Dec. 5, 2022

Chokepoint Capitalism with Cory Doctorow Part One

Today we welcome the author of Chokepoint Capitalism Cory Doctorow over two episodes. In this first installment, we focus on market structures.


Today we welcome the author of Chokepoint Capitalism Cory Doctorow over two episodes. In this first installment, we focus on market structures.

Transcript

Richard Kramer: Welcome to Bubble Trouble. Conversations between the independent analyst Richard Kramer, that's me, and the economist and author Will Page, where we lay out some inconvenient truths about how financial markets really work. We have a fantastic guest for today. The author of Chokepoint Capitalism. And we're going to have a discussion with the inimitable Cory Doctorow over two parts. The first we're gonna focus on market structures and monopsony. We'll get our head around that word. And then the second, we're gonna dig deep into copyright and how artists can take back control of their precious works.

Cory is a prolific author, speaker, an activist, and we're delighted to have him with us today. More in a moment.

We have an extremely special guest today that I'm really thrilled to have with us because I have read many of his science fiction books and indeed, my teenage son was an avid reader of many of his young adult science fiction books for many years. We have the inimitable Cory Doctorow who has just published a new book called Chokepoint Capitalism which is really on point with our thinking about Bubble Trouble. I'm not going to go through the long list of all of Cory's accolades and his roles and all that stuff. He's already declaiming that for the moment. But, I do remember one personal story which is, he gave a reading at a comic store which is now defunct in London called Orbital Comics. And I took my then 11 year old son along-

Cory Doctorow: Mm.

Richard Kramer: ... to get a signed copy of the graphic novel that he had just published. And Cory was a true gentleman then and he is a real gentleman to come join us on his book tour now.

Cory Doctorow: Thank you. Orbital was such a lovely store.

Richard Kramer: It-

Cory Doctorow: I'm so sad to see it's gone.

Richard Kramer: ... it is a lovely, sad departure from, uh, from Soho. So, Cory, just as a quick starter, can you give people a sense of where they can find your stuff? You're not someone who's a shrinking violet-

Cory Doctorow: Sure.

Richard Kramer: ... and hard to find. And a little bit about what prompted you to write Chokepoint Capitalist?

Cory Doctorow: So, if you go to Pluralistic.net that's got links to all the ways you can find me. I write an essay, uh, more or less every day about topics in the news. I've been a blogger for 20 years, and then that goes out as a Twitter feed, a Mastodon feed, a Tumblr feed, a Medium feed, an RSS feed, newsletter and so on. Wherever it's on a platform I control, there's no surveillance, no metrics, no advertising. And all those links are at Pluralistic.net.

In terms of Chokepoint Capitalism, I should note that the lead author on this book is not me, it's my colleague Rebecca Giblin, a brilliant law professor from the University of Melbourne-

Richard Kramer: Mm-hmm.

Cory Doctorow: ... who has done some of the most important empirical work on how copyright interacts with artists' incomes. And Rebecca and I are both veterans of the copyright wars. We had spent decades arguing about w-whether copyright should be longer, broader, wider, um, and what the distributional effects of that would be. W-whether that would make anyone more money and if so, who that would make more money for. And we'd observed that for 40 years, really since the 1976 Copyright Act in the United States, copyright had increased in duration, increased in scope, more works could be copyrighted, more kinds of works, the statutory damages had gotten higher, the ease with which you could prove that you were entitled to statutory damages got easier, the industries that make use of copyright had gotten more profitable. But the artists whose labor created the works had gotten a smaller and smaller share of that money both r- in real terms and proportionally, their incomes were declining.

And we did a presentation together when I was out on a book tour in Melbourne. And we were in the back of a cap and we were talking about this and we decided that this was the real crux of the matter, that people had decided in the, kinda great battle that you could either be on team tech or you could be on team content, but you had to choose a side and there wasn't a team artist. And we thought that there could be a team artist. And, and as we looked at the way these markets are structured, we came to the conclusion that the reason that copyright was making the industries bigger but not, um, helping their work force was the same reason that if you give your kids more lunch money, it will make the bullies who steal their lunch money every day richer but won't get them fed. And the fact that the bullies are out there demanding that kids get more lunch money because they're going hungry, doesn't mean that there is an amount of lunch money that will eventually benefit those kids.

And we, we called the bullies at the gate, we called them the chokepoint operators and we set out to examine how the rigged markets work and to come up with very detailed technical proposals for how to unrig them.

