In the case being tried, why is it not straightforward to demonstrate that higher costs for the merchants due to anti-competitive practices by credit card companies leads to higher costs for consumers, and therefore meets the two-sided market standard that the author fears?
I'm not sure on the edges whether the concept of harming competition for the benefit of consumers is just, but at least in the example case I don't see how this is an issue.
Are the standards for demonstrating harm so high that you can't make a strong legal case that higher costs for merchants gets passed to consumers?
Account wise, merchant fees are an expense taken out of revenue, not out of profit. The fee is a cost on goods sold. Merchants care because by contract it causes them to inflate the price of all products, they're disallowed from explicitly showing the customer the fee as a line item, even though it has the same effect on price as a tax.
Most merchants would prefer the buyer have more information about why something costs what it does. Ergo the cash and debit card buyer would have no such fee on their receipt; someone with an ordinary credit card might have a 3% fee, and someone with a high kickback card might have a 5% fee. Rather than permitting freeloaders.
Seems like six of one, half dozen of the other. The merchants are the ones directly paying the transaction fee, but merchants only provide services to consumers in the for-profit sector so long as they can make a profit. As a bit of an extreme to clearly demonstrate the principle, if a business is operating at a 3% profit margin on revenue before processing fees, and credit card providers demand a flat 3% + $0.30 fee per transaction, then the business becomes unprofitable, and loses $0.30 per transaction. Only one of three things can happen here. 1. The business eventually shuts down. 2. The business raises its prices. 3. The business cuts costs (lowers quality of product on average? Unless can take advantage of non-harmful cost-saving mechanisms, like informing consumers of cheaper transaction payment options, offering incentives for such, etc. which is what is being restricted anti-competitively). All three of these responses directly harm consumers. Case closed?
"In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"
Your own report contradicts your argument all over the place.
"There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above"
" retailers of smaller ticket items in particular have seen
increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers"
I didn't bother reading the entire report, either.
Consumer cost is basically the sum of all of the underlying costs, and all of the underlying vendors' profits.
In the short term, if the cost of payment processing goes up or down, the merchant covers the change with its profits; however, prices can move. If I'm a merchant and my costs went up, I'm going to try to increase my prices to cover my costs and my profit target; if my costs go down, I may lower my prices to try to attract more customers, or because my competitors lowered theirs -- especially given all the merchants are paying similar fees, a big drop in processing fees would likely be reflected in consumer costs.
Yep. All costs are subsidized by the end consumer. That includes costs of service providers (aka, middle men) like shipping and credit card fees.
The merchant sets their prices based on the cost of the product and the cost to bring the product to market. If their profit is too low to sustain the business, prices go up. It does not matter why profit is too low. Any cost to the merchant increases the price for the consumer.
The people who actually pays for this are cash and debit card users. Because there is a single price for merchants, the merchant charges marginally higher to cover the cost of the transactions. Credit card users are less impacted because credit card companies convert a portion of the revenue into incentives for their card users to continue using their cards. (Chase Sapphire Reserve anyone?)
From the abstract:
On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year.
With regard to the supreme court case itself, and the question of the credit card merchants having an oligopoly... What's stopping Paypal, Square, Stripe, or even Apple Pay from making the leap from payment processor to issuing their own Credit/Debit cards?
When you use your credit card or debit card in a store, you swipe it in a Point Of Sale terminal.
That terminal connects, via network, with payment processing software managed by Visa (and other card suppliers) to authorize the payment and move the money from your balance to store's balance.
If you were to create your own credit card, how would that processed? Visa is not going to process your credit card.
In order to have your credit card processed you would have to convince stores to upgrade POS terminals to also talk to your card authorization network.
That's just not gonna happen which is why Visa is not going to loose their lock on credit cards.
The only viable solution would be legislation that forces Visa to process other people's cards, maybe via some standard protocol, at a reasonable price (and that price would have to be much, much lower that Visa's fees to make that workable, because you want to make money on processing fees too).
Google, Samsung, and Apple have already got these companies to make changes. Android Pay, Apple Pay, and Samsung Pay are all supported widely and offer arguably higher security _and_ faster speeds than existing credit cards.
The major card networks (not sure if that's the right term, issuer isn't either), all entered the business around the same time, and all from a position of banking or at least providing credit (Discover was created by Sears).
Of the companies you mentioned, only Paypal could really do this, and in fact, they did have some in-store options available, although they're apparently being shut down. It's really a marketplace problem though -- you have to have enough consumers so that it's useful to businesses, and you have to have enough businesses that it's useful to consumers. And you have to have enough clout that the rest of the banking industry won't refuse to deal with you.
So if you wanted tech giants to have less power what exactly would you do?
I suppose you could tell your representative, but then they'd have to somehow influence the senators of your state, but even if that happens you need a majority rule to do something, when it comes to an eventual vote, right? Even if they did have a majority, the Supreme Court, which is inherently stacked one way or another, could simply negate whatever decision was made, no?
It's amazing that despite all of the technological growth, there are more middle people than ever skimming off the top. Somehow it feels that technology is simply making things even more inefficient.
>So if you wanted tech giants to have less power what exactly would you do?
It's really easy. This is the nuclear option, but it's very doable: eliminate their Section 230 immunity [1]. All of these internet businesses and platforms are running markets online, but they face zero liability for anything bad that happens on their platform. It's what gives Google and Facebook such high margins. They employ a relatively small number of highly paid software engineers and let the buyers and sellers take it from there on their marketplace.
