An Unintentional Part of Tech


This post is by Jeff Carter from Points and Figures


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The big tech companies are being looked at closely for antitrust.  The Stigler Center at Chicago Booth had a two-day event I was at a month ago that was enlightening.  I blogged about it and the ideas, themes, and thoughts that spewed forth from that conference are finding their way into the editorial pages of major publications and on leading blogs all over the spectrum.

One thing I heard that was interesting when it came to newspapers was that while most newspapers were dying, papers like the Wall Street Journal had “figured it out” and were profitable and better than ever before.  Hiring not firing staff.

Pivot to universities.  My alma mater, Illinois, just dumped its in-person MBA program in favor of an online program that it initiated a couple of years ago.  Makes total sense.  There was no demand for the in-person program. They didn’t even have 50 students signed up.  Illinois undergraduate program at the Gies College of Business is really very very good.  But, students that go there are looking at matriculating to places like Chicago Booth or Kellogg when it comes time for an MBA. I went to Booth.  Gies himself went to Kellogg.

If you are going to do an MBA and can qualify for an in-person top 20 program, why would you go anywhere else?  In Chicago we are lucky to have two of the top 5 programs in the world.  Tough to compete against them, especially as they extend their brands.

When I look at trading, the introduction of tech brought concentration.  We are seeing a big consolidation of trading firms in the high-frequency trading space.  There used to be thousands of market makers in the Treasuries, now there are just a few dominant ones.

In retail sales, $20 billion of sales was lost last year as brick and mortar shops get run over by the internet.  Of course, Amazon is the leading e-commerce platform but they aren’t the only one.

This seems to happen when tech disrupts an industry vertical over and over again.  Only a very few of the original participants survive. But the ones that do figure out ways to make a lot more profit than they did before.

I think there are some baby steps we can take to curb the power of winner take most in industry short of full-blown anti-trust action.