Alibaba

[Clement]

China Should Curb Tech Monopolies to Ensure Growth, Says PBOC Advisor
https://www.bloomberg.com/news/articles/...oc-advisor

*Markets create monopolies, need tight regulation: Cai Fang
*Economist says competition positive for long-term growth

..

Beijing should strengthen efforts to control the expansion of technology companies because the development of internet platforms leads to a “winner takes all” dynamic, which increases inequality and slows economic growth, an advisor to China’s central bank said.

“The new technological revolution with more prominent properties of increasing returns will inevitably produce an unprecedented tendency toward monopoly,” Cai Fang, a member of the People’s Bank of China’s monetary policy committee, told the state-run Securities Times in an interview.

..

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I disagree that central planning and the elimination of all monopolies is the answer. I'm leaning towards Peter Thiel's idea, that (IMO, "benevolent") monopoly is probably an ideal outcome in free market economy (for all stakeholders). As profits come-by more easily in natural monopolies (like Google) and pseudo-monopolies (like Apple), companies do not need to push manipulative tactics to their logical extreme, and thus, could be more moral, more innovative, take greater risks, provide more services at an extremely low costs (see what Google provides basically for free; Gmail, Google Drive, YouTube etc.; R&D that are extremely costly in the short-term, with unknown upside in the long-term like Waymo, Google Cloud, DeepMind, Quantum Computing etc.) etc.

But of course, it doesn't matter what I think; in the case of Chinese tech.

I think that the scalability (near zero marginal costs of serving additional customers) of Alibaba and other ecosystem based companies causes them to tend towards natural monopolies. However, I disagree that monopoly is an ideal outcome of a free market and i do not think the current regulatory backlash against Alibaba is unique.

It is not unique to China that regulators are generally against companies using their dominant position in one market to get unfair advantages in adjacent markets. Alibaba, through its ecosystem, has a commanding position as an intermediary of goods and services. The regulators are trying to prevent it from leveraging on this position to gain unfair advantages in other markets, which i think is not that far out of the ordinary. For example, Microsoft faced similar problems when they tried to use their position in operating systems to gain unfair advantages in the browser market.