If they were actually responsible or liable for what happened on their platform, it would mean they'd have a lot more policing to do. And policing costs money. Customer service costs money (which is why there's no one to call at Facebook or Google when something's wrong with your account).
Suddenly those highly efficient, zero liability two-sided markets have a lot more frictional costs, and that will ultimately limit their power because the flywheel won't snowball as much.
That isn't "give them less power", that's "kill all of them dead unless they're huge enough to tank a massive and never-ending money pit". What you're suggesting could be folded into an expensive but manageable cost of doing business for companies the size of Google or Facebook, but would utterly destroy a small company. That would shift the balance of power towards large companies and away from small ones, and large companies don't need any more advantages than they already have.
Look any time anyone suggests a regulation this is always what everyone responds with. But this isn't even a new regulation, this would be the elimination of a freebie for the tech industry.
It'd be extremely easy to limit the impact of it by not eliminating the freebie for everyone, recognizing that there's societal value in enabling these online marketplaces.
Think Systematically Important Financial Institutions [1]. The "too big to fail" banks bear the toughest capital requirements, your local community bank doesn't. The same can be done for the tech industry.
Adding more regulation to one industry just because other industries have it is not sane policy making. One must consider how each operates as an independent system and think about all the implications when one tries to poke it.
Getting rid of platform immunity would result in massive censorship and decreased freedoms for the individual USERS of that service.
These platforms would just ban everything that is slightly controversial, on the off chance that they could be sued for it.
It is not about the rights of the companies that I care about. What I don't want is for this kind of massive censorship to happen to the users of these sites.
Immunity allows users to remain free and mostly unregulated. It is what makes the internet useful.
And I care about this issue, even though it would be "legal" for these companies to ban everything controversial, so please don't say "The 1st amendment protects you from the government, not private companiezzz!!"
Newsflash: the thing you're afraid of happening is already happening.
Google, Facebook, Amazon exercise editorial control of their platforms all the time. They delete spam, malware, porn. Just this week Google pulled right wing YouTube content as they moved to remove gun content [1]. They banned anything with the word "gun" in their shopping search [2]. These were never neutral platforms and they never pretended to be. The tech industry lobbyists cloak themselves in the language of free speech and liberty to avert regulation, but they have always been censoring content on their platform if it served their commercial interests.
And your proposal, to hold them liable for content on their platform, would making things a hundred times worse, as they'd now take down more content because they are afraid of being sued for it.
It would certainly be great if the big tech companies engaged in less censorship. Which is why we need more policies that encourage them to be neutral platform, possibly like the utilities laws we have, instead of doing the opposite of making them more likely to take down content.
Lets move them towards being a more neutral platform with less or no editorial control. That would be wonderful.
> Lets move them towards being a more neutral platform with less or no editorial control. That would be wonderful.
Ugh, no. Editorial control and moderation makes the difference between a community and an open sewer.
But let's make sure we don't create such a liability that nobody wants to host user content at all. Because the easiest thing to do is to omit user content and focus exclusively on licensed, first-party, commercial content that has a contract associated with it. That doesn't create communities.
This is blanket false. Our legal system already factors in culpability and reasonableness. Intent is a crucial part of our legal system. The problem is, Section 230 helps big companies avoid responsibility even when they ARE culpable. A small company doing their best to moderate their site is not going to be held legally responsible for bad user content, companies making hundreds of billions by avoiding spending money moderating content, are.
Section 230 has to go if we're going to do anything to fix the Internet.
Eliminating the Section 230 would incur additional barriers to entry for small companies, as they would have to spend more resources to police their platforms, while also opening themselves up to expensive legal battles before their platforms even take off. While the tech giants have plenty of legal, financial and engineering resources to take on the challenges posed by eliminating Section 230.
What you're proposing would actually give the tech giants even more power.
Doesn't 230 just cover the publishing of user generated content?
I don't see how if affects "two-sided markets" at all.
It seems like it would make far more sense to make operators of two-sided market places liable without destroying every small forum and every blogging platform and possible every public chat platform.
Section 230 only effectively helps large companies. Any small site taking reasonable measures to manage their site would be fine. But companies which sit on hundreds of billions in cash while making a profit on illegal activity (as Google, Facebook, and Twitter are all guilty of), should not be immune to prosecution for their willful violations of the law.
I don't see how you can say that. Section 230 was made to allow service providers to monitor content without becoming responsible for all the content that gets posted by users.
Let's say you run a small forum and someone starts harrassing users and creates a very toxic environment. 230 allows you to delete this person's comments/account without suddenly being liable for everything users post on your site.
Big companies will just have a team create an automatic filtering tool with strong rules to prevent lawsuits. The forum runner doesn't have the money or resources for that. Maybe startups would pop up and sell filtering services but Joe Smith who was just trying to host a community gardening forum isn't going to want to/be able to pay for that. Either he pays, let's trolls run wild, or brings down the site. It's a lose-lose scenario.
Suggesting that US law makes a company legally culpable for all interaction with that company's website has no basis in our legal system. That isn't how our law has ever worked. The first and foremost thing to understand about law is that intent is as important as the actual act itself.
So, no, there is no way removing the blank check we cut big tech is going to hurt small startups or a community forum. And most of those are going to have human moderators that do a much better job than those "automatic filtering tools" you seem to suggest are a solution.
The whole point here is that automatic filtering doesn't work. We've seen YouTube, Facebook, and Twitter prove that. Of course, Google has hundreds of billions of dollars at it's disposal, but it isn't hiring human moderators, because it has no reason to: Our government holds that Google isn't responsible for anything on it's platform, so it is better off keeping the money as profit.