Richard Kramer: And, I guess Chokepoint Capitalism rolls off the tongue a little bit better than monopsony rents [laughs].

Cory Doctorow: Yeah, or gobsinistic conduct.

Richard Kramer: Yes, yes, and the, uh, uh, I have been explaining the concept of monopsony to various people, but it just doesn't have that kinda grab you off the shelf kind of, uh-

Cory Doctorow: It sure doesn't. Well, we never had a life-ruining board game called monopsony.

Richard Kramer: No, no, we didn't.

Cory Doctorow: So nobody had the opportunity to come, become familiar with that term and as they did with Monopoly. But, you know, monopsony is a market where buyers have power.

Richard Kramer: Yep.

Cory Doctorow: And intuitively that might seem a little weird, but then you go, "Well, wait a second. If you're an author and there's only five major publishers, there might only be four pretty soon depending on whether-

Richard Kramer: Yeah, yeah.

Cory Doctorow: ... S- Simon and Schuster, Random House win their appeal." Um, then anything you wanna sell to readers has to go through these very powerful buyers who decide how much you're gonna get paid and then how your work is gonna get marketed, and it's very hard to get around them.

Richard Kramer: Yeah, I'm gonna throw the baton-

Cory Doctorow: And if you j-

Richard Kramer: ... over to Will because he is an absolute, he's been deep in the weeds of the copyright issues for many years and I think he's just raring to-

Will Page: Yeah, I th-

Richard Kramer: ... to get on this.

Will Page: ... also, but just on monopsony, we have this uber hipster blog called Stratechery-

Richard Kramer: Mm-hmm.

Will Page: ... Ben Thompson. And he has about 250,000 followers of his blog. And he talks again and again about aggregation theory, and unless I'm missing something, he's just talking about a monopsony-

Cory Doctorow: But-

Will Page: ... he's put lipstick on a pig. I mean-

Cory Doctorow: Oh, yeah.

Will Page: ... there's no sexy term, so we call it aggregation theory, we present it as a whole new thing. Uh, is that how you see it?

Cory Doctorow: Well, orthodoxy for 40 years has become more and more welcoming of corporate power. And really oriented around this idea that there live among us kind of genetic sports who have the special genius that it would take to make us all better off, and that when they, given their reign, they grow these gigantic empires. And the last thing we wanna do is put those empires in chains because then we don't reap the benefit of like little Jeffy Bezos in his-

Will Page: Yeah.

Cory Doctorow: ... overnight delivery machine.

Will Page: [laughs].

Cory Doctorow: Um, and you hear it being said in a very open way now. Whenever Warren Buffett is declaring his unslakable lust for businesses with wide, unbridgeable moats, he's just talking about monopsony. When Peter Thiel says a "competition is for losers," he's saying like, "Why should I have to bid against some lesser man with-

Will Page: Mm-hmm.

Cory Doctorow: ... less vision than me to acquire the inputs for my firm when I am clearly the smartest guy in the room and if I'm given my, my free reign then I don't have to waste money that I could, could otherwise spend on, I don't know, tormenting migrants with night vision scopes or whatever."

Will Page: [laughs].

Cory Doctorow: And I'll be able to make us all better off, except for those migrants that he torments with night vision scopes.

Will Page: [laughs].

Richard Kramer: And certainly we had a previous guest named Kurt Anderson-

Will Page: Mm-hmm.

Richard Kramer: ... who's written a brilliant book called Fantasy Land, and also one called Evil Geniuses about the 30 to 40 year effort to get that mode of thinking accepted in popular discourse.

Will Page: Mm-hmm.

Richard Kramer: The idea that from Milton Freedman's initial stuff about, oh, well stakeholder capitalism, the only obligation a firm has is to make as much money as they possibly can, externalities be damned

Will Page: Mm-hmm.

Richard Kramer: And that, that we've had a decades long sweep of history of concentration. And this was one of the areas I wanted to start off with because a lot of the, what you describe in the creator world, in the artist world, and what's happened to them, don't we just, at a higher level, see this all over the place-

Cory Doctorow: Sure.

Richard Kramer: ... whether it's big finance and big oil and big pharma and the concentration of so many industries, hasn't this just been a... You're examining one outcome of this trend towards gigantism that there was, uh, when I grew up, I thought the Tyrannosaurus was the biggest ever dinosaur, but-

Cory Doctorow: Mm-hmm.

