The political jousting for the big tech

Let the hammer fall

There’s a reason why I am focused on the big-tech (and it represents an ongoing discourse/discussion) around its gradual impact on healthcare. It is critical to be aware of the legal landscape (if not the specific articles of law or the legal theory), but how landmark judgements shape the policy direction.

Christopher Min writes:

Amazon, the $1.8 trillion do-everything-for-everyone company, operates online and bricks-and-mortar retail stores, sells outsourced computing services, runs a global logistics operation, produces movies, provides a social network built on streaming, dominates smart speakers, peddles home security services, aims to launch a satellite network, provides healthcare services, and last year acquired Zoox, a self-driving car company.

The importance of the network effects is clear:

A characteristic of platform companies, says Kai Wu, founder and chief investment officer of investment firm Sparkline Capital, is that they take advantage of “network effects” such that every additional user they add potentially brings greater value than the previous one.

The same is true of smartphone operating systems—think of the duopoly of Android and Apple’s iOS—e-commerce marketplaces like Amazon’s, and the like.

This is an interesting argument here:

Old-style industrial behemoths were largely premised on supply-side economies of scale that were exhausted long before a company could completely take over and monopolize a market for goods, which is one reason that General Motors, for example, never ate the entire auto market. The network effects the tech companies are enjoying create a whole new class of economies of scale, which were largely unavailable to industrial conglomerates.

Something more and to conclude:

Until and unless those regulations have a meaningful impact on the profits or acquisitiveness of these tech giants, all evidence from the study of platform economies suggests that they will only grow bigger. In other words, Amazon, Microsoft, Apple and Alphabet might just be where GE was in the middle of the 20th century, a time when it dominated its industries but was, in terms of revenue and market value, only just getting started.

The companies will grow bigger and more powerful (and entrenched) unless there’s something from the regulators. The push back from the regulators has started:

How the FTC Is Reshaping the Antitrust Argument Against Tech Giants – WSJ

Since mid-1980s Reagan-era reforms of antitrust law, the test for whether a company is a monopolist has been whether its dominance harms consumers—usually through higher prices or shoddy goods. It has been hard to make that charge stick against companies that offer many of their services free, like Google and Meta Platforms (née Facebook), or at (usually) competitive prices, like Amazon ; or that take a cut of what seems to be a big, competitive market, like Apple does with apps.

To understand, we have to look at an unusual word the FTC has used of late: “monopsony.” If a monopoly is a market with one dominant seller, a monopsony is its inverse, a market where one buyer is pre-eminent. Monopolists can gouge consumers. A monopsonist has the same power over sellers.

FTC launched internal investigations and tightening the noose around:

FTC Staff Presents Report on Nearly a Decade of Unreported Acquisitions by the Biggest Technology Companies | Federal Trade Commission

Launched in February 2020, the inquiry analyzed the terms, scope, structure, and purpose of these exempted transactions under the Hart-Scott-Rodino (HSR) Act and the Commission’s reporting requirements by Alphabet Inc.,, Inc., Apple Inc., Facebook, Inc., and Microsoft Corp. between Jan. 1, 2010 and Dec. 31, 2019. These companies comprise the top five U.S. companies by market capitalization.

The report appears here.

That’s where monopsony enters the discussion. This focus is one of the newest ways the FTC is attempting to establish harms to competition from big tech companies, says Krista Brown, a senior analyst at the American Economic Liberties Project, a liberal think tank with which Ms. Khan has collaborated in the past. Marketplaces where companies are both a referee and a player, setting the terms of how the market works and also participating directly by selling their own goods and services, are of special concern, she adds.

These issues will have a huge impact on the healthcare – assuming the legal jousting goes in favour of the FTC, will they turn their attention towards the hospitals (or their efforts to tame the healthcare market)? I am surprised they haven’t focused their attention on EPIC (which makes the EMR) and has an outsize market for the services.

The impact of the distribution (and gatekeeping) is huge. Apple controls the app store (including the reviews and discoverability), as most users don’t go beyond the default. New apps clutter the screen for attention, and usually recoup their costs through the advertising SDK’s. It is easy to say that “patients will download applications”, but it requires a lot of effort to make it relevant (and actionable). Otherwise, they serve as vestiges of executive decisions (and sunk costs) that remain useless for both parties involved.

Some more legal stand-offs:

An ongoing lawsuit brought by a group of state attorneys general accuses Google of using its position in the middle of auctions for online advertising to unfair advantage. Google, a unit of Alphabet, has said the lawsuit lacks merit, that its advertising technologies support a huge variety of sites, that it helps websites and apps reach customers around the world, and that there is vigorous competition in online advertising.

Google has captured the bulk of advertising costs (across the world), and I don’t know of any other “money-making” machine. They will use all resources at their disposal to keep their cash cows intact. I don’t think the big tech will be broken up- possibly a little better regulation, and this is not going to be the end of the argument. Should they extend the attention to healthcare? It should be clear that they are beginning to smell the blood in the waters. Healthcare represents the best profits (and predictably so) out of any other industry.

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