anti-monopoly

Recently, the General Administration of Market Supervision issued the Anti-monopoly Guide for Platform Economy (Draft for Comment). The media circle, combined with the suspension of listing by ants, set off a storm of anti-monopoly public opinion.

An article in New Fortune, The Reaper: Tencent Ali's 20 trillion Ecosphere, points out: "Tencent and Alibaba have built an ecosystem with a market value of 10 trillion respectively through investment and mergers and acquisitions of 500-600 billion yuan in recent years, which has expanded by 10 times in five years. In contrast, the total market value of listed companies controlled by Shanghai local government is 2.8 trillion yuan; The total market value of more than 300 listed companies in Shenzhen 1 1 trillion yuan; Total market value of A shares 10 trillion USD. The capital energy of Tencent and Ali can even be compared with that of a first-tier city. 1"

Many people deeply feel that Internet giants have brought a lot of convenience to their lives, but they are also worried about their dominant market position and the resulting wealth concentration effect.

In European and American countries, antitrust investigations are like the sword of Damocles hanging over Facebook and Google. Will Tencent and Ali face similar supervision and investigation?

Antitrust has always been a controversial topic. Administrative monopoly has long been a consensus in the economic field and no longer needs to be discussed. However, there are great differences among economists about the investigation of natural monopoly.

How to define monopoly? What is the anti-monopoly standard? Is it "greatness is the original sin"? Does antitrust support innovators or crack down on innovators? Does the market concentration created by giants such as Facebook, Google, Tencent and Ali improve economic efficiency or harm social welfare?

Anti-monopoly is not only a legal issue, but also a complex economic issue. This paper analyzes natural monopoly and anti-monopoly law with economic principles from the perspective of a brief history of American anti-monopoly.

The content of this article

First, the chaotic antitrust.

Second, the academic battle between the two.

Third, the reaper in the era of algorithm

(Text is 8000 words, reading time is 30', read quietly, thank you for sharing)

1890, the world's first anti-monopoly law "Anti-monopoly Law" was born. This law, called "Economic Constitution", is the product of political struggle.

/kloc-in the last 20 years of the 0/9th century, American consortia invented trust organizations to unite similar large enterprises and act in concert to dominate the market and control prices. This has led to a serious dual economy. The core is the economic circle of trust and large enterprises, and the periphery is a large number of small enterprises and the bottom poor with fierce competition around the core.

1904, the total capital held by trust organizations in various economic sectors in the United States was as high as $20.4 billion, of which 1/3 was in the hands of seven trusts. 19 10 The production trust ratio of some industrial sectors in the United States is as follows: textile industry 50%, glass manufacturing industry 54%, cotton printing and dyeing industry 60%, food manufacturing industry 60%, wine-making industry 72%, metal industry (excluding steel) 77%, and chemical industry 8 1%.

In the periphery, a large number of small and medium-sized business owners, farmers and the working class are squeezed by trust and are on the verge of being eliminated by society. The bottom peasants, small business owners, anti-monopoly party and United Labor Party broke out vigorous anti-monopoly movements, such as Granci Movement, Green Back Paper Money Movement and Anarchism Movement, trying to break the dull political atmosphere in the gilded age.

Therefore, this law, which was born in response to political demands, lacks sufficient legal argumentation and appears "simple". Article 2 of the law stipulates that "monopoly" and conspiracy to monopolize are prohibited. However, neither the text nor the annex of the law gives the exact meaning of "monopoly", nor does it stipulate which behaviors are prohibited one by one.

Senator Sherman believes that the specific criteria should be judged by the judge: "It is difficult for us to accurately distinguish between legal and illegal business alliances through the definition of legal vocabulary. In each case, it must be decided by the court whether it is legal. "

Of course, this is the practice of American case law. But Sherman also admitted that the anti-monopoly law "did not announce a new legal principle, but only granted those old and well-known common law principles to our complex state and federal judicial organs."

The promulgation of this law seems to be only to calm public anger, so that it has almost become a dead letter for more than a decade. At that time, some people commented on this law: "The bill itself did nothing but calm people's voices about antitrust litigation-any litigation-and solved nothing."

