The Neverending Movie of Unintended Consequences

admin Sunday January 15, 2023

Competition matters. When antitrust law appeared, its target was—well—trusts. At least theoretically, capitalism couldn't prevent the appearance of monopolies. Antitrust law had at least the merit of allowing to control that threat.

It didn't take long until antitrust laws were invoked against so-called "monopolies". As years went by though, the public got more and more envious, until the USA got to the point of suing... a software corporation. To the USA's defence, it is true that at the time, Microsoft might have appeared to the ignorant as a monopoly, being highly dominant in a highly strategic market. But the case had the effect of banalizing grave market interventions. Today's chaotic software ecosystem may in part be an unintended consequence of that action and the fear it created in the industry. Yet, the scenario keeps repeating over and over again, often targeting completely legitimate software companies.

Unfortunately, in fact, the movie is not quite a repetition of the same sequence. A couple years ago, No Food for Thought warned that even Facebook, a corporation which doesn't even have 1% of world market cap, was threatened by so-called antitrust measures, after acquiring... Giphy, the short videos database! And it turns out the threat was most real, now that Facebook's appeal of the terrible decision of the UK’s Competition and Markets Authority resulted in UK's Competition Appeals Tribunal simply upholding it. Antitrust law has infected most of the developed world, and now threatens even the entertainment industry.

"Moore's law" is unequivocally dead and the world keeps complexifying, innovation becoming more and more expensive. As short-termism and populism slowly replace entrepreneurship and competition, the future of innovation looks bleaker than ever. But hey, at least you can still use Giphy without having a Facebook account... that is, until it goes bankrupt.


May 2023 Update: Meta Sells Giphy

Giphy is not going bankrupt at this time. Meta is selling it to Shutterstock, wasting merely 5/6 eek of Giphy's value.