FTC Antitrust cases

[Sweet]

Another antitrust case against Apple this time.  This adds to Amazon, Google and Facebook / Meta I believe.

 

With Apple they do have a closed ecosystem and a dominant market position, elements of a monopoly, but I don’t feel they actually have a monopoly or that it’s particularly hard to leave Apple.

 

The FTC has gotten more aggressive over time in pursuing companies it regards as being too big in anyone market.  

 

It also seems odd that the FTC are going after some of the most important US companies which ironically often compete with one another in products and software.

[LC]

11 minutes ago, Sweet said:

It also seems odd that the FTC are going after some of the most important US companies which ironically often compete with one another in products and software.

 

That's fair but the counterpoint (not that I really agree) is that - if Apple, Google, Meta, Amazon, etc. are all out there competing with each other and presumably driving down profits in the name of adding consumer value, why are those stocks essentially the high flyers of the US economy?

 

Is it competition or simply an oligopoly? 

[cubsfan]

5 minutes ago, LC said:

Is it competition or simply an oligopoly? 

 

Yeah, great point. Serious moat + oligopoly

[Sweet]

Oligopoly sure but they are competitors of each other and they are not sitting down and conspiring on prices to give the consumer a bad deal.  
 

In the case of Apple specifically it’s offering is not a commoditised consumer product, that was never their pitch.  So looking at their margins and how they run their ecosystems and concluding it’s illegal seems like a stretch.

 

Don’t like the phone get one of the many other phones out there.

Edited March 21 by Sweet

[scorpioncapital]

The FTC is even going after money losing or precarious companies. Look at irobot merger fail. Stock from 50 to 8. Or grail by illumina the company doesn't even have a product yet. Meanwhile some drug companies are allowed. It's scary as it seems almost random?

[Gregmal]

5 minutes ago, scorpioncapital said:

The FTC is even going after money losing or precarious companies. Look at irobot merger fail. Stock from 50 to 8. Or grail by illumina the company doesn't even have a product yet. Meanwhile some drug companies are allowed. It's scary as it seems almost random?

Its not random. Nobody on Main Street really knows or cares who Bristol Meyers is. But "standing up to evil big tech" like Amazon or Apple is a sure win even if the case is BS. Same with the airlines "jackin up y'alls rates"...even though we know labor and oil are the real reasons....Illumina IMO is an actual monopoly, thats the only one I kinda see. The rest of these are just for show and political points. 

[Sweet]

Illumina was pretty much a monopoly for a while, and in hindsight it was right to block Pacbio, but that monopoly is gone.  Pacbio is a genuine a competitor and their product is better than Illumina’s - although much more expensive right now.  Oxford Nanopore too but their execution is terrible.

[dwy000]

25 minutes ago, scorpioncapital said:

The FTC is even going after money losing or precarious companies. Look at irobot merger fail. Stock from 50 to 8. Or grail by illumina the company doesn't even have a product yet. Meanwhile some drug companies are allowed. It's scary as it seems almost random?

it wasn't the FTC that killed iRobot it was the European regulators.

[cubsfan]

1 hour ago, Sweet said:

Oligopoly sure but they are competitors of each other and they are not sitting down and conspiring on prices to give the consumer a bad deal.  
 

In the case of Apple specifically it’s offering is not a commoditised consumer product, that was never their pitch.  So looking at their margins and how they run their ecosystems and concluding it’s illegal seems like a stretch.

 

Don’t like the phone get one of the many other phones out there.

 

Absolutely agree - they have pricing power because of great products, not collusion. The FTC ought to be chasing criminals.

Edited March 21 by cubsfan

[scorpioncapital]

57 minutes ago, Sweet said:

Illumina was pretty much a monopoly for a while, and in hindsight it was right to block Pacbio, but that monopoly is gone.  Pacbio is a genuine a competitor and their product is better than Illumina’s - although much more expensive right now.  Oxford Nanopore too but their execution is terrible.

 

pacbio is 3.80. The offer was at 8. It also seems to be failing after the anti-trust diss. What I see happening is that governments deny mergers on businesses which have such bad management? or other issues (perhaps they were in a competitive market all along!) that they do badly themselves even if the government tried to save them or the public from some big giant. Now, I'm not sure what this means when the government gives them a handicap benefit but they turn around and possibly go bankrupt!

 

[Sweet]

1 hour ago, scorpioncapital said:

 

pacbio is 3.80. The offer was at 8. It also seems to be failing after the anti-trust diss. What I see happening is that governments deny mergers on businesses which have such bad management? or other issues (perhaps they were in a competitive market all along!) that they do badly themselves even if the government tried to save them or the public from some big giant. Now, I'm not sure what this means when the government gives them a handicap benefit but they turn around and possibly go bankrupt!

