The latest issue of Boston Review has a lively forum on the growing power of network-based businesses such as Amazon, Uber and Airbnb. These companies may not be monopolies in the strict conventional sense of the law, but they nonetheless use their market dominance and network platforms to extract all sorts of advantages from competitors, suppliers and consumers.
K. Sabeel Rahman, a professor at Brooklyn Law School, presented his assessment of the situation, and then nine people of various persuasions (including me) responded. Rahman stated the problem succinctly:
The kinds of power that Amazon, Comcast and companies such as Airbnb and Uber possess can’t be seen or tackled via conventional antitrust regulations. These companies are not, strictly speaking, monopolies; Urban and Airbnb, in particular, do not engage in the kind of price-fixing or market dominance that is the usual target of antitrust regulation today. These companies are better understood as platforms or utilities: they provide a core, infrastructural service upon which other firms, individuals and social groups depend.
The problem is that conventional antitrust regulation isn’t really equipped to deal with information economy platforms, which tend to connect buyer and sellers in more efficient ways while offering very low prices. What’s the problem with that? Well, the problem is open networks paradoxically result in "power law" outcomes in which a minority of players tend to dominate the universe of users. Some companies have used this network-based advantage to limit competitors' access to the market, impose unfair conditions on consumers or producers, and evade consumer and labor-rights laws.
Rahman calls for a re-purposing of Progressive era policies from a century ago that tamed large monopolies like railroads by subjecting them to public utility regulation. Is this the way to go? Juliet Schor of Boston College agrees that there is a problem, but considers the regulatory approach nostalgic and unimaginative. She argued:
“Peer-to-peer structure and peer ownership of capital undermine the argument for private ownership of platforms and, by extension, for the public utility model. This is not to say there isn’t a strong public interest in this sector – there is. But the compelling feature of these entities is that most of the value in the market is produced by the peers, not the platforms. This suggests that platforms can and should be owned and governed by users. If they are, we can worry less about rent extraction, concentrations of political power, and the other concerns Rahman raises.”