Richard Kramer: ... who knew, there's a Gigantosaurus that's even bigger.

Cory Doctorow: Mm-hmm. Mm-hmm.

Richard Kramer: And you could always make larger entities which are theoretically more efficient. Isn't this, isn't, aren't we just looking at one, uh, part of that elephant?

Cory Doctorow: So, y-you're right that this is part of a wider trend, and in fact, part of our theory change in this book is that artists frankly just aren't important enough to change this [laughs] stuff on our own, but that the circumstances that artists find ourselves in are really related to the circumstances that lots of other workers find themselves in, and there's scope for solidarity across sectors. That's how we, that's how we get stuff done.

Creators do have a couple of distinctive circumstances that make them particularly vulnerable to this. So, one is that creators create for reasons that are unrelated to theories of rational economics.

Will Page: Right, correct.

Cory Doctorow: The ki-

Will Page: There was creativity before there was copyright.

Cory Doctorow: Yeah. There certainly was, right? I mean, remember that books are older than copyright, than commerce, than paper, than binding. One of the things that just freaks me out when people talk about, "Well, it's an ebook and here are the licensing terms and they say that you can't do this and you can't do that," like, w-what kind of jumped up, 10 second year old infant are you to tell me that my ancient medium needs to be bound by terms of service that was invented for DOS.

Will Page: [laughs].

Cory Doctorow: This is, like, this is something old an sacred, not some modern bit of commerce for you to so blithely dismiss of. But, we know the joke about the kid who runs away and joins the circus and his dad finds him shoveling elephant poop and he says, "Son, come home." And the kid says, "What? And quit show business?" People-

Will Page: [laughs].

Cory Doctorow: ... make art 'cause they can't stop. So, creators aren't alone in doing their job for isogenous reasons, for reasons unrelated to their compensation. And wherever we find people who work out of a sense of admission, we often find exploitative work arrangements. So think of healthcare workers, people who work with young children, people who work with elderly people and disabled people and so on, who are often subjected to very bad circumstances and effectively, their bosses are saying, "I dare you to leave these people to die or suffer."

Will Page: Right.

Cory Doctorow: Right?

Will Page: Mm-hmm.

Cory Doctorow: "I'm, I'm gonna cut your wages and let's see, let's see who blinks first." And the other-

Will Page: I say, that's heavy.

Cory Doctorow: Yeah. Yeah, well.

Will Page: But it's true.

Cory Doctorow: The teachers in Ontario just did this too, and notorious there blink, but you know, my friend, David Graber who died during the pandemic, he wrote a brilliant book called Bullshit Jobs.

Richard Kramer: Yeah, yeah.

Cory Doctorow: And one of the points of that book is that in a world in which so much of the work that we do, uh, contributes so little to anything that anyone cares about, that we assign a kind of perverse premium to jobs that are satisfying, we say, "How could you possibly want a higher wage? Aren't you satisfied by doing something that matters?

Will Page: [laughs].

Cory Doctorow: Surely it's only people who like tick boxes or fill out a rectangle on the org chart to make some princeling at a multinational feel big. Those people are the people who need to be well compensated, otherwise, what would they have in their lives? But, you know, the other thing-

Will Page: Yeah, you know why you earn in a year what an investment banker earns in a month? Because you want to do this.

Cory Doctorow: That's right. You're getting the intrinsic satisfaction of wiping the bums of dying people, whereas they have to put in the hard work of going to Nobu for lunch every day.

Will Page: [laughs].

Cory Doctorow: So, the, the other thing I think that makes creators vulnerable is that the mechanism by which creators are meant to extract a higher share of the revenue from their work, copyright is extremely sensitive to market concentration and it accelerates market concentration. So, copyright in a creator's hand, it, it, is only good to the extent that there are a lot of buyers, that there not a monopolistic environment. Copyright in the hands of monopolists can be used to corner and structure future markets. And I know you have a history with Spotify; we have a couple of chapters on Spotify I'm sure you saw in the book where we talk about the fact that the big three labels controlled 70% of the recorded music when Spotify was kicking off, meant that Spotify had to build a service to the specifications of the big three labels, so they got to build their own future.

