DOJ accuses Visa of monopoly that affects price of 'nearly everything’
cnbc.com
cnbc.com
In the US there actually exists (begins to exist) now a cheaper alternative to credit card payments: FedNow. See https://en.wikipedia.org/wiki/FedNow
It's an instantaneous bank transfer, without a credit card company in the middle extracting rents.
For dodgy/disreputable online shops, credit cards will still be better, due to the possibility of chargeback. And of course for actually buying things on credit. But for most regular cases, this shouldn't be necessary.
Systems like FedNow are already highly successful in India (UPI) and several other countries.
I don't believe them. I think innovation is stymied either by monopoly, regulation or both. I think specifically we allowed monopoly to encroach in an unprecedented way since the Reagan era. I think there are a lot of rich guys breaking the law, the Sherman Act and its kin are real, the DOJ and the FTC have teeth again, America can be innovative in every field and it's time for action.
Enforcing antitrust law is the path to better products and services and maybe even a restoration of wealth equality to some degree, because historically starting businesses was what kept the fruits of the American economic pie more distributed than they are today.
For what it's worth, I think you're both right to some degree.
It's easier and faster (and probably cheaper) for me to instant wire money from one euro to several thousand to any random Bulgarian person or business in their own currency, or for said business to take money from my account, while retaining all banking protection, than it is for two silicon valley Californian to do it short of using a private business solution.
Overall the state of the banking and payment infrastructure in the US compared to their advancement level always weirds members out. Well, not infrastructure not the right word, I'm sure the backend is great but what is exposed to people seem to suck.
It's your money you should be feeling in charge not finding solution to be able to use it.
(1) the way to define up and coming economies seem to fit into confirmation bias and/or survivor bias.
(2) why is size such a strong variable?
(3) US had massive rollout of dial up, why/how did broadband get established if size of existing infrastructure is inversely correlated to adaption of new tech? (If I understand your argument correctly). Broadband should never really have rolled out. For that matter, there is a large deployment of satellite internet in the US, wouldn't your low earth satellite example also be a counterexample?
(4) why would advancement in one sector be counter evidence for market capture and regulatory hurdles in a different sector? The examples just seem unrelated.
(5) US internet speeds have been pretty slow for a long time. Could it be that market capture and lack of competition is a larger factor rather than the cost of adoption? Another example, Japan has been pretty far ahead of mobile phone tech for a while. If the cost of adaption of new tech were the biggest issue, wouldn't they have stagnated some time ago? That was an already saturated market for over a decade, yet still moved forward.
(6) could it be more important that new markets lack existing monopolistic capture?
Though, I will agree that existing infrastructure/deployments do create an inertia for stagnation. I have that view for US road infrastructure. It is all going to last many decades more, and with it the single occupancy vehicle.
My credit card in the UK had chip-and-PIN in 2004 - it was probably around earlier too, though less common. Almost every bank card issued has had contactless for over 10 years too. Simply being a developed economy is not the only reason!
This was then gone for a good while, whereas today I guess its back in a way, you get some kinds oy payments (food etc) without pin, and a few others, until it will require a pin, then allows a few more pin-less buys, but I think it also depends on the sum.
SEPA is Eurozone wide and has existed for 15+ years. Instant payments were only introduced in 2017 but it didn’t take much time for banks in Germany, Italy, Spain etc. to support them.
It's like saying that because Apple is paying a Chinese factory to build phones that Apple "builds phones".
And the key for this is competition and regulation not (yet) captured by entrenched players.
On the contrary, credit cards are a neutral standard, which is interoperable. It can be improved but it's vastly better than bank OAuth.
Of course Visa/Mastercard/Amex/Discover are very well moneied interests, positioned pretty tightly in the market and have no incentive to help it's success along.
This is really the one we need to fix on both ends.
Right now we have a system where fraud is really easy, e.g. an incompetent merchant gets breached and the attackers get thousands of credit cards to use at innocent unrelated merchants. Then the attackers steal goods from those merchants and the merchants get chargebacks from the cardholders. This is crazy.
What you want is a system where the merchant submits a payment request which is then either manually approved by the customer on their bank's website (e.g. for immediate delivery of goods) or has to be submitted and displayed on the customer's statement at least 30 days before the transfer, giving the customer that long to dispute it (e.g. recurring payments/subscriptions). That would eliminate the vast majority of fraud and also make it simple for customers to cancel subscriptions they don't want (just go to your bank's website and ban that merchant).
The reason we don't have this is that the banks like getting credit card fees and chargeback fees, so they have no incentive to build it, and use regulatory capture and anticompetitive practices to keep anyone else from building it.
That's how it works with my current bank and my previous one as well here in Italy: the first few transactions require manual approval via app, then the system "learns" that it's you and just notifies you there's been a transaction with your card.
It never happened to me so I'm only speculating, but I suspect that, as soon as it detects suspicious activity, confirmation is requested again.
But this is where we get into antitrust issues. Visa imposes a 3% cap on the surcharge you can add, but then typical processing fees (e.g. Stripe) are 2.9% + $0.30. For a $1 transaction that's >30%, but Visa caps the amount exposed to the customer at 3% -- and low value transactions are the exact market where the lower-fee competition would gain the most ground from having a price advantage. How is that not an antitrust violation?
However I consider that highly unsafe.
> TIPS is a harmonised and standardised pan-European service with common functionalities for the settlement of Instant Payments across different countries and jurisdictions. It is based on the Single Euro Payments Area (SEPA) Instant Credit Transfer scheme.
https://www.ecb.europa.eu/paym/target/target-professional-us...
