Stratechery Friendly Google and Enemy Remedies
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Aug 6, 2024 Explore the rise and fall of the railroad industry tied to the Panic of 1873, leading to pivotal monopolistic practices and the Sherman Antitrust Act. Delve into the recent ruling against Google, dissecting its illegal tactics to maintain a search monopoly. Learn about the complexities of digital market dominance, the strategic alliance between Apple and Google, and the implications of Google losing its default status in tech competition. Unravel the challenges of innovation versus complacency among dominant players.
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Railroad Competition and the Panic of 1873
- Railroads in the 19th century faced fierce competition, leading to a race to the bottom in pricing.
- This overinvestment and speculation culminated in the Panic of 1873, causing widespread bankruptcies.
Standard Oil's Rise
- John D. Rockefeller's Standard Oil achieved efficiency through vertical integration and innovative product creation.
- This allowed him to undercut competitors and secure long-term contracts with railroads, creating a durable price advantage.
The Sherman Antitrust Act
- Standard Oil's practices, while benefiting consumers with cheap kerosene, negatively impacted small businesses and farmers.
- This led to political discontent and the passage of the Sherman Antitrust Act.