And there are many ways that we document in the book, that future that they built was detrimental to new market entrants, things like Most Favored Nation deals that didn't come with big fat equity packages that the labels were able to extract from Spotify, so everybody's getting a low purse stream rate that makes the th- the IPO pot big, but only the big three have got shares that blow up when the IPO comes.

Will Page: The big four, Merlin, the collective-

Cory Doctorow: Merlin. You're right.

Will Page: ... had [inaudible 00:12:34].

Cory Doctorow: That's right.

Will Page: We're gonna take you to the break now. This conversation's in full flow covering market dynamics and we'll be back after the break to delve deeper into this very, very interesting topic.

Well, I, I definitely wanna come in o-on that debate about the distribution-

Richard Kramer: Mm-hmm.

Will Page: ... and long-tail because it's an interesting one. I mean, I've been debunking the long-tail theory since 2008. You may remember I, I published a piece of work which made me no fans, but I showed that it was 30 million tracks in the download store shelf, 10 million of which had no clicks. 80% of choice was a dormant long-tail.

Richard Kramer: Mm-hmm.

Will Page: And of those which had a click, it was even more hit heavy than in the physical world.

Richard Kramer: Hmm.

Will Page: And that, to a certain extent is continued. And I guess the long story short in that one is it does seem to me that when you offer more choice, people want more hits, and Richard, you talk about the paradox of choice here. Do you, let's try and wrestle a minute with the supply and demand factors in this issue. Do you see the winner-takes-all being a function of supply? There's just too much choice? Or is it a function of demand and who controls demand?

Cory Doctorow: See, I think it's a function of regulatory forbearance, right?

Will Page: Mm-hmm.

Cory Doctorow: I think it's very hard to dis- and in fact, on, on the way over, I was emailing, on the train down from Edinborough, I was emailing with a, an antitrust lawyer I know here in the city who, we're talking about structural separation and the idea that you can have these platform markets where firms are on the one s- on both sides of a sale, and how it, it's very hard to know whether they're cheating. When Google says, "Well, we put a thing that belongs to us at the top of the Google search rank, but we did it because we genuinely believe it's the best thing."

How do you figure out whether they're telling the truth? And if they are telling the truth as they understand it, how do you figure out whether they're right? Unless you've got a front row seat in Plato's cave, you don't know.

Will Page: Uh, you inspired another thought there, Cory. I'm grateful for it. Uh, we look at Facebook, and I wanna get into Facebook as-

Cory Doctorow: Sure.

Will Page: ... we go further into this podcast. We're gonna have a competition of who called out Facebook first, and-

Cory Doctorow: [laughs].

Will Page: ... I checked the dates. We went in March. I think you went in February. So you bask in the glory of told you so.

Cory Doctorow: Right.

Will Page: Why their stock's in the toilet. With Facebook, here's another really good example for you to mull over, Cory, which is, if Facebook say the cost of their ad space to me is worth X, that is, if I want to use that banner ad of entry to promote Oculus Headsets-

Cory Doctorow: Mm-hmm.

Will Page: ... I determine the market value of that internal ad for it-

Cory Doctorow: Mm-hmm.

Will Page: ... which is the reservation wage that the rest of the market has to compete against. And if I cook my books then inflate that number higher than the real market average should be, then back to monopolistic power. It's using market power to force the cost of advertising to everyone else above what would be a natural equilibrium.

Cory Doctorow: Y-

Will Page: My own brand is worth far more than I know it is-

Cory Doctorow: Sure.

Will Page: ... because that's how I'm gonna present it to the market.

Cory Doctorow: And you're getting at something really important here, which is the administrateabilty of policy. Right, if we say to firms, "All right, you're allowed to corner important markets, but you have to promise that you're not gonna cheat." It's really hard to figure out whether they're cheating.

Will Page: Scout's honor.

Cory Doctorow: Yeah.

Will Page: Scout's honor regulation.

Cory Doctorow: I swear. Well-

Will Page: [laughs] Pinky swear.

Cory Doctorow: ... I think if you look at a, a, an even more concrete example, there was the incredibly telling moment in the house subcommittee testimony of 2020, where Jeff Bezos was asked whether he ever observed the pricing or sales of third party merchants on his platform to inform what he might do in his first party products.

Will Page: Mm-hmm.

Cory Doctorow: And there was an obvious, that kind of ah-ha moment where he said, "Well, I'm not really sure. I'll have to get back to you."

Will Page: Mm-hmm.