Ironically, after the promulgation of the Anti-Monopoly Law, trust organizations rose rapidly. 1904, there were 3 18 trusts in the United States, 93% of which came into being after the promulgation of the law 1890.

At the same time, there have been some bizarre judgments. 1895 the first anti-monopoly case was the famous case of American federal government v knight company. At that time, refined sugar companies in the United States tried to integrate four major companies, including Knight Company, through share swap, which controlled 98% of the refined sugar industry in the United States. The federal government of the United States brought companies such as Knight to court, and the lawsuit went to the Supreme Court.

The court held that these four companies controlled absolute market share and constituted a monopoly. But the key point is that the anti-monopoly law only applies to trade and commerce, not to production.

The full name of this law is the Law on the Protection of Trade and Commerce from Illegal Restriction and Monopoly, which does not cover the fields of production, manufacturing or industry. Finally, the judge ruled that the government lost the case with 8: 1

After this judgment came out, all trust organizations in the manufacturing field at that time were exempted from the sanctions of the Anti-trust Law. On the contrary, trade unions and workers' strikes have become anti-monopoly targets. At that time, concerted actions such as workers' strike and demanding higher wages were considered as monopolistic behaviors, and trade unions were considered as monopolistic organizations.

1894, Pullman went on strike and refused to transport mail. The federal government sued strike leader Eugene Debs to the Supreme Court for the crime of "restricting trade". As a result, the Chief Justice convicted Debs according to the anti-monopoly law.

From 1890 to 1897, among the first 13 cases that were found to have violated the Anti-Monopoly Law, 12 cases were against the labor organization. None of the anti-monopoly cases of 1890- 1900 18 have been closed.

In this way, this law, which was spawned by political factors, became a tool of political struggle, which in turn triggered more intense social confrontation.

In that turbulent era, President william mckinley created economic prosperity and was called "Prosperous President". However, it is generally believed that President McGinley is a puppet of capitalists, and he is nicknamed "Hannah's child". At that time, there was a famous industrialist named mark hanna. He is engaged in mining, ironmaking and shipbuilding in Lake Erie, and is famous for rigging elections. He has a nickname "political boss". Hannah single-handedly helped McGinley become governor, and then successfully ran for president.

190 1 year, President McGinley was assassinated by anarchists, and Vice President theodore roosevelt succeeded him as president. The assassination of McGinley made Roosevelt deeply feel the undercurrent and crisis of American society. As a Republican reformist, Roosevelt raised his broadsword and attacked the trust as soon as he came to power. He tried to make a "decapitation action" to set the record straight, and instructed the Federal Ministry of Justice to initiate an antitrust lawsuit against Northern Securities.

What is the origin of Northern Securities? Northern Securities has mastered the world's largest railway network, including the North Atlantic Railway, Quincy Railway and Chicago Railway. Behind them are Wall Street bosses Morgan and Rockefeller.

Old Morgan lost his temper when he heard the bad news in his apartment. Old Morgan never imagined that this young politician who received his support and funding committed suicide in his second year in office.

Old Morgan invited a first-class team of American lawyers to fight Roosevelt to the end, and the lawsuit finally reached the Federal Supreme Court. In 1903, the justice of the Supreme Court ruled that the company violated the anti-monopoly law with a 5: 4 judgment.

This case was called "the first shot of American antitrust monopoly in the 20th century", which greatly reversed the attitude of the Federal Supreme Court towards trust. Since then, Roosevelt initiated 44 lawsuits against large enterprises in one breath, of which 25 won, and successfully dissolved the beef trust and the oil trust. People therefore called Roosevelt a "trustworthy animal trainer".

After Roosevelt, President Wilson, a Democrat, signed the Federal Trade Commission Act and Clayton Act, which improved the anti-monopoly legal system of the United States.

19 18, the federal government accused the Chicago Trade Association of price manipulation and was suspected of monopoly. In the end, the local court did not convict the defendant of breaking the law, but let the federal government reach a settlement with the trade association. At that time, Justice brandeis applied the principle of reason in this case. The so-called reasonable rule is to judge whether a restriction is illegal, and to consider all the facts of the behavior, not just the scale. Later, many judges cited this case and reasonable rules to make judgments.

