BIG IDEA: Rapid increases in technology causes an increase in supply of XXX, which allows for and causes the consolidation of these markets. This is evident thorugh history.
In “Can Washington Stop Big Companies?”:
“Mr. Reback, who is now working against Google, argued that the government’s antitrust prosecution of Microsoft had altered the company’s culture — which in turn created room in the market for entrants like Google and Facebook.”
(it is not one company in particular, or even one industry in particular, but is a HISTORICAL TREND)
- Rapid Increase of Technology in the late 1800s- Parrels increase in technology during the tech boom
- Engelman, Ryan, et al. “The Second Industrial Revolution, 1870-1914.” US History Scene, US History Scene, ushistoryscene.com/article/second-industrial-revolution/.
- “After the invention of steam power and the cotton gin by Eli Whitney in 1793, cotton could be shipped from the American South by New England ships to the vast textile factories of Great Britain, producing a reverse triangle trade around a single global commodity.”
- Almost platform busines smodel (integrating
- “ During the Second Industrial Revolution, innovations in transportation, such as roads, steamboats, the Eerie Canal, and most notably railroads, linked distant, previously isolated communities together.”
- “Inventions during the Second Industrial Revolution were interconnected. The railroad spurred the growth of the telegraph machine. Telegraph lines and railroad lines inextricably bound together as telegraph polls dotted the distance of railroad lines. The telegraph, and later the telephone, ushered in the era of instant communication and brought about, in the words of cultural historian Stephen Kern, “the annihilation of distance.” This was a profound change for Americans. The “local” shot outward to the “national” and even “international” as a new sense of world unity was established through these new technologies. These technologies also increased the pace of life and the manner in which people worked and lived.
- Major technological advances of the Second Industrial Revolution:
- • 1870s – Automatic signals, air brakes, and knuckle couplers on the railroads; the Bessemer and then the open-hearth process in the steel mills; the telephone, electric light, and typewriter.
- • 1880s – The elevator and structural steel for buildings, leading to the first “skyscrapers.”
- • 1890s – The phonograph and motion pictures; the electric generator, contributing to modern household items such as refrigerators and washing machines and gradually replaced water and steam powered engines; and the internal combustion engine, which made possible the first automobiles and the first airplane flight by the Wright brothers in 1903.”
- Consolidation of markets due to increased supply-Creation of Monopolies
- “Rockefeller annihilated rival oil firms through committed competition, secret deals with railroad companies, and fixed prices and production quotas. He bought out competing oil refineries and managed all aspects of the operation, including drilling, refining, storage, and distribution. Before long, Rockefeller’s Standard Oil Company controlled a majority of the nation’s oil industry
- “By the 1890s, Carnegie dominated the steel industry and had accumulated a fortune worth millions. His steel factories were the most technologically advanced in the world, although this honor came at a price for his workers. Carnegie ran his companies with a dictatorial hand; his factories operated around the clock and workers were burdened with long hours.”
- Recognition of these monopolies and legislation to bring them down
- Beattie, Andrew. “A History Of U.S. Monopolies.” Investopedia, Investopedia, 9 May 2017, http://www.investopedia.com/articles/economics/08/hammer-antitrust.asp.
- “Responding to a large public outcry to check the price fixing abuses of these monopolies, the Sherman Antitrust Act was passed in 1890. This act banned trusts and monopolistic combinations that lessened or otherwise hampered interstate and international trade. The act acted like a hammer for the government, giving it the power to shatter big companies into smaller pieces to suit its own needs.”
- “The Antitrust Laws.” Federal Trade Commission, Etc, 11 June 2013, www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws.
- “Congress passed the first antitrust law, the Sherman Act, in 1890 as a ‘comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.’ In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act.”
- “The Sherman Act outlaws “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.” Long ago, the Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable.”
- “The Federal Trade Commission Act bans “unfair methods of competition” and “unfair or deceptive acts or practices.” The Supreme Court has said that all violations of the Sherman Act also violate the FTC Act. “
- “The Clayton Act addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates (that is, the same person making business decisions for competing companies). Section 7 of the Clayton Act prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”
Greater Significance: Nearly identical trends occurred in the1890’s to 1910’s compared to trends occurring today with the tech boom. These monopolies were effectively shut down using legislative power. However, this power was only called for because these companies were unfairly fixing prices and taking advantage of their positions. FOR THE MOMENT, most tech companies continue to lower prices to secure market dominance and are becoming monopolies. Are these monopolies okay if they don’t fix prices? Will these companies fix prices once they secure market dominance, and how can we fith these companies once they do, if they do?