This week’s monopoly round-up has a lot of useful news, as usual. Amazon must face a monopolization trial over its control of audiobooks through its subsidiary Audible, Boeing is in trouble again after a 787 Dreamliner crashed in India, the Canadian antitrust enforcer is going after surveillance pricing