
A Land of Monopolists: From Portable Toilets to Mixed Martial Arts - jayliew
https://mattstoller.substack.com/p/a-land-of-monopolists-from-portable
======
ideals
2 things I got out of this, first is how I see the same names showing up
multiple times. KKR and Platinum Equity seem to have a niche for obscure
monopolies. And also that is seems to be a viable strategy to start a port-a-
john business to be acquired by Platinum Equity's United Site Services port-a-
john empire.

Also Dana White hasn't been run out of town yet and everyday I wonder how that
is still possible.

~~~
MoomerLoom
The cult of JRE fans helped give its popularity another boost, but in reality,
what other league are you going to watch save a different fight sport like
boxing? People like to huddle around the cooler and focus on one league (See:
NFL, MLB, NBA). That's not to say WNBA or XFL don't exist, but think about the
multiplier of games you'd have to keep track of with your friends for all of
them.

Natural entertainment monopolies...interesting concept.

~~~
ideals
Well OneFC is a pretty viable competitor in Asian markets. I love their 4oz
muay thai division. PFL seems like it has a lot of potential in the US but
trying to overthrow a monopoly is hard of course.

I agree with your statement though, I've written about it before back when XFL
was going on. I think there is some potential for multiple fighting orgs
however. But first they need to take away some market share from UFC. Once
they get on more even grounds we might see cross-promotion fights, something
that is normal in boxing. As it stands though, UFC has nothing to gain from
that, but Bellator/OneFC cross promotion has been floated in the past.

~~~
hash872
ONE (previously OneFC) is not a competitor in any sense of the word. They have
extremely low ratings, were kicked off of ESPN for low ratings, and have to
comp most tickets to every show. They are deeply unprofitable and simply
burning investor (now VC) cash

~~~
lp251
Chatri said that 3 billion people watched a recent ONE event. How can you say
they have low ratings?

/s

------
LatteLazy
Like so many articles in this space, there is a lot of assumption, claims
without evidence and vague assertions. The author doesn't seem to know what
Predatory Pricing is. He also dismisses economics of scale as an accounting
fiddle.

I sympathetize with his general position (as life gets complex, barriers to
entry rise and markets of many small companies are replaced by one's of a few
big companies.

But then he gets lost in his own prejudices/conspiracy theories about harvard,
financial engineering etc. Not really helpful to his wider point...

~~~
hash872
If you're not broadly familiar with Matt Stoller- he's an ideologue. He is a
far, far leftist on economic issues.

>He also dismisses economics of scale as an accounting fiddle

He proposed on Twitter to make bulk discounting illegal for the entire US
economy, on the theory that any kind of discounting is just predatory pricing.
In other words, whether you buy 1 computer server or 10,000, 2 avocados or 2
million, the price per unit would be exactly the same. He thinks this would
harm large companies and help smaller ones

~~~
maxsilver
> He proposed on Twitter to make bulk discounting illegal for the entire US
> economy, on the theory that any kind of discounting is just predatory
> pricing.

Is this a real thing? I follow Stoller on Twitter, and have never heard him
say anything like that. Just that predatory pricing is often snuck in under
the guise of "discounting" (which is true).

He's definitely a centrist on economic policy, which turns a lot of people
away (most Americans have never heard of a centrist view of any policy of any
kind, and most Americans are _far_ more conservative than they'd ever actually
admit to). But nothing about him seems ideologue-ish, and he's certainly not
anywhere near left-wing on economic policy.

~~~
greenonions
Could you provide any example where discounting was actually proved to be
predatory pricing?

How is discounting not a valid method of pricing?

~~~
maxsilver
Flooding a market with below-cost goods (or "discounts"), to drive out
competitors so that you can generate a monopoly, is predatory pricing --
literally by textbook definition. It's also illegal, it is a direct violation
of US federal anti-trust law.

[https://www.ftc.gov/tips-advice/competition-
guidance/guide-a...](https://www.ftc.gov/tips-advice/competition-
guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost)

No one is against "discounting" (as in, coupons for Cheerios, or discounts for
bulk orders). But illegal predatory pricing is often passed through the
economy under the disguise of "a discount", and it's correct for people to
challenge that.

~~~
greenonions
It most certainly is illegal, but can you find a definitive example of such
behavior?

It's theoretically a highly illegal and unethical thing to do, but in reality,
monopoly control of a market is highly unlikely.

