Fierce, Cutthroat Competition Is Best Regulator
From an interesting article in today's Wall Street Journal "Rivals Explore Amazon's Territory" about the intense "cutthroat" competition among Amazon, Google and Apple (see stock return data above for the 3 companies vs. the S&P500 over the last six months):
All three companies are butting heads after long inhabiting different markets.
1. Google will launch a phone that it will sell online directly to consumers, and take direct aim at Apple's iPhone. Given that Amazon already sells cellphones online, that could hurt the retailer as well.
2. Apple's expected unveiling of a tablet computer, likely to have an e-reading function, threatens Amazon's Kindle. Amazon said its e-reader was its biggest-selling product in 2009. The tablet also is expected to offer film and TV shows, strengthening Apple's iTunes as a video service. That could hurt Amazon's video-on-demand service.
3. Google plans to start an e-book store this year, called Google Editions. Consumers will be able to buy digital books that can be read on a range of devices. More important, Google plans to let independent bookstores sell e-books through the service, buttressing their ability to compete with Amazon.
MP: It's exactly the type of intense market competition described in the cases above (and the threat of potential competition from some kids in a basement or dorm room writing code right now to start the next challenger to Google or Apple), and not government bureaucrats at the Department of Justice or Federal Trade Commission, that is usually the best regulator of all, and the most effective protection for consumers against the potential anti-market, anti-consumer behavior of producers.
It's a basic law of economics (Perry's Law) that "market competition breeds competence" (and lower-priced, higher-quality products), and government restrictions on competition and market forces breed incompetence (and higher-priced, lower-quality products), so the more the competition, and the more cutthroat the competition is, the better the outcome for consumers. It's also the case that the "smell of profits" attracts competition, and Amazon, Google and Apple all have stock returns double the 30% market return over the last six months measured by the S&P500, so that redolent attractive odor of profits might be churning up some potentially significant competition right now.