So far, the anti-monopoly law in the United States has mainly cracked down on unfair competition behaviors such as fixing prices, monopolizing behaviors and restricting competition. However, due to the lack of strict definition of monopoly in the legal field, judges can not completely follow reasonable rules in specific rulings, and sometimes fall into the inertial thinking of "presumption of guilt of large enterprises".

1937, the federal government filed anti-monopoly lawsuits against Alcoa, Alcan and 64 executives of their related shareholders, with as many as 140 suspected acts. Learned Hand, a famous judge of the Court of Appeal for the Second Circuit, found the defendant guilty in a very simple way, that is, the defendant's market share exceeded 90%.

He pointed out: "90% market share is enough to constitute a monopoly; It is doubtful whether 60-64% market share constitutes a monopoly; The 33% share is definitely not. "

"Big is the original sin"? There is great controversy and ignorance in the legal field. The anti-monopoly work urgently needs the professional support of economists.

It was not until 1936 that the Federal Antitrust Office hired the first economist in history. However, the role of the bureau's economists in antitrust cases is limited to data collection and litigation support. In 197 1, Judge Posner once described it like this: "Now, economists in the antitrust bureau of the Ministry of Justice are lawyers' maids and have been ignored."

Professor Mei Sen of Harvard University and his disciple Bain absorbed the monopoly competition theory of Chamberlain and Mrs Robinson, and put forward the famous industrial organization theory-structuralism. According to this theory, market structure determines market performance. Bain inspected 42 American sample manufacturing industries in 1936- 1940, and came to the conclusion that concentration is positively related to enterprise performance. Bain also investigated the relationship between entry barriers and profits in 20 American manufacturing industries. Results The average rate of return under high barriers was significantly higher than that under low barriers.

The research of Harvard school is equivalent to demonstrating that "greatness is the original sin", pointing out that large enterprises use high barriers and market concentration advantages to obtain excess profits, hinder technological progress and reduce market efficiency; At the same time, tell the government and judges that to see whether an enterprise is suspected of monopoly, we only need to look at the market structure-the level of market concentration, the number and scale of enterprises.

Harvard school's structuralism is very much in line with the appetite of the American judicial department and is called "the first salute of the economic revolution of anti-monopoly law" This theory permeates anti-monopoly legislation and judicial decisions.

From 65438 to 0965, Professor Donald Turner of Harvard College became Assistant Attorney General. He attracted a group of young economists to join the anti-monopoly work. Under his impetus, 1968, the Bureau of Justice issued the "Guide to Merger", which was jointly formulated by a group of economic policy experts and professional lawyers from the Anti-monopoly Bureau of the Ministry of Justice, including the analytical framework of industrial organizations.

In fact, the structuralism of Harvard School has serious defects. This theory lacks a solid theoretical foundation and strict logical reasoning and mathematical argumentation. Large enterprises are bound to reduce economic efficiency and hinder technological innovation?

Economist Thomas? Di Lorenzo once published an important article in International Law and Economic Review. This paper points out that during the whole 1980s of 19, the real GDP growth rate was 24%, while the real output growth rate of monopoly industries recorded at that time was as high as 175%.

Large enterprise organizations have also significantly reduced product prices. It took Carnegie Steel nearly 25 years to reduce the rail price from 1875 to 160 USD/ton to 17 USD/ton. Rockefeller reduced the price of refined oil from more than 30 cents per gallon to 5.9 cents per gallon in 1897; The railway network of Northern Securities has greatly expanded the sales market of factories in the Great Lakes region, promoted the formation of a unified domestic market in the United States, and greatly reduced commodity prices; In the 1920s, old Ford invented the assembly line, which reduced the price of cars to that of ordinary people in a short time. Since then, cars have entered ordinary people's homes.

Why are large enterprises efficient?

