Zuckerberg & Co regulate how Rockefeller - is that even possible - and then fall the stock markets?
The excitement over Cambridge Analytica, the election campaign of The Donald, and the amalgamation with Facebook's privacy practices was huge. One could almost get the impression that Hannibal Mark had risen with his data elephants over the sugar hills in the Western Alps and threatened from there now the cuddly zone in the offline West.
The call for regulation sounded immediately and loud. In this context, however, the question arises, who could regulate what and how, if that leads to any improvement at all?
In a free society, it is certain that part of freedom is that adult citizens should not only give away their assets, as many religious founders in front of them - the same everyone can do with his data. You click and you already make your contribution to the data collection of another.
I. Regulate like Rockefeller
John D. Rockefeller is considered to be the richest man of modern times. In the Middle Ages probably only Fugger was richer. Rockefeller's fortune was created by building a monopoly in the processing and distribution of oil with a world market share of more than 90% in the top. His company Standard Oil has been the subject of decades of multi-faceted confrontation within American society. The climax reached this, as the US under President Theodore Roosevelt 1906 on the basis of the newly introduced antitrust laws brought lawsuit. In 1911 Standard Oil was split up into 34 successor companies. Many of them still exist today, such as ExxonMobil, ConocoPhilipps or Chevron.
Not inconsiderable asset growth Rockefeller scored after the breakup. The courses of the successor companies fell initially to the bottomless. Rockefeller realized, however, that the companies would continue to have a great value in the future and bought into selling prices on a large scale in this one. That he had a temporarily unique monopoly was no coincidence. His business acumen was very pronounced and enabled him to use his own defeat for a profitable business. He also benefited in particular from the fact that the newly invented cars and the First World War caused rising oil prices. Thematic investing à la private equity from the textbook.
Regulation alone guarantees neither profit nor loss - it is a stock market influencing factor among many.
II. Regulation of Oligopolies
For the regulation of monopolies and cartels, there are specially appointed competition and antitrust authorities in all market-economy-organized societies worldwide. An undoubtedly strong position in this area is the European Union. Just think of Jack Welch, the former King of GE. He had incorporated dozens of corporations within decades. At the end, he wanted to quickly swallow Honeywell. But EU Competition Commissioner Mario Monti thwarted him. On lengthy votes Welch wanted to get involved just before the pension and said the deal abruptly.
Neither GE nor Honeywell has monopolies that are even close to those of Rockefeller. The topic today is rather the so-called dominant position and in this context the topic of oligopoly. This is not only written by specialist magazines, but the New Yorker has also taken on the issue in detail years ago.
Oligopoles are a widespread phenomenon. The Economist went so far as to suggest to Warren Buffett that focusing on elusive oligopolies was his primary investment strategy. Economic Moat is often called that - in German you can say: difficult to overcome moat. Of course, many value disciples do not want to hear that, but the accusation is: the focus on oligopolies is today the alternative to focusing on monopolies à la Rockefeller.
III. Oligopole, not just at the gas station
Everyone knows it, the newspapers write about it, but there is never anything to prove - the oligopoly at the gas station. And that will not change. One of the most important features of an oligopoly is that there are equitable interests among the oligopolists that do not require direct voting because the optimal behavior is obvious.
In the City Nord in Hamburg, the oil companies do not need to put any pennants in the window, so that the competitors know that the price should be raised. The gasoline market in Rotterdam is public, the direction of prices so clear and in well-functioning oligopolies there is no one who does what would be most unpleasant: a price war . One raises the price of gas a penny, others think about what is good for them. It is neither telephoned nor written an email and certainly not a cartel process triggered by the purchase of a company. Whether the price rises or falls a penny, perhaps the consumers are interested. For the oligopolists, it is much more important that the margin is not negatively affected. That would be the case with a price war. But the states like to help with that: ANTI-DUMPING calls itself that. Have you heard of it recently, in connection with Trump, Stahl and China ?
The structures within which oligopolies operate are mostly completely legal. And the stakeholders - above all trade unions and tax-raising politicians - have little interest in anything being changed. Who pays that: you, of course. With higher prices and less innovation. This is the chance for the little ones - and there are so many of them in Switzerland and Germany that Chinese and Americans are really jealous.
IV. WWW monopolies
Donald Trump not only picks up on China and tariffs. Even Amazon is not safe from him. Again, while many Europeans believe in this issue, Trump argue only polemically, it is also here on closer inspection but different. Amazon is a marketplace where non-Amazon companies sell their products and sell and pay for them. The side effect is that Amazon as a platform sees exactly what other companies' products run well on their own platform. It's hard to believe, but a common practice of Amazon is simply to have these products made and then offer them on the platform in direct competition with the companies that originally had the idea. The fact that Trump is not purely polemical, can be seen from the fact that there are, for example, from the prestigious US University Yale already detailed studies on this subject, which are presented on prime time in the US stock market television.
The problem is clear:
The innovation yield of the small business owner goes flutes. Amazon puts them at first, but over time suffers the whole model, because smart entrepreneurs do not want to put up with it. They go to another marketplace - what was his name?
If Amazon by the competition authorities as "standard
OIL Delivery "corporation is classified, which proves therefore, among other things, no real profits, because other markets are" tapped ", is clearly what happened. See above: Regulation and structural change. Whether this then prevents Jeff Bezos from closing in on Rockefeller financially may be doubted (see also above).
V. WWW Oligolpole
Data Hannibal Mark provided a striking example in recent days. Facebook has a huge database and explains that it makes a new offer. Dating. The courses of the listed dating portals in the US went downhill. Of course, there was also the hint that Facebook tried unsuccessfully earlier. In the context, I found the comment of a FT reader more interesting: "I'm waiting for dating on Amazon. They also offer delivery. "
Joking aside. The problem becomes clear: the distinction between monopoly position, unfair competition and allowed product innovation is difficult. Increasing regulation in this area is certainly needed to put data handling on a safer footing. However, experience also shows that more regulation is one of the classic measures to promote oligopolies.
It therefore remains to be stated that more regulation is an issue. It is, however, unlikely that the asset growth in Silicon Valley will weaken as a result. The concentration is probably even more. The stock market should profit from this because the stock exchanges are the playground of the oligopolists of all countries.