Now, where it starts to get interesting is perverse incentives: Much of advertising profits comes from malware and scams. Ad companies make billions off this illegal, criminal behavior. And since we've granted them platform immunity, because it's "user content", they're free to keep making that money. They have no reason to take down illegal content, they can't be held responsible for cash cow scams like the fake rehab center fiasco that make them millions. (Source: https://www.theverge.com/2017/9/7/16257412/rehabs-near-me-go...) Even if they get pressured to shut them down, they get to keep all of the profits.
Section 230 protects companies which knowingly (and this is key, intent is important) do not remove illegal and criminal conduct because it is profitable, and they can't be held responsible for it. Section 230 does not protect small businesses, and the marketing to protect it relies on fundamental misconceptions about basic legal responsibility. Companies without intent to profit off criminal conduct are protected by the basic concepts of our legal system: That you can't commit a crime without intent.
It's amazing how the organizations promoting how critical Section 230 is to "small businesses" are funded by the five largest companies in the US by market cap. (The Center for Democracy & Technology spoke out against SESTA-FOSTA in some articles today, Amazon, Apple, Facebook, Google, and Microsoft are all top tier sponsors.)
> Suggesting that US law makes a company legally culpable for all interaction with that company's website has no basis in our legal system. That isn't how our law has ever worked.
As far as I can tell (and I am not a lawyer) you are wrong about this and there is case law to prove it. As wikipedia says:
"The act was passed in part in reaction to the 1995 decision in Stratton Oakmont, Inc. v. Prodigy Services Co.,[3] which suggested that service providers who assumed an editorial role with regard to customer content, thus became publishers, and legally responsible for libel and other torts committed by customers. This act was passed to specifically enhance service providers' ability to delete or otherwise monitor content without themselves becoming publishers. In Zeran v. America Online, Inc., the Court notes that "Congress enacted § 230 to remove the disincentives to self-regulation created by the Stratton Oakmont decision."
And here is the link to the court decision being referenced:
> Any small site taking reasonable measures to manage their site would be fine.
The case law indicates the opposite. Without 230, small sites would have to take NO MEASURE to manage other peoples content on their site. As soon as they took any "reasonable measures" to restrict that content they would assume the role of publisher and become liable.
> Even if they did have a majority, the Supreme Court, which is inherently stacked one way or another, could simply negate whatever decision was made, no?
It could, but that's kind of a stretch. In terms of anti-trust the courts have the Sherman Antitrust act (1890). This is the substance of the law:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
There is a little more elaboration in the Clayton Antitrust Act (1914) and later amendments, but not much.
The courts have been left to develop a large body of judge made law in this area because Congress has done so little legislating. If Congress wished to put antitrust law on a firm and detailed statutory basis, my sense is that the courts would be very glad to be rid of the responsibility of developing it almost out of whole cloth.
Well, we could eliminate corporate subsidies, for one. It wouldn't curb these giants all that much I presume, but they and other large corporations do receive substantial subsidies.
Making it more inefficient? Or making more obvious the inherent inefficiency of the mantra “everyone must have a job to thrive and the economy must always grow”
I rather think the latter. We’ve just now been able to shine light on 60 years of this bullshit social memes real costs
Cancer rates seem to have gone up. But then one looks closer and it’s diagnosis rates due to improved techniques.
Similar idea: we can measure effort better. Oh look at all the waste
It's amazing that despite all of the technological growth, there are more middle people than ever skimming off the top. Somehow it feels that technology is simply making things even more inefficient.
Technology doesn't change people's motivations - it simply rearranges who gets to fulfill their wishes a little.
As long as people want to live 'I GOTTA get mine, worry about the rest later', we're going to continue being the cancerous species that we are, biting the hand that feeds us (our community, our planet, etc)
The obvious answer is that if an industry or company is a monopolistic or oligopolistic rent-seeker, then it should be nationalized or converted to a public utility.
Do you want web search, or logistics, or OS development, or air transport, or social media to be government controlled? (I disagree that any of those are monopolies, but people occasionally bellyache about those as possibly uncompetitive markets.)
When I think about my experiences with other government services, I’m not hopeful that they’d do a job I’d be interested in having done.
We, as the tech community, tend to be trusted by our friends and family for recommendations. Start pushing your friends and family away from the tech giants. You aren't going to win every battle, but if people know you have concerns, it does subtly change the message, people are coming around to understanding what these companies are and how they work. They have billions of people's data they're built on, but we can still start to erode it. Remember how Google Search and Gmail all became popular in the first place: We, everyone's "computer expert nephews" told people about them, and how great they were. Now we can tell them about DuckDuckGo and our favorite privacy-oriented mail service.
Additionally, we can avoid working ourselves for companies doing unethical things, like paying off academic researchers to make public statements supporting them, financing think tanks and lobbyist groups to push their agendas, and acting in blatantly anticompetitive ways. Sure, all of these tech giants have tons of people waiting to work there, but we can still reduce the pool of candidates, people who know better need to walk away. This not only reduces their talent, but means that talent is available to start and improve new competitors to the entrenched parties.