> In 2020, Lael Brainard announced the upcoming FedNow service would provide "a neutral platform on which the private sector can build to offer safe, efficient instant payment services to users across the country",[20] after 2018 the European Central Bank launched the TIPS instant payment settlement system.[21]
It is retail transactions where I and someone/something else trade money for goods that need the "instant" aspects of this.
A2A / Pay By Bank is a growing payment method.
Merchants will begin incentivizing it due to the cheaper costs relative to cards.
We’ve implemented it and I’ve presented to the largest websites in the world about the opportunity as we are one of the early adopters.
You’ll start to see it much more frequently.
It happened once to my debit card when I was 20, and I went without food for a few weeks. Thank God for food pantries.
Ever since, I've used MasterCard for everything. They might be an evil monopoly, but fixing fraud is stupendously easy, and becomes not my problem with one mouse click.
When you dispute a debit card charge, the money is completely inaccessible until the dispute is resolved.
With a credit card, you haven't lost anything yet.
The value that credits cards provide isn't the network, it's the insurance (chargebacks). And while I appreciate payment insurance when I'm paying for an expensive object from halfway around the world, it's unnecessary overhead when I'm buying a bagel in a cafe.
If I lend out $X dollars but my client says the loan was accessed fraudulently then who pays for this loss? The bank, the payment processor (FedNow/Visa), the customer, or the vendor?
Liability is on the receiving or the originator institution. But in practice, it depends on the contract with the “processor”. Many Pay By Bank “processors” offer a guarantee model to cover these returns. Otherwise, liability is typically on the merchant.
However, Nacha is beginning to iterate on their return codes to better fit the e-commerce use case and clearly define liability.
One exception is that for debit, you're possibly out the money until the dispute is settled; one mechanism to avoid that would be a regular overdraft facility (in the European sense, i.e. with a listed interchange fee and not a fine-like flat fee like in the US) for credit-worthy account holders, and a refund of all interest incurred due to eventually successfully charged back payments.
That seems like a lot of risk for me, if I happen to lose a chargeback for some reason.
In Europe you do. There's no reason this can't be the case in the US too.
What is correct, though, is that while you wait for a credit card dispute process to be resolved, you have not spent any money, and still have that money in your bank account. But if you want to dispute a debit card charge, that money is gone until the dispute is (hopefully) resolved in your favor.
The only way to regulate that problem away is to require debit-card-issuing banks to preemptively return the money to an account immediately after the account holder disputes a charge, which... I dunno, maybe that's not a terrible idea. Or maybe it is.
Sort of.. generally in Europe chargebacks are still pretty rare in general and convincing your bank to make one is non-trivial and takes a lot of time
I would be interested to know which country and bank gave you a hard time to do charge back
Visa (and MasterCard as well) have colluded with banks in multiple countries (not just in the US) to eradicate national debit card payment networks that cost consumers either $0 or a very small flat fee per a transaction (e.g. $0.10) and replace them with their own branded debit cards that attract fees for the consumer, for the merchant and generate revenue for the payment network. The revenue is tiered (e.g. premium debit cards attract higher interchange fees that go directly to Visa/MC), hence the proliferation of Platinum debit cards. And consumers are now left with debit card transaction surcharges that have been passed on to them whereas Visa is profiteering from every single party involved in the end to end payment processing.
National debit card payment networks are now dead, courtesy of Visa/MC.
[1] https://en.wikipedia.org/wiki/Pix_(payment_system)?wprov=sft...
But who says that the same party has to offer payment rails and dispute protection? There are successful models of the two being decoupled in some markets (e.g. various providers offering fraud/chargeback insurance on top of SEPA Direct Debit in Europe).
I'd never buy an airline ticket in cash, for example: If the airline were to go bankrupt (which has affected me more than once in my lifetime), I'd have no recourse.
IIUC, your (and the counterparty's) financial institutions will need to participate[0] in the FedNow program.
My bank (one of the big ones) does not participate. Which isn't too surprising as they issue lots of credit and debit cards, with which FedNow directly competes.
Hopefully, one of these days FedNow will be ubiquitous. While I'm not holding my breath, I'm also optimistic that it can and will work.
[0] https://www.frbservices.org/financial-services/fednow/organi...
This is way too reductive. In the US, credit cards are complicated. For instance, I get about 2.5% of every purchase back, either in cash or kind. Yes, the merchant pays 4%, and VISA/matercard take a bit, and my issuing bank takes a bit, but calling that "extracting rents" feels like pure rhetoric.
FedNow is awesome and will make the market more efficient, but merchants aren't going to lower prices due to lower fees, especially while there's a mix of fee-less transactions and credit card transactions. At least in the short term, adopting FedNow is just giving money to the places you buy from (for retail transactions).
One can certainly argue that this system is net positive due, e.g., to greater credit availability for people who need it, chargeback discipline, etc. It’s a very complicated system that impacts a bunch of stuff. But it being merely a ~3% surcharge (on most retail transactions nationwide!) does not deflect the monopoly charge.
How? Because you just spelled out oligopolistic rent seeking behavior to a T...?
Oh but you like it because you get a kickback. Jeez. Credit cards are literally a tax on the poor but people don't want to hear that. Don't get me wrong, I use the hell out of my credit card, and feel guilty knowing that system specifically means less well off folks are paying higher prices to subsidize card usage.
You just described "extracting rents".
For people like me who treat a credit card as a debit card, I see no reason for vendors to pay that "tax" if there are almost free alternatives. I'm ok losing the cashback which you and I are paying for anyway.
Who doesn't love a good negative-sum game!