Cory Doctorow: But of course, that is especially in a platform like Amazon, which has a very clear rule which says "Thou shall not sell for less-

Will Page: Mm-hmm.

Cory Doctorow: ... somewhere else than you sell on our own platform." And tying that in with your point, which is if Jeff Bezos knows how much he can charge for a first party product, then that effectively sets the market price for all third party products, especially if he knows he's going to aggregate a very-

Richard Kramer: So-

 ... high portion of demand.

 ... y-you're, this, so this is, the thing i`s that I, Jeff Bezos might have genuinely believed that he wasn't doing it, but his organization itself was so big and riddled with conflicts that th- it could very easily have been an executive at Amazon. And if, if you've seen any of the reports on Amazon's internal data l- data handling practices, they're very much a move fast and break things company. Until recently, they had no audit logs of who had copies of all of their data. Internal teams would just spin up and say, "We've got an idea for product," and the first thing they would do is make a copy of all of Amazon's customer data, all of Amazon's merchant data to start working with it. There was no logs of where it was going, there was insider threats, there was sales of this data to, from, f- to marketplace sellers to gain advantage over other marketplace sellers, sales to third parties, there were leaks, all kinds of things, all in the service of growing very quickly.

So the idea that Jeff Bezos can even know is very hard. So thi- this is not distinct to Amazon. There are lots of circumstances in which someone is meant to be the referee, right? Is meant to run a fair game where even though it might be efficient and simple and even sometimes better to let them be the referee, like, think of how easy it would be if you and the, your soon to be ex wife could both use the same lawyer in your divorce.

Will Page: [laughs].

Richard Kramer: Right? You wouldn't have to copy all those papers, you'd save more money, when you were done the divorce estate would have more money. We all understand why there's two lawyers in this arrangement. I remember when I first moved to London I lived near, near you. I lived in Kentish Town and I, my landlord at the flat I was renting said, "Well, you have to go down to Foxton's to negotiate the lease," and I went down to Foxton's to negotiate the lease and they said, "All right, we, uh, need some money from you because we are going to negotiate the lease for you." And I said, "Well, who do you negotiate it with?" And they said, "Well, us."

Will Page: [laughs].

Richard Kramer: Right? And, and, it, it was unsurprisingly a very bad lease 'cause my landlord paid them 100x over the life of that flat more than I ever would. This doesn't take Milton Freedman si-sitting there and saying, "Incentives matter," to you undertoo- to understand why this is a bad deal. And historically, the way that we regulated large structurally important firms that had to be referees is we told them they couldn't participate in the game.

Will Page: Right.

Richard Kramer: If you owned a bank, you couldn't own a business that competed with the businesses you were lending money to-

Will Page: Mm.

Richard Kramer: ... for just like totally obvious reasons.

Cory Doctorow: I'm running Cory's Pizzeria, an right next to me is Barkley's Pizzeria, and we both borrow from Barkley's for our capital, and I need to buy a new pizza oven and Barkley's Pizzeria buys [laughs], needs to buy a new oven, but Barkley's Pizzeria gets their loan interest free and mine comes at a 6% loan, 6% with high penalties if I miss a single payment, I'll go out of business, Barkley's Pizzeria won't. And eventually Barkley's owns all the pizzerias, right?

Trains weren't allowed to own freight companies. The idea that we have Amazon, Apple, Google, all sitting in these positions where they are platform users and platform owners, and where they keep getting caught with their hands in the cookie jars, right? The- there's been so many instances in which they've abused this power, not just in ways that are shady, but like actually illegal, that, it seems like just the minimum prudent standard to say, you could be the referee, you can own a team, but you can't be both.

Will Page: But let's go where the rubber hits the road in this for me. It's gonna get a little bit heavy going here for our listeners, but just hold this for a second. What we're discussing here is a problem of monopsony power, but when you drop monopsony and flip it over to monopoly, that's where I think you see a slight counter case-

Cory Doctorow: Hmm.

Will Page: ... that is a typical monopoly, if you borrowed 9,000£ to study at London School of Economics this year, we'd say that a monopoly restricts output and increases cost. You get a classic chart, and that's what a monopoly does. Tech monopolies, for me, do the opposite. They expand output, and to a large extent, reduce cost. So it doesn't fix the textbook definition. It doesn't fit the regulatory framework. So from a monopoly perspective, the counter argument would be, I'm making things cheaper for the consumer, and that's what matters most.

