Where Warren’s Wrong • Hacker News Board

Re: Where Warren’s Wrong

#271

Post by tathougies » Wed, Mar 13, 2019, 12:04 AM UTC

scarface74 wrote: post #223

tathougies wrote: post #214

Earlier quoted context omitted.

Profit is a function of competition. If Apple had competitors, it would not be able to charge as much as it did for its computers. You argue that Apple does have competition, and that's nominally true if you are very coarse and sloppy with your comparisons, but due to marketing and their walled garden, they are basically a monopoly over the upper / more artistic portions of the market: https://wccftech.com/apple-ipho…

Profit is a function of competition. If Apple had competitors, it would not be able to charge as much as it did for its computers. Are you really saying that Apple has no competition in computers ? Apple has been competing against commodity PC makers for 40 years. Or are you saying that Apple doesn’t have competition making MacOS computers? Apple competes with generic PC makers by making a differentiated experience .…

> Are you really saying that Apple has no competition in computers?

Of course not. A company need not have a monopoly in every market they compete in. For example, Apple produces an office suite (iWorks), but due to the competitive nature of that industry doesn't make money off of it.

Apple doesn't have a monopoly on computers, but it does not make much profit off of them. Most of its profit comes from smartphones, where they do have a monopoly on the upper portion of the market, and also within their own walled garden.

For example, in 2015, 50% of Apple's revenue was iPhone: https://www.businessinsider.com/heres-where-apple-really-mak...

Re: Where Warren’s Wrong

#272

Post by lswainemoore » Wed, Mar 13, 2019, 12:12 AM UTC

root_axis wrote: post #233

mech422 wrote: post #227

Earlier quoted context omitted.

Amazon is the one that continues to amaze me. People forget the original pitch to investors was _LOSE_ money for 5 years until they either drove competitors out of business, or became the single largest e-commerce provider. I've never understood how this was legal. It seems like the definition of 'anti-competitive' and 'predatory'? If Microsoft gave a free computer with every purchase of windows, and could afford to…

Sounds ok to me. I think the consumer would be very happy with 200 dollar PCs that were comparable in quality to thousand dollar machines.

Ok...but the point is that after they achieve the monopoly they can jack up the price to well over a thousand dollars without worrying about losing market share.

Re: Where Warren’s Wrong

#273

Post by nanis » Wed, Mar 13, 2019, 12:47 AM UTC

scarface74 wrote: post #231

dragonwriter wrote: post #225

Earlier quoted context omitted.

> Are you really saying that Apple has no competition in computers? They can have no competition for their computers when other people are selling computers. The reason the pricing power standard is used in antitrust is that a intuitively appealing descriptive category may not actually be a domain in which all products are actually considered against each other by purchasers and thus may not actually be a single mark…

So every company is therefore a monopoly on their products since competitors can’t sell them? Coke has pricing power on Coke and can sell it at premium over Generic Cola. Does that make Coke a monopoly?

> So every company is therefore a monopoly on their products since competitors can’t sell them?

Yes. It has a monopoly over its product.

In terms of whether we care about their monopoly power, two things matter: 1. Whether they are close substitutes to those products; and 2. Whether there is free entry & exit in the industry.

Given that a monopolist will only operate along the elastic portion of the demand curve it faces, availability of substitutes is almost a given. When the monopolist makes supranormal profits, other competitors see an opening for providing those substitutes which reduces the welfare loss from Coca Cola's monopoly over its products.

Re: Where Warren’s Wrong

#274

Post by ars » Wed, Mar 13, 2019, 1:46 AM UTC

strange_quark wrote: post #193

_ea1k wrote: post #79

Earlier quoted context omitted.

So your argument is that a marketplace is a place where it is easier for a third-party to get their goods sold than a retailer? And the distinction is how a supplier gets their product in is the differentiator? And then the argument is that the marketplace (where it is easier to get listed) should be regulated more than the retailer (which often uses control over sales to push prices up)? I'm not onboard with this.

The argument is that retailers take on risk by agreeing to sell a product since they purchase the product upfront. A marketplace like Amazon is different because they can take on 0 risk while still collecting all the data about what's selling and then turn around and undercut the vendor with an Amazon Basics product risk free.

> since they purchase the product upfront.

That's not actually how retail works. Products are shipped to stores first, then are sold, and only 1 to 3 months later are the vendors paid.

Unsold products are simply returned with no risk to the store.

On top of that vendors will PAY stores for better shelf space, and will even be willing to stock the shelf, for free, for the store.

Re: Where Warren’s Wrong

#275

Post by lsiq » Wed, Mar 13, 2019, 1:50 AM UTC

cm2187 wrote: post #33

chj wrote: post #22

The author is nitpicking. Warren may be wrong about the history of bing and google, but that's not really important. She's 100% right about Amazon, and the author conveniently forgot to mention. Most people in tech industry always strive to build monopoly and dominance. In their eyes, Warren's idea is of course insane. But viewing from another point, in order to protect competition and small businesses, her proposal…

Actually amazon is the one that I would say doesn't have a monopoly. It doesn't have a monopoly in the retail space (far from it), nor in the cloud hosting (let alone server hosting) business, nor in online streaming (music/tv). Google on the other hand has close to a monopoly on search (and browsers). Facebook on social medias.

I love how people love saying Amazon doesn't have a monopoly in retail when that massive category includes the sale of all consumer (and some producer) goods.

Amazon has 70%+ market share in many sectors of retail, such as books. But because it's only a fraction of their business, it seems like nothing.