And I absolutely believe we need to advocate that legislators and judiciaries start taking a renewed look at antitrust enforcement, and we need to advocate for removing blanket immunities that these companies enjoy. Congress just realized in the past two years that these companies have a lot of sway over elections, and if anything gets Congress moving, it's protecting their reelection campaigns.
somehow in a case about the credit card industry, which actually extracts monopoly rent on most personal financial transactions its more important for author to talk about about "tech" bogeyman
some of those cases will involve healthcare providers or energy distributors, so what? The case potentially affects all transactions where there is processing or market-making intermediary. There's no specificity on how it applies to Google, Amazon or Facebook products even those are named in the headline. It's just a terribly written editorial with vague legal analysis and mentions tech firms for click-bait sensationalism.
No healthcare provider or energy distributor has as large a share of their respective markets as Amazon or Facebook do theirs. They're in the best position to abuse their market dominance. If this ruling is upheld, their ability to do that is directly affected — specifically, strengthened — significantly. Perhaps irreversibly.
Washington — The Computer & Communications Industry Association has filed an amicus brief on how the Supreme Court should look at multi-sided business models from an antitrust perspective when it hears the upcoming Ohio v. American Express case.
While CCIA does not weigh in on the substance of the financial services issues impacting merchant fees,
the tech trade association does argue that constraints on all sides of a multi-sided firms should be considered when analyzing if a plaintiff has made out a prima facie case of anticompetitive conduct. The American Express case represents the first time that an antitrust dispute involving “multi-sided markets” — where a third party service provider is in the business of uniting buyers with sellers — has come before the Supreme Court of the United States.
...
“Two-sided markets” or “multi-sided firms” is a term of art in the theoretical economics literature that refers to business models that have multiple sets of customers, such as many of CCIA’s members.
Multi-sided businesses operate under complex economic dynamics as they must consider the effects of their pricing and output decisions on both sets of customers, as well as the interrelationship among the customers on each side of their business.
Whether a multi-sided firm has market power or not requires consideration of the actual effects of multi-sidedness. Ignoring these competitive realities would risk penalizing healthy competition to the detriment of consumers.
How do railways (freight, passengers) or telcos not meet the definition of “multi-sided firm”? Those are the first two monopoly cases that came to mind. Can you name any anti-trust suit ever brought against a firm with one set of customers? (And zero suppliers/employees, if you take the argument being made to its logical extreme)
I’m not buying the “this time it’s different” argument at all.
I don't live in the US or the EU, but the more you see situations like this (privacy legislation is a similar area), the more glad I am that the US does not dominate global commerce, and perhaps is even purposefully moving away from such leadership positions.
This is a situation where competitors may be able to get started in the EU (or other large market), and grow to scale there, shielded from this kind of anti-competitive behaviour.
Eventually, the existence of clearly successful businesses offering products at a lower cost outside the US might increase the pressure inside the US for change and for a fair playing field.
Telecom doesn't even deserve to be in that batch. A $50 or $70 cell plan is close to meaningless next to the cost of home ownership, education and healthcare.
Cell plans also have not gotten more expensive over 30 years inflation adjusted. When you include what you actually get in plans today, they've gotten cheaper vs 30 or 20 years ago.
Cable Internet as another example, hasn't gotten expensive out of line with inflation over the last 20 years. While simultaneously what you can do with cable Internet has dramatically increased.
Those other items on the other hand, have seen cost inflation dramatically beyond other consumer goods.
Telecom costs a median American $100 to $150 per month. That's more like the cost of a home insurance policy.
Doesn't it seem as if, when amortized over all home residents and mobile callers, more resources would be required to build a home than to provide mobile service?
It's not about whether big tech companies — or any companies — cause "market failure". It's whether their behavior is anti-competitive. Are they leveraging their market leadership in a way that hinders other players from participating in the market? Not just, are they making a better product, or have more users: are they interfering with other companies efforts to compete?
How that question is answered regarding AmEx will shape how future similar cases, many of which will involve tech, are judged. There's no equation between them; it's just what this decision will mean.
Consumer protection isn't just about prices, and antitrust isn't just about consumer protection.
In United States v. Microsoft [0], Microsoft was found to have abused its dominance as the maker of Windows to compete unfairly against Netscape, which was free (as was IE), among others. The "browser wars" was Microsoft blocking entry into a market where the price was already zero.
Clearly businesses that accept AmEx are considered consumers for that purpose. This is not being debated here.
What is being debated is if there is a two sided market (two separate groups of consumers), should we add a NEW interpretation that requires harm shown for BOTH groups of consumers rather than just ONE group of consumers.
Yes, and this case was showing the price change for businesses that accept AmEx. T
>> American Express, for example, charges both merchants who accept its cards and consumers who use them. Using this concept, the Second Circuit held that the government would have to show that any price increases for merchants also harmed cardholders, or at least didn’t benefit them. In effect, the court introduced a dramatically new rule, making it much more difficult to win important antitrust cases and to stop anticompetitive behavior.
How is that even relevant? The issue is weather the card company can gag a merchant. Not just from disclosing their terms, but from recommending a competitors card. Sounds like the second circuit has some friends.
I don’t want to detract too much from this discussion, but I can provide insight into what kind of bullying company AmEx truly is, and how their ethos permeates throughout everything they do.
I worked for AmEx for about 5 years. Everything was going great, and they announced a 5-month paternity leave program. I’m not going to lie, but it made it a lot easier to decide on having a child. Long story short, my son was born, I took paternity leave, and got laid off after 2 months into my paternity.
I get that I’m an at will employee, which is what lawyers keep telling me. It’s true that large companies, not just tech companies exert a lot of power, especially when it comes to swaying what’s ethical and what’s not. That’s a whole separate discussion, but AmEx clearly used me to send a message- don’t act on our gesture... or else. Influencing future behavior is what AmEx is really good at. Not credit cards.
