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Comment by slg | Hacker News Reader

>An example of how many (most?) monopolies are able to exist because of some sort of legal authorization or protection. Regulatory capture.

To be clear this "legal authorization or protection" is not necessarily over regulation. Depending on the market, sometimes monopolies are the result of too much government regulation and sometimes they are the result of not enough government regulation. For example, most of the big tech monopolies do not exist because of regulatory capture. They exist because the government never put in enough effort to stop the monopolies from forming.

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> For example, most of the big tech monopolies do not exist because of regulatory capture. They exist because the government never put in enough effort to stop the monopolies from forming.

Is it possible they exist because the immense economies of scale and near zero marginal cost that software provides makes for a winner take all market?

As a customer, why would one use the 2nd best option, when the best option is available at no extra cost or very little cost?

That assumption doesn’t go well with what we saw in the case of Instagram and then Snapchat. Both took significant share out of Facebook but Facebook was able to buy Instagram and copy Snapchat to retain its monopoly. The Instagram acquisition shouldn’t have been possible is what the parent seems to be alluding to.

Instagram had 10mn users and a one week old Android app at the time it was acquired.

Their ad system was pretty much ported from FB, one assumes, and their ads were sold by FB reps as part of a package.

I honestly don't know if they would have made it independently (and we'll never know, I guess).

The snapchat thing was different. Snap had a policy of focusing on iOS, while FB, IG and Whatsapp (all of which cloned their core feature) were available on Android. I personally think Snapchat shot themselves in the foot with bad product strategy.

And look at TikTok. They are definitely the biggest competitor FB have ever faced, so I'd imagine that the future competitive landscape for them looks much more difficult than the past.

> I personally think Snapchat shot themselves in the foot with bad product strategy.

Seems to have worked out poorly for them.

Well yes, that is the "Depending on the market" part I mentioned in the sentence before the one you quoted. Some markets have traits that are more likely to lead to natural monopolies. A government acting in the best interest of its citizens would usually work on creating regulation in these markets to discourage monopolies.

You make an implicit assumption that a monopoly can't be the best way to organize an industry, and that competition is always better.

I'm not convinced by this assumption as i've seen contrary evidence. I've seen monopolies doing a great job, and i've seen competition destroy quality of service and price.

I would agree that the government needs to mitigate private actors. This regulation can take the form of splitting a monopoly but it can also take the form of keeping it a monopoly and regulating it by having a presence on the Board or through law.

The idea that we need multiple groups of people working on solving the same goal concurrently doesn't strike me of a one-size-fits-all approach. Multiple competing restaurants in a town is probably the way to go. Having virtual operators on the back of one physical infra as is the case with phone carriers for instance I would say is probably causing lots of overheads. I've seen it first hand from the inside. Turns out it's really complex to virtualize infra and have tenant-based billing. The only real difference is now you have 5 companies competing on marketing and offers on top of the same physical reality. Marketing costs can't vanish so the consumer is losing that money one way or another

That and lack of anti-trust action (or other deterrents against large businesses) on the part of the government.

A consumer shouldn't chhose the second if they don't want to. But governments should step in to ensure that the market remains competetive.

I don't know if I would argue it applies to tech, but the economic term for this is a "natural monopoly", a market where the most efficient outcome is to have a single supplier. A common example is electrical transmission, since it wouldn't make sense to have 3 separate overlapping distribution networks. These are typically allowed to exist by regulation and controlled in some way, for example there is the common carrier concept for electrical transmission.

Big tech wouldn't have the silos or platform lock downs (ie power/user capture) they have today without the ip legal framework. People would be able to legally circumvent their bs and offer services around gaps in their platforms and would encourage more competition and result in a less monopolistic practice.

I think all monopolies are violence enforced or they are competitive otherwise somebody would step in and undercut their costs and the government has a monopoly on violence so...

Software patents are a failure. Software shouldn't be patentable. I bet software innovation would increase, not decrease, without patents.

Some exist because of copyright otherwise Microsoft would have been legally cloned out of business back in the day.

> do not exist because of regulatory capture

It's reasonable to conclude that Facebook and Twitter have benefitted greatly by not having expenses to properly monitor their platform due to section 230 safe harbor exemption. They are able to get away with selective enforcement on their platform and not pay a monetary penalty for doing so.

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