What happens back in the supply chain, well that's good blood on the carpet capitalism. But for the-

Cory Doctorow: Mm-hmm.

Will Page: ... consumer, they're spending less on that lawn mower. They're spending less on that tent. They're spending less on that carton of Tropicana than they would've done otherwise. And I think it's a bit of a tug-of-war going on there, but just walk me through how you see that.

Cory Doctorow: Yeah, so I think there's two, two ways to think about this. One is to consider it on its own terms, and one is to consider it in a historic context. So, on its own terms, the idea that consumer welfare is the only thing that matters, assumes that there is a consumer who is not a worker, right? That wage suppression that comes through the supply, through supply chain squeezes will always be offset by lower prices.

W-we've already seen that doesn't work.

Will Page: Right.

Cory Doctorow: I mean, one of the reasons we've had debt fueled consumption at increasing levels, now to really unsustainable levels, since the dawn of the neoliberal era is that, uh, uh, even as the cost of hard goods was declining and services, wages weren't keeping up, they were stagnating and people had to, uh, raid the equity in their homes; they had to borrow money on their credit cards-

Will Page: Mm.

Cory Doctorow: ... a- and then that brings me to the second problem, which is the historic argument for this. So, the origins of American antitrust law are in John Sherman's Sherman Act of 1890. And John Sherman stood on the floor of the Senate and didn't say a word about consumer welfare. He said, "If we would not permit a King to rule over us, we should not allow an autocrat of trade to rule over us. That when we allow firms to become too big to fail and too big to jail, that they're able to structure our markets in ways that are really harmful to us." So, one of the things that's happened over the years, that we've allowed corporate power to swell, is it's made it harder to regulate wisely. And as a consequence, we've had things like a general draw down of public services at an increasing private expense to, to use those services.

So, not only are homes more expensive because we treat them as assets and we have dysfunctional planning and so on, but you have to raid the equity on your home to send your kid to uni, and also to pay for your retirement and also to, to pay for your healthcare, your long-term care. It's even worse in the United States, but it's not great here. I'm a British citizen. I lived here, my f-family is here, my in-laws are here and people are hanging onto the equity in their homes with their bare fingernails if they were lucky enough have it. And the people who weren't lucky enough to have it are on the really pointy end of this where everybody who is trying to squeeze an, some income out of their homes is, uh, jacking up rents and militating for fewer tenancy protections and so on.

So you create a situation when you allow corporate power to concentrate and when you allow wealth more broadly to concentrate, where the parochial interests of small numbers of people are given priority and the broad interests of large numbers of people are not. And as Piketty writes in Capital in the 21st Century, that is intrinsically destabilizing.

Will Page: Mm-hmm.

Cory Doctorow: Right? That just when you need food but you're growing ornamental flowers for fees, um, then eventually people get hungry enough that you get bread riots, right? And so, you can't allow our, your policy to, your policy world to be dominated by just a handful of people who have all the money and all the power in the world to throw at it because then policy becomes an auction.

Will Page: But going back to that counterargument which is, to reiterate today's tech monopolies and-

Cory Doctorow: Mm-hmm.

Will Page: ... there's a joke there because I'm using plural to thrive monopolies-

Cory Doctorow: Sure.

Will Page: ... which is an oxymoron in itself.

Cory Doctorow: Well, okay. Let's call them entities with pricing power which is longer than monopoly, but more-

Will Page: Sure.

Cory Doctorow: ... oligopolies, yeah.

Will Page: You could almost say, how many tech monopolies do we need to worry about before we have a problem with competition. But still, o-o-on that, I did say they expand output and reduce price-

Cory Doctorow: Mm-hmm.

Will Page: ... which is net positive for the consumer, but le- let's think this through for a second. Thanks to the size and scale of these tech monopolies, in our current profession, a first time author, a long time established author, we're gonna see a million front less book titles get released this year. A record.

Cory Doctorow: Mm-hmm.

Will Page: A record of all time. And they're all available on Amazon.

Cory Doctorow: Right.

Will Page: We're gonna see, you just heard Apple and there's 100 million songs on their platform, far more than the 1,000 Steve Jobs promise to put in your pocket in-

Cory Doctorow: Sure.

Will Page: ... 2002. And they're there on the touch of a piece of glass. So, by having these tech monopolies on one part of the value chain, we have far more choice available to the consumer. We can debate price in a second-

Cory Doctorow: Mm-hmm.

