by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The traditional case against monopolies is that they are bad for consumers. But some technology companies, especially social-media concerns such as Facebook, complicate that, because they become more valuable to consumers the more they dominate the market. Facebook is like the telephone. One telephone user finds it not valuable at all — there’s nobody to call. Two telephone users find it of limited usefulness. A network of billions of users makes the telephone immeasurably more useful. Peter Thiel, founder of PayPal and an early investor in Facebook (who has written in these pages), says that he likes to invest in monopolies, but Amazon, Apple, Google, and Facebook are not monopolies in the traditional sense, leveraging their market power to squeeze more out of consumers via higher prices. They mainly do the opposite. “We measure an antitrust violation by looking at consumer harm — not harm to competitors,” Penn law professor Herbert Hovenkamp told PolitiFact. That’s one reason the Trump administration, in spite of the president’s big talk, probably won’t move against Amazon: There isn’t a case. When consumers begin to feel the bite, conventional economic theory goes, then competition will step in and set things right.
But what if the bite isn’t felt? We don’t write a check to Facebook or Google once a month. We compensate them in other ways — attention must be paid and privacy surrendered and personal data sliced and repackaged and traded like a subprime mortgage.