This week in political economy.
- India’s competition authority imposed a 1.36 billion rupees ($21.1 million) fine on Google after it found the company guilty of “search bias.” Google, the Indian regulator charged, abused its dominant position in the Indian markets for online search and search advertising. The penalty, BloombergQuint reports, amounts to 5 percent of Google’s average total revenue in India in the last three years.
- Amazon is launching its own delivery service, dubbed Shipping with Amazon, reports the Wall Street Journal, putting it into direct competition with UPS, FedEx—and the US Postal Service. In the meantime, The Atlantic’s Derek Thompson writes about the “Amazon-ification” of Whole Foods, Amazon’s latest purchase. Earlier this week, the Wall Street Journal’s Heather Haddon and Sarah Nassauer explored how Amazon’s takeover of Whole Foods affected the retailers’ suppliers, who now have to pay more to get their products on the shelves.
- Bloomberg reports on the mounting backlash in cities bidding for Amazon’s HQ2 project: “While mayors and governors compete to offer Amazon billions in tax breaks, these locals have no interest in paying the company to come to their towns.”
- In the latest issue of Esquire, NYU professor Scott Galloway—author of last year’s The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google—presents a thorough and exhaustive case in favor of breaking up Amazon, Apple, Facebook, and Google. “Why should we break up big tech? Not because the Four are evil and we’re good. It’s because we understand that the only way to ensure competition is to sometimes cut the tops off trees, just as we did with railroads and Ma Bell,” writes Galloway. On a related note, Politico’s Nancy Scola interviews MIT professor David Autor on Big Tech’s contributions to rising inequality and how those might be fixed.
- Concerned about the ill effects of social media and smartphones, early Facebook and Google employees—among them early Facebook investor Roger McNamee and Tristan Harris, a former “Design Ethicist” at Google—have created a new non-profit pushing for more regulation of tech platforms, the Center for Humane Technology. They are also launching a campaign about the dangers of technology. Titled “The Truth About Tech,” the campaign is aimed at parents, students and teachers. The New York Times and Mashable report.
- Facebook, The Verge reports, hired a full-time pollster to monitor the approval ratings of its co-founder and CEO Mark Zuckerberg. The pollster reportedly quit after six months.
- Last week, in response to the fake account scandal at Wells Fargo, the Federal Reserve imposed a serious penalty on America’s third-largest bank, restricting its growth until the bank institutes “sufficient improvements” in its governance. The Fed also pressured Wells Fargo to oust four board members. In the Washington Post, former Treasury Secretary Lawrence Summers argues: “Wells Fargo’s board members are getting off too easy.”
- In remarks prepared for the INCOMPAS Policy Summit, FCC commissioner Mignon Clyburn stressed the importance of competition, praised the Department of Justice’s attempt to block the Time Warner/AT&T merger, and harshly criticized the FCC for its failure to promote competition: “Strangely enough, the opposite holds true, when the current FCC majority analyzes markets. By their definition, just about anything will count as competition even if the quote unquote competitor is as real as a fifteen-dollar bill.”
- On a related note, Ars Technica has a piece on the “Verizon puppet” jokes that FCC Chairman Ajit Pai told at a recent dinner and that the FCC is currently trying to keep from seeing the light of day.
- Earlier this week, Reuters reported that Mick Mulvaney, head of the Consumer Financial Protection Bureau, is pulling back the CPFB’s investigation into the massive data breach at Equifax last year. Now, 31 Democratic and Independent Senators are demanding to know why.
- In the New York Times, Nathaniel Popper writes about the growing demand in US universities for graduate-level classes on blockchain, the technology that underlies cryptocurrencies like Bitcoin. One of the Popper’s interviewees, NYU professor David Yermack, visited the Stigler Center for three interrelated seminars on the implications of blockchain for the future of finance. You can watch the talks and read their transcripts here, here, and here.
- In The Hill, The Roosevelt Institute’s Susan Holmberg explains why antitrust enforcers should seek ways to address the “hidden culprits” influencing mergers that increase market concentration: hedge funds.
- BuzzFeed’s Molly Hensley-Clancy on the Koch Foundation’s growing influence within US colleges.
Chatter from the Ivory Tower
- A new report by the American Economic Association’s Committee on the Status of Women in the Economics Professions paints a grim picture of the current state of women in economics, showing that the share of women becoming professional economists has been flat for the last decade. Justin Wolfers summarizes the report’s main conclusions in the New York Times. In The New Republic, Heather Boushey—Chief Economist at the Washington Center for Equitable Growth—writes about the discrimination that women still face in economics. “If men cannot overcome their sexism toward female economists, then how can they assume that any job market—or any market—is free of discriminatory bias?” she asks.
- In a new working paper, Grace Weishi Gu and Eswar Prasad look at employer-provided non-wage benefit expenditures, which account for one-third US employers’ labor costs, and find evidence that labor costs have become countercyclical in the past 40 years.
Stigler Center Goings-on
- Two new Stigler Center events: Next week, Italian banker and investor Roberto Nicastro will deliver two stand-alone, interrelated lunch seminars on fintech and banking in Europe. Later in the month, Booth professor Guy Rolnik and Sharon Bowen, former commissioner of the Commodity Futures Trading Commission (CFTC), will discuss the challenges and opportunities facing regulators in the financial sector and beyond.
- In the latest episode of Capitalisn’t, “Capital Isn’t in the 21st Century,” Luigi Zingales and Kate Waldock revisit Thomas Piketty’s surprise bestseller to see how it holds up in the current political and economic climate.
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