FWIW, I have had bad experiences with AMEX chargebacks. Even when it’s obvious their cardholder is committing fraud. There’s a sort of weird corporate swagger that says “yeah, so what?...we’re big, you aren't”. Lost a chargeback for non delivery when I had the cardholder’s signature on UPS paper.
It's the same as your experience. They're "Consumer" friendly, where the customer is the one who holds the credit card, not the one getting paid. They will act like dicks towards merchants because they would rather not face the possibility of consumer backlash, even in the face of obvious fraud.
I’ve come to find out that it’s not illegal if they let you go for other reasons than taking paternity. Getting this to court is hella expensive and uncertain. So, it’s up to me to fight it and show that they let me go for paternity alone.
To add: I also was turned down by lawyers but because of an arbitration agreement. Then I found some help and we kicked a Big Bank’s ass. We’re building a community to help others do the same at levelplayingfield.io.
We, as workers, should push to change that. If someone has sued their employer for a legit reason, that should have absolutely no bearing on their employment status.
What reason did they have to fire you? Other than downsizing your team or something, what possible reason could they have had to fire you 2 months into your paternity leave?
Chance of lawsuit * expected payout < cost of paying employee for the rest of their paternity leave.
There's confounding variables in there too like the OP said with the idea that he was an example for the other employees to jot actually take their benefits
You should look into federal and state labor authorities; while a lawyer not being paid upfront (one who would be taking a contingency fee) may balk at a case without more up-front evidence, public authorities may be willing to open an investigation with just a basic colorable claim. There will still need to evidence that you were fired for using paternity leave, but you may not bear the burden of uncovering it.
I've seen this idea play out in a differen't industry and if your claim resembles something legitimate then it has promise. The only reason I say legitimate is because in the version I was privy to it was a disgruntled employee lying through her teeth about almost cartoonishly evil happenings. She was threatened with criminal prosecution for intentionally, key word there, trying to deceive the investigator.
That's how it works for discrimination in general. If you can convince a judge or jury that the choice was based in discriminaton (your simple plotline vs their excuse of how random it was, or whatever), you win. It's a hard fight.
At a big company, likely other people tried to claim paternity leave as well, and non-paternity leave people were laid off, and (with legal discovery) you can do the math on ratios of layoffs across the cohrots.
>A bipartisan consensus has formed around this idea. Senator Elizabeth Warren has charged tech giants with using their heft to “snuff out competition,” and even Senator Ted Cruz — usually a foe of government regulation — recently warned of their “unprecedented” size and power.
>But the decision in a case currently before the Supreme Court could block off that path, by effectively shielding big tech platforms from serious antitrust scrutiny.
The case before the Supreme Court concerns interpretation of statutory provisions, not Constitutional law. A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act.
Kudos to the Justice Department! This is the sort of thing they should do more of.
Who the fuck is on the 2nd Circuit bench and where do they get off inventing "a new concept to create a special set of rules"? Has there never been a firm that served two distinct sets of customers? How long has Amex itself existed, and how did they conduct business before this new concept was invented by judges not legislators? Corruption on parade!
Fortunately the Republicans have packed the SC with "originalists" who will be eager to slap down this new-concept bullshit... haha well one can dream, right?
Just consider this, Amazon refuses to sell (some) Google products because of their whims from time to time. Maybe this extends to other brands/companies other than Google that I haven't even heard about. Isn't this bad for the consumers? How has Amazon been able to make this decision without any consequences?
"An assessment of market power is the initial inquiry under the indirect method. In this case, the parties had stipulated 2013 network market shares of Visa, 45 percent, Amex, 26.4 percent, MasterCard, 23.3 percent and Discover (not a defendant here), 5.3 percent."
"(The states did not seek review of the 2nd Circuit's decision that they failed to make a prima facie case under the indirect method.)"
Have the states have conceded that Amex lacks market power?
"Gorsuch reiterated that in the absence of market power, a vertical restriction "is not within the cognizance of the antitrust laws." And, without more, a 26 percent share of a market does not constitute power."
How much direct harm can be caused by a firm that lacks market power?
102 comments
[ 2.8 ms ] story [ 115 ms ] threadI'm not sure on the edges whether the concept of harming competition for the benefit of consumers is just, but at least in the example case I don't see how this is an issue.
Are the standards for demonstrating harm so high that you can't make a strong legal case that higher costs for merchants gets passed to consumers?
This is a common misconception. These fees come out of merchant profits. Otherwise, merchants would not care.
Most merchants would prefer the buyer have more information about why something costs what it does. Ergo the cash and debit card buyer would have no such fee on their receipt; someone with an ordinary credit card might have a 3% fee, and someone with a high kickback card might have a 5% fee. Rather than permitting freeloaders.
In the real world, reductions in debit card fees (in the USA, via the Durbin Amendment) have not lead to lowered prices, just increased profits. [1]
This explains why merchants care about processing fees.
[1] From page 27 of https://www.law.gmu.edu/assets/files/publications/working_pa...
"In the year following Durbin’s implementation, gasoline retailers realized more than $1 billion in savings from reduced interchange fees. But 'while this should mean savings of roughly 3 cents per gallon, no savings have been passed on to consumers.' This is particularly remarkable and instructive given that the retail gasoline industry is highly competitive, and at least one other study has demonstrated that gasoline excise taxes are almost instantly and fully passed through to consumers"
"There is little doubt that the Durbin Amendment had a major effect on consumers — and would-be bank customers — as issuers have, in various ways, passed on some of the costs of reduced interchange fee receipts, as discussed above"
" retailers of smaller ticket items in particular have seen increased interchange fee costs as a result of the Durbin Amendment, and there is anecdotal evidence that these fees are being passed on to consumers"
I didn't bother reading the entire report, either.