 

Yes they could go bankrupt but even then their tech could be scoped up.

 

Pacbio are losing money now but they are gaining traction in the sequencing world.  They’ve recently released new protocols which will bring the cost down for many of their applications significantly.

 

I expect adoption to pick up.  The biggest disappointment is Oxford Nanopore, they are pushing R&D hard and arguably it’s the best tech, but just not getting the traction.  

[ValueArb]

On 3/21/2024 at 9:54 AM, LC said:

 

That's fair but the counterpoint (not that I really agree) is that - if Apple, Google, Meta, Amazon, etc. are all out there competing with each other and presumably driving down profits in the name of adding consumer value, why are those stocks essentially the high flyers of the US economy?

 

Is it competition or simply an oligopoly? 

 

I think the evidence is clear that consumers have benefited tremendously from all of these companies so does it matter if they are an oligopoly?

 

Apple customers benefit from premium products with cutting edge features and innovations, for customers who are only focused on price there are cheaper competitors in every single one of its markets. The DOJ is suing in part because they don't think Apple should 15-30% of every app sale and subscription on the iPhone/iPad, but as a developer I remember when we only used to get 30% of revenues after distributers and retailers took their share and billed us for co-marketing. The iPhone App Store created the greatest gold rush in the history of software development and IIRC paid developers over $60B last year alone. Apple's 15-30% fee isn't just for credit card processing, its for hosting, distributing, app review, international hosting and distribution, co-marketing and developer tools, support & apis.  Most importantly it provides such a trustworthy app purchase experience by intensely vetting apps, with easy refunds and subscription cancelations, that customers don't blink an eye at buying software from an unknown developer like myself, increasing my sales tremendously.  

 

No one has to use Google search but its free and its the best, and its ad network provides immense value to small businesses. Same with Facebook, no one has to use it but its free and valuable to billions of people, while its ad targeting is the best available and a huge boon to small startups trying to launch businesses in niches. Amazon has saved its customers hundreds of billions and made their lives significantly better.

 

Does it come down to quibbling over who gets the larger slice of the pie? Sure they are all immensely beneficial to customers, partners, the economy and their investors, but maybe the DOJ needs to force these companies and their investors should take a smaller cut of the pie so that the DOJ can distribute some back to voters? So the party in power can tell those voters, Joe did that!

 

Imagine you ran the only grocery store in town, which you keep clean, well stocked with fresh prepared foods and  all the locals favorites, and staffed with happy helpful employees. Sure your prices are a bit higher than other groceries, but it doesn't stop the locals from heavily trafficking your store and providing you with outstanding profit margins. You aren't a monopoly, anyone who is extremely price sensitive can save 10-15% by driving twenty minutes down the road to a Walmart situated in a crappy area on far cheaper land. But now a new mayor decides that you make too much money, so he demands you increase pay levels substantially (even though you don't lack for good employees at your current wage rates) and offer a special locals only discount of 15% to match Walmart prices (which would apply to 90% of your customers). He calls you a greedy millionaire taking advantage of the people of "his" small town, and declares if you don't agree that he'll have the towns zoning board rezone your property for non-commercial use. 

 

Not only is that inhernenly unfair, but its damaging to the economy of the town in the long run. Why would anyone try to build a successful retail business in it if as soon as their new business finally becomes profitable the current party in charge will demand a share for their supporters? Why is the FTC and the DOJ trying to bully successful businesses in what is supposed to be a free market economy, and make it likely that less future investment will take place in our borders?

Edited March 22 by ValueArb

[mattee2264]

The main area in which competition authorities screwed up is by allowing a lot of acquisitions by Big Tech that essentially bought out potential or actual competition and greatly increased their market share. 

 

There has always been a soft touch to tech regulation on the basis that they don't want to discourage innovation and creative destruction will supposedly ensure that strong market positions are not permanent. 

 

 

[KCLarkin]

Why is there so much desire to destroy American companies with strong market positions? Competition is now global and you need strong national champions. If you handicap American tech, who wins? China, Korea. In the best case, you give some modest market share to another American big tech co.

 

Can you imagine Taiwan trying to voluntarily cede TSMCs dominant position?

 

This reflexive hatred of "big tech" is such self-inflected nonsense. 

[sleepydragon]

26 minutes ago, KCLarkin said:

Why is there so much desire to destroy American companies with strong market positions? Competition is now global and you need strong national champions. If you handicap American tech, who wins? China, Korea. In the best case, you give some modest market share to another American big tech co.

 

Can you imagine Taiwan trying to voluntarily cede TSMCs dominant position?

 

This reflexive hatred of "big tech" is such self-inflected nonsense. 

It’s ok. China is doing the same thing. They are competing who burned their house first

 

[KCLarkin]

But China will win a race to the bottom. If the only difference between phones is cost, China will win.