A law and economics blog by academics covering antitrust, data privacy, corporate law and regulation.
HN commenters cite it to argue Cambridge Analytica had little effect and to discuss board duties, antitrust and capitalism.
That's true, but the shareholders have delegated the decision on how to spend the money to their legal representatives on the board. There's a strong presumption that the shareholders have elected board members whose decisions they support, so if the board makes decisions and the shareholders don't vote them out, those are presumed to express the preferences of the shareholders. Note that those decisions do not have to maximize shareholder profit. Shareholders can elect board members who commit to maximizing shareholder value, but they can also elect board members with a variety of other preferences and ideas about how to best run a company, or how to best spend its cash on hand. The board can legally pursue a wide range of strategies, and shareholder lawsuits basically never prevail (in the U.S.) absent some kind of overt wrongdoing, like secret side deals made by board members or something like that, or else shenanigans related to mergers and equity (e.g. some kinds of dilution).
(There's a persistent myth to the contrary, but it's not really rooted in law; see e.g. http://truthonthemarket.com/2010/07/27/the-shareholder-wealth-maximization-myth/ and http://hbr.org/2010/04/the-myth-of-shareholder-capitalism/ar/1 ... and even if that weren't true, courts are willing to grant considerable leeway to business strategies such as "building goodwill" and "increasing positive sentiment towards the brand", since courts aren't in a good position to second-guess a duly elected board…
It's a relatively simple argument first made by Economist Paul Samuelson a century ago.
> A businessman could not build it for a profit, since he cannot claim a price from each user. This certainly is the kind of activity that governments would naturally undertake. Even if the operators were able—say, by radar reconnaissance—to claim a toll from every nearby user, that fact would not necessarily make it socially optimal for this service to be provided like a private good at a market-determined individual price. Why not? Because it costs society zero extra cost to let one extra ship use the service; hence any ships discouraged from those waters by the requirement to pay a positive price will represent a social economic loss—even if the price charged to all is no more than enough to pay the long-run expenses of the lighthouse.
> https://truthonthemarket.com/2021/06/22/the-virtues-and-pitfalls-of-economic-models/
If one is to pay any amount of money more than the marginal cost, and decides not to that is an example of dead-weight loss.
I think the major issue here is that those that wish to abolish copyright and patents aren't then actively promoting another idea, as you say. Let's look at spaces where it is currently illegal to copyright or patent something, say, Maths formulas. Do we have no one working on new maths? No. We have plenty of Mathematicians. They either work for companies creating trade secrets, or they work for Universities releasing their work in journals…
Ok, so add the phrase "I believed that I was enhancing shareholder value" to whatever the thing is that you're doing.
People get fired all the time based on bullshit performance improvement plans that come down to "pissed off the manager". I've personally been put on PIP the day after saying some impolitic things because of, officially, a bunch of 2 year old tickets in the bug tracker that were never going to be fixed.
Fudging your justifications is a time-honored tradition. How come people are so loathe to do it when 'the shareholders' are involved?
EDIT: Was googling and found this:
http://truthonthemarket.com/2010/07/27/the-shareholder-wealth-maximization-myth/
There's apparently precedent for very wide latitude given to 'business judgment'. You can do whatever you want as long as you say "I thought I was enhancing shareholder value in the long term" afterwards.
This does not explain the meme I referenced above which seems to go way beyond legal CYA into actual moral beliefs in business culture.
Like the IBM forever-lawsuit.
> The Department of Justice began its antitrust case against IBM on January 17, 1969. The DOJ sued under the Sherman Antitrust Act, claiming IBM tried to monopolize the market for "general-purpose digital computers." The case lasted almost thirteen years, ending on January 8, 1982 when Assistant Attorney General William Baxter declared the case to be "without merit" and dropped the charges.
> The case lasted so long, and expanded in scope so much, that by the time the trial began, “more than half of the practices the government raised as antitrust violations were related to products that did not exist in 1969."
https://truthonthemarket.com/2020/02/03/the-ghosts-of-antitrust-past-part-2-ibm/
It's embarrassing that law/courts are utterly unable to do anything at all to large businesses behaviors. They are so slow in matters of consequence as to be useless.
It could go that way but it's usually the most powerful to have the connections with lawmakers and suggest what to write (or not to write) in some laws.
About unintended consequences, check this article about GDPR after one year https://truthonthemarket.com/2019/05/24/gdpr-after-one-year-costs-and-unintended-consequences/
I quote a couple of sentences but there is much more there
> After the rule took effect in May, Google’s tracking software appeared on slightly more websites, Facebook’s on 7% fewer, while the smallest companies suffered a 32% drop, according to Ghostery, which develops privacy-enhancing web technology.
> The fact that Google’s compliance strategy has ended up hurting its competitors and redirecting higher demand back to its own marketplace, where it can guarantee it has user consent, has unsettled publishers and ad tech vendors
> you wonder whether capitalism truly does produce the most efficient allocation of resources
it does, but current state of capitalism has kinda degenerated. the main sentinel about this is the fact that us antitrust has not imposed any decent spinoff in the last 20-25 years.
just to give you an example of proper activity of antitrust activity: IBM released the ibm pc as a farily open/standard platform in the 80ies because it had just got out of a multi-year, very serious and very expensive litigation with the DoJ.
The litigation lasted 13 (!!!) years, from 1969 to 1982. See https://truthonthemarket.com/2020/02/03/the-ghosts-of-antitrust-past-part-2-ibm/ if you want to know more.
Think of what the DoJ should do to Amazon, Apple, Google and Microsoft (which had its own antitrust lawsuit... in the 90ies).