In the short term, if the cost of payment processing goes up or down, the merchant covers the change with its profits; however, prices can move. If I'm a merchant and my costs went up, I'm going to try to increase my prices to cover my costs and my profit target; if my costs go down, I may lower my prices to try to attract more customers, or because my competitors lowered theirs -- especially given all the merchants are paying similar fees, a big drop in processing fees would likely be reflected in consumer costs.
The merchant sets their prices based on the cost of the product and the cost to bring the product to market. If their profit is too low to sustain the business, prices go up. It does not matter why profit is too low. Any cost to the merchant increases the price for the consumer.
Here's a good paper that goes into this: https://www.bostonfed.org/publications/public-policy-discuss...
From the abstract: On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year.
When you use your credit card or debit card in a store, you swipe it in a Point Of Sale terminal.
That terminal connects, via network, with payment processing software managed by Visa (and other card suppliers) to authorize the payment and move the money from your balance to store's balance.
If you were to create your own credit card, how would that processed? Visa is not going to process your credit card.
In order to have your credit card processed you would have to convince stores to upgrade POS terminals to also talk to your card authorization network.
That's just not gonna happen which is why Visa is not going to loose their lock on credit cards.
The only viable solution would be legislation that forces Visa to process other people's cards, maybe via some standard protocol, at a reasonable price (and that price would have to be much, much lower that Visa's fees to make that workable, because you want to make money on processing fees too).
I have a credit card from Wells Fargo. It's still made by Visa and Visa takes its cut of credit card processing fees.
My point is that in practice you can't issue a credit card and avoid Visa (or Mastercard) processing fees.
You would have to get most merchants to upgrade their POS terminals to support your payment network and that's not going to happen.
Technically there are 26 different cards most POS terminals support. 11 of those are Visa or MasterCard
Edit: "Private labeled" is considered anything a normal gateway will accept and go into the generic category. Which absolutely exists
Of the companies you mentioned, only Paypal could really do this, and in fact, they did have some in-store options available, although they're apparently being shut down. It's really a marketplace problem though -- you have to have enough consumers so that it's useful to businesses, and you have to have enough businesses that it's useful to consumers. And you have to have enough clout that the rest of the banking industry won't refuse to deal with you.
I suppose you could tell your representative, but then they'd have to somehow influence the senators of your state, but even if that happens you need a majority rule to do something, when it comes to an eventual vote, right? Even if they did have a majority, the Supreme Court, which is inherently stacked one way or another, could simply negate whatever decision was made, no?
It's amazing that despite all of the technological growth, there are more middle people than ever skimming off the top. Somehow it feels that technology is simply making things even more inefficient.
It's really easy. This is the nuclear option, but it's very doable: eliminate their Section 230 immunity [1]. All of these internet businesses and platforms are running markets online, but they face zero liability for anything bad that happens on their platform. It's what gives Google and Facebook such high margins. They employ a relatively small number of highly paid software engineers and let the buyers and sellers take it from there on their marketplace.
If they were actually responsible or liable for what happened on their platform, it would mean they'd have a lot more policing to do. And policing costs money. Customer service costs money (which is why there's no one to call at Facebook or Google when something's wrong with your account).
Suddenly those highly efficient, zero liability two-sided markets have a lot more frictional costs, and that will ultimately limit their power because the flywheel won't snowball as much.
[1] https://en.wikipedia.org/wiki/Section_230_of_the_Communicati...
It'd be extremely easy to limit the impact of it by not eliminating the freebie for everyone, recognizing that there's societal value in enabling these online marketplaces.
Think Systematically Important Financial Institutions [1]. The "too big to fail" banks bear the toughest capital requirements, your local community bank doesn't. The same can be done for the tech industry.
[1] https://en.wikipedia.org/wiki/Systemically_important_financi...
These platforms would just ban everything that is slightly controversial, on the off chance that they could be sued for it.
It is not about the rights of the companies that I care about. What I don't want is for this kind of massive censorship to happen to the users of these sites.
Immunity allows users to remain free and mostly unregulated. It is what makes the internet useful.
And I care about this issue, even though it would be "legal" for these companies to ban everything controversial, so please don't say "The 1st amendment protects you from the government, not private companiezzz!!"
Google, Facebook, Amazon exercise editorial control of their platforms all the time. They delete spam, malware, porn. Just this week Google pulled right wing YouTube content as they moved to remove gun content [1]. They banned anything with the word "gun" in their shopping search [2]. These were never neutral platforms and they never pretended to be. The tech industry lobbyists cloak themselves in the language of free speech and liberty to avert regulation, but they have always been censoring content on their platform if it served their commercial interests.
[1] https://www.bloomberg.com/news/articles/2018-02-28/youtube-s...
[2] https://www.engadget.com/2018/02/27/google-gun-shopping-sear...
It would certainly be great if the big tech companies engaged in less censorship. Which is why we need more policies that encourage them to be neutral platform, possibly like the utilities laws we have, instead of doing the opposite of making them more likely to take down content.
Lets move them towards being a more neutral platform with less or no editorial control. That would be wonderful.