Classical economists have always believed that free market is the only way to allocate resources effectively. 193 1 year, ronald harry coase, who was still studying at the London school of economics, won a scholarship to study the industrial structure in the United States. Coase found that large industrial enterprises in the United States implemented effective management (Taylor Revolution) and their internal economic efficiency was very high. He is keenly aware that organizational planning within the enterprise is as efficient as free market. He introduced the transaction cost, and wrote his opinion into the famous Essence of Enterprise (1937). Later, new institutional economists such as Williamson realized the internal efficiency of enterprises and general economic organizations. This theory is equivalent to denying the structuralism of Harvard School.

Since the 1970s, the United States has been caught in a stagflation crisis, with the rise of neo-liberalism, and the Chicago School's idea of "giving priority to economic efficiency" has become popular. The research of economists such as stigler, Demsetz and Posner tells the federal government and judges that whether an enterprise monopolizes depends mainly on economic efficiency, rather than the market share and concentration advocated by Harvard School.

With the rise of information industry, Chicago's behaviorism set off the "second wave of anti-monopoly revolution" and launched a fierce confrontation with Harvard School's structuralism in the new technology era. This is reflected in two famous cases:

First, 1974, the federal government v at & amp； Test cases.

The reason for the lawsuit is that the company uses the monopoly profits obtained from electronic equipment to subsidize its network; By refusing to buy equipment from non-Bell suppliers, MCI or other operators are prevented from linking with local manufacturers and monopolizing the telecom equipment market.

This lawsuit has been going on for nearly ten years, and it is in&; T agrees to accept the ruling of the Ministry of Justice 1982. Two years later, the largest telephone communication company in the United States was legally split into seven large-scale regional telephone holding companies, and only the long-distance telephone business, Bell Laboratories and Xidian Company were retained, and the scale and sales volume were reduced by 80%.

It is generally believed that at & amp； The split of T promotes the competition and innovation in the field of communication. However, people soon realized that the power to defeat monopoly is not anti-monopoly, but technological innovation-the information revolution that is erupting. After the disintegration of Bell system, the innovation of mobile communication system is weakening the natural monopoly of Bell system based on wired communication.

Samuelson wrote in his book Economics: "The disintegration of Bell system clearly revealed a truth to people: the rapid development of technological innovation does not depend on the power of monopoly. 4"

The second case is 1969 federal government v. IBM.

The cause of action is to monopolize or attempt to monopolize the market of general digital electronic computer systems, especially computers designed for business; By lowering prices, competitors are prevented from entering the industry, new products are introduced, and the attractiveness of other companies' products is reduced.

This is a long-drawn-out lawsuit, and a dozen is more than ten years. At that time, the Chicago School had an increasing influence on the anti-monopoly judicial action, and the anti-monopoly thoughts of the Federal Ministry of Justice and the Supreme Court were in a transitional period, so it was difficult to make a decision.

IBM argues that the government is punishing the winners, not anti-competitive behavior. What the government does is to punish those enterprises that foresee the great potential of the computer revolution and rule the industry through its "superb technology, foresight and industry". IMB also pointed out that its share of income from selling electronic data program products and providing labor services in the United States does not occupy a monopoly position in the market as claimed by the government. Its market share was 56.4% at 196 1, 54% at 1968, and dropped to 40.7% at 1972.

1982, William Baxter, director of the Antitrust Bureau of Reagan Administration, decided to dismiss the lawsuit on the grounds of "unnecessary". His explanation is that, unlike the telecommunications industry, the computer industry is not regulated and faces strong market competition pressure. He believes that this industry is essentially competitive, and the government's attempt to reorganize the computer market may not promote but damage the efficiency of the economy.

Compared with at&,IBM is lucky.

In the competition between "greatness is the original sin" and "efficiency first", the latter won more support. Posner of Chicago School was appointed as the judge of the Seventh Federal Court of Appeal by President Reagan. He introduced the efficiency principle in the economic analysis of law into antitrust cases. He said: "If the losers don't go out, the winners will be punished instead. Even if there are enough enterprises in the market to participate in the competition, this competition is only artificial and artificial. 5"

1992 The Guide to Horizontal Integration of Enterprises jointly issued by the Ministry of Justice and the US Federal Trade Commission basically abandons the idea of structuralism and takes the economic efficiency before and after the merger as the benchmark.