Re: Where Warren’s Wrong

#276

Post by chj » Wed, Mar 13, 2019, 2:45 AM UTC

hosh wrote: post #252

chj wrote: post #22

The author is nitpicking. Warren may be wrong about the history of bing and google, but that's not really important. She's 100% right about Amazon, and the author conveniently forgot to mention. Most people in tech industry always strive to build monopoly and dominance. In their eyes, Warren's idea is of course insane. But viewing from another point, in order to protect competition and small businesses, her proposal…

The author has written a lot about Amazon, how it gained power, both in that article and in others on that blog. He did not conveniently forget to mention it. The article may seem like nitpicking the history of Bing and Google at the beginning of his article. However, if one were to read through the whole thing, he is showing how Warren is coming from an inadequate frame to make an effective policy. The author analyz…

Warren's Amazon coffee maker argument is pretty convincing, but the author focuses on the history of bing and google, that's a big turn off. Shouldn't the author come from the perspective "Where Warren's Right" if the author's "Aggregation Theory", which I am not familiar with, happens to have the same spirit of Warren's proposal? Is it reasonable that since Warren made a mistake about bing and google, therefore she's inadequate for coming up with a policy?

To be honest with you, I didn't read the whole thing. Instead of spending many screens of texts in the beginning to show how Warren's wrong, the author could instead promote his own theory right at the start, then we will have a better idea where he's coming from. Right now, from the structure of his writing, it feels nitpicking.

Re: Where Warren’s Wrong

#277

Post by known » Wed, Mar 13, 2019, 4:29 AM UTC

I've a simple/enforceable solution; Tax their revenues;

Re: Where Warren’s Wrong

#278

Post by abalone » Wed, Mar 13, 2019, 4:49 AM UTC

yeldarb wrote: post #77

abalone wrote: post #49

I’m worried about breaking up Apple. Control of the App Store is how they keep the iPhone secure and malware free. They make money on things sold through the store, yes, but they make most of their money in the phone itself. Break that up and now whoever runs the store has a lot more pressure to make money by exploiting your data, cutting back on curation, etc.

I don't think that's what's being proposed. It's that if they are going to control the App Store they can't also participate with their own apps. For instance, Apple Music, which has gotten over 50 million paying users not by being the best music app but by being pushed heavily by Apple as the platform owner. In Warren's plan, Apple Music could not be controlled by Apple. It would have to compete in the App Store on…

> For instance, Apple Music, which has gotten over 50 million paying users not by being the best music app but by being pushed heavily by Apple as the platform owner.

Apple Music has more music, a longer free trial and integration with iTunes which lets you upload your own music and sync it to all your devices among other features. By one estimate it converts free users into subscribers at 3X the rate of Spotify.[1] That’s a sign of happier customers, not just being pushed by the platform. Worth mentioning they pay artists more too.

And what are you saying, Warren would let Apple run the store but would have to break off Music into a separate entity? All their other bundled apps too like Maps? I didn’t get that from the proposal.. and it doesn’t strike me as consumer friendly.

[1] https://bgr.com/2018/09/25/apple-music-vs-spotify-paid-subsc...

Re: Where Warren’s Wrong

#279

Post by RestlessMind » Wed, Mar 13, 2019, 4:57 AM UTC

chj wrote: post #22

The author is nitpicking. Warren may be wrong about the history of bing and google, but that's not really important. She's 100% right about Amazon, and the author conveniently forgot to mention. Most people in tech industry always strive to build monopoly and dominance. In their eyes, Warren's idea is of course insane. But viewing from another point, in order to protect competition and small businesses, her proposal…

> The author is nitpicking

You are being charitable to the author. Usually Stratechery articles are decent, but on this one, the author has many ignorant remarks.

> Bing

Microsoft, if not checked with antitrust investigations, could have shoved Bing (or Live, or MSN Search) down everyone's throat. Just like Google tried to do with Google+. So to credit Warren's point, without antitrust case, we could be living with Bing (or Live or MSN Search).

> of course a browser should be bundled with an operating system; a new computer without a browser would be practically useless (for one, how do you install a browser?).

Hasn't the author heard of floppy disks or CDs with software, which was the popular way to install softwares in 90's? In fact, without Microsoft's free offering, browsers could have remained a software worth paying for and we wouldn't be living with an almost monoculture.

> Google would have emerged with or without antitrust action against Microsoft.

I read a wonderful article a while back, which stated that the real effect of antitrust on Microsoft was that every minor decision was heavily scrutinized internally, with lawyers vetting the major decisions, thus dampening the velocity of the company. So it is debatable whether Google could have emerged without the antitrust lawsuit.

Re: Where Warren’s Wrong

#280

Post by hjk05 » Wed, Mar 13, 2019, 7:31 AM UTC

cgriswald wrote: post #116

scarface74 wrote: post #78

Earlier quoted context omitted.

And it “captured it” because of the incompetence of the previous incumbents in retail - Barnes and Noble, Toys R Us, Tower Records, Walmart, etc. Why should the government punish companies because they were able to disrupt incumbents? Should we also punish Apple because RIM and Palm couldn’t compete?

You seem to be arguing for a winner-take-all approach to the market. Should future competitors to [monopolistic entity] be punished because [previous competitors] were unable to effectively compete? In any case, I don't think punishment is really an apt metaphor for breaking apart a monopoly.

Amazon is not a monopoly... monopoly does not mean “successfull company I son’t like”