Chapter 8:

Case Study

1. How does the first era of antitrust thinking (1890-1950s) differ from the second era?

The first era of antitrust thinking was used to target and breakup industrial giants of the 19th and 20th centuries. This allows small firms and other entrepreneurs to enter markets, and prevent anti-competitive prices and any behavior that restrained free trade. Their goals were to open the market and phase out any monopolistic businesses. However, by the 1960s antitrust was changing with economic thinking, interpretations by courts, and economy and politics. Concentration of economic power was not considered to be anti-competitive, but considered to lead to greater efficiency and lower prices for consumers. Firms could also buy up key competitors now to also lead to greater efficiency for firms and not restrain trade. The thought was that if firms were able to create better efficiency then consumers would benefit from the lower costs and would not have to pay as much.

2. What is a “natural monopoly” and how has the United States dealt with natural monopolies?

Dominant firms that secured large sectors of the market with large initial investments but little reward was considered natural monopolies. This includes: Electric and gas utilities, telephone and cable systems, and railroads. These firms were considered to have the first-mover advantage that allowed them to possess an almost impenetrable market. Also, due to having no competition, the firms were able to manipulate prices, quality, supply and reduce innovation. However, the government interfered with telephone companies in the 20th century by creating a single national system operated by a single firm.

3. What are three possible solutions to the market dominance and anti-competitive behavior of Facebook, Google, and Amazon?

Amazon, Facebook, and Google all face criticism for trying to monopolize the market by selling goods at lower than cost. This has led to many companies and suppliers fearing that they will invade their market and take their consumers away since they would be unable to compete. The first change that could be made to ensure this doesn’t occur is to change the view of these companies to platforms providing access to audiences and capturing consumer time on site, instead of traditional businesses selling products and services. Another solution would be to split them up into stand-alone independent companies. Finally, the United States could follow the EU and create a regulatory model for Big Tech firms in a number of areas such as antitrust, privacy, and taxation.

4. How does the European model of antitrust differ from the American model?

The EU has created a regulatory model for Big Tech firms to investigate antitrust, privacy, and taxation. They use these regulations to focus on anti-competitive behavior of big firms, and fine any Big Tech Firms for violating competitive laws and regulations. The EU also does not believe that focusing on price and efficiency are the only criteria to judge monopolistic behavior, and has chosen to focus on the impacts that occur to new entries of innovative firms. Overall, the EU has a much broader view of antirust that is similar to the first era that America possessed.

Projects

1. Go to Google and find the Advanced Search link. Examine its SafeSearch filtering options. Surf the Web in search of content that could be considered objectionable for children using each of the options. What are the pros and cons of such restrictions? Are there terms that could be considered inappropriate to the filtering software but be approved by parents?

SafeSearch has two filters called “Show most relevant results” and “Filter explicit results” that allows the user to filter sexually explicit content from your results. The “Show most relevant results does not come up with any results that children should not see and shows far less results because of that fact. On the other hand, the “Filter explicit results” has far more search results and have some results that should not be observed by children. The pros are that the search engine is safe for children to use without them exploring socially unacceptable websites, can be used at work for the same reason, and narrows down the content. However, some cons are that some people are not able to find what they are looking for due to something being determined as inappropriate and the fact that people have been having issues disabling SafeSearch. I believe that there are some terms that SafeSearch would not being willing to allow that parents would approve of due to things like double entendre and the fact that Google may simply believe that the word is inappropriate for the user to be searching.

 

4. Review the section on net neutrality and search for two articles that take a position on the topic. Summarize each article and then write an essay describing your own position on net neutrality.

CNN: Appeals court upholds net neutrality rules but provides path for states to push back - Net neutrality has been repealed during the beginning of October that are in place for internet providers. The parties that opposed net neutrality were pleased by this ruling, but the advocates also won due to the court striking down key aspects which makes it possible for states to create their own net neutrality laws. The FCC Chairman believed this was a victory that would allow the internet to be free and open that benefits consumers and broadband development. However, the FCC commissioner said that she was pleased that states and localities were able to develop their own rules to protect an open internet. This article believes that the disassembly of net neutrality is politically motivated that focuses on profits. One way that may occur is through paid prioritization that benefits applications such as self-driving cars and telemedicine that allows wealthy firms to dominate the market even more.

Fox Business: Trump lauds net neutrality court victory, says it will lead to 'many big things' – The article revolves around Trump’s tweets that basically say only positive things about a very controversial internet. Whether these things actually come true, such as improved speed of the internet and 5g, is another case. However, based on readings the only websites that will be faster are wealthy firms. However, this has yet to be seen and will have to be further examined in the future.

I believe that net neutrality is essential for keeping the internet open and not taking away broadband and internet access for certain websites that cannot make payments for additional speed. However, most companies have said that these were not going to be issues. Politicians and companies will come under fire either way by groups that are supporters or against the issues and will either benefit the country or cause further mistrust.