The article reports that Google is appealing an antitrust case involving stifling competition by abusing its dominance of the Android operating system. In 2018, the European Union (EU) executive Commission, which is the EU’s antitrust top enforcer, fined Google $5 billion in what is considered the largest fine for anticompetitive behavior (Chan). Google has also faced two more fines, which takes the total tally to over $8 billion, for such practices as requiring smartphone producers to take several applications from Google. This is a requirement where if developers want any app at all then they have to get the bundle of applications. On its part, Google argues that Android is free and open-source, which has made cell phones cheaper and has facilitated its competition with Apple, Google’s chief rival. The commission accuses Google of paying wireless carriers and phone makers to exclusively pre-install the Google search app, deals amounting to below 5% of the market, for which Google feels the deals cannot hurt rivals. Despite these arguments, the EU holds its position that Google misuses its market dominance to prevent rivals from emerging from Google’s shadow.
Importance of the Information
The information contained in this article is critically useful since it explains how dominant companies attempt to circumvent antitrust scrutiny and continue to exercise their monopoly power. Google makes its products freely accessible, which means that competitors cannot compete with free products and that the companies can take advantage of the user base. These companies hold the user data of billions of people and use it to customize or personalize adverts for their customers, which helps them to make billions of dollars while offering their products freely to ordinary customers. Google may believe that open source products are harmless, but the fact remains that all rivals hoping to enter the market would have to contend with a dominant firm using prices to push competitors away. The information can also be deemed useful for businesses across the world, especially those growing rapidly since it indicates the opinions and positions of the legislative bodies regarding market dominance. Even a business model that offers free products or that creates a platform for other businesses to operate may still be considered a monopoly if there are no alternatives for users in the market.
Article: ‘Tampon Tax’ Critics Hope State-Court Lawsuit Can Build Pressure for the Texas Legislature to Repeal
- Topic: Tax Incidence
- Source: The Dallas Morning News
- Date: April 23, 2022
Article Summary
This article describes an issue with taxation where the State of Texas imposed a sales tax on menstrual care products, which has been perceived by lobbyists as a financial barrier for low-income women. As a case of tax incidence, it can be demonstrated that taxing these products will cause their prices to rise, which means that the consumers are the stakeholders who bear most of the tax burden. As a result, the lobbyists have decided to sue the office of the Comptroller since the state has not complied with the demands over the past six years to repeal the tax (Garrett). The main argument is that the tax discriminates against women, who are forced to pay more for essential products despite their financial situation, unlike men whose products have been exempted from the sales tax. Since the lawmakers have refused to respond to the demands of the Texas residents, the article explains that lawsuits are considered the best option in the push for the repeal of the tampon duty in the State of Texas.
Implications of the Article
The article presents a classical case of tax incidence where the government’s efforts to tax products often leads to consumers paying higher prices for commodities and services. In this case, a tampon tax becomes a controversial subject considering the sensitive nature of these products and the fact that the consumers are mostly low-income earners who cannot afford the higher prices. The sales tax on the menstrual care products does not necessarily affect the producers and the distributors, who would count the taxes as costs to be passed on to the final consumer. This article explains how the tax burden is shared among stakeholders, most of whom pass it on to the consumer, which should be the basis of the legislature in making taxation decisions on essential products.
Overall, the state of Texas should reconsider the tampon tax due to its detrimental implications on the welfare of women who feel discriminated by the legislation. Alternatively, the state can provide further regulations on the redistribution of the tax burden such that the tax incidence does not detrimentally affect only the consumers of these products. From a legal perspective, the fact that men’s health products do not face the same taxation makes the issue controversial, especially when viewed from a feminist perspective.
