So if there are 3 competitors and one drops out, the other two are now guilty of something? In all my years studying economics and law, I never heard anyone suggest anything remotely this draconian.
Considering in the Google antitrust case it came out that the companies were working hand in glove for years, what were have is a duopoly where the participants collude. This is also the case in broadband where ISPs carved up neighborhoods between themselves to reduce competition.
So sure, duopoly of real competitors is one thing, but that’s rarely the case once players realize they can set prices and divide the spoils.
> Considering in the Google antitrust case it came out that the companies were working hand in glove for years, what were have is a duopoly where the participants collude.
But then, the problem is that you have a cartel, not a duopoly. That’s the thing: you can only punish companies for their actions. A duopoly is a fact, in itself it does not imply any particular behaviour from either company. If there is collusion, then it’s anti-competitive behaviour, abuse of their dominant positions in the market, etc. Things that are already illegal and should be enforced.
> This is also the case in broadband where ISPs carved up neighborhoods between themselves to reduce competition.
The reason there is only 1 broadband ISP is because people are not willing to pay sufficiently more for fiber to offset the costs to install fiber to the home, especially in places with buried utilities.
Therefore, the existing coaxial connection is the only economically viable option.
Also, it rarely makes sense for 1 home to have multiple physical infrastructure connections, so they lend themselves to natural monopolies. If a house has access to fiber, it makes no sense to spend resources to run another fiber to the house.
Which is also why ISPs should be utilities, but that is not comparable to personal devices.
> So if there are 3 competitors and one drops out, the other two are now guilty of something?
Well, Microsoft eventually got all but forced to port Office and, for a time, Internet Explorer to macOS to evade getting sanctioned by the EU.
In a similar vein, if the market is not healthy any more, the duopolists may be forced by regulatory authorities to make life easier for potential startup competitors: open up file format specifications, port popular applications with network effects (iMessage, Facetime, Find My in the case of Apple) to other platforms or open up specifications to allow others access/federation.
> Well, Microsoft eventually got all but forced to port Office and, for a time, Internet Explorer to macOS to evade getting sanctioned by the EU.
I have seen some people assert this a few times in the last couple of weeks and I don’t know where this comes from. This is not at all what happened.
This was part of an agreement between Apple and Microsoft in 1997, long before any EU decision. Microsoft bought some Apple shares and agreed to support office on MacOS for a few years, and Apple made IE their default browser.
One can argue whether they did it to improve the optics in their (American) antitrust lawsuit (and there are several details that do not make sense if it were the case), but it certainly was not forced on them by any court.
Ugh, this entire thread will be a frustrating exercise in folks insisting their feel-feels are the law of the land because they hate Apple and that takes precedence over facts and reality.
> So if there are 2 competitors and one drops out, then it's hardcore illegal, but otherwise it's a-okay?
No, it is absolutely not. There is nothing illegal about having a monopoly in the US. The government even explicitly and purposefully creates and grants monopolies pretty often. Natural monopolies are not illegal. Abusing your government-granted or natural monopoly is the illegal behavior.
I'm curious to see how they even construe a duopoly as a monopoly under current law, because this will have some profound impacts to the entire economy if they succeed.
The term “HHI” means the Herfindahl–Hirschman Index, a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600).
The HHI takes into account the relative size distribution of the firms in a market. It approaches zero when a market is occupied by a large number of firms of relatively equal size and reaches its maximum of 10,000 points when a market is controlled by a single firm. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.
The agencies generally consider markets in which the HHI is between 1,000 and 1,800 points to be moderately concentrated, and consider markets in which the HHI is in excess of 1,800 points to be highly concentrated. See U.S. Department of Justice & FTC, Merger Guidelines § 2.1 (2023). Transactions that increase the HHI by more than 100 points in highly concentrated markets are presumed likely to enhance market power under the Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade Commission. See id.
So if there are 3 competitors and one drops out, the other two are now guilty of something? In all my years studying economics and law, I never heard anyone suggest anything remotely this draconian.
