[adam_arthur]

Yes, exactly. The law needs to be updated to account for this new world of "platforms".

By platform, I mean an ecosystem a private entity creates which they monetize through content created/uploaded/deployed by external parties.

AWS and others fall under this definition too. The truth is, cloud computing should be a low margin industry in the long run. Yes, software has close to 0 marginal cost of production, but the same is true of your competitors. Basic economic principle implies that in a competitive market, the price to customers should be close to the cost of production.

In the old days, the economy was largely physical goods based, so it was very easy to simply buy a competing product if you don't like the one you have now. That by and large didn't entail becoming entrenched in a whole ecosystem.

Laws need to be updated to tackle the inherent monopolistic elements of platforms, social and so on. China is taking this path, so it will be interesting to see how that develops.

It's important to recognize too, that leveraging a monopolistic position to produce excess profit is effectively a direct transfer of wealth from the littler guys to the bigger guys.

e.g. Apple taking a 30% cut on the app store directly takes from app creators, who may raise prices 30%, which ultimately hits customers.

[dalbasal]

>> The truth is, cloud computing should be a low margin industry in the long run.

The free market ethos, IIRC, suggests that all industries should be low margin in the long run, no? Innovators and shuch are supposed to be compensated with high margins, but not perpetual high margins. The whole idea is that 25%> margin do not exist in perpetuity.

[adam_arthur]

Yes, exactly. If the market is perfectly competitive, and cost to switching is low, margins trend towards 0.

The same should be true in software, regardless of how cheap it is to produce an additional unit. Of course, because it's cheap for anybody else to produce that additional unit too.

The reason we see such high margins in software is a combination of "first mover advantage", pseudo-monopolistic like elements to the business, and the fact that industry is so new, VC money does not tend to go towards creating direct competitors as there is ample opportunity elsewhere.

In the short run, first movers and innovators will be able to generate high margins of course. And sometimes business X really does produce a better product than the rest, as some would say Apple does. But given that software is cheap to maintain once built, you would expect many viable and roughly equivalent competitors to be built in the long run.

At the end of the day, legislation should be written to foster "competitive capitalism", as that produces the best result for the public at large.

For example, it should be as easy to switch between SaaS providers as the flick of a button. Apple should have to allow competing app stores and not give preferential treatment to their own... And so on.

If you think about the App store example in isolation, the fee they charge is a direct transfer of wealth from app creators and app buyers to Apple. Would they be able to charge 30% if there were competing app stores? Maybe, but I doubt it over the long run. Certainly at least they wouldn't be able to charge Epic that amount, as Fortnite is big enough to entice people through side channels for loading the app.

Looking at it as choice of Apple or Android is not an appropriate level of granularity for anti-trust IMO.

We must recognize that markets created within a platform also must be competitive, not just the gateway into that ecosystem. Cost of switching becomes high, which leads to de facto Monopoly power by the platform owner.