July 14, 2024

Welcome to Letters from CAMP, a newsletter on anti-monopoly activity in Canada and abroad, brought to you by the Canadian Anti-Monopoly Project. In this installment we have:

• Data breaches across industries show the hidden cost of centralization in our economies
• Saskatchewan’s missed opportunity to capture the value of its natural wealth
• U.S. DOJ prepares price fixing case against rental software company RealPage

Let’s dive in.

When Monopolies Fail: The Not-So-Hidden Costs of Centralization

In a week that highlighted the vulnerabilities that concentrated economic power brings, we’ve seen major failures from Ticketmaster, AT&T, and, in the rear view, Rogers – each underscoring the risks of monopolistic control over critical systems and data.

Ticketmaster’s recent hack exposed the fragility of its ticketing monopoly, with hackers releasing data to create over 38,000 duplicate concert tickets. This breach not only threatens to create chaos for venues and fans, but also reveals how Ticketmaster’s dominant market share amplifies security risks across the entire live events ecosystem. A hack of Ticketmaster is a hack of almost the entire North American entertainment market.

Meanwhile, AT&T disclosed that hackers accessed a Snowflake-hosted cloud platform containing sensitive customer data, including call records and text message details for nearly all of its tens of millions of subscribers. This incident exposes the dangers of centralizing vast amounts of data with a single cloud provider, even as companies like Snowflake promise unparalleled efficiency and scale.

Closer to home, Canadians finally received the CRTC’s report on the massive Rogers outage from 2022. While the report attributes the failure to human error, it glosses over the systemic risks created by having so much of Canada’s telecommunications infrastructure controlled by a handful of small players.

The common thread? Concentrated economic power amplifies the scale of our vulnerabilities. When giants stumble, entire industries feel the tremors. Ticketmaster’s hack threatens the whole live events ecosystem. Snowflake’s breach has shockwaves across the many industries that compose its corporate consumer base. Rogers’ outage paralyzed swaths of Canada’s communications and financial infrastructure. These incumbents claim that only they have the resources to manage critical systems. But the reality is that their size makes them juicy targets for bad actors and potential catastrophic points of failure for our economies. Fair competition doesn’t just drive innovation and better pricing, it boosts resilience through distributed risks and higher standards for consumer protection. Multiple ticketing platforms, diverse cloud services, and a richer telecom landscape would all help mitigate the impact of individual failures.

But when monopoly becomes a reality, we need robust oversight and real consequences for failures that can impact tens of millions. With neither adequate competition or consumer protection we should not be surprised by the next week of headlines highlighting the not-so-hidden costs of monopolies.

Potash Profits: When Public Wealth Becomes Private Gain

Despite the appearance of runaway success, Saskatchewan’s potash industry offers a stark lesson in the perils of putting the interests of big business ahead of broad-based prosperity. Despite controlling a third of global potash reserves – a larger share than Saudi Arabia’s portion of the global oil market – Saskatchewan has seen its provincial debt double since 2008 despite frozen social assistance rates and child poverty at 26% compared to the national average of 18%.

How is this possible? As Eric Cline, former Saskatchewan cabinet minister sees it, a royalty and tax system that heavily favors industry players over public benefit. In 2022, when potash revenues doubled to $18 billion on unchanged production, the province received a mere $1.4 billion while industry pocketed a $7.2 billion windfall. Rather than spreading the benefits of the resources under our feet and investing in our productive infrastructure, Saskatchewan provides another case study of Canada’s natural wealth being concentrated in the hands of the few.

Turning away from the lessons of former Alberta premier Peter Lougheed’s approach to the province’s oil resources, the case of potash represents a missed opportunity to invest in education, healthcare, and poverty reduction. Returning to Cline, “let’s be considerate of investors and shareholders. But at the same time, let’s consider the needs of children to be fed and to have a quality education, and of people to have a roof over their heads.”

The Hidden Hands Shaping Rental Markets

Recent developments south of the border have shed light on a troubling trend in rental markets: the use of algorithmic pricing tools to potentially facilitate collusion among landlords. As the U.S. Department of Justice prepares a lawsuit against rental software company RealPage, Canadians must ask: are similar technologies inflating rents in our own already overheated housing market?

This situation is emblematic of the challenge of algorithmic pricing to competition policy, something CAMP highlighted in its submission to the Competition Bureau’s consultation on competition and AI. We need to balance the use of tools that make markets more efficient with the understanding that they can also facilitate the private collusion we have laws to protect against. The answer is to use the Competition Bureau’s new powers to investigate the use of algorithmic decision making and their effects on market dynamics.

Algorithmic collusion in housing is particularly problematic because it shows how collusion can occur even outside the usual suspects, highly concentrated markets with few players. While Canada has its share of oligopolies we must contend with, we need to be vigilant for unfair competition in any market. Reversing the ongoing housing crisis will take action at all levels of government and across policy disciplines. Competition policy has a role to play in ensuring that fair competition in the housing market works for those who need an affordable roof over their head.

If you have any monopoly tips or stories you’d like to share, drop us a line at hello@antimonopoly.ca

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