Comment by jaggirs | Hacker News Reader

Comment by jaggirs | Hacker News Reader

This is good and all, but there is a much simpler solution to this problem and others:

Progressive taxation of companies

I know this sounds outrageous, but hear me out. What if monopolies split themselves? Wouldn't that be great? Does the same company really have to make the phone and the charger? No, but there are 2 reasons apple does:

1. Collaboration between the phone department and the charger department is slightly easier.

2. They can abuse their monopoly on iphone chargers to force you to pay more for them.

Apple makes about 30 billion on iphones per quarter. Assuming all iphones were $600 (which they arent) and everyone uses 2 chargers per iphone (because the first one broke) priced at $20, apple would be making $2 billion from chargers.

Say, if they didn't abuse their monopoly position for chargers they would make only $1.8 billion from them.

This is $2.0 billion - $1.8 billion = $0.2 billion less revenue.

Now if you just tax apple progressively such that taxes for 32 billion in revenue are more than $0.2 billion higher than paying taxes for 30 billion in revenue, apple will split into iphoneapple and chargerapple by themselves!

Now in practice you might not want to tax revenue but for example the value of the company or something else.

Also you don't want the 'split' companies to still behave like they are one company, this means that you want the split-off company to have different shareholders from the main company, because otherwise they would just behave in mutual interest.

More in line with the topic, netflix might decide to split into a 'movie suggestions algorithm' service and a 'movie streaming' company.

Google would split into a gazillions of different companies.

But some interoperable internet legislature might be a little more realistic :)

If we think the advantages of monopoly power are undesirable, we should tax them. Don't fine them for abusing monopoly power; it's an asset, tax them just for having it. Same thing that Sanders said about the banks - tax them for simply being large, and they'll break themselves up.

edit: If walled gardens had to pay taxes on their moats, they'd stop digging them.

The way it works now is as follows:

* Monopolies by themselves are OK

* Abusing monopoly power in one market to leverage an unfair advantage in another market is NOT OK.

In the case of the latter there ain't a tax (the irony is that large behemoths are already avoiding paying their fair tax). A tax lcould also morally legalize the behaviour (moral is important in antitrust behaviour look at the claws/lobby of tobacco firms).

On the contrary, it is a fine by a government subjected by a court of law. Every government has to start this lawsuit themselves though. It takes a lot of effort, time, money. On top of the fine, action as a result of being found guilty can be demanded as well (see history of US phone companies).

Sure, Apple will split into iPhoneApple and ChargerApple... after signing an exclusive 100 year contract for ChargerApple to be the sole supplier of chargers to Apple, for a fixed price, blah blah blah trivial workaround.

You need to se it like this: iPhoneApple is selling off it's charger operations to someone else (it is important that they are different shareholders). Once the companies are split up, iPhoneApple won't want chargerapple to have an exclusive contract, since their phones are worth more if chargers are cheaper. So the only reason they would want to give an exclusive contract to ChargerApple is to sell it for more money. Considering this, they might as well sell it first and then negotiate an exclusive contract. Or hell, maybe they find someone who will pay more for it than their spinnof. At this point, iPhoneApple will realize what every other smartphone maker in the industry realizes: Selling exclusive charger contracts is not worth it.

There are not enough different shareholders in the world to hold all of Apple's divisions.

What entity has billions lying around to buy sections of Apple? Only the US Federal Government, which can print money at will.

I find this idea really interesting! Do you have any reference on studies that have looked into the idea or places that have implemented it?

No, all I've come up with googling 'progressive tax for companies' are textbook explanations why it is not 'fair' to do this. Presumably it wouldn't be fair to tax a company with revenue more than a highly valued startup. Fairness is too ambiguous a term I think to determine policy. Besides that, there are other monetary features to apply a progressive tax on.

And with that 0.2 billion Apple (along with several others) will make sure no such law is passed.

If a law like you propose was possible, then it would already be possible to split the monopolies. Neither can happen until workers are actually in control of the state, as opposed to the current dictatorship of monopolists.

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