The emerging information technology revolution is destroying all monopolists. Chicago School tells the world that there is no real monopoly, and there is no permanent monopoly, only a never-ending wave of technology.

The organizational structure of the anti-trust bureau after 1983 shows that economists and lawyers have the same status. Since then, American antitrust work has entered a rational stage dominated by economists.

Here, the views of liberal economists on anti-monopoly law have changed. At first, they supported the anti-monopoly law based on Cournot model, but now many of them have turned to the opposite side. For example, Friedman thinks that the disadvantages of anti-monopoly law outweigh the advantages. Coase also said: "I'm fed up with antitrust laws. The price rises, and the judge says it is a monopoly; When the price drops, the judge says it is predatory pricing or dumping; Under the condition of constant price, the judge said it was a kind of price collusion. What does the judge want? "

Therefore, since the 1980s, anti-monopoly work has been less entangled in those specious "monopolies"-market occupation, grabbing excess profits, predatory pricing and dumping, and more turned to illegal competition of large enterprises, such as fixing prices, bundling sales and restricting competition.

As Judge Posner said: "The real unilateral behavior of enterprises seeking or maintaining monopoly profits is to cheat the patent office or blow up the factories of competitors. Fraud and violence are generally fully punished by other laws and regulations. 5"

For example, the famous federal government v. Microsoft case. The reason for the lawsuit is that Microsoft used its monopoly advantage in the operating system field to forcibly bundle and sell its application software; The Justice Department asked Microsoft to split in two. Finally, the Bush administration decided not to try to split Microsoft, but to ban tying behavior of Microsoft, and asked Microsoft to ensure the compatibility of Windows software and non-Windows software.

The results of the Microsoft case show once again that the anti-monopoly investigation has little to do with monopoly itself, but is aimed at illegal competition. More and more jurists and economists believe that monopoly should be left to free competition, technological innovation should solve monopoly and law should solve illegal competition.

However, with the rise of Internet giants such as Facebook and Google, some people are worried about their dominant position in supermarkets.

Facebook is firmly in the position of a global social leader, with two social generals, Instagram and WhatsApp. Facebook has 654.38+0.59 billion daily users and 2465.438+0 billion monthly users, which are distributed in major countries around the world.

Google dominates the global search engine and mobile operating system. In the United States, the market share of Google search engine is as high as 86.4%, and in Europe it is 9 1.4%. Google Android has an absolute share of 85.9% in the global smartphone market.

Facebook and Google may have greater market power than giants such as Northern Securities, Standard Oil and Telephone and Telegraph Company in history.

At this time, the view that "greatness is original sin" became popular again. In early August this year, two US senators tried to introduce a new bill called Monopoly Deterrence Act. If the bill is passed, technology giants such as Facebook and Apple may face severe penalties-a fine of 65,438+05% of US market revenue.

In recent ten years, the most common antitrust accusation against Internet giants in Europe and America is abuse of market dominance. This accusation seems to be a "guilty inference".

In fact, there are some unfairness in the dominant position of internet giants-controlling private data.

Data is a user's private resource, and data ownership is also a private right. Internet giants do not adopt distributed systems, and private data is monopolized by centralized databases. Therefore, the market dominance of Internet giants is actually the dominant advantage over private data. In the era of algorithms, private data is likely to be abused by giants in the name of "big data".

In recent years, Facebook has been investigated by Congress many times. Facebook was involved in a data abuse scandal, and a British company named Cambridge Analytica was exposed to improperly obtain 87 million Facebook user data. Subsequently, the US Federal Trade Commission launched an investigation into Facebook.

At the hearing, a member of parliament asked the founder Zuckerberg: "Is Facebook eavesdropping on what users say?" Zuckerberg tactfully replied: "We allow users to upload and share their own videos. These videos do have sounds, and we do record and analyze those sounds in order to provide better services to users. "

Zuckerberg actually has a hundred arguments. Facebook stores users' private data and matches corresponding information according to personal data. This involves two major problems: first, stealing user privacy information; The second is to control (match) information through algorithms. In the United States, this kind of behavior is suspected of violating personal privacy and controlling freedom of speech. During the election, it may also be suspected of interfering with the election and threatening American democracy.

