Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy specializing in how the Internet affects competition, markets, the economy, and policy,...We've linked to Precursor a few times, Mr. Cleland takes a dim view of the evolution of the platform companies.
This is part 29 of what has turned out to be a bit of a serial presentation.
From the Precursor Blog:
This post introduces a new white paper here with a first-of-its-kind, cost-estimation model of the cumulative hidden public costs of U.S. Internet industrial policy* entitled: “Internet Platform Corporate Welfare and Leechonomics.” *U.S. Internet-first, industrial policy in the 1996 Telecom Act, effectively exempted only Internet companies from: all U.S. communications law, regulation, and public responsibilities; normal non-communications Federal/State regulation; and normal civil liability for what happens via their platforms and business models.Some previous posts:
Nutshell Summary: Sweeping Government exemptions and immunities from risks and costs overwhelmingly favor zero-sum, parasitic policy arbitrage and corporate welfare, which perversely fosters unproductive “leechonomics.” U.S. Internet policy most incents platform business that maximizes arbitrage spreads, i.e. taking maximal societal risk that un-immunized competitors can’t take, where the benefits can be capitalized by platforms, and the costs socialized to the public (>$1.5T), because the government has only exempted and immunized platforms from normal accountability and responsibility for consumer welfare.
White Paper’s Executive Summary: This white paper’s estimation of the hidden public costs of U.S. Internet industrial policy shows that Internet platforms are far from free of public costs and risks to the consumer. It also shows that Internet platforms are not predicated on free market economics, but on a pernicious policy of corporate welfare and zero-sum, parasitic policy arbitrage that fosters unproductive “leechonomics.”
The evidence here quantifies how the online space is not what many think it is, a free market, but a favored market, where U.S. Government policy effectively stands on scales of competition to favor winner-take-all Internet platforms over everyone else.
This initial estimate starts an ongoing estimation process of the hidden public costs of U.S. Internet policy, by just focusing first on America’s best-known, dominant Internet platforms: Amazon, Google, and Facebook, to prove that they are not really as free, or as low cost to the public, as conventional wisdom has been led to believe.
A conservative estimate of the hidden risks and costs that U.S. Internet policy affords Amazon, Google and Facebook to non-transparently and effectively offload to the public, consumers, taxpayers, competitors and suppliers, as hidden off-ledger, unacknowledged public liabilities, is roughly $1.5 trillion over the last two decades. That would be about $4,900 for every American, or the equivalent of over 70% of these platforms’ 1-1-2018 market cap value. In short, U.S. Internet policy causes exceptional anticompetitive distortions in the economy....MORE
"Facebook, Google And Amazon Wield Power Over Us All, And Everyone Should Be Worried" (AMZN; FB; GOOG)
Readers may remember the author of this piece, Scott Cleland, from our links to his personal blog, Precursor.*
Here he is at BuzzFeed:...
"How the Internet Cartel Won the Internet and The Internet Competition Myth"
"Why Amazon Buying Whole Foods Will Attract Serious Antitrust Scrutiny"
"Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms"
"Why EU Monopoly Search Ruling Will Be a Tipping Point for Alphabet-Google" (GOOG)