Draft
How much is too much? It’s a central question in anti-trust theory. By economic definition, a monopoly is unlikely to be good. With little competition, innovation ceases. But what if the monopoly is simply the best option out of technical prowess?
When a business wields money to cause market distortions, it doesn’t allow certain markets.
Thiel’s anti-globalization opinion is actually a decent example of tech companies using their money to expand their product lines to markets where the tech does not fit the culture.
Private equity buying out industries is a great example of money not doing its job.
There’s also the problem of stock buybacks. The issue being money being used to
People hate tech CEOs and some just hate billionaires in general.
At what point should we even have billionaires? I was told that billionaires shouldn’t even exist, but just by the natural markets, a billionaire is just inevitable — you don’t need to be a scum and buy out firms or crud competition through political lobbying to become a billionaire: just a good business at big scale.
What I question instead is the degree of leverage. The classic concern about too much power is PE buying out a huge market share or buying out companies in general and worsening quality. The reasoning goes once you have leverage of your key stakeholders, you can enshittify your service quality but keep the prices. In classical economics, this is usually reserved for the classic monopoly, but monopolies on certain aspects of the market a company plays in is sufficient to hold significant power. and why is power an issue? I argue that companies can gobble up market share and can naturally become big without flexing power just due to sheer market size and growth. In startup tech world, this is simply a natural order of network effect centric companies like Uber. A healthy market where innovation may continue is where the barriers of entry are still low enough for incumbents to be slightly disrupted or at least for competitors to have other options.
Rather, my issue is not just the classic economic sense of monopolies ceasing to innovate, but also the power of money. I want to discuss how the power of money can create companies that never had an incentive to improve but to profit. Some markets simply cannot have many players like airlines, but entrants are viable — they just have a higher financial and logistical barrier of entry than many other markets. I want to distinguish these companies that require a high amount of money needed versus those that simply want to be monopolies. I also want to discuss to what degree a company should be allowed to own a certain size of the market before anti trust suits should be involved to allow more entrants — the classic example being Google and their different integrated products that make it impossible for customers to want to leave. And whether it’s ok if a monopoly’s technology is simply that much more superior (Google), whether new entrants require customers to improve their products or simply need more research to simply best them (Google vs ChatGPT), or whether a heavily funded company is branching out so much to make it impossible for new entrants in those branches to compete (specialization vs ecosystem). I think the fundamental issue I have are companies that try to gobble up without really innovating from the get go and/or future that prevents companies with new innovation from entering and for small businesses that can cater to small needs to compete with many side effects like unable to cater to multiple smaller market niches like grocery stores for minorities.
I think it’s wrong to condemn people for wanting and becoming billionaires. I think it’s right to condemn those who use the money they can amass, whether personal or through investors a like the Saudi Soverign Wealth Fund, and own a market to innovate and differentiate in only their own way instead of through competition.
Peter Thiel had an anti globalization argument where, due to the network effects of Facebook and their globalization effort and other tech companies’ similar global expansion efforts, the world is starting to look the same. Rather than have Facebook’s that are uniquely designed by how a society wants it, due to network effects, new entrants could never compete. How would you regulate that though?
To many people’s original anger, I think it’s unrealistic and outright dumb to say there shouldn’t be any billionaires. At the scale and current U.S. denomination’s value, you are going to have billionaires regardless due to sheer scale.
And do you only start prosecuting if they’re doing a bad job? How do you determine that legally?