~~~
maxsilver
I mean, one textbook example of that behaviour is late-90's-Microsoft ---
[https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor...](https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp).

Amazon's behaviour today is another example of it, but since we haven't really
enforced any anti-trust laws in the past decade, it would be easy for someone
to claim Amazon "doesn't count".

------
peter_d_sherman
>"He observed that “68% of private equity buyouts are add-ons from previous
acquisitions,” which is to say that most acquisitions by private equity firms
are attempts to expand market power for companies they already own. A quarter
of these acquisitions, in fact, are “tied to an investment with at least five
add-ons.” Given that there are thousands of private equity firms making
transactions every year, that’s a lot of attempts to increase market power."

[...]

"Doing a roll-up is designed to take advantage of how capital markets value
bigger companies versus small ones, or what is called multiple expansion.

 _Buying a small family owned business for three to four times its cash flow_

(or what is known in annoying accounting-speak as earnings before interest,
taxes, depreciation, and amortization, abbreviated as EBITDA), putting it into
a conglomerate that financiers then call a ‘platform’ or ‘market leader’,
means you can often

 _sell the much bigger company for eight to ten times that cash flow later
on_."

My comments:

Buy low, sell high...

Makes sense from a pure business perspective...

------
jeffreyrogers
I worry about something like this happening with housing. PE firms are sitting
on a bunch of cash currently and I can imagine a scenario in which the recent
damage coronavirus + lockdowns have done to the economy leads to a bunch of
foreclosures. If PE firms step in to buy these homes and to manage them at
scale that will just lead to further concentration of housing wealth.

~~~
justaguyhere
I forget the name, but there was one company that bought properties throughout
the US after the 2008 market crash - we are talking about hundreds of
thousands of properties here, massive scale.

I remember (2014 or so) looking for apartments in some places in NYC - I went
to multiple buildings before it struck me that they were all owned by the same
company. I've been a renter all my life and the situation is not good for
renters.

I don't care if the super rich have mega mansions and million dollar cars. It
is when they start monopolizing essential resources like water, housing etc
that it becomes a serious issue.

Another thing I noticed on HN - HN doesn't seem to like landlords being
criticized, I guess many people here are well off and are landlords
themselves. I do not understand why a person should be allowed to own multiple
houses, just because they can afford it.

There is a German town that bought apartment buildings from private companies
to take charge of the out of control rent. Maybe it is time for such measures.

After healthcare, housing (mortgage or rent) is how you keep a large
percentage of the population chained to their jobs and control them easily. It
is also the reason tiny house movement is taking off in other countries. In
the US, legislation is a bottleneck for tiny houses. Who wants to be a slave
to banks for 30+ years just to have a roof over one's head (assuming one can
get a loan in the first place)?

~~~
AlexandrB
> I don't care if the super rich have mega mansions and million dollar cars.
> It is when they start monopolizing essential resources like water, housing
> etc that it becomes a serious issue.

If you're a billionaire, you quickly run out of mansions and cars to buy for
yourself and your money has to go _somewhere_. This is why you hear statements
like "billionaires shouldn't exist" \- mass acquisitions are an obvious use of
that kind of capital and allow for rent-seeking behaviour on owned assets.

~~~
justaguyhere
Water monopoly is a problem. Shitty companies like Nestle are prime examples.
There are private corporations thinking of all kinds of ways to control rivers
and even ground water. With water shortages being predicted all over the
world, this doesn't look good. It takes a special kind of evil to control
something as basic as water.

------
hash872
It's not really the UFC's fault that multiple MMA promotions have also been
attempted, and failed as businesses. No non-UFC promotion (Bellator, ONE,
Rizin, KSW, Cage Warriors, LFA, etc.) has turned even a dime in profits in the
last decade. And Bellator has signed multiple famous UFC fighters (former
champs like Benson Henderson), including some (Phil Davis, Ryan Bader) at the
height of their career. I don't think their ratings even budge a bit when
these ex-UFC fighters are on.

I don't think the UFC should have been allowed to buy Strikeforce, and I think
many of their restrictive contract provision should be struck down in court.
But it's not the government's fault that none of the UFC's competitors are
unable to turn a profit, and I don't really see a role for government there
overall. If some business models don't work in practice, they don't work

------
tenpoundhammer
While monopolies are bad, I don't see what's listed in this article as
monopolies. I see a series of small businesses that are more profitable when
economies of scale are utilized. So, the small businesses are being bought up
by a few larger players.

When saying this is bad, what is the author optimizing for?

This market consolidation should decrease consumer prices, as long as actual
monopolies are not in place and price fixing doesn't occur. At the same time
the individual owners are getting buy-outs they are happy with. Seems fine to
me.

What am I missing?

