Question

discussion antitrust 1 feb15

discussion antitrust 2 feb 20

discussion antitrust feb 22

Answer 1

Ans. Like many institutions, antitrust was invented for the twentieth century Fordist economy. And so it shouldn’t come as a surprise that shifting to the digital economy calls for a radical upgrade. But any antitrust discussion needs to take into account one simple law that makes it easy to understand the digital economy: With the rise of computers and networks, there’s now more power outside organizations than inside them. That’s because billions of individuals are now equipped with ever increasing computing power and are constantly connected to one another through vast networks.

This power shift radically transforms the rules of engagement for companies competing on any given market. In the past, you reached a dominant position by concentrating power within your organization: you’d invest in tangible assets, hire more employees, patent cutting-edge technology, invest in a valuable brand. Now that power has moved from the inside to the outside, companies become powerful by harnessing that outside power and using it to generate growth and, eventually, profits. At the heart of every tech company’s business model are features that are all about bringing these connected individuals from outside to inside the value chain—data collection, orchestrating peer-to-peer interactions and utilizing a flexible workforce.

In the past, concentrating power on the inside meant that corporations confronted the difficulties found in trying to expand large organizations. With diminishing returns to scale, it was rational for dominant firms to focus on protecting their position rather than conquering a larger market share—an equation that explains why most markets were dominated by three competing firms of roughly the same size rather than by a single one that had defeated all others. In their efforts to position themselves for the long term, those firms designed distinctive value chains so as to maximize their market power in the presence of strong competitors. Antitrust as we know it was designed to deal with that situation.