission. Yes, there may be other factors with IP that we should consider when dealing with mergers, but end-users and everyday people are harmed much much more often due to copyright issues than they ever are due to patent and trademark issues.

> I do not know exactly what will happen in this case, but it seems like Amazon's proposing to buy a single studio is very unlikely to result in harm to consumers.

Sure, and I do not know exactly what will happen when we place a straw on a camel's back. But in each case it seems like it's very unlikely that the camel's back will break. It's a sorities paradox in reverse: Which individual acquisition is the point at which network effects start creating problems. Each individual M&A is unlikely to be the one that causes the problem, and yet if you allow each one because it is unlikely, eventually the system stops functioning correctly.

Based on this line of reasoning, literally any acquisition is bad. What's the limiting principle?

I disagree.

Based on this line of reasoning, literally any acquisition that increases the power of copyright holders has downsides.

I'm not saying acquisitions can't also have have upsides. I'm not saying that the net benefit can't be positive for the end-consumer.

I agree with huitzitziltzin that it's possible that this acquisition is net welfare-improving. I think we probably mostly disagree in:

- the extent of the downsides to increasing the power of copyright holders, AND

- the probability that this particular acquisition is net welfare-increasing

The measure of "consumer welfare" used by US antitrust is mostly concerned with prices, which I've always thought was a bit cynical but it is what it is. Do consumers stand to pay higher prices when a single company controls the production, licensing, and distribution of content?

I would argue yes and the government has argued it, too, when they forced movie studios to divest their stakes in movie theaters.

I think you're both arguing the same point: that monopoly markups can negatively impact consumer welfare.

The central argument is whether Amazon specifically is a monopoly in any of the industries in which it operates, so as to be able to charge higher prices you speak of — that's not what's happening.

In fact, the GP comment laid out exactly why vertical acquisitions often improve consumer welfare, in the case that the company being sold is itself a monopoly:

> And indeed, in the Apple hypothetical you could well expect consumers to be better off and for exactly the same reason: if Apple purchases an input (the M1 chip) from a monopoly supplier (the hypothetical non-Apple-producer), vertical integration removes one monopoly markup.

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