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“Woodruff. But first these past couple nof years have been a kind of turning point point for public attitudes about some tech and social nmedia giants. It s led some ask broader questions about nmonopolies power and competition at his confirmation hearing this week. William nbarr.
The nominee to be attorney general told. Senators quote in silicon valley have taken shape under the nnose of the antitrust enforcers that s part of the focus of tonight s report nfrom. Our economics correspondent. Paul solman.
It s for our regular feature making sense paul solman you want to do what to facebook tim wu. Columbia law school break them up paul solman break up the company and thus nthe facebook monopoly law professor tim wu was saying in a trailer. We shot for tonight s nstory tim wu. I think that if you look carefully nat facebook.
It is in some ways. The poster child for the curse of bigness in our time. Paul solman. The curse that america has abandoned antitrust nenforcement and left us with an economy dominated by de facto monopolists like facebook google nand amazon and things used to be different in 1911.
John d. Rockefeller s standard oil ntrust was broken up because of its vast power over a century later many think facebook s ntolerance for disinformation and its invasion of privacy are similarly sinister but facebook proceeds unchallenged tim wu the us government allowed them to nbuy their two main competitors. Instagram and whatsapp. So there s been no real competition in social nnetworking for the last six years.
And so i think they felt in some ways above nthe law above competition. Paul solman. But what about google tim wu. Yes so you know google has proven itself willing nto destroy all of its competitors over the last 10 years or so narrator waze.
The number one real time navigation. Napp. Tim wu. Waze was this promising israeli company.
Nthat could have been a platform for other competitors and they just bought them you know online maps that s important to ncommerce that s where people often start google has extinguished many industries that nmight possibly compete with it vertically by giving its own products preference right nwhen. You search..
Paul solman and amazon. Tim wu. What i m concerned about with amazon nis. The fact that they have become the only real place online.
Where you can sell things paul solman. But it s just amazing what amazon ndoes right tim wu. There s good amazon there s bad amazon. The good amazon in my view is the one that nhas made it easier to get a lot of products relatively easily.
But maybe you invent a better mousetrap. They make the amazon version and then they nown that market paul solman. But they re super. Convenient nright.
Tim wu in our times. The path towards a dangerous nfate is paved with convenience and it s taking us closer to this structure that we had in nthe gilded. Age. Where you had one great monopoly per industry paul solman or industries.
Dominated by just na. Few firms not monopolies. But oligopolies that still control price and service. Tim wu.
People may like amazon and google. Nbut. Ask people how they feel about the airlines. Ask people how they feel about their cable ncompany and ask people how they feel about pharmaceutical bills.
These are areas where the competition has nshrunk. We re left with just a few choices paul solman. The classic argument against nmonopoly that i learned was that the monopolist will be able to charge higher prices. Because nshe or he is the only game in town.
Tim wu. Yes..
That is the classic argument nbut. I think it s too thin an argument and it turns out that the damage done by monopolies nis. Frankly much greater than just higher prices paul solman. First says wu.
The industry ntends to stagnate tim wu. A monopolist has no real need to innovate nno real need to improve things you know like at t by the 1960s or 70s. Ntheir. Idea of improvement was three way calling actress want someone else on the line.
That s easy too flip. The switch button. Then dial a code number nand. The number you want and presto tim wu they didn t believe in answering machines.
Nfor regular people it was against the fax machine the modem nthe internet. All this kind of stuff forget it paul solman so i remember films about general nmotors and how they prevented electric cars from coming in and how they wiped out light rail ntrams in cities that was all true tim wu that was all true and it s just a nlong line of discussion of where once a monopoly in a tech industry is there they ntend to want to suppress what s coming next or control. It or make sure it doesn t hurt nthem paul solman. I m thinking about silicon alley nhere in new york or silicon.
Whatever all over the country in various cities. And i would have thought the last thing we nneed to worry about is too little innovation in technology. In america. Tim wu.
You know you would think that but amazon and google are the new faces of nnew york innovation. If you talk to venture capitalists in silicon nvalley. They say well if you go anywhere near facebook. Or anywhere near google.
You re nfinished that s the kill zone paul solman. Twenty years ago as we reported nback then the kill zone was around microsoft silicon valley antitrust lawyer gary reback nhad represented nearly all of microsoft s major rivals gary reback attorney. They can take any product nthey want bundle it into the operating system and put competition out of business paul solman that s what microsoft had done nwith its internet browser. Christine varney attorney when you click non that internet icon you re going to get what microsoft considers the best way for nyou to get to the internet.
Which is the internet explorer that s produced by microsoft paul solman by bundling explorer into the nwindows operating system for free microsoft. According to netscape..
Was competing unfairly nwith netscape s browser called navigator tim wu microsoft was the power of convenience. N1990s version and i think there is this courageous moment nwhere. The government said we don t buy it we think you just want to monopolize this nindustry. We think you want to control the future of nthe internet by controlling the browser.
And so microsoft s control was broken. Then you had all these other companies emerge that s when google amazon facebook got their nstart so i think it s a cycle. I think you constantly need to keep your eyes non. The big guys and break their capacity to control the future.
Mark zuckerberg. Chairman and ceo. Facebook ni. Know that when we address these challenges.
We will look back and view helping people nconnect and giving more people. A voice as a positive force in the world. Paul solman. Another curse of bigness you nwon t be surprised to hear outsized political influence.
Tim wu. The more concentrated an industry nand extreme. The monopoly is the more easily able to influence government to get what it nwants. Paul solman.
So what s an example. Tim wu. 2003. You know debating new prescription ndrug legislation.
The pharmaceutical industry decided that the nbest thing it could do was to prevent medicare. Which of course is the biggest buyer of ndrugs from negotiating for lower prices. The lobbying effort was over 100 million. But the investment paid off to the tune of n 10.
Billion to 15 billion a year paul solman now imagine the clout of a facebook nan amazon. A google..
But even higher prices stagnation and political ninfluence says. Tim wu. Don t exhaust. The list of bigness downsides.
There s also economic inequality. Tim wu. A growing number of economists have nrecognized that when you have most industry concentrated to three or four firms. The tendency nis towards wage stagnation towards higher profits for shareholders and executives and ncertain professionals.
But the rest of the population making less paul solman. Consider health care wu says nthe fastest growing sector of the economy. Tim wu. It s very difficult to bargain with na monopoly hospital for a higher wage.
If you re a nurse. What s your leverage especially if there s nonly one hospital in town because they bought all the other hospitals paul solman. Finally. Tim wu cites one more ndanger perhaps the most ominous of all you have written about the dangers of the nconnection between monopoly and authoritarianism tim wu.
There s a history and a track record nof. An economy dominated by monopoly flipping into an authoritarian form of government and i don t think. It s crazy to start becoming nconcerned about possible rise of fascism in our times. Paul solman.
But you re not saying facebook. Nand amazon and google are in cahoots with the government in the way that companies were nwith hitler in germany in the 30s. Tim wu. No i m not saying anything like that i think we need to be very careful about making nsuperficial comparisons.
But i do think we need to be aware of the ndangers of a union of private and public power imagine facebook cooperating with an authoritarian nregime they know everything about us. They know what we do they know how to influence us. If you imagine these two units working together ni think. It s a very scary prospect paul solman for the ” .
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