Why Everything is a Monopoly... Again

last week between record Market crashes and rebounds endless election nonsense and the wrapping up of the Olympic Games one of the most important legal verdicts ever was being made District Judge Amit meta ruled that Google was a monopolist and acted as one to maintain its own Monopoly this surprised absolutely nobody but it also surprised everybody because every trillion doll company in the world today is a monopoly of some kind illegal or otherwise the market assumption was that Regulators would keep looking the other way and let this happen forever but that is changing which is bad

news for Corporate America because I don't know if you have noticed but there aren't that many companies anymore for an alarming amount of major companies becoming a monopoly isn't just a good way to maximize profit it's the only way they can make a profit hey Tyler Google has lost its Department of Justice antitrust suit the judge finding that it violated antitrust law the distribution agreements were found to be anti-competitive and in violation of section two of the Sherman they Apple but they pay similar amounts to Samsung Motorola LG I worked with a couple interns last

year and every intern that I've seen come on has just exuded is a monopolist and it has acted as one to maintain its Monopoly not all monopolies are necessarily illegal and hot take alert some of them can even be good for consumers a company is allowed to have market dominance if their product is better than all their competitors or if no competitors even bother trying to compete because one company has such a commanding lead Google for a long time had the best search engine on the internet that's a bit more questionable these days but people

choose to Google things because that would normally give them the best search results that's not illegal unless that company uses its market dominance to entrench its position and make it harder for others to compete today there are lots of search engines that are just as good if not better than Google what Google actually got in trouble for was paying companies like apple billions of dollars every year to make their search engine the default on their mobile phones which made it much harder for these alternative search engines to compete because let's be honest with ourselves who

is changing the search engine default options on our phones obviously I am not a lawyer and while I did consult one while writing this brief outline if you ever find yourself running a Fortune 500 company you probably shouldn't use a YouTube video as a guide on how to enact anti-competitive measures now the reason this otherwise standard antitrust lawsuit is such a big deal is because monopolies have become an epidemic in the modern corporate world for three simple reasons the first reason is that there is simply more opportunity than ever to create a monopoly the goods

and services that we consume are far more varied today than they have ever been at any point even in modern history four decades ago there weren't any search engs to monopolize and the world's biggest companies made far more basic products take us steel and Nvidia both of these companies were the most valuable in the world at their respective Peaks both of them made products primarily to service other businesses and both of them were at the Forefront of an industrial trend us steel was making well steel right as America was on a building spree and Nvidia

is making h100 gpu's right as the world is pumping AI into everything the difference is that steel beams are an extremely basic product compared to Cutting Edge proprietary microprocessors according to company filings Nvidia sold 150,000 of these chips to Microsoft alone and another 50,000 a meta so that the companies could accelerate the rate in which the internet is turned into procedurally generated flop every single one of these gpu sells for around $25,000 according to Baron but it only costs the company a few hundred to manufacturer Nvidia can get away with charging these margins because it

is a monopoly and these companies have literally nowhere else to go Nvidia owns the market for AI compute because it has developed Cuda which is the industry standard for building machine learning models remember dominating a market because you can undercut your competitors or Force suppliers not to work with them is legal but monopolizing a market because your product is better is completely fair game it's hard to make steel beam so good that any other steel beam is literally unusable by comparison so after antitrust laws were introduced it was much harder to maintain a Monopoly with

a basic product but even more profitable to maintain one with Advanced products I only used it as an example because talking about Nvidia in a video makes the YouTube algorithm recommend this video about Nvidia to people who want confirmation that their Nvidia Shares are going to make them Rich Apple creates a monopoly with its product ecosystem Microsoft has an effective Monopoly on operating systems outside of Apple products Google has a monopoly on search engine and online video Aramco has a monopoly on Saudi oil and meta has a monopoly on Boomer memes these are the companies

that have made it to the promised land of market dominance but there are also trillions of dollars being invested into companies that do nothing but take market share food delivery ride sharing and even AI applications tend to lose a lot of money and are only kept Alive by constant investor funding rounds the only way that these businesses make sense is if they out last their competitors by achieving market share through a product that is often made more appealing than it really ought to be by selling it below cost companies like Lucid Motors Uber and open

AI lose money on every new customer and user they gain but their investors don't care as long as they are gaining market share if those companies do become a monopoly then they can fatten up their margins and join the trillion doll club with the other Tech monopolies now this all sounds pretty dystopian but in some rare circumstances it can actually be good for you as a regular person for a while you can enjoy incredibly cheap food delivery which was partially paid for by some Silicon Valley venture capitalist and the user experience of streaming movies was

better when Netflix controlled the entire streaming market so it's time to learn how money Works to find out why the good types of monopolies don't last and why we are suddenly getting so many of the bad kind instead this week's video is sponsored by triple 10 I know many of you are sitting at work right now thinking you'd rather be working on something more fulfilling and something that you know will be relevant for many years to come triple 10 is an online education platform offering flexible beginner-friendly boot camps with the highest graduation and employment rates

in the industry whether you're looking to increase your income or work remotely triple 10 can help you get there with a get a job or get a refund guarantee and 87% of graduates getting hired in 6 months or less the boot camps cover various technology Fields providing real company projects for hands-on experience making it ideal for anyone with any background to transition into Tech what sets triple 10 apart is its flexible financing options including installments and success-based plans attractive deals for upfront payments and unlimited externship opportunities even after graduation triple 10 ensures you reach your

