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Consolidation has accelerated over the past couple of years: Nokia buying Alcatel-Lucent, AT&T buying DirecTV, Alaska buying Virgin America, Dow Chemical & DuPont, Charter acquiring Time Warner to create a cable behemoth comparable to Comcast, Intel & Altera, Avago & Broadcom: no sector is spared.

Monopolistic, or at least oligopolistic pricing power has become an essential component of US capitalism.

by Bernard on Wed Apr 6th, 2016 at 04:08:32 PM EST
Although, in the case of AT&T-DirecTV, there was at least a half-decent argument for synergies on paper, since DirecTV didn't have its own Internet offering and AT&T had shitty television.

The airline and cable-Internet industries seem, to me, to be the industries where consolidation has been the most obviously awful for people.

Unfortunately, in the cable-Internet industry, consumers are basically screwed.  A handful of the really powerful networks can basically increase their fees at will, and the Comcasts of the world, who enjoy either monopoly power or, at least, strong advantages over in-market rivals (like DSL), can pass it on to consumers.

Even if the cable providers could gain enough market power to force the networks to cut fees, it's not going to get passed on to consumers.  It'd just be shifting money from ESPN to Comcast.

And the capital and regulatory hurdles make it virtually impossible for new entrants unless it's somebody like Google who's got more money than it knows what to do with.

At this point, the airlines aren't even worth bothering with unless you're going across several states or overseas.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Apr 6th, 2016 at 05:06:18 PM EST
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I think it makes sense in the semiconductor industry given the economies of scale required for profitability. Unlike heavy industries, though, startups can still emerge because you can simply contract out production (fab and back end) at competitive rates and stay independent or sell to a bigger player anywhere in the evolution of the company.

Other than the issues that have come up with privacy and copyright (not to be ignored obviously) it isn't an industry prone to natural monopolies versus say anything infrastructure related like power and telecom.

you are the media you consume.

by MillMan (millguy at gmail) on Thu Apr 7th, 2016 at 02:19:41 PM EST
[ Parent ]
For an industry not prone to natural monopolies (which is certainly true), it has done not too bad in that department: Intel & Qualcomm come to mind. And yes, I've been in this industry before: back in the nineties and the aughties, there were a lot of chip making startups created every year, thanks to the foundries like TSMC or UMC.

Today, the giant foundries are still there, but the "silicon" startup have dried up. And as an equipment designer, your choice of chip set platforms keeps shrinking, even in supposedly "hot" sectors like Wi-Fi...

by Bernard on Thu Apr 7th, 2016 at 03:45:53 PM EST
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