“American democracy has always been at war against monopoly power.”
That's how the chair of the House subcommittee kicked off his hearings on online platforms and market power.
But has it?
The case of NYSE itself would suggest otherwise. Thread
https://twitter.com/adam_keesling/status/1298325694179491841 …
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Like other platforms, stock exchanges benefit from network effects. As traders say, liquidity begets liquidity. In C19th, New York had a slight edge over Philadelphia. That edge grew and New York went on to dominate domestic stock trading for over 100 years.
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But at the end of C20th the foundations shifted. NYSE's customers got stronger and as technology got cheaper, they wanted in. They lobbied policymakers and by 2005, NYSE's monopoly was broken. Its customers set up their own venues and NYSE went on to lose half its market share.pic.twitter.com/mYhE499OAV
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But wait. The new rules that broke NYSE's monopoly in trading paved the way for them to capture a new monopoly further up the stack, in data and connectivity. And as every trader knows, data and trading go together like gas and cars or babysitters and dinners out.pic.twitter.com/kL8l15EZW7
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Soon NYSE was giving its trading away for free and shoring up its position in data and connectivity.pic.twitter.com/CuzLPJbbh5
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Unsurprisingly, customers aren’t happy. The lobbying has started and the cycle has begun again. From fragmentation to monopoly, to fragmentation to monopoly, to... To see what's next, sign up to Net Interest for an update this Friday.https://netinterest.substack.com/
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