Google, Motorola Mobility deal seeks EU approval

So while the bureaucrats decide whether a voluntary transaction can occur in a supposedly free society, we wait on innovation and progress, thanks EU and DOJ!

Originally posted by yellowsub:

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So while the bureaucrats decide whether a voluntary transaction can occur in a supposedly free society, we wait on innovation and progress, thanks EU and DOJ!

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Um... the U.S. Department of Justice is tasked with ensuring competition is continuous... if you don't have competition then you have a monopoly and that's not a free market. It's the reason the AT&T / T-mobile deal is being opposed by the DoJ now, because they believe after a review that it would be disastrous for competition in the U.S. market.

As for the European Commission, the EU is a common market and so the EC is tasked with ensuring competition in the european market is not eliminated or badly hurt by large mergers.

You can argue about the size of governments and their powers in a free society if you like, but when it comes to these kinds of mergers, there are hurdles for a reason, because at the end of the day, it affects everyone, not just the two companies involved.

This is of the size that should require review, but it is a lot different than the AT&T/T-Mobile case because Google doesn't have a hardware division yet, and there are no limits on buying up patents.

Originally posted by KillerBug:

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This is of the size that should require review, but it is a lot different than the AT&T/T-Mobile case because Google doesn't have a hardware division yet, and there are no limits on buying up patents.

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Yep, its just a formality, thats more or less what both the EC and Google are saying. It won't have a problem gaining approval on either side of the pond.

Originally posted by Dela:

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Originally posted by yellowsub:

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So while the bureaucrats decide whether a voluntary transaction can occur in a supposedly free society, we wait on innovation and progress, thanks EU and DOJ!

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Um... the U.S. Department of Justice is tasked with ensuring competition is continuous... if you don't have competition then you have a monopoly and that's not a free market. It's the reason the AT&T / T-mobile deal is being opposed by the DoJ now, because they believe after a review that it would be disastrous for competition in the U.S. market.

As for the European Commission, the EU is a common market and so the EC is tasked with ensuring competition in the european market is not eliminated or badly hurt by large mergers.

You can argue about the size of governments and their powers in a free society if you like, but when it comes to these kinds of mergers, there are hurdles for a reason, because at the end of the day, it affects everyone, not just the two companies involved.

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I am going to take the position that this is wrongheaded from a practical and a moral standpoint.

For starters in a free society every transaction is voluntary so the charge that "it affects everyone? is true but also irrelevant. You are free to do business with someone or not. So if you don't like a company you can do business with someone else or start your own business. This is a voluntary way of regulating businesses, the last thing most businesses want to do is encourage more competition as a result of their bad policies. Netflix's latest troubles demonstrate aptly what happens to companies that do things their customers don?t like.

Two, such laws or restrictions require the initiation, or at least threat, of force. I know there are many who will disagree with this. These are people who see violence and coercion as the only way for man to relate to one another. In a free society man can relate with one another only through voluntary consent. This only requires a ban on physical force or the threat there of. Any laws that require the government to initiate force against citizens are immoral.

Lastly if you have a true capitalist system or what I would call free trade (between free people ? imagine that) there would be no artificial impediments to entering the market. This certainly increases the likelihood that there will be greater competition. If your concern is that companies are too big therefore we must regulate them, look at government regulatory and tax policy. These policies have only encouraged the growth of large corporations. The early proponents of regulation were actually businessmen who wanted to be shielded from competition. Furthermore it is this idea that the government can protect us that I am attacking. This is complete fantasy propagated by statist politicians and those aspiring to become the next statist politician.

Originally posted by yellowsub:

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For starters in a free society every transaction is voluntary so the charge that "it affects everyone? is true but also irrelevant. You are free to do business with someone or not. So if you don't like a company you can do business with someone else or start your own business. This is a voluntary way of regulating businesses, the last thing most businesses want to do is encourage more competition as a result of their bad policies. Netflix's latest troubles demonstrate aptly what happens to companies that do things their customers don?t like.

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That's a very simple view to take on it. The merger in question here is the Google acquisition of Motorola Mobility, and as I said, it is more or less a formality that it seeks antitrust approval in both regions, so it's not a good example of why these hurdles are in place.

Now take into account mergers of large wireless companies, as an example. Think of the effect their business has on the public. They lease and use public airwaves, under conditions, to enable wireless communications. They have millions of customers, who have consumers rights, and they have competition which means they are not free to simply keep hiking up prices or providing bad service. They also employ thousands of workers, whom without, they couldn't maintain their networks or expand them, they couldn't sell their products, they couldn't provide services for users of their products and so forth.

In a deal like the AT&T / T-Mobile dead, it is NOT just two entities involved, it's millions of people. Taking that particular merger, for example, that would put the combined AT&T / T-Mobile network into the top spot of all providers in the United States, ahead of Verizon Wireless. Combined with Verizon, two carriers would account for 75% of all users in the market. If you have two firms competing for custom from the public, which they depend on, there will be a degree of competition among them. If you have three competing, there will be _more_ competition among them.

Competition is what drives innovation, drives down costs and drives up quality of service. If you have only a small number of players in control of a domestic market, you risk stagnation instead of innovation, you risk monopoly-like practices and you risk employment loss by the lack of incentive to improve. If a corporation has no incentive whatsoever to spend more money on R&D, on employing new skilled workers, on public service to keep up their image, etc., then they just won't do it.

Remember, it is not just AT&T and Verizon etc. who are in the U.S. wireless market, anybody who has a cell phone plan is. That's why these regulations exist, it is an acknowledgement that the market is made up of everyone. Now of course, the mega-libertarian argument is if you don't like a company then just don't do business with them. Fair enough, but at the same time, like-minded people ironically also call to strip away regulations that stop entire markets from consolidating into one, or very few entities, which means you may have very little choice in the matter of whether or not you want to do business with a firm.

I'm not trying to go on and on about AT&T and T-Mobile, instead I'm just trying to point out that there are a lot wider effects of massive mergers than just two companies combining to make one. Macroeconomics is not that simple. The one thing we know for sure that drives innovation in a free market is competition, and its the one thing that executives trying to push up the share price would love to do away with when they are near the top of the ladder.