Curbing the New Corporate Power


K. Sabeel Rahman presents his argument, over at the Boston Review with responses by Juliet B. Schor, Adam Thierer, Arun Sundararajan, Sofia Ranchordás, Dean Baker, Robin Chase, David Bollier, Mike Konczal, and Richard White. Rahman (image by Rodrigo Corral):

Recent commentary on threats posed by Internet companies has drawn on the language of antitrust and monopoly. In a provocative New Republic essay last year, Franklin Foer argued that Amazon represented a modern form of monopoly; like U.S. Steel and the monopolies of the late nineteenth century, Amazon had acquired the power to unfairly discriminate on the market. But unlike those monopolies, Foer argued, Amazon has kept consumer prices low, obscuring its market power. According to Paul Krugman, Amazon is a different kind of monopoly. It does not extract rents from consumers but rather operates as a monopsony, a company whose buying power allows it to discriminate against suppliers. Google too is the subject of monopoly concerns thanks to its dominance in information gathering and its growing political influence. Former Secretary of Labor Robert Reich used the same analogy to nineteenth-century monopolies in his critique of Comcast.

In contemporary antitrust regulation, however, the central question is whether concentrations of economic and market power enable extractive or unfair consumer prices. On that metric, it is hard to show how Amazon and other Internet companies use power in harmful ways. If these companies lower prices and increase access for consumers, how could they be considered dangerous? Defenders of these companies also point out that they face competitors in the marketplace: Amazon does not control the retail sector; on paper, at least, Google has rivals in search; at the national level, Comcast faces competition in Internet service provision.

The kinds of power that Amazon, Comcast, and companies such as Airbnb and Uber possess can’t be seen or tackled via conventional antitrust regulations. These companies are not, strictly speaking, monopolies; Uber and Airbnb, in particular, do not engage in the kind of price-fixing or market dominance that is the usual target of antitrust regulation today. These companies are better understood as platforms or utilities: they provide a core, infrastructural service upon which other firms, individuals, and social groups depend. For instance, the publisher Hachette depends on Amazon to access the book-buying public. This dependency operates in the other direction as well. Consumers depend on the diligence of Airbnb and Uber to ensure that services contracted through them are safe and as advertised.

A platform thus presents a uniquely troubling form of private power that manifests in its ability to set not just prices but also the wages or returns for producers, and, most importantly, the terms of access to the marketplace itself.

More here.