>The idea that accepting cash is cheap is actually a myth. While some business owners might think the 3 percent fee for processing credit cards is a burden, research from IHL Group shows that cash handling costs many retailers between 4.7 and 15.3 percent. This means for every $100 sale, a business is paying between $4.70 and $15.30 just to manage their cash. And, the cost is only increasing as more businesses and consumers trend away from cash.
>Handling cash also comes with many unwanted risks. The process business owners must go through to manage cash is a clear burden. They have to account for it; count the drawer nightly and rely on employees to use the honor system when doing so; package it up and either hire a courier or send an employee to transport it to a bank; pay fees for processing and handling; and ultimately run the risk of exposing the employee, cash, and the business to liabilities that may not be recoverable.
https://www.plainscapital.com/blog/the-cost-of-accepting-cas...
Buying from Standard Oil was more efficient than trying to stick with non-oil-based alternatives, but that doesn't mean that Standard Oil didn't illegally manipulate the market to maintain a monopoly that hurt consumers.
FYI, Standard Oil was never actually charged with market manipulation. The court determined that all of their acquisitions were legal, but that it was within the scope of the Sherman Antitrust Act to break them up just by virtue of their market power.
https://www.lendingtree.com/credit-cards/articles/na-vs-eu-i...
Grandparent commenter was engaging in a false dilemma fallacy (cash handling vs US merchant cc fees...and not US merchant CC fees vs what the rest of the world pays.)
I looked through the lawsuit and this is about stifling alternative payment methods.
The issue isn't the solution, the issue is the staggering cost of the service in the US vs everywhere else. It's 2x higher in the US, for no good reason other than having a monopoly. In Europe near-instant wiring of money is trivial so for large purchases, businesses can just accept a transfer - so MC/Visa have competition there.
Here, wire transfers are a royal pain in the ass, slow, and expensive, so there's no competition. Zelle and others are slowly changing that, but they mostly compete against paypal for p2p payments, not b2c etc.
>Visa charges 3%. Everything you buy could be 3% cheaper, that's better than cash back.
>And anyone that ever uses cash for anything is overpaying, because prices everywhere have been jacked up to include headroom for "give back 2.5% as credit card rewards"
>For people like me who treat a credit card as a debit card, I see no reason for vendors to pay that "tax" if there are almost free alternatives.
There doesn't need to be a magical new business here. Some numbers changing can resolve a lot of pressure.
This feels like a weaselly way of putting it. I want to know the average (or median) cost of cash handling, not what it costs for "many" (whatever that means) retailers. It could be that the 15.3% figure represents costs that 0.01% of retailers have to bear, and that 4.7% is for 10% of retailers. And it could be that 90% of retailers spend less than credit card fees managing cash.
Or they could mean what you want them to mean, and it really is more expensive than credit card fees for the median business to manage cash. But from their wording, it's hard to know the truth behind it.
Sniff-test-wise, I find it hard to believe that gas stations (and other retailers) would offer a cash discount if cash was actually more expensive for them to handle than credit cards. It seems unlikely that they wouldn't have come up with that without at least some research to quantify their cash-handling costs.
Well said. I totally agree, and I can't imagine any basis in reality for cash handling costing retailers 4.7% (much less 15.3%). Sure, cashiers need to handle change, but that's not a big cost compared to turnover for most businesses.
Penny-wise, pound-foolish isn’t a saying because it’s a total rarity. Plenty of people follow “common” practices that seem positive but are actually negative.
Cash is much easier to steal from your employer, let alone miscount, misplace, or even accidentally destroy. You’ll see most if not all of these outcomes occur if you work a service/retail job.
Debit fees are that low because of the Durbin Amendment, which legislated caps on debit card fees (amongst other things). Credit card fees are where the real money is made, and the meat of the complaint here.
From the DOJ Press Release [0]:
"Justice Department Sues Visa for Monopolizing Debit Markets"
"Filed in the U.S. District Court for the Southern District of New York, the complaint alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart the growth of its existing competitors and prevent others from developing new and innovative alternatives."
0 mentions of the word "credit" 27 mentions of the word "debit"
I'd love for this lawsuit to be about Credit Card fees, but it appears be limited in scope to debit card fees.
[0]: https://www.justice.gov/opa/pr/justice-department-sues-visa-...
But when you go in to pay, the price after sales tax ends up being something like $57.63 (or whatever, you get the idea). So for checks, not an issue, but for cash... they now have to keep loads of coins on hand, lots of small bills, and presumably reload those often.
Either raise or lower your price. Someone buying a $57.63 cake isn't going to balk at paying an extra $2.37. And if you make it $60 even, after tax, you don't have to keep anything but $10 and $20 bills in stock for your best-selling cake, because you'll get a mix of bills in, but the only way you give change will be from a $100 bill (2 x $20) or a $50 and a $20 (1 x $10). You will still get other bills in sometimes, and some coins, and of course they do sell other sizes (but they don't do a lot of small-scale things like cupcakes). Most sales require an order in advance.
Just cutting down on all that cash handling would be advantageous (and that's why one of the owners is always at the register).
However, many customers (1) throw odd change in the tip jar, and (2) an exact amount might discourage add-on purchases.
In this case, an exact amount would certainly result in zero tips. The customer would need appropriate bills and wonder how much would be appropriate (since 15% of $60 is too much).
So it very much fits the mold of “95% of sales are single items”.
So instead of advertising a $55 cake that sells for $57.62 or whatever, advertise a $57.33 cake that sells for exactly $60.