~~~
bergstromm466
> I see a series of small businesses that are more profitable when economies
> of scale are utilized

That is literally the definition of monopolizing...

> market consolidation

Again, that's just another word for monopolizing...

It reminds me of people who say "I, as a man, like having sex with other men —
but no, I am not gay or bisexual"

It's like society has become 'definition phobic'? Or maybe some words have
lost their old definitions and have taken on new ones? Or it's just
Doublespeak and everyone is fragmented and we lack decent complex adaptive
systems?

The rules for what consists of a monopoly are somewhat arbitrary anyway. I
think we should have worker coops everywhere, instead of this
American/English-style Neoliberal Corporatism, which often takes away people's
autonomy and creates a whole array of bureacratic corporate hierarchies. A
company in the Netherlands called Buurtzorg is having a lot of success
organizing themselves very differently than the hyper-consolidation that we
have seen the healthcare systems in the West become victim to. [1]

-

> What am I missing?

I don't even know where to start...

Have you been in therapy or sought professional help? Many therapists now have
to work within one size fits all models. For example: in some countries
patients get therapy sessions in blocks of 12. Regardless of wether they would
benefit from just 2-3 sessions. Or maybe around 25, spread out over a year, is
what would best support them. This cookie-cutter standardization approach
completely destroys equitable and personalized healthcare options, and takes
away the autonomy of therapists.

[1] [https://www.theguardian.com/society/2019/nov/20/radical-
plan...](https://www.theguardian.com/society/2019/nov/20/radical-plans-power-
back-social-workers-families)

------
skee0083
It's the paradox of capitalism. Just ask yourself. Why in the world would a
business want to compete with another business? They don't, it's not
profitable. And only X amount of businesses can exist within a given radius
before profits margins decline to the point of nonexistence. It's all a zero
sum game. That's why established monopolies are protected by the system.

------
dumbfoundded
It seems like the only solution to these types of rollouts happening in every
industry may be based in law. The economics of rollouts make it impossible to
compete in any other way.

------
Apocryphon
WashPo: "The End of Small Business"

[https://news.ycombinator.com/item?id=23815212](https://news.ycombinator.com/item?id=23815212)

------
ghufran_syed
“private equity” is not a company, its an industry - so its not clear to me
why only _one_ private equity company at a tine would try to cash in on this
opportunity? And if _several_ such companies are trying to do the same thing,
then its unlikely that _any_ of them will become a monopoly.

Its like worrying about “real estate investors” getting a “monopoly” on the
ownership of houses - it’s not going to happen. Real estate investors are
_part_ of the market, and having an additional source of demand tends to raise
prices, which is bad for _new_ buyers and good for _existing_ homeowners. But
there is no monopoly.

~~~
anonAndOn
While we may never see a monopoly on owning the house itself, we are well on
our way to seeing at least one monopoly in the home buying process. [0][1]

[0][https://www.alta.org/business-tools/title-insurance-
mergers....](https://www.alta.org/business-tools/title-insurance-mergers.cfm)
[1][https://www.ftc.gov/news-events/press-
releases/2019/09/ftc-c...](https://www.ftc.gov/news-events/press-
releases/2019/09/ftc-challenges-proposed-12-billion-merger-title-insurance)

~~~
ghufran_syed
Or we would if the FTC didn’t try and block it - isn’t this the way an
antitrust regulator _should_ work?

~~~
anonAndOn
You are right that the system worked as intended, for now. Give it a little
time and a few more lobbying dollars. This opportunity is too lucrative to
pass up.

------
chmaynard
Matt Stoller's posts on monopoly remind of this aphorism:

"If the only tool you have is a hammer, it's tempting to treat everything as
if it were a nail."

------
amadeuspagel
>But [a bunch of accusations against a hedge fund] show all the fancy nonsense
about economic efficiency and capital market fluidity is just that

------
clairity
> "It would also help if it were much easier to bring and win private
> antitrust suits, so that we don’t have to rely on inept government
> enforcers."

the examples enumeration is good information, but to me, this quoted bit would
have been a better jumping off point for an article.

what are the precedents and barriers to private antitrust suits?

monopolies are a scourge and a bane to free markets.