In the end, the US Federal Trade Commission approved the settlement agreement by a vote of 3 to 2. As the price of the settlement, Facebook paid a fine of $5 billion-the largest fine issued by the US government to a technology company.

Recently, China officials stressed that operators in a market-dominant platform economy should not engage in illegal and illegal competitive behaviors such as abusing market dominance, defaming goodwill, holding transactions, or engaging in "invisible" unfair competitive behaviors by relying on algorithm recommendation, artificial intelligence and big data meta-analysis.

In 1920, Pigou, a British economist, divided price discrimination into first-class price discrimination, second degree price discrimination and third-class price discrimination in welfare economics according to its degree. Among them, the first level of price discrimination, also known as complete price discrimination, uses different prices for each different buyer of the same commodity.

The Robinson patman Act promulgated by the United States from 65438 to 0936 is an anti-price discrimination law. This law stipulates that two conditions must be met to determine that price discrimination is illegal: first, the same commodity uses different prices for different consumers; Second, this kind of behavior is harmful to competition or consumers. It can be seen that this law prohibits first-class price discrimination.

Under normal circumstances, enterprises can't achieve first-class price discrimination, which often exists because all customers' private data are free to control. Therefore, opposing the first-level price discrimination is not against the price discrimination itself, but against the illegal acts behind it, such as the abuse of private data behind the killing of big data.

Amazon is the "initiator" of Internet big data killing. In 2000, Amazon implemented different pricing policies for the same DVD. The price that new users see is $22.74, but if they are old users who are determined by the algorithm to be willing to buy, the price will be displayed as $26.24. If you delete Cookie, the price will drop immediately. Soon this strategy was discovered and complained by users. Amazon CEO Bezos publicly apologized, saying that this was just an experiment and promised not to discriminate in price.

I analyzed the killing of big data in the article "Algorithm, Exploitation". Killing big data means that the Internet platform takes advantage of controlling private data and implements "first-class price discrimination" for each user with the help of algorithms to maximize the "consumer surplus" of each user.

Look at the problem of ants again. Ma Yun ridiculed the Basel Accord as a club for the elderly. But the leverage ratio of ants far exceeds the regulatory requirements of the Basel Accord. Perhaps, Ma Yun believes that the big data risk control of ants can break through the leverage ratio of this supervision compared with the statistical learning control of banks.

However, Ma Yun neglected that the reason why ants have the algorithmic advantage of big data banking is because ants control the private data of hundreds of millions of users for free and have a dominant advantage over private data. Ants can control private data by using algorithms, thus becoming "behemoths". In theory, ants can use the algorithm to implement complete price discrimination and maximize the "transaction surplus" of each user. When every user's wealth balance is tilted to ants, the default rate will definitely rise, and the moat built by ants will be swallowed up by algorithms, which will also lead to systemic financial risks.

This is the price discrimination in the algorithm era, which poses a threat to the financial system.

Pigou established the condition of optimal market efficiency in welfare economics, that is, private marginal income = social marginal income. What do you mean? This equation means "no one can take advantage of others". When a country establishes such a just law (the system is an endogenous variable), the economy is the most efficient, and there is no externality in theory.

In the era of big data, Internet giants forcibly occupy private data for free, which means private marginal income and social marginal income, that is, Internet giants take advantage of private interests. This will inevitably lead to externalities and damage economic efficiency and social welfare. If private data cannot be privatized by technical means in a short time, then the Internet giant must be put in the spotlight. This is the function of anti-monopoly law.

References:

1 reaper: Tencent Ali 20 trillion ecosystem, Tao Juan, new wealth;

2 Cambridge American Economic History (Volume II), Stanley L. engelmann, etc. , Renmin University of China Press;

3 Economics, paul samuelson, People's Posts and Telecommunications Press;

Centenary of American Federal Antimonopoly Law, Li Shengli, Law Press;

5 Anti-monopoly Law, by Richard A. Posner, China University of Political Science and Law Press,

Welfare Economics, Pigou, Commercial Press.