Hell, people might actually tell others how it ended up being the exact price on the sign
Cash allows you to hide revenue. You do not forward the sales tax / VAT of the item you sold, and you don't declare the revenue of the cake.
Added to that you need the cash to pay your suppliers, as they need cash to pay their employees partially in cash, as employment taxes are sky high.
I'm pretty skeptical of that number, but more importantly
> And, the cost is only increasing as more businesses and consumers trend away from cash.
That should be excluded here. We want to look at the baseline cost of cash as a major payment method, not the effects of a payment method becoming overly niche.
The actual study is here.[1] "Depending on the segment and current processes, retailers can recoup upwards of 200-500 labor hours a month per store." It's related to ads for cash handling systems and armored car services.[2] It's not promoting card use.
[1] https://www.ihlservices.com/product/the-cost-of-cash-handlin...
How cute. The value proposition of accepting cash isn't to save on transaction fees, it's to save on Uncle Sam's fees. Cash doesn't have to go into a register and get Z'd at the end of the day (or have a Quicken invoice to go with it, depending upon the type of business). Although I neither condone, participate in, or tolerate tax fraud, it's absolutely a thing, and their failure to mention it doesn't inspire confidence in their conclusions.
But otherwise your POS won't let you get away with that, and your customers will usually be grossed if you're handing them goods for cash without any receipts. Food business could be the last bastion where it would somewhat work on a regular basis IMHO.
Visa charges both the acquiring and the issuing bank on top of that; that's then called "scheme fees".
The issuers pays these out of the interchange; the acquirer charges the merchant for them, so they end up paying a bit more than the figure you've quoted.
I don't think government should be setting prices. But disrupting monopolies is one of those things governments are good for.
That’s a bad assumption. Being a monopoly isn’t illegal. You have to also behave anti-competitively.
Which is why it's reasonable to some that someone getting in trouble for "being a monopoly" is actually getting in trouble for some specific actions they took.
People having monopolies have a strong urge to maintain them, the means to do so, and not doing so might actually require lots of thinking and trying to walk a very thin, straight line.
on edit: ok it seems this post mentions a monopoly that takes no anti-competitive steps, which is a company I've never heard of https://news.ycombinator.com/item?id=41642040 but if they have 100% of the market I guess there's no reason for them to be anti-competitive, that kind of thing comes when you have 80% of the market but it's threatened (guesstimate)
"I didn't get rich by writing a lot of checks" -- Bill Gates
But, God forbid that the government build any infrastructure for the economy's main highway, and crypto is the only alternative possible.
That’s also one of the main criticisms. If you pass around a 50$ bill it stays 50$. If you pass around 50$ online fees eat it up and it’s gone.
And even if you did want to make that argument, I'm not sure I care to subsidize Visa's profit margins in other places; capping fees in the US to a similar level as in Europe would be fine with me.
(Except maybe not really: I do very well with rewards from credit cards. Mandated lower fees would make those disappear overnight. Of course I can't prove that I wouldn't still be saving more money with mandated lower fees, though. But I think the average person would probably save with capped fees, and that's what's most important from a policy perspective.)
(Of course this presupposes that merchants set prices in order to pass along CC fees to the customer, rather than just charging whatever highest price the market will bear. If CC fees get reduced, prices might stay the same.)
Overall fee (bank + network) seems to be around 1% in Europe and 2-3% in the US. So if we subtract the cashbacks/rewards which are almost nonexistent in the EU these days I’m not sure that the difference is that huge.
Also credit cards usually have monthly fees in Europe which be more than $€10 per month or so. Of course benefits like travel insurance etc. might balance that out.
Visa's actual take is like 0.15% or something. It's tiny.
These are just the problems that occur to me off the top of my head. They are solveable, but it would require a decade-long regulatory commitment with serious weight behind it.
What regulators should really focus on in my opinion is any uncompetitive contractual obligations visa is imposing on vendors.
Imagine a universe where different hardware doesn't interoperate (e.g. androids can't call iphones, Macs can't use google.com, ChatGPT is only accessible to Comcast subscribers) I hope we can all agree it's a nightmare scenario. Sometimes the free market gets it right without intervention, sadly sometimes it does not.
Oh, you mean like how iOS has a private text chat system Androids can't access, and they're only kinda partially giving access to some of the features a decade later? Wouldn't that be crazy.
Nextel had exactly this with the walkie talkie feature and the market sorted it out.
What seems to be happening is that the payment networks are making exclusive deals with big issuers like banks and these deals are allowing specific payment networks to have a lot of pricing power with merchants, who have to pay a fee to everyone involved in the transaction(gateway, processor, etc).
This seems like a perfect opportunity for a common good. Something to make transactions easier and cheaper and help keep the economy running.
But that would be big-government-communism-anti-jobs-whatever-people-are-mad-at. So that’s not how we do it.
We’re getting FedNow (eventually). Seems like you could built a debit card processor on top of that.
You may still need Visa/MC/whatever for international customers to use debit. But American has a lot of Americans doing debit from American bank accounts.
It’s technically live [1].
[1] https://www.frbservices.org/financial-services/fednow/organi...
It’ll just take time.
Interestingly, the other 2 big banks—Citigroup and Bank of America—are missing. They both do support RTP though (which apparently is a different network operated by the same entity that backs ACH). Unsure if RTP is meant to compete with FedNow.
Credit card processors end up having unjust influence over every business that has a significant online component, and the processors don't hold back from using that influence to force the hand of many businesses that aren't big enough to fight back. They simply threaten to block the business for having X objectionable but legal content.
