This week in political economy.
- Facebook is embarking on a radical overhaul of its news feed, emphasizing status updates from friends and family and de-emphasizing articles from news outlets. In The Atlantic, Franklin Foer calls the move “a concession of defeat” following months of mounting criticism over the role Facebook plays in society and media and the role it played in the 2016 presidential election. Jason Koebler at Motherboard also welcomes the decision, though it would significantly decrease exposure to content by Motherboard through the platform. “A society that relies on a centralized portal to get its news may very well be doomed,” he writes.
- On that note, don’t miss the Washington Monthly’s cover story, “How to Fix Facebook—Before It Fixes Us,” by Roger McNamee, a venture capitalist and an early Facebook investor.
- The tech backlash that began in 2017 continues to rage on in 2018, with investors asking Apple to study the health effects of its products and enable parents to better limit children’s use. Meanwhile, Israel’s antitrust regulator is looking into the business practices of Google and Facebook to make sure they’re not acting anti-competitively.
- Amazon shares just hit $1,300 for the first time. During the holidays, reports Bloomberg, Amazon captured 89 percent of online spending in the five-week period beginning on Thanksgiving.
Back in June, when Amazon’s stock first crossed $1,000, Open Market Institute’s Lina Khan explained why Amazon’s continued success is not cause for celebration.
- New piece by Jason Kint in the Daily Beast: Facebook and Google’s “dirty secret” is that they’re “really junk mail empires.”
- “Should internet firms pay for the data users currently give away?” asks The Economist.
- States are pushing back on net neutrality repeal. Lawmakers in at least six states including California and New York, reports the New York Times’s Cecilia Kang, have introduced bills in recent weeks that would forbid Internet providers from blocking or slowing down access to certain sites or services.
- In non-tech news, the Federal Energy Regulatory Commission has rejected the Department of Energy’s bid to subsidize nuclear and coal plants, saying the proposed rule change gives preferential treatment to certain resources with no evidence that the result will be “just and reasonable.”
Chatter from the Ivory Tower
- João Granja and Christian Leuz, both of Chicago Booth, have a new NBER paper out that looks at how the “death of a regulator”—in this case the 2011 abolition of the Office of Thrift Supervision and transfer of its oversight functions to stricter regulators under Dodd-Frank—impacted lending of the banks under its remit and associated local business activity. They find a boost of around 10% to lending and greater entry and exit among firms in counties more exposed to OTS banks.
- Harvard Law School’s Einer Elhauge surveys new research on horizontal shareholding—the “common ownership” phenomenon that has recently drawn concern from the OECD as well as inspired a new Capitalisn’t podcast episode—and concludes that it often has clear anticompetitive effects, and when it does it is illegal under both the Clayton Act and the Sherman Act in the United States and EU Treaty Articles 101 and 102 abroad.
- At ASSA last week, Allegretto, Godøy, and Reich surveyed the effects of minimum wage hikes in seven cities. The takeaway: positive wage effects and only small hits to employment.
- Another ASSA session featured four papers on the (till now understudied) competitive effects of occupational licensing, which Lindsay and Teles also recently looked at on ProMarket. When it comes to research on labor market barriers to entry, when it rains it pours.
- Don’t forget! The deadline to submit papers for the conference on Corporate Political Engagement in Europe and the US (to be held June 9-10, 2018 at Oxford’s Blavatnik School of Government) is January 31.
Stigler Center Goings-on
- In Jotwell, Sergio J. Campos reviews Roy Shapira’s & Luigi Zingale’s case study on DuPont’s emissions of the toxic chemical C8.
- Sign up for our upcoming January 18 event: a conversation between Stigler Center Director Luigi Zingales and Duff McDonald, author of the recent The Golden Passport, on the MBA elite and the limits of capitalism. Details here.
Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.