Monopoly: An Ocean of Analogy

So I recently came across an insightful if overly alarmist article from The American Conservative regarding the question of whether to apply anti-monopoly laws to technology companies. Exploring whether more deliberate anti-monopoly policies for digital technologies are warranted is useful, and many of the points the article makes (about network effects, privacy, etc) are things I agree with. I confess I was shocked to read an article in TAC that advocates for more government regulation. And then, they blew my mind. Holy mother of god, no kidding, the article goes on to suggest:

The … goal [should be] sharing the wealth. What may be needed is a new kind of social contract under which a substantial portion of the wealth generated by robots and other non-human systems is redistributed.

This is The American Conservative, “a nonprofit, nonpartisan organization that presents a measured, pertinent, principled conservatism for our time,” advocating for wealth redistribution! I… I don’t recognize my country any more.

We Must All Reject Lumps

However, the analysis suffers from at least one serious flaw: the article lumps unrelated things together, and then condemns the lump.

Google controls nearly 90 percent of search advertising, Facebook almost 80 percent of mobile social traffic, and Amazon about 75 percent of e-book sales.

So… uh… one of those numbers is simply wrong. Google’s share of the US digital ad market is 42.2%. [1]

But more importantly using “tech companies” to discuss monopoly is like using “boats” to discuss maritime risks. Putting Facebook and Google in with Amazon is like putting aircraft carriers and nuclear subs in with container ships. Facebook and Google have a role in controlling our access to information; Amazon lets us order stuff. Google dominates search traffic, yes. Facebook controls social, yes. Amazon? Sure, Amazon has a comparable influence on e-book sales… but ebook sales are less than 25% of the overall book market. 73%, 79%, 19%. Definitely the same thing.

Furthermore, the comparison weakens when we consider the broader context. A media monopoly, whether “technical” or traditional, is more dangerous to the world than a non-media monopoly. The latter controls pricing, which is bad; but the former controls thinking. So we should consider how different technical media is from traditional media, shouldn’t we? If so, the companies he chooses to talk about media monopolies seem almost willfully selective. How can we talk about Facebook and Google and not talk about Sinclair (who have a 71.5% reach), Ion Media (67.3%), and maybe even Fox (at 37.4%)? It’s like talking about the power of world navies, and focusing on Germany and France while leaving out the US, Russian, and British forces. Google and Facebook are platforms; they don’t write or frame the news. If you are worried about the media narrative, worry about the media. Now, to be fair, it is interesting to compare the revenue of those companies. Sinclair made $4.5BB in 2017; Fox $28.9BB. Google brought in an impressive $111BB, Facebook $40.7BB. So is the problem the market position? Or the ability to generate revenue from it? [2]

Similarly, if you want to consider whether Amazon has a monopoly, you need to define the market. Are we comparing it against retailers? Amazon had 4% of US retail sales in 2017, compared to Target’s 4.7% and Walmart’s 10.8%. If it’s media, Amazon is basically rounding error. Why is Amazon on this list?

The theme of the article is about data – and specifically marketing data. That’s interesting, but again, the comparison is incomplete. How much data do those technical companies really have, compared to, say, your grocery store? If you use a “rewards” card at a retailer, they know all about your purchasing. Is what Amazon has so different? If you read your news online, the newspaper knows a lot about your interests. How much more does Google really know?

These questions are useful and interesting, and I don’t know the answers. But sadly those aren’t the questions the article poses. Instead, the article says “technology bad!” and then moves on to propose strong measures to address that badness. If you’re going to target technology companies, you need to frame your attack. This article does not. This article is basically a scare story.

So why would the American Conservative post an article trying to scare us about tech companies? What is the commonality between these companies, what really distinguishes them from more traditional media companies or retailers?

It’s about the Captain

Without further analysis, I offer this useful table [3]:

Company CEO Party affiliation
Sinclair Christopher Ripley Republican
Ion Media Brandon Burgess Republican
21st Century Fox James Murdoch Republican
Walmart Doug McMillon Republican
Target Brian Cornell Republican
Apple Tim Cook Democrat
Amazon Jeff Bezos Democrat
Facebook Mark Zuckerberg Democrat
Google Sundar Pichai Democrat
Twitter Jack Dorsey Democrat

Is there, perhaps, something obvious that distinguishes these companies from the more traditional ones?

Where’s His Other Hand?

So what is this article really about?

Let’s consider it in context of what I’ve heard other conservative outlets focusing on. Like it or not, there are people who listen to Trump, and that includes a broad swatch of the media. Trump has a certain genius for distracting those people from issues that matter. He is adroit in bloviating sleight-of-hand. And when a trickster makes a big motion with one hand, you better watch the other hand.

So when Trump is pointing bigly at Amazon, and other conservative outlets pile on to “tech companies,” it is worth asking, what is in the other hand? Why the sudden attention? What are they pointing away from?

I think it’s this:

Our system of democracy is under organized attack by a foreign state. Our president was elected, in no small part, because the Russians manipulated our media. More frighteningly, they probed, and in at least some cases, compromised the voting machines. Instead of looking into that, our government is looking at Mark Zuckerberg and Amazon.

Should we be discussing market share of digital companies? Yes. Should that take precedence over talking about the companies that have a monopoly position in voting technology? 43.8% of the machines are supplied by Election Systems and Software; 37.3% by Dominion Voting Systems. That’s 81% of the machinery used to select our politicians, controlled by two companies. And they’re being hacked by the Russians.

Personally, I find that possible monopoly much more intriguing than the risk posed by Amazon’s position in selling romance e-books.

[2] The data about media and tech company position and revenue came from, who “fight to ensure [media and technology] are used for justice.” There’s a spreadsheet on that page that is pretty fascinating if you’re a data wonk; strongly recommend taking a look.
[3] Most of the political affiliation information came from the Open Secrets database of political donations. The exception is Sinclair, but if you question that I offer this: David Smith was the CEO until January of this year, and in 2016 David Smith met with Trump and told him, “We [Sinclair] are here to deliver your message.”

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