The latest issue of Boston Review has a lively forum on the growing power of network-based businesses such as Amazon, Uber and Airbnb.  These companies may not be monopolies in the strict conventional sense of the law, but they nonetheless use their market dominance and network platforms to extract all sorts of advantages from competitors, suppliers and consumers. 

K. Sabeel Rahman, a professor at Brooklyn Law School, presented his assessment of the situation, and then nine people of various persuasions (including me) responded.  Rahman stated the problem succinctly:

The kinds of power that Amazon, Comcast and companies such as Airbnb and Uber possess can’t be seen or tackled via conventional antitrust regulations.  These companies are not, strictly speaking, monopolies; Urban and Airbnb, in particular, do not engage in the kind of price-fixing or market dominance that is the usual target of antitrust regulation today.  These companies are better understood as platforms or utilities:  they provide a core, infrastructural service upon which other firms, individuals and social groups depend.

The problem is that conventional antitrust regulation isn’t really equipped to deal with information economy platforms, which tend to connect buyer and sellers in more efficient ways while offering very low prices. What’s the problem with that? Well, the problem is open networks paradoxically result in "power law" outcomes in which a minority of players tend to dominate the universe of users. Some companies have used this network-based advantage to limit competitors' access to the market, impose unfair conditions on consumers or producers, and evade consumer and labor-rights laws. 

Rahman calls for a re-purposing of Progressive era policies from a century ago that tamed large monopolies like railroads by subjecting them to public utility regulation. Is this the way to go? Juliet Schor of Boston College agrees that there is a problem, but considers the regulatory approach nostalgic and unimaginative. She argued: 

“Peer-to-peer structure and peer ownership of capital undermine the argument for private ownership of platforms and, by extension, for the public utility model.  This is not to say there isn’t a strong public interest in this sector – there is.  But the compelling feature of these entities is that most of the value in the market is produced by the peers, not the platforms.  This suggests that platforms can and should be owned and governed by users.  If they are, we can worry less about rent extraction, concentrations of political power, and the other concerns Rahman raises.”

Bring on the Participatory Sensing

For decades, Congress has delegated the fate of our public lands, the air, water and wildlife to federal agencies, where a familiar dynamic of regulatory capture and corruption quickly takes root.  It’s depressingly routine:  industry foxes are appointed to guard the chicken house, they make politically motivated judgments about scientific data, they engage in legalistic subterfuges and throw blankets of secrecy over the data and decisionmaking.  A complicit Congress cuts budgets in order to cripple regulatory effectiveness. 

So here’s an interesting idea for changing the political ecosystem of regulation:  Use Web 2.0 platforms to let citizens participate directly, and let the data be seen by everyone, in near-real time, on the Web.  Reinvent regulation as an open source project, as it were, so that everyone can participate and industry money and interventions cannot so easily corrupt the process.  

Freedom From Harm: The Civilizing Influence of Health, Safety and Environmental Regulation

Public Citizen and Democracy Project, 1986.  Co-authored with Joan Claybrook.  This book surveys the neglected, life-saving, civilizing benefits of health, safety and environmental regulation, which are typically understated or ignored by cost-benefit analysis and corporate adversaries of regulation.  In particular, the book focuses on the Food and Drug Administration, the Environmental Protection Agency, the National Highway Traffic Safety Administration, the Consumer Product Safety Commission and the Occupational Safety and Health Administration. 

Sophisticated Sabotage: The Intellectual Games Used to Subvert Responsible Regulation

by Thomas McGarity, Sidney Shapiro and David Bollier  Environmental Law Institute, 2004. Drawing upon dozens of law review articles, this book explains in rigorous detail how regulated industries exploit cost-benefit analysis, risk assessment and other contrived quantitative models to avoid health, safety and environmental regulation. An excellent explanation of how economics has overwhelmed law and thwarted government action by using contrived analytic models. Valuable for legislators, public policy analysts, journalists, law scholars and students.

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