goals with top-notch guidance and support over 1,000 students have already changed their careers and now work in Tech thanks to Triple 10 change your career today with triple 10 get 30% off all programs by clicking on the link in the description transform your career into Tech with triple 10 today across the world there are thousands of businesses being started with with the sole intention of just being acquired by a larger more established company or more recently a private Equity Firm tax structures have incentivized investors and entrepreneurs to seek an exit over building a sustainable business

that provides them with non- capital gains income over the long term according to the corporate law firm white in case Global mergers and Acquisitions volume has tripled over the last two decades alone one of the best ways to build a monopoly is to just buy out every other competitor which is exactly what has been happening just this week the the global Food Giant Mars agreed to purchase Kenova the makers of Pringles and other snack foods for $36 billion this is one of the largest corporate Acquisitions ever in an industry that is already dominated by a

small handful of companies with food prices as high as they are more corporate consolidation isn't going to help but it's only getting more popular because of the second reason which is that it's just becoming so easy big companies have a lot of cash and they've been able to borrow even more at very low interest rates for a very long time time even now after recent rate hikes interest on institutional borrowing is much cheaper than it was for most of American corporate history this has made it really easy for companies to buy every company in their

field and it's made it possible to build businesses where the only way that the founders will ever make any money is by selling it to someone else you are watching this video right now on YouTube which was acquired by Google before it made any money and today it's the company's largest revenue Center outside of search advertising the growth of private Equity has helped this as well by providing another exit opportunity to company owners private Equity Acquisitions are normally smaller in scale but that doesn't mean that they can't create monopolies a common business strategy employed by

private Equity is to roll up businesses if you ever find yourself as a private Equity manager here is how you would do that you would buy up lots of local businesses from their owners depending on the size of your fund these will most likely be small and unglamorous businesses like plumbing companies HVAC shops or local mechanics these businesses are actually great ACQUISITION Target because they make a nice stable profit and the owners don't have as many options to sell as a bigger better known company which means if they want to retire or step away from

their business you are one of the only people they can get money from your next step is to centralize operations like booking accounting marketing and customer support into one office this cuts down on costs but it also means that your businesses aren't going to be competing with one another no private Equity Fund is going to be able to buy all of the mechanic shops in America but you don't need to if you own all the shops in a local area you still have a monopoly it's just a local Monopoly and unless people want to drive

2 hours to get their car fixed they are going to have to pay what you ask this is actually even better than the big Global monopolies because you are way less likely to get in trouble with the FTC because you are too small to show up on their radar not that it really matters because of the third reason why everything is a monopoly these days so this probably won't come as a shock to you but Regulators like FTC and their equivalent in other countries haven't been doing the best job of fighting back against monopolies these

organizations have two strategies that they are supposed to use the first is by blocking mergers or Acquisitions that it deems as creating a monopoly remember a monopoly can only exist of Market power is achieved through a better product so merging two or more companies together that would have too much Market power is technically against the rules the second strategy is by breaking up companies that get too big into smaller competing companies like what happened with AT&T and standard oil the problem is that it hasn't really been doing either in fact the big famous corporate breakups

of the 20th century have regressed and they are slowly merging back together again monopolies are the natural state of businesses and unless the authorities do something to address it even companies that were famously broken up will eventually return back to the monopolistic equilibrium according to public data compiled by the Washington Center for Equitable growth funding for the FTC and the department of justices and antitrust division has been cut progressively since 2008 even though deal volume in complexity has massively increased since then which means they are trying to do more with less the FTC also has

to take companies to court before they can block mergers or break companies up which means they can only pursue so many cases at a given time there is also the not so secret revolving door between people that are supposed to be regulating these companies and high-paying jobs working for the companies themselves Joseph Simons was the former chairman of the Federal Trade Commission after he left office he became partner at the law firm Paul Weiss a law firm that specializes in corporate mergers and Acquisitions the chairwoman before him is now partner at Wilson cini one of

the largest corporate law firms in the world and you'll never guess it but the chairwoman before her also became partner at a law firm specializing in mergers and Acquisitions if you ever get appointed to the chair of the FTC there is a genuine incentive to do a good job but not too much of a good job that you can't get a high-paying job in the private sector as soon as your appointment is finished the current chair Lena Khan is among the most aggressive FTC leaders to hold position in recent decades and she has pushed through

some genuine wins like this recent Google ruling and the Banning of non-compete agreements this has also made her extremely unpopular with business figures lobbying openly for her removal so unfortunately there probably isn't any partner position waiting for her at a prestigious Law Firm once her appointment is finished now buried in here is the most damaging thing that monopolies do they are bad for consumers but they are much worse for workers if you work in an industry controlled by a monopoly you literally have nowhere else to go which means they can get away with paying you

just enough to keep you from retraining somewhere else getting rid of non-competes makes this a lot harder for companies to do so you should go and watch that video next I will also be writing an article on this week's Mega merger from my perspective as a former investment banker who used to work on deals just like this you can read that in other articles like it on my totally free email newsletter LinkedIn the video description so sign up to keep on learning how money works