Without exaggeration, you can make instant money transfers across banks; buy stocks, gold, insurance, bonds, foreign currency; pay taxes and other government fees; make international SWIFT transfers; open retirement accounts; buy private healthcare; instantly open as many checking, savings, CD accounts as you want; and many more.
And in the US, they try to sell Zelle as the biggest innovation in banking. It's just pathetic.
For context, the current chair of the FTC is Lina Khan who is only 35 years old. She became famous while a student at Yale Law School for writing Amazon's Antitrust Paradox [1], which has come to revolutionize the thinking on antitrust.
A recent example is asthma inhalers. An asthma inhaler in the US costs ~$500. In France it's $7. Now we can't just import from overseas. That's illegal (because reasons). So how are generic inhalers blocked? By tricks to extend patents. In this case, the patent holder justifies a patent extension with a small piece of plastic on the cap so you don't lose it.
That's all capitalism does: it builds enclosures, on this case on "intellectual" property and by buying the government to create a monopoly by banning imports and banning Medicare from negotiating prices.
Just the threat of FTC action and a Senate investigation has created concessions by (so far) 3 of the 4 inhaler makers agreeing to cap inhaler costs at $35. From $500. With just a threat.
Companies are so concerned about this that big donors to the Harris campaign want Lina Khan fired [2] (she is, of course, history in the event of a Trump victory in November).
This should be a lesson in both the necessity of regulation and how easy it can be if you halfway try. The idea that the government is bloated and ineffective is propaganda by those who want to poison the water supply to make a slightly higher profit.
Personally, I want the FTC to go after national ISPs.
And I fully support investigation and regulation of the Visa payment network.
[1]: https://www.yalelawjournal.org/note/amazons-antitrust-parado...
[2]: https://www.bloomberg.com/news/articles/2024-09-06/kamala-ha...
Lina in fact, has repeatedly lost in court and is widely viewed, by both antitrust hawks and doves alike, as being remarkably ineffective.
You'd be very hard pressed to compare her record to any effective FTC chair (IE in reigning things in) and say "yeah she's doing great"
Instead, she's showboated and lost repeatedly, which has only emboldened most companies who feel that she is so inept that they having nothing to fear.
In fact, she's lost so much she has been getting asked if she's doing it on purpose to try to get more power (lol):
https://thehill.com/opinion/finance/4490640-internal-ftc-ema...
Career FTC employess, who (despite what HN may think) are very very good lawyers and very good at antitrust law, have no faith in her "honesty and integrity":
"The annual OPM poll of federal employees shows morale and respect for the “honesty and integrity” of FTC leadership plunging from the highest level among federal agencies to the lowest levels under Khan."
That's not really a great sign. The biggest win they've had is basically "A settlement that blocked anticompetitive harms of pharma giant Amgen’s $28bn acquisition drug maker Horizon"
In the same time period, they lost 6 much more major cases in a row (microsoft/activision, etc). That's unheard of.
If you want someone who cares about the press, and will file lawsuits at the drop of a hat, take Lina. If you want someone who is actually going to achieve meaningful change, she ain't your person. I'd rather have an FTC that anyone is actually afraid of.
I would rather they reformed patents for pharma and medical devices, and fought regulatory capture more than intervening more.
Small government types are often caricatured as being blindly pro business, but they realize that every new regulation is a chance for regulatory capture and help businesses to build a moat.
This is actually the ideal state of regulators. That they take action against a select few, which in turn 'scares' everyone else into complying with the law. Self regulation is much better than actual regulation.
This not self-evident, and is very subjective.
Also, if regulator has to make san example of someone first before the rest fall into line, that is not self-regulation in my book, just plain regulation. Actual self-regulation ensures there are no triggers to activate governmental regulation.
There's absolutely no evidence of this and plenty of evidence to the contrary.
A great example that springs to mind is the Grenfell Tower fire [1]. Grenfell Tower is a council block in England. These were historically housing for poorer people and were typically built cheaply and badly in the postwar era.
So what happened? Some cladding was improperly applied to the building. That allowed a fire to spread. Often these blocks only have one stairwell. They're concrete buildings so generally fires are contained to a single unit. As such, the safety advice is, in case of a fire, to stay in place. The cladding fire was different because the fire rapidly spread ato
At the time of the fire, the UK government was moving towards self-regulation by the UK building industry. The Grenfell Tower fire kinda ruined that plan.
Self-regulation is no regulation. Deregulation is no regulation. Corporate shields limit liability. By the time a problem is discovered, those responsible might be long gone or the proceeds of their negligence might be irrecoverable.
The only reason this idea exists is to increase profits because regulation hurts profits. That's literally it. It's a completely silly idea (like libertarianism).
A strong government is completely necessary to a well-functioning society.
Patents and import restrictions are orthogonal to capitalism as an economic system. They're obviously not the invisible hand of the market, but the actions of the very draconian hand of the government
Private property is an enclosure. Intellectual property is an enclosure [2]. All of this is rent-seeking behaviour.
The story of Tetris is such a great example of all that capitalism actually does in practice: licensing and sub-licensing deals. The game was actually created by a few Russians. Everything else was just enclosures.
[1]: https://www.joewrote.com/p/the-origin-of-capitalism-the-encl...
[2]: https://www.marxist.com/intellectual-property-rights221105.h...
visa was able to "impose a web of exclusionary agreements on merchants and banks. These agreements penalize Visa’s customers who route transactions to a different debit network or alternative payment system."
BankAxept charges maximum 0.135% fees, even less for high-transaction businesses:
And let me be very blunt so people aren't confused, I think if Trump wins, the people he installs in the DOJ will be less than motivated in pursuing these cases.
