Taming 800 Pounds Gorilla!
Can regulations can catch up with platform giants?
This is the concluding part of the three part series on Platform and Anti-trust. You may want to read the first two parts on Size does Matter and 800 Pounds Gorilla Unleashed.
The central thesis of three part series is as follows- Platforms gain extraordinary power through user side network effects and commodification of supplier and use access to cheap capital to execute Predatory Pricing and Vertical Integration. Governments must maintain oversight over platforms by continuously evaluating the threat to Customer Welfare and work towards Preservation of Open Markets.
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DTW
During the Week, Amazon filed a request with Federal Trade Commission seeking recusal of new Chairwoman Lina Khan from antitrust investigations of Amazon.
Amazon fired the first shot against Lina Khan as a pre-emptive strike as she has established her credential as an anti-trust domain expert and now being chair of Federal Trade Commission gives her direct control over federal government action against the BigTech. She is particularly a thorn on BigTech side especially Amazon because of her seminal article in Yale Law Journal, Amazon's Antitrust Paradox, which The New York Times described it as "reframing decades of monopoly law". Read more about platforms leveraging on Network Effects and creating monopolies in my previous newsletter on Size Does Matter.
This is an important phase in the current debate about BigTech monopoly and extraordinary control over humanity connected to internet or otherwise. BigTech is not afraid of spending big dollars in its attempt to manage regulations and regulators. According to a report in Statista, BigTech represented by AAFG have massively increased their spending on lobbying in face of anti-trust scrutiny. They have spent a combined total of $51.7 million on US federal government lobbying over the past twelve months which is 29 percent more than 2015 and nearly five times compared to 2010.
BigTech specially Facebook and Google which have faced serious anti-trust charges have also not shied away from bolstering their advocacy and PR arsenal. Imagine Facebook hiring former UK deputy prime minister Sir Nick Clegg as head of its global affairs and communications team in 2018 and then using his well-placed expertise to advise Facebook on how to keep the regulators away.
I wrote earlier about the problem of regulations and platforms in 2 Big 2 Ctrl newsletter. Please click on the link to read how issue of platform and regulations could be understood from three different perspectives- Regulation of Platforms , Regulations on Platforms and Regulations by Platforms.
More importantly , the government’s concern should be reducing the threat to Customer Welfare AND Preservation of Open Markets. This would require consolidated action from governments across the world as a splintered internet and/or haphazard approach to BigTech regulation would allow them play governments against each other. They might also use the regulatory arbitrage as it already exists in financial world to create safe havens with no regulatory oversight.
The current setback suffered by US regulators on their case against Facebook’s acquisition of Whatsapp and Instagram points to the problem of using 20th century manufacturing industry anti-trust paradigms for the 21st century exponential technology corporations where the consumer facing product is typically free. In fact , Facebook went past Trillion Dollar valuation around the time a federal judge dismissed the case against Facebook brought by Federal Trade Commission (FTC) and 48 state attorneys general.
In an even earlier piece on Platforms and Nation States , I had jokingly warned about how Platform Skynet looms ! Nations have to think out-of-box to deal with platforms as their relationship is going to become ever more complex. We are entering a new world where seemingly unrelated events in far off countries can have damning consequences for millions far away in time and space. Technology and globalisation have increased the potential of platforms acquiring power that they should not have and can not control !
OTW
Over the Weekend, I read two of the latest works by Jhumpa Lahiri- In Other Words and Whereabouts: A Novel. Some of you might recall English language drama film Namesake directed by Mira Nair and written by Sooni Taraporevala based on the novel The Namesake by Jhumpa Lahiri. Of course, it was an extraordinary adaptation and was lovely to see Tabu and Irrfan Khan play first-generation immigrants from West Bengal to the United States.
These two books are extraordinary because they were originally written in Italian by Jhumpa Lahiri and then translated in English. In the Author’s note in “In Other Words“, she talks about her reluctance to translate her own work into English as it might lead to loss of “rough edges and its oddness“. After all, she felt compelled to learn Italian and did not want to go back and forth between English and Italian. The case with her Italian fiction work Whereabouts: A Novel is different as she wrote it in Italian and then translated it in English as well.
One of the striking feature of Jhumpa’s work is her portrayal of migrants both internally and externally. More often than not, migration is associated with pain and trauma of uprooting ourselves, leaving one’s native and then perhaps re-rooting at a new place. But like in many parts of her novels and non-fiction, migration is also harbinger of hope and new beginnings. Having grown up and lived across the country, I can sort of understand the multi-placedness of home. I have always felt plural identities whenever somebody has asked me “Where are you from?“. It is not rootlessness but on the contrary I feel more local and global simultaneously and thus exhibit more multicultural manifestations.
Stay Safe and get vaccinated ASAP.
I Love You
Shailendra
OTM
Opportunities through MountainSpeak are available for current second year MBA students in sprINTERNship.
Idea of sprINTERNship is to create sprint version of live business projects focusing on Marketing and Strategy. These engagements would be mostly remote work involving social media, market research, platform strategy, data analysis and landscaping reports. Students can use the following link to submit a proposal
https://forms.gle/SYhjDhyFAmpwRJSM8
I would again request my readers in corporate world to share small live projects for my current students.Please use the following google form to share interesting projects.