Article: U.S. Trade Deficit Hit Record in 2021 as Americans Spent on Computers, Games
- Topic: International Trade
- Source: The Wall Street Journal
- Date: February 8, 2022
Article Summary
The article analyzes the international trade between the United States and China and other countries, which has resulted in a trade deficit rising by 27% to reach an all-time high of $859.1 billion. The result of this increase is that it has underscored the strength of the American economy and highlights the hefty dependence on imports from other countries engaging in international trade with the United States. The deficit with China alone grew by 14.5% to reach $355.3 billion for the year 2021, which reverses the decline observed under the Trump presidency and the trade policies designed to reduce the deficit. The problem that emerges with this issue is that China has been accused of not meeting the purchase commitments that are intended to fill the gap in this deficit (Hayashi and DeBarrows). However, the main issue should be the fact that the American consumers have spent heavily on imported products, including game machines, computers, and furniture while, at the same time, spending less on travel and dining. The growing American economy resulted in the rise in process, which significantly resulted in higher importation of lower-priced commodities from abroad.
Importance of the Article
The article informs of the nature of international trade between countries with unequal purchase commitments from one another, which is the real cause of trade deficits. Additionally, the growth of the domestic economy can be considered a major cause of trade deficits considering that rising costs and prices push consumers to spend more on cheaper imports. The United States is considered the largest economy and recorded more growth in 2021 than most developed countries, but it sold fewer products and services than it imported. The reason for this scenario goes down to production costs and prices where a country with higher costs sells less than the partner with lower costs and prices for commodities.
Therefore, the growth of the American economy, as explained in the article, is one issue that offsets its position in international trade with its partners. Even though China has purchase commitments, the trade between the two will be adversely affected by prices where the country that sells cheaper sells more products and services. In this case, the position of the United States in international trade with its partners could be compromised if the trade deficit was allowed to rise, which calls for stiffer regulatory measures.
Article: A Normal Supply Chain? It’s ‘Unlikely’ in 2022
- Topic: Demand and Supply
- Source: The New York Times
- Date: February 1, 2022
Article Summary
This article explores how the year 2022 with face abnormal supply chains caused by chaos at ports, warehouses, and retailers, which are expected to spread throughout the year and beyond. The demand and supply for goods and services are expected to change considering that unreleased products at ports and warehouses reduce supply, which means demand becomes higher than supply (Goodman). Using the laws of demand and supply, the resulting scenario, which has started to unravel, is rising prices as a result of lower supply and inflation caused by growing costs at the ports and warehouses. With cheap shipping no longer available and the fact that the markets are dominated by a few companies, it becomes easy for this situation to spread quickly across industries and markets on a global scale. The government of the United States is responding by contemplating antitrust enforcement against dominant companies due to the hike in prices for such commodities as beef, poultry, and pork.
Importance of the Article
The article illustrates the shifts in demand and supply caused by external factors and disruptions in the supply chains for common products and services. In this case, globalization should make it easier for markets to fill the demand and supply gaps and for economies to avail the products and services demanded by the consumers. However, globalization has been seen as an issue since a problem in one country quickly spreads across the international markets affecting customers from all over the world. The demand and supply mechanisms are affected by the market dominance of a few companies, which means that problems with producers quickly spread to entire markets. These dominant firms control prices for basic commodities, resulting in rising costs faced by such businesses quickly translate into higher prices, or shortages in supply when the companies cannot deliver the goods to consumers. The information in the article has implications for business regulation across the world, especially with regard to the nature of competition. Overall, it is made apparent that companies cannot be allowed to dominate markets considering that their control can be detrimental to consumer wellbeing, especially during times of crises.
Works Cited
Chan, Kelvin. “Google in Court to Appeal EU’s 2018 Android Antitrust Case.”U.S. News & World Report, 2021.
Garrett, Robert. “‘Tampon Tax’ Critics Hope State-Court Lawsuit Can Build Pressure for The Texas Legislature to Repeal.”The Dallas Morning News, 2022.
Goodman, Peter. “A Normal Supply Chain? It’s ‘Unlikely’ in 2022.”The New York Times, 2022.
Hayashi, Yuka, and Anthony DeBarrows. “U.S. Trade Deficit Hit Record in 2021 as Americans Spent on Computers, Games.” 2022. The Wall Street Journal.