The secret ingredient is crime

Another example of what must be a bug in the RSS reader, causing blog content to leak across the multitudinous timelines of the multiverse.

Byrne Hobart’s Ad-Supported Platforms are a Unique Antitrust Problem comes from the timeline where a large oligopoly platform company is

a market where incumbents can’t slack off, where everyone competes on a level playing field, and where the taxes the platform levies are precisely calibrated based on ability to pay

and where

generosity to the consumer is monetized through ruthless exploitation of their business counterparties

The problem with applying this to our timeline, though, is that it’s based on assuming a platform where it’s reasonable to expect an honest seller.

On our timeline, the platform companies design the rules of the advertising game to facilitate fraud. They’re not setting up a market where sellers compete on price, quality, and service. Platforms choose to increase their own ad revenue by operating an auction with, in effect, shill bidders. So if a platform runs an ad auction that’s limited to the real sellers of a particular product or service, they’re going to make less money in the short term than if they also allow fraudulent sellers to bid.

So the platforms end up extracting value from both sides—from the sellers in the form of artificially high ad rates, and from the customers in the form of exposure to more fraud than they would encounter otherwise.

Maybe the difference betwen the two timelines is that here, we have a Section 230 that applies to advertising? Or maybe, on the other timeline, there wasn’t the gap between expected revenue growth and value creation that motivated platforms to try to fill that gap with crime?

The most important feature of a win-win ad medium is that it’s based on some activity that is obviously (to the buyer) harder for a fraudulent seller to do than for an honest one.