Ugh, no. Editorial control and moderation makes the difference between a community and an open sewer.
But let's make sure we don't create such a liability that nobody wants to host user content at all. Because the easiest thing to do is to omit user content and focus exclusively on licensed, first-party, commercial content that has a contract associated with it. That doesn't create communities.
Section 230 has to go if we're going to do anything to fix the Internet.
Eliminating the Section 230 would incur additional barriers to entry for small companies, as they would have to spend more resources to police their platforms, while also opening themselves up to expensive legal battles before their platforms even take off. While the tech giants have plenty of legal, financial and engineering resources to take on the challenges posed by eliminating Section 230.
What you're proposing would actually give the tech giants even more power.
I don't see how if affects "two-sided markets" at all.
It seems like it would make far more sense to make operators of two-sided market places liable without destroying every small forum and every blogging platform and possible every public chat platform.
Let's say you run a small forum and someone starts harrassing users and creates a very toxic environment. 230 allows you to delete this person's comments/account without suddenly being liable for everything users post on your site.
Big companies will just have a team create an automatic filtering tool with strong rules to prevent lawsuits. The forum runner doesn't have the money or resources for that. Maybe startups would pop up and sell filtering services but Joe Smith who was just trying to host a community gardening forum isn't going to want to/be able to pay for that. Either he pays, let's trolls run wild, or brings down the site. It's a lose-lose scenario.
So, no, there is no way removing the blank check we cut big tech is going to hurt small startups or a community forum. And most of those are going to have human moderators that do a much better job than those "automatic filtering tools" you seem to suggest are a solution.
The whole point here is that automatic filtering doesn't work. We've seen YouTube, Facebook, and Twitter prove that. Of course, Google has hundreds of billions of dollars at it's disposal, but it isn't hiring human moderators, because it has no reason to: Our government holds that Google isn't responsible for anything on it's platform, so it is better off keeping the money as profit.
Now, where it starts to get interesting is perverse incentives: Much of advertising profits comes from malware and scams. Ad companies make billions off this illegal, criminal behavior. And since we've granted them platform immunity, because it's "user content", they're free to keep making that money. They have no reason to take down illegal content, they can't be held responsible for cash cow scams like the fake rehab center fiasco that make them millions. (Source: https://www.theverge.com/2017/9/7/16257412/rehabs-near-me-go...) Even if they get pressured to shut them down, they get to keep all of the profits.
Section 230 protects companies which knowingly (and this is key, intent is important) do not remove illegal and criminal conduct because it is profitable, and they can't be held responsible for it. Section 230 does not protect small businesses, and the marketing to protect it relies on fundamental misconceptions about basic legal responsibility. Companies without intent to profit off criminal conduct are protected by the basic concepts of our legal system: That you can't commit a crime without intent.
It's amazing how the organizations promoting how critical Section 230 is to "small businesses" are funded by the five largest companies in the US by market cap. (The Center for Democracy & Technology spoke out against SESTA-FOSTA in some articles today, Amazon, Apple, Facebook, Google, and Microsoft are all top tier sponsors.)
As far as I can tell (and I am not a lawyer) you are wrong about this and there is case law to prove it. As wikipedia says:
"The act was passed in part in reaction to the 1995 decision in Stratton Oakmont, Inc. v. Prodigy Services Co.,[3] which suggested that service providers who assumed an editorial role with regard to customer content, thus became publishers, and legally responsible for libel and other torts committed by customers. This act was passed to specifically enhance service providers' ability to delete or otherwise monitor content without themselves becoming publishers. In Zeran v. America Online, Inc., the Court notes that "Congress enacted § 230 to remove the disincentives to self-regulation created by the Stratton Oakmont decision."
And here is the link to the court decision being referenced:
https://w2.eff.org/legal/cases/Stratton_Oakmont_Porush_v_Pro...
> Any small site taking reasonable measures to manage their site would be fine.
The case law indicates the opposite. Without 230, small sites would have to take NO MEASURE to manage other peoples content on their site. As soon as they took any "reasonable measures" to restrict that content they would assume the role of publisher and become liable.
It could, but that's kind of a stretch. In terms of anti-trust the courts have the Sherman Antitrust act (1890). This is the substance of the law:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
There is a little more elaboration in the Clayton Antitrust Act (1914) and later amendments, but not much.
The courts have been left to develop a large body of judge made law in this area because Congress has done so little legislating. If Congress wished to put antitrust law on a firm and detailed statutory basis, my sense is that the courts would be very glad to be rid of the responsibility of developing it almost out of whole cloth.
I'm trying the "work for a tech giant and do a poor job" approach to this problem. I don't think it's working.
Big gov't and big business go together.
I rather think the latter. We’ve just now been able to shine light on 60 years of this bullshit social memes real costs
Cancer rates seem to have gone up. But then one looks closer and it’s diagnosis rates due to improved techniques.
Similar idea: we can measure effort better. Oh look at all the waste
Technology doesn't change people's motivations - it simply rearranges who gets to fulfill their wishes a little.
As long as people want to live 'I GOTTA get mine, worry about the rest later', we're going to continue being the cancerous species that we are, biting the hand that feeds us (our community, our planet, etc)
When I think about my experiences with other government services, I’m not hopeful that they’d do a job I’d be interested in having done.
Additionally, we can avoid working ourselves for companies doing unethical things, like paying off academic researchers to make public statements supporting them, financing think tanks and lobbyist groups to push their agendas, and acting in blatantly anticompetitive ways. Sure, all of these tech giants have tons of people waiting to work there, but we can still reduce the pool of candidates, people who know better need to walk away. This not only reduces their talent, but means that talent is available to start and improve new competitors to the entrenched parties.