Will Page: ... but would, if you follow the logic, we did something about this, would choice therefore suffer?

Cory Doctorow: So-

Will Page: You would lack the convenience, you would lack the choice.

Cory Doctorow: Yeah, so this is a thing I call the fallacy of the inseparable offer, right? In order to get Audible, you have to have DRM that locks every book that you sell on Audible to Audible. I don't see why that's true. Google would like us to believe this, right? Google would like you to believe that in order to have a really good search engine, you have to be spied on in every conceivable way, right? Like, someone came down off a mountain with two stone tablets and said, "Larry, Serge, thou might stop rotating thine log files and start mining them for actionable market intelligence."

And the reality is, Google was a really great search engine for half a decade before they st-started spying on you. Mark Zuckerberg would like you to think that in order to talk to your gran you need to be spied on, but Facebook also didn't spy on your for [laughs] half a decade. And as Dina Srinivasan writes about in the Antitrust Case Against Facebook, Facebook billed itself as the non-surveilling alternative to MySpace.

Will Page: Mm-hmm.

Cory Doctorow: That was their unique selling proposition when they were first coming into a broad market and leaving just the .edu market behind. So, the question is: Do we need to have a firm where the drivers are being maimed at 5x the rate or the warehouse workers are being maimed at 5x the rate of other warehouse workers, where the drivers are urinating in bottles and where there is a huge city planning problems with, uh, city tax spaces being eroded by demanding special favors and so on, in order to get overnight delivery? Or in order to get everything that we want.

Or, could we imagine, uh, a version of this that was better regulated, more competitive, more decomposed into other, into subparts rather than being unified through lots of acquisitions, where lots and lots of actors in the market would participate in order to offer the same services, but not just under one roof?

Richard Kramer: Let me just get to your point about regulatory forbearance, because you and I met in Brussels in March-

Cory Doctorow: That's right.

Richard Kramer: ... and you were in the, we were in this conference with all the big beasts of European regulation for-

Will Page: We podcasted there. We called it the Muscles in Brussels.

Richard Kramer: Muscles in Brussels-

Will Page: The lack of muscles in Brussels, of course.

Richard Kramer: Right. We did a podcast after this talking about the sanctimonious pronouncements of everyone from Vestager and Terry Britton, to Lina Khan and Jonathan Kantner, all talking tough about what they were going to do. And yet, if you go back 30 years ago to George Stigler's regulatory capture theory-

Will Page: Mm-hmm.

Richard Kramer: ... it feels as if, uh, I have been trying to explain for the past five to 10 years, why regulation remains so woefully ineffective at finding the structural separation. Now, I think there is one small side case, which is, none of the big tech companies have made major acquisitions in the past five years 'cause they are-

Cory Doctorow: Scared.

Richard Kramer: ... afraid of the proctological examinations, which-

Cory Doctorow: Yep.

Richard Kramer: ... would ensue. Fine. So, you've slightly amended their ability to expand their footprints.

Cory Doctorow: Mm-hmm.

Richard Kramer: But, most of the structural separation you're talking about just has, it's spun its wheels and gone nowhere, and I have as little hope for the DMA and the DSA in Europe as I do for some of the efforts-

Cory Doctorow: Mm.

Richard Kramer: ... by the House and Senate and DOJ and elsewhere. It feels as if they are outgunned and out matched and kind of not even on the same playing field. Tell me why-

Cory Doctorow: Right.

Richard Kramer: ... that view doesn't hold.

Cory Doctorow: So, yeah. I'm just, I refuse to be a nihilist about this stuff.

Richard Kramer: Okay [laughs].

Cory Doctorow: So the, and we need to decompose that into a bunch of different questions. So like, one is, can you make good regulation and enforce it? Well, like, clearly, right? We used to get poisoned at dinner.

Richard Kramer: Yeah. Food safety.

Cory Doctorow: Now we're-

Richard Kramer: Food safety's a good example.

Cory Doctorow: ... now we don't, right?

Richard Kramer: Yeah.

Cory Doctorow: Building codes. Just all kinds of stuff. Can we break up monopolies, even when they're much larger, more powerful in the States? We got, we got John D. Rockefeller, right [laughs]?

Richard Kramer: And we broke up the AT&T monopoly-

Cory Doctorow: Sure.

