Book review: Chokepoint Capitalism

A couple of weeks ago, I reviewed Jonathan Taplin's 2017 book Move Fast and Break Things, noting that, although the impotence of antitrust law in the face of big tech firms is an important problem, that book lacked a central thesis and as a result, didn't provide a path forward. That is not the case for Chokepoint Capitalism, by Rebecca Giblin and Cory Doctorow, which I just finished reading.

Giblin and Doctorow take aim at the same targets at Taplin, but they offer a compelling underlying story grounded in business economics: that large platform firms create 'chokepoints' between the creators of cultural content and consumers, and exploit those chokepoints to the detriment of creators. The argument here is not that consumers are made worse off. In fact, the platform firms generally benefit by creating extra value for consumers (as I noted in this recent post), and some (e.g. Google or Facebook) provide their services to consumers for no monetary cost. These firms often take advantage of network effects - the value that each user receives increases as the number of users increases - but even without network effects, the platform firms find ways of locking in their customers. Then, having all (or a large majority) of the consumers on their service allows these firms to extract profits from the creators of the content, who need to go through the firm to get to the consumers. It is this monopsony behaviour [*] that is the true problem in these markets, and which goes mostly ignored by antitrust law.

How do these firms create chokepoints? Giblin and Doctorow spend the first part of the book outlining the many and various ways that chokepoints are created, giving detailed examples of the rise of chokepoints across many industries. They later summarise that:

...businesses fortify themselves against competition by aggregating copyrights on an industrial scale and by taking advantage of network effects, licensing mazes, regulatory capture, horizontal and vertical integration, and self-preferencing. All this keeps competitors out and lets middlemen muscle their way in between audiences and culture producers to capture a greater and greater share of the money that flows from one to the other.

The book is very well written, and easy to read. A lot of the anecdotes and stories are sobering, but there is also occasion to make the reader smile, such as this (which references the ongoing legal battle between Apple and Epic Games):

We didn't believe East German bureaucrats who insisted that the Berlin Wall's purpose wasn't to keep the people locked in, but rather to stop outsiders from breaking into the workers' paradise of the German Democratic Republic. We shouldn't believe Apple when it insists that preventing interoperability is just a way of enforcing its customers' preferences. Apple can easily prove that its customers don't want to escape its walled garden: just let Epic install a gate and see if anyone goes through.

I'm sure that Apple would not be pleased to be equated with East Germany! What really sets this book apart though is the focus on solutions in the last part of the book. Rather than considering a re-working of antitrust legislation as the only path forward, Giblin and Doctorow present a number of potential solutions. As they summarise:

Creative workers and producers deserve a better deal - one that delivers them a dignified and fair share of the wealth generated by their work. We've shown some of the key actions that can get them there, like enshrining transparency and interoperability rights, simplifying licensing, facilitating collective action and cooperative ownership, putting time limits on copyright contracts, and mandating minimum wages for creative work.

Ultimately though, Giblin and Doctorow note that it will take collective action to drive systemic change:

Individual solutions aren't going to get workers a fair go any more than recycling is going to fix climate change. They might move the dial, but they won't achieve the fundamental change we need to save the world. If we're going to successfully countervail the enormous power of today's robber barons, it will be by collectively combining to do so.

To be most effective, this collective action will need to occur at a global, rather than national or local, level. Again, it is systemic change that is required, and an international collective approach is necessary to avoid large firms playing countries off against each other.

One aspect of the book that I particularly liked is that Giblin and Doctorow apply a more critical lens to their proposed solutions than many other authors would, noting for instance the practical limitations of remuneration rights. Rather than undermining their argument, this critical view adds substantial weight to their arguments.

That isn't to say that I agree with everything in the book. I'm not convinced by the argument on job guarantees for cultural workers or that cooperatives are a scalable solution, for example. And at one point, Giblin and Doctorow write that:

The cause of chokepoint capitalism is oligarchy, the concentration of wealth and power into too few hands.

However, I suspect that many of us would agree that oligarchy is an effect of the chokepoints, not just a cause. The rise of Google or Facebook alone should convince us of that point - no oligarchy was required up front to ensure the success of those firms.

Nevertheless, this is an excellent book on the topic. It is well worth a read for anyone who is interested in how the cultural markets (in particular) got to the point that they are at now, and how society might resolve these issues in the future.

*****

[*] A monopsony is a firm that is the only buyer in a market. This distinguishes it from a monopoly, which is the only seller in a particular market. The term monopsony is often also applied when there are few buyers (even though, technically, that would be an oligopsony).