That seems entirely reasonable.
I find it interesting that HN posts so many article about how the intelligence agencies are “loose canons”. A big part of that are the tens of thousands of employees that never change when the President does.
Seems like a great idea that a new President could clean house.
Corporate greed and military spending aren’t up for debate though. We can bicker about guns and immigration policy all we want but some topics aren’t even on the table for discussion.
Regarding the modern Progressive movement though, I find them a bit too authoritarian for my tastes. There are countless examples but classic Western liberalism is at odds with their ideology. They’ve fallen into the classic revolutionary entrapment of their own power being tied with continued upheaval. If you are not with them completely then you are the enemy. From the Google Manifesto to JK Rowling’s cancelling, they remind me of the mob during the French Revolution. They just eat their own and refuse to accept any kind of meaningful critique.
Liberalism requires debate, disagreement and questioning the status quo. I don’t see that amongst the modern Progressives. They would rather burn it down than build something better.
Ironically, I fear them gaining power as much as I do the religious right. Neither contains the capacity for building the coalitions needed for stable governance. I like moderates. Stability. Peace. Compromise. Mutual Respect. Empathy. I just don’t see those values in those circles.
Now that I’ve politely disagreed, I suppose it’s just a matter of time before someone comes along to insult me and prove my point.
I connect the erosion of bodily autonomy in America to the Democratic mandates for health insurance purchase with Obamacare and then certainly the federal mandate for employees of large corporations to receive the experimental EUA Covid vaccine.
In the arena of basic human rights, any political party that demands I show my private medical information as proof of vaccination in order that I may continue to work in a 100% remote job has lost the thread and there's no way back to good graces.
The "my body my choice" and workers rights Democratic party locked me down on home detention as a non-essential worker for over a year and finally got me RIF'd from my fancy job because I refused to show my papers well after the crisis had ended. Would you call that fascism or authoritarianism?
And that erosion of bodily autonomy at the federal level led to the _easy_ overturning of Roe v Wade! At the time the federal vaccine mandates were announced, I called it that they were weakening Roe. Play stupid games, win stupid prizes.
The Democratic party needs to end and something new needs to grow to replace all the corruption. There's not one good policy for humanity coming from them and certainly far too much optional war and needless killing.
There is no political party that demands this. I've worked 100% since the start of the pandemic and have only been asked for proof of vaccination for a company onsite. Never once been at threat of losing my remote job because of vaccination status. Sounds like your company was just looking for an excuse to lay people off.
> And that erosion of bodily autonomy at the federal level led to the _easy_ overturning of Roe v Wade! At the time the federal vaccine mandates were announced, I called it that they were weakening Roe. Play stupid games, win stupid prizes.
Really? You should've told the Supreme Court because they didn't mention vaccines at all in their decisions to overturn Roe v Wade.
> There's not one good policy for humanity coming from them and certainly far too much optional war and needless killing.
This is not even remotely true and is so emotionally charged that it is impossible to actually have a discussion. I much prefer their policies on public infrastructure, environment, and climate just to name a few.
Of course. I called it a RIF for a reason. At the time, I was caught unawares and was very hurt by what I saw as a betrayal. It was my sense that the RIF was a politically-driven move and it was a compliance test that I had failed. It sounds like you were fortunate to have not been so caught up in it.
In my depths-of-despair blue state, the lockdowns were brutal and the outcomes on kids here have been tragic. Adults I know are just now processing the pain, many marriages wrecked. I lay those terrible Covid politics and ruination at the Democrats' feet.
> Really? You should've told the Supreme Court because they didn't mention vaccines at all in their decisions to overturn Roe v Wade.
Yes, really, it wasn't a sacred cow. The zeitgeist was: my body, my choice, but only when the mob allows it, all courtesy of Covid. RvW is just one more easy come, easy go judicial decision.
Health science will continue to advance and the abortion racket will eventually end.
> is so emotionally charged that it is impossible to actually have a discussion.
Yeah, you're right. I was coming on too strong there. :/
> public infrastructure
Infrastructure is not a Democratic issue, but the corruption is worse under the D's. Rural broadband is the latest government spending fiasco.
> environment and climate
Democratic climate politics is a racket. It's bumpersticker politics, and junk science. What climate model ever survives, where is the science in meta-analyses? Regulations around pollution is something everyone can get behind. I remember smog in Los Angeles in the 70's and it is so much better now. But pollution isn't fear porn that brings in the big bucks, boiling seas are. The catastrophism is OLD and TIRED, and none of the fear porn hath come to pass. It's such a racket.
Name some more favored policies! In the seventies we had the misery index under Carter. Under Biden, we got the huge spike in deaths of despair. Democratic public health policies are schizophrenic. What a huge mess, I can't understand Democratic voters!
JD Vance has approximately as much policy control in a Trump administration as Kamala Harris would.
VPs don’t have “policy control” but they do have access to the President and the opportunity to influence them. If Trump wins, Vance will be meeting with Trump regularly, and have the opportunity to try to talk Trump into things - I doubt Vance will always succeed, but he probably will sometimes. Whereas a defeated Harris won’t be meeting Trump regularly and so will lack the same opportunity.
~1900... ~1950... ~1980... ~2000...
About time for the wheel to turn around.
but alas....
Hasn't this basically been the state of things since the late 1990s? What changed that they're going after them now?
The FTC has been staffed with very good antitrust lawyers for a long time. The career employees give a crap or they wouldn't be there - every single one of them could make a lot more in private practice. They are at the FTC because they give a crap and are good.
As such, there's no need to denigrate them without any evidence.