Richard Kramer: ... and then over 40 years slowly put it back together in two companies, not three.

Cory Doctorow: So, what happened-

Richard Kramer: Why not one?

Cory Doctorow: ... with AT&T is very instructive, though, 'cause AT&T was the last hurrah of a movement that started with the breakup of standard oil, and by 1982 there were two big tech antitrust investigations underway. One was IBM, one was AT&T. IBM had been in, it antitrust hell for 12 years; they'd outspent the DOJ antitrust division every year on outside counsel.

Richard Kramer: Yep.

Cory Doctorow: For 12 consecutive years, they called it Antitrust Vietnam. Ronald Reagan sweeps into office, he's got an antitrust czar. They, he understands, the antitrust czar, Reagan didn't understand anything, but his antitrust czar understood that these two firms were together strangling the American tech industry. It was really bad for American innovation and America was losing its global edge and that they needed to get rid of at least one of them and they said, "Ideologically, AT&T is easier to get rid of than IBM because we can go out and tell our frothing Chicago adult base that AT&T is a creature government. That it was never really a company to begin with because it had this regulated monopoly status for all these years."

Richard Kramer: [laughs] Wow.

Cory Doctorow: Whereas IBM is this-

Richard Kramer: Yep.

Cory Doctorow: ... freestanding American institution. IBM meanwhile, 12 years of antitrust hell, you talk about the tech firms losing their nerve to go after, to go after acquisitions, after 12 years, IBM said we're gonna build a PC, we're gonna use commodity components 'cause we know the DOJ doesn't like us owning our supply chain. Not gonna build our own operating system 'cause the DOJ doesn't like us [laughs] building our own operating system. There's that kid Bill Gates and his pal Paul Allen. They've got a company called Micro dash Soft. They lost the dash after they got the contract. And we're gonna get them to build it. And then this amazing weird queer punk technologist named Tom Jennings who worked for Phoenix-

Richard Kramer: Yep.

Cory Doctorow: ... who previously had built a thing called FidoNet was asked by Phoenix to clone the ROM of the IBM PC-

Richard Kramer: Mm-hmm.

Cory Doctorow: ... which he did and they were like, "We don't see anything. There's no problem with this." And Compact, Gateway, Dell, they all use those ROMs to, to compete, uh, against IBM. A couple of decades before, IBM would've crushed them like a bug. They would've made the rubble bounce, but they let them get away with it. But then we stopped, which is why AT&T reformed.

Richard Kramer: Right.

Cory Doctorow: Standard oil did not reform into a couple of giant companies until we stopped enforcing antitrust law. There's actually like a, there's, there's no like causal mystery here.

Richard Kramer: Mm-hmm.

Cory Doctorow: When we tell companies that they aren't allowed to do predatory or anti competitive mergers, they don't. And [laughs] when we tell them that they can, they do.

Will Page: So, just come quickly in on AT&T, also in that whole story was the story of the car phone.

Cory Doctorow: Yeah. A-a-and-

Will Page: Which is a beautiful story who-

Cory Doctorow: ... foreign attachments. Foreign attachments.

Richard Kramer: Yeah.

Will Page: ... of just a dashboard, radio, integration to a phone allowed you to compete at the edge.

Richard Kramer: Yep.

Will Page: No car phone, no modem, no modem no internet.

Richard Kramer: Yep.

Will Page: So we have to tip our hat to the car phone for just perhaps throwing the first stone against the wall of the AT&T monopoly.

Richard Kramer: And, uh, in the s- in part two I wanna get what's currently happening with some of the tech companies because some of them are going through some existential crises-

Will Page: Mm-hmm.

Richard Kramer: ... and indeed talk, I know Will wants to dig into the topics of copyright and dig more into some of the topics of Chokepoint Capitalism. So we'll be back with our esteemed guest, Cory Doctorow.

Cory Doctorow: Excellent.

Richard Kramer: If you're new to Bubble Trouble, we hope you'll follow the show wherever you listen to podcasts. Bubble Trouble is produced by Eric Nuzum, Jessie Baker, and Julia Natt, at Magnificat Noise. Special thanks this week to Oliver Bloice and Elizabeth Arnold at Platoon Seven Studios in London for helping us record this episode. You can learn more at BubbleTroublePodcast.com. Until next time, on behalf of my cohost Will Page, I'm Richard Kramer.