And I absolutely believe we need to advocate that legislators and judiciaries start taking a renewed look at antitrust enforcement, and we need to advocate for removing blanket immunities that these companies enjoy. Congress just realized in the past two years that these companies have a lot of sway over elections, and if anything gets Congress moving, it's protecting their reelection campaigns.
http://www.ccianet.org/2018/01/ccia-files-supreme-court-amic...
Washington — The Computer & Communications Industry Association has filed an amicus brief on how the Supreme Court should look at multi-sided business models from an antitrust perspective when it hears the upcoming Ohio v. American Express case.
While CCIA does not weigh in on the substance of the financial services issues impacting merchant fees, the tech trade association does argue that constraints on all sides of a multi-sided firms should be considered when analyzing if a plaintiff has made out a prima facie case of anticompetitive conduct. The American Express case represents the first time that an antitrust dispute involving “multi-sided markets” — where a third party service provider is in the business of uniting buyers with sellers — has come before the Supreme Court of the United States.
...
“Two-sided markets” or “multi-sided firms” is a term of art in the theoretical economics literature that refers to business models that have multiple sets of customers, such as many of CCIA’s members. Multi-sided businesses operate under complex economic dynamics as they must consider the effects of their pricing and output decisions on both sets of customers, as well as the interrelationship among the customers on each side of their business. Whether a multi-sided firm has market power or not requires consideration of the actual effects of multi-sidedness. Ignoring these competitive realities would risk penalizing healthy competition to the detriment of consumers.
I’m not buying the “this time it’s different” argument at all.
This is a situation where competitors may be able to get started in the EU (or other large market), and grow to scale there, shielded from this kind of anti-competitive behaviour.
Eventually, the existence of clearly successful businesses offering products at a lower cost outside the US might increase the pressure inside the US for change and for a fair playing field.
Cell plans also have not gotten more expensive over 30 years inflation adjusted. When you include what you actually get in plans today, they've gotten cheaper vs 30 or 20 years ago.
Cable Internet as another example, hasn't gotten expensive out of line with inflation over the last 20 years. While simultaneously what you can do with cable Internet has dramatically increased.
Those other items on the other hand, have seen cost inflation dramatically beyond other consumer goods.
Telecom costs a median American $100 to $150 per month. That's more like the cost of a home insurance policy.
How that question is answered regarding AmEx will shape how future similar cases, many of which will involve tech, are judged. There's no equation between them; it's just what this decision will mean.
In United States v. Microsoft [0], Microsoft was found to have abused its dominance as the maker of Windows to compete unfairly against Netscape, which was free (as was IE), among others. The "browser wars" was Microsoft blocking entry into a market where the price was already zero.
[0] https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor...
What is being debated is if there is a two sided market (two separate groups of consumers), should we add a NEW interpretation that requires harm shown for BOTH groups of consumers rather than just ONE group of consumers.
Yes, and this case was showing the price change for businesses that accept AmEx. T
How is that even relevant? The issue is weather the card company can gag a merchant. Not just from disclosing their terms, but from recommending a competitors card. Sounds like the second circuit has some friends.
I worked for AmEx for about 5 years. Everything was going great, and they announced a 5-month paternity leave program. I’m not going to lie, but it made it a lot easier to decide on having a child. Long story short, my son was born, I took paternity leave, and got laid off after 2 months into my paternity.
I get that I’m an at will employee, which is what lawyers keep telling me. It’s true that large companies, not just tech companies exert a lot of power, especially when it comes to swaying what’s ethical and what’s not. That’s a whole separate discussion, but AmEx clearly used me to send a message- don’t act on our gesture... or else. Influencing future behavior is what AmEx is really good at. Not credit cards.
It might be illegal, but the onus is on me.
dan(a)lpf.io
There's confounding variables in there too like the OP said with the idea that he was an example for the other employees to jot actually take their benefits
At a big company, likely other people tried to claim paternity leave as well, and non-paternity leave people were laid off, and (with legal discovery) you can do the math on ratios of layoffs across the cohrots.
If paid, it was likely a disability insurance policy, so paying you wouldn't even affect their bottom line.
>But the decision in a case currently before the Supreme Court could block off that path, by effectively shielding big tech platforms from serious antitrust scrutiny.
The case before the Supreme Court concerns interpretation of statutory provisions, not Constitutional law. A bipartisan consensus in Congress could negate the Supreme Court ruling simply by amending the Sherman Antitrust Act.
Sure, but is that likely to actually happen? Just because Congress could possibly negate a court ruling doesn't mean there's nothing to see here.
Who the fuck is on the 2nd Circuit bench and where do they get off inventing "a new concept to create a special set of rules"? Has there never been a firm that served two distinct sets of customers? How long has Amex itself existed, and how did they conduct business before this new concept was invented by judges not legislators? Corruption on parade!
Fortunately the Republicans have packed the SC with "originalists" who will be eager to slap down this new-concept bullshit... haha well one can dream, right?
"(The states did not seek review of the 2nd Circuit's decision that they failed to make a prima facie case under the indirect method.)"
Have the states have conceded that Amex lacks market power?
"Gorsuch reiterated that in the absence of market power, a vertical restriction "is not within the cognizance of the antitrust laws." And, without more, a 26 percent share of a market does not constitute power."
How much direct harm can be caused by a firm that lacks market power?