Considering in the Google antitrust case it came out that the companies were working hand in glove for years, what were have is a duopoly where the participants collude. This is also the case in broadband where ISPs carved up neighborhoods between themselves to reduce competition.
So sure, duopoly of real competitors is one thing, but that’s rarely the case once players realize they can set prices and divide the spoils.
> Considering in the Google antitrust case it came out that the companies were working hand in glove for years, what were have is a duopoly where the participants collude.
But then, the problem is that you have a cartel, not a duopoly. That’s the thing: you can only punish companies for their actions. A duopoly is a fact, in itself it does not imply any particular behaviour from either company. If there is collusion, then it’s anti-competitive behaviour, abuse of their dominant positions in the market, etc. Things that are already illegal and should be enforced.
> This is also the case in broadband where ISPs carved up neighborhoods between themselves to reduce competition.
The reason there is only 1 broadband ISP is because people are not willing to pay sufficiently more for fiber to offset the costs to install fiber to the home, especially in places with buried utilities.
Therefore, the existing coaxial connection is the only economically viable option.
Also, it rarely makes sense for 1 home to have multiple physical infrastructure connections, so they lend themselves to natural monopolies. If a house has access to fiber, it makes no sense to spend resources to run another fiber to the house.
Which is also why ISPs should be utilities, but that is not comparable to personal devices.
1 reply →
> So if there are 3 competitors and one drops out, the other two are now guilty of something?
Well, Microsoft eventually got all but forced to port Office and, for a time, Internet Explorer to macOS to evade getting sanctioned by the EU.
In a similar vein, if the market is not healthy any more, the duopolists may be forced by regulatory authorities to make life easier for potential startup competitors: open up file format specifications, port popular applications with network effects (iMessage, Facetime, Find My in the case of Apple) to other platforms or open up specifications to allow others access/federation.
> Well, Microsoft eventually got all but forced to port Office and, for a time, Internet Explorer to macOS to evade getting sanctioned by the EU.
I have seen some people assert this a few times in the last couple of weeks and I don’t know where this comes from. This is not at all what happened.
This was part of an agreement between Apple and Microsoft in 1997, long before any EU decision. Microsoft bought some Apple shares and agreed to support office on MacOS for a few years, and Apple made IE their default browser.
One can argue whether they did it to improve the optics in their (American) antitrust lawsuit (and there are several details that do not make sense if it were the case), but it certainly was not forced on them by any court.
1 reply →
Yea, that is pretty much what I meant. This would be good for everybody in the end.
So if there are 2 competitors and one drops out, then it's hardcore illegal, but otherwise it's a-okay?
Ugh, this entire thread will be a frustrating exercise in folks insisting their feel-feels are the law of the land because they hate Apple and that takes precedence over facts and reality.
> So if there are 2 competitors and one drops out, then it's hardcore illegal, but otherwise it's a-okay?
No, it is absolutely not. There is nothing illegal about having a monopoly in the US. The government even explicitly and purposefully creates and grants monopolies pretty often. Natural monopolies are not illegal. Abusing your government-granted or natural monopoly is the illegal behavior.
I'm curious to see how they even construe a duopoly as a monopoly under current law, because this will have some profound impacts to the entire economy if they succeed.
4 replies →
https://www.justice.gov/atr/herfindahl-hirschman-index
Herfindahl-Hirschman Index
The term “HHI” means the Herfindahl–Hirschman Index, a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600).
The HHI takes into account the relative size distribution of the firms in a market. It approaches zero when a market is occupied by a large number of firms of relatively equal size and reaches its maximum of 10,000 points when a market is controlled by a single firm. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.
The agencies generally consider markets in which the HHI is between 1,000 and 1,800 points to be moderately concentrated, and consider markets in which the HHI is in excess of 1,800 points to be highly concentrated. See U.S. Department of Justice & FTC, Merger Guidelines § 2.1 (2023). Transactions that increase the HHI by more than 100 points in highly concentrated markets are presumed likely to enhance market power under the Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade Commission. See id.