By now, you’re probably aware that many U.S. lawmakers think Big Tech has a stranglehold on certain digital industries and therefore should be regulated or broken up.
But what if I told you there was a world in which the government didn’t actually discourage monopolies. A world where the government approved of, even supported, one company dominating at the expense of competition.
No, it’s the world you’re living in right now. I’m talking about government-sanctioned monopolies, companies that have less competition than the ’72 Dolphins and own total market share in their respective industries.
Think about the last time you bought a train ticket from Philly to Boston. Did you search any website other than Amtrak’s? You probably wanted to, but alas, there is no other option. “Amtrak has an uncontested, indefinite monopoly on intercity train operations in the United States,” writes Cornell professor Rick Geddes. And that’s fine with the government, considering it owns all of Amtrak’s stock.
Now think about utilities. You can’t shop around for your electric company like it’s HBO Max or Peacock. Many of these firms have a monopoly that is perfectly legal.
Why the government is ok with it
It thinks some products and services are so indispensable that inviting competition would be a waste of everyone’s time and inconvenience the consumer. Often, this is because of extremely high upfront costs and the efficiencies provided by scale.
- While it’s not expensive to launch a Morning Brew competitor (still, you don’t want to try), it is outrageously expensive to launch a rival to, say, California’s Pacific Gas & Electric (PG&E) utility.
- PG&E’s network includes nearly 170 dams, 42,141 miles of natural gas distribution pipelines, and 106,681 circuit miles of electric distribution lines.
The government response to industries like electricity provision has typically been: “Okay, if it makes sense to have just one player give everyone electricity in a certain region, let’s have one player. But we’ll heavily regulate it so consumers aren’t gouged.”
This framework has plenty of critics. Some argue that recent technological innovation in the power industry could open the door to healthy competition…if the government allowed it.
Bringing it back to Big Tech
Is it crazy to think that some of these tech companies have built such extensive “digital infrastructure”—the dams and pipelines of the internet—that they should also be treated like utilities? Not totally crazy: Thinkers on the left and right have been floating this idea for years. And the pandemic, which has left us dependent on social media for critical information and on Amazon for life’s essentials, has poured lighter fluid on those arguments.
But the folks who wield actual power aren’t swayed. Democratic Rep. Ro Khanna, whose district includes Apple’s HQ in Cupertino, CA, recently told C-SPAN, “I would not trust federal regulators to understand the innovation that is required to make the next iPhone.”
So don’t expect Google Search to be treated like it’s water flow to your house. But it probably won’t mind if it is—sometimes the closer the government gets up in your business, the more license you have to operate as a monopoly.
source : Morning Brew