Wednesday, May 31, 2017

Digital market monopoly fact of the day

Consider this from a new book by Jonathan Taplin,
Last year, between Facebook and Google, they took about 80 percent of all new advertising on the internet. That’s shocking. The local newspaper couldn’t make any money from advertising, and the New York Timescouldn’t make any money from advertising. Take, for instance, something like YouTube. A musician with a big, successful song, if they could sell a million downloads on iTunes they could make $900,000. If they’d get a million views on YouTube they’d make $900. So it just became obvious that’s where the problem was... I got to see that Amazon was doing the same in the book business. It wasn’t a monopoly, but a monopsony—it could force book sellers to push their prices down, down, down.
I kept coming back to these three—Google, Facebook, and Amazon. All have extraordinary market shares. Google has an 88 percent market share in search advertising and an 80-plus percent market share in Android. Amazon has a 74 percent market share in e-books, and Facebook controls 70-plus percent of mobile social media when you add Instagram, Messenger, and WhatsApp. What more empirical evidence does one need to prove concentration?
 And more,
I do not believe that Apple and Microsoft are monopolies, as they are competing in markets with many players. Google, Facebook, and Amazon are clearly monopolies. I my view, a rent-seeking enterprise is someone who has control of a specific asset—1.9 billion people, in Facebook’s case—and they extract rent from that in the form of advertising premiums for access to the data that they have. The same thing happens with Google. They have data, and they extract advertising premiums for marketers to get access to this specific asset that they have. In the case of Amazon, it is a monopsony, so their ability to extract rents is not as simple as it is with Facebook and Google and has more to do with their control of their specific market, which is access to the online book market, whether through e-books or regular books.
I really do not understand why this does not attract anti-trust action? Or I guess this is crony capitalism of the digital age!

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