Tim Wu Insists That Market Domination Is A Monopoly
from the um,-no dept
So we recently posted about Tim Wu’s claims that the internet is filled with “monopolies,” by noting that just being successful and dominating a market does not, in fact, create a monopoly on that market. Wu himself appears to have stopped by and made the following comment, which he asks us to “post… somewhere visible.” Hopefully a new post will do the trick:
A firm that dominates a market is a monopoly. End of story. That is the definition of a monopoly. It is not necessarily an illegal monopoly, or a problem, but that’s a different issue. It is, however, clearly a monopoly by any standard definition.
Now, I like Tim and agree with a lot of the stuff he says. But sometimes he goes out on a limb, and this is one time where I think he’s just wrong. If we look at the basic definition of monopoly, you see that it’s about having an exclusive situation — being the only seller in the market, or having exclusive control. If that’s the definition of monopoly, then Wu’s claims that Google and Facebook are monopolies is clearly wrong. Neither company is the exclusive seller or has exclusive control over the markets they’re in. And yet, I think most people agree that both companies “dominate” their markets.
In looking through some other definitions of monopoly as well, I only found one that included the word “dominate” and it’s from Wiktionary, stating: ” To dominate something by excluding everyone else.” So that’s a case where dominate is in the definition of monopoly, but it’s conditional. It’s not saying all domination of a market is a monopoly, but if you dominate by excluding everyone else. Again, I don’t see how Google and Facebook are excluding anyone.
There are plenty of “monopolies” to be concerned about these days. But I think Wu is making a mistake in claiming that these services are monopolies.