The set of political employees at the FTC is very small.
As for the rest, much like other critics, i don't believe Lina is competent, and i dont' think she's been effective at all.
I think she's showboated a lot and made plenty of press, but in the end, that just hides that they have achieved, in practice, far far less than almost any FTC that gave a crap.
When she's gone, she will leave behind a legacy of crappy precedent it will take someone years to clean up to get things to a state where the FTC can win antitrust cases again (their win rate under Lina is remarkably low).
The DOJ, on the other hand, has done a great job.
1. What’s the best place to research FTC win rates?
2. Given that Khan is taking an “aggressive” approach to what sorts of cases the FTC should pursue, wouldn’t it make sense for the win rate to be lower under her leadership?
2. No, actually. At least, not this much lower. The win rate is certainly limited by aggression in the extreme, but not as limited in practice as you might think.
Assume for a second the FTC historically only brought 50% of cases it had a 100% chance of winning (IE was not that aggressive).
If it now brought 100% of cases it had a 100% of winning, it would be much more aggressive (file twice as many cases), but the win rate would still be 100% :)
Now, obviously, if they were bringing 100% of cases they had a >50% chance of winning before (0% of cases with <50%), and now are bringing 100% of cases they had a >25% chance of winning before (0% of cases <25%), the win rate would go down a lot.
But the general view of experts (on both "sides", which includes some of their long time very-good very-experienced now-retired career attorneys ) is, basically
1. they were much closer to bringing 50% of the 100% win cases before.
2. they haven't moved to bringing 100% of the 100% win cases, they've moved to some totally strange and random distribution that is based more on press and politics. Microsoft/activision is a good example of this - their argument is very weak (basically that microsoft is monopolizing the cloud gaming business!?)
3. it would be a lot more effective to start by bring 100% of the 100% win cases, or 100% of the >95% win case or whatever, than what they are doing now. You can/should be a lot more aggressive, but still "feared" for winning.
I've put aside any of the other complicated factors to simplify the comment enough to answer your question effectively.
If anyone felt we were at the point they had been bringing 100% of >50% win rate case, and were now trying to bring 100% of >40% win rate cases, I think you'd see a very different perception occurring among experts.
The other complex disagreement (but is a bit of a sideshow given that) is not just on the approach overall, but the fallout from losing so much.
That argument, roughly, looks something like this on the legal side.:
A. The FTC has a tendency to file in a small number of courts (DC, California, Delaware).
B. It gets appealed to roughly the same courts as well
C. You end up in front of the same judges a lot
D. Being humans, they are not immune to bias (though again, these are much better judges than people give them credit for)
E. As a result, bringing crappy (IE 25% win rate) cases in front of them just doesn't just affect your current case, but also affects whether the 100% win rate case stays a 100% win rate case.
This is almost certainly true, and you can argue over the degree to which it's true.
We'll call this the "reputation effect on enforcement ability".
Similar argument about companies doing the calculus about their mergers and business practices, IE the "reputation effect on deterrence ability".
So even among the hawks (which i am, for example, but i'm an american school hawk, not a european school hawk :P) you end up with a view that you can be a lot more aggressive without either of these reputation effects, and you should start there, not with a randomized distribution that is in some sense more aggressive, but is unnecessarily causing serious reputation effects. This will, in turn, likely also enable you to turn 95% wins into 100% wins, etc.
Yes, they probably also believe in what they're doing and yes, they've been putting this together for a while, but it's not a coincidence that we've had a regular cadence of these announcements for the past few months.
Edit: Recognizing when your party is playing a political game is a healthy part of the democratic process even if you agree with their goals. Pretending your preferred party is above political showmanship isn't even party loyalty, it's just naivete. Everyone needs to put on the show to accomplish their goals.
I'm not implying anything is broken about the process, but they're clearly timing their actions around the election. As just one example: out of the 36 Antitrust press releases from the Attorney General's office (the tags on this press release) [0], 13 (36%) were in 2024 and 7 (19%) were just in the months of August and September of this year. A regular cadence of 36 Antitrust announcements since the administration started would be <1 per month, so 3.5/mo over the past two months (one of which isn't even over) is a clear outlier. There's some allowance to be made for the time it takes to put a lawsuit together but not enough to account for that large a difference.
Again, that's not to imply anything about the ethics or motives of the people involved, nor to say they were sitting on their hands until now. All I'm saying is it's a reality of our political system that sometimes the answer to "why now?" is "because we saved it up for the election".
[0] Using filters here, unfortunately I can't directly link to a filter view: https://www.justice.gov/news/press-releases
I'm not sure why people get so offended at the idea that political appointees on their side time their actions around election cycles. It's easy to believe about the $other party (for whatever value of $other), but for some reason we're very hesitant to acknowledge that our own people play the same game by the same rules.
Acknowledging that doesn't imply anything about the policy or about the motives of the actors, it's simply an acknowledgement that they're good at their jobs and know how to time things. But I guess it must feel slimy and we like to believe our guys are above that sort of thing?
[0] https://www.reddit.com/r/stocks/comments/1dyb7t0/whats_going...
60% seems pretty well short of monopoly. Also, if you factor in that cash is an option, and the significant inroads being made by options like Square and Venmo, Visa doesn't actually even have a majority in the market.
I'm skeptical of this action overall. I love competition as much as the next guy, but Visa, Mastercard, and Discover's primary value they provide is fraud detection and prevention. There are enormous economies of scale at play, and it's hard to believe that breaking up the big guys into dozens of independent, fly-by-wire cut-rate providers is in the public's best interests long term. That is, unless the federal government wants to come in and actually pursue small-time fraud.
The quote from the DOJ:
> “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,”
This is the thing that's illegal, not some forbidden percentage of market share. Illegally using your position in the market to distort it to your advantage, to prevent competitors from existing, and (generally) to raise prices.
From the actual legal complaint https://www.documentcloud.org/documents/25173584-visa-lawsui...
> Visa is a monopolist in the general purpose debit network services and general purpose card-not-present debit network services markets in the United States with market shares of at least 60% and 65%, respectively, by payment volume. Mastercard is the second largest debit network in the United States and processes less than 25% of debit transactions in either relevant market. No other competitor has more than a single digit share of debit transactions in either market.
> Visa has monopoly power in the relevant debit markets because it has the power to control prices and exclude competition in each market.
Of course, the whole court case will be arguing whether Visa has the power to control prices and exclude competition. DOJ thinks they do, I'm guessing Visa thinks they're fine!
It can be done, at scale, but definitely a business risk.
Absolutely. There's Discover, Mastercard, Google Pay, Apple Wallet, crypto, checks, and good old-fashioned cash.
The real competition is the NACHA's ACH system. Square and Venmo ride atop existing payment networks. The innovation is adding another level of ease of use over another layer of rent-seeking largely because Visa is slow to innovate and ACH is effectively a government product.
> Visa, Mastercard, and Discover's primary value they provide is fraud detection and prevention.
Most of this value is provided by the MSP and merchant banks, not by the card associations. ACH fraud protection is mostly reversable transactions.
> independent, fly-by-wire cut-rate providers is in the public's best interests long term
That is what we have today - tons of small MSPs and a few big ones. Square, for example, is a big one.
Not necessarily accurate. My bank does not offer the ability to reverse transactions or replace funds lost to merchants. They also can't remove fraudulent merchants from the payment network.
Lots of places stopped taking cash. In many places my only option is to pay with a card.
Almost everywhere else in the world, physical cards require a PIN, and online payments (above some amount/risk threshold, at least) require 3DS authentication.
Both methods are pretty secure.
I would argue that cash is not an option in more cases than it is an option.
A business can't be cash-only and survive today; so no, cash is NOT an option.
As for your assertion of fraud-prevention as a benefit, it's a joke. Credit-card issuers have, for some reason, ENABLED fraud in the USA. First they dragged their asses on issuing chip-based credit cards for what, a decade or more after the rest of the world had adopted them. And now that we finally have them, what did the issuers do? Defeat their purpose by neglecting to implement PINs. WTF. "Chip & PIN" is standard operating procedure across the industrialized world except in the USA.
You could drastically curtail fraud overnight by simply implementing the PIN requirement. But we've gone the other way, with a lot of retailers giving up on ANY attempt at validation.
There must be some tax benefit of fraud for the card issuers. Or they're clinging to the extra profits out of fraudulent transactions that are perpetrated but not caught. Regardless, there's no excuse for abetting it, or tolerating this consumer- and business-harming oligopoly.
Is that really a monopoly though?
> The DOJ said Visa imposed “exclusionary” agreements on partners and smothered upstart firms.
- Monopoly market share
- Negative impact to customers
(e.g. higher prices)
- Collusion to thwart competition
The latter two are more relevant to modern global enterprise competition. A duopoly isn't really optimally lowering prices for anything, as there's limited risk of defection and price signaling is pretty easy.
Of the $32.653 billon in revenue Visa pulled in last year, 2.3% was network and processing opex, while 53% was pure bottom line profit[1].
Furthermore, squaring 17.9% tax provision line item: if your household had simple married-filing-jointly tax return with an AGI greater than ~$139.5k, you paid more in 2023 taxes than Visa...and that assumes you live in a state without income taxes.
Think about that for a hot minute while recalibrating expectations.
[1] https://www.sec.gov/Archives/edgar/data/1403161/000140316123...
My hot minute is that corporations don't pay taxes, consumers do via higher product\services prices, investors do via lower investment returns, or the employees do via lower wages.
And the bonus, the government gets less taxes from those lower investment returns and lower wages.
How much did visa pay in taxes? Less than a single 140k family? Why are we comparing corporate taxes and individual taxes? They are completely different.
You’re assuming quite a few things - the most significant are that the cost is borne equally among Americans. Instead, many Americans use credit card networks instead of debit cards, and those who use debit cards may have no option to avoid the fees.
Is there no alternative system that succeeds in affording both convenience and low (even state-subsidized) costs?
If you want to add middlemen as companies built on the cryptocurrency, you can and for some things they might be useful. But you absolutely should not need them by default in the contemporary era where we have cryptography and the internet.
Please get back to us when the cryptocurrency ecosystem has a lower rate of fraud than the mainstream ecosystem. Until then it looks like you've just traded each episode of one kind of fraud for twenty episodes of another kind.
> If you want to add middlemen as companies built on the cryptocurrency, you can and for some things they might be useful.
Moxie's article on why centralization is inevitable resonated with me [0], and all the evidence I've seen suggests that crypto is just as vulnerable to it as anything else. The middlemen who are initially optional inevitably become a core part of the ecosystem that you can't get away from. See Gmail. The decision you get when building an ecosystem isn't whether there will be middlemen, it's whether to plan around them or not.
[0] https://moxie.org/2022/01/07/web3-first-impressions.html
Bootstrapping trust is a hard problem and arguably by definition requires some middlemen, some of the time.
The DAO getting hacked many years ago does not refute the idea of using math and the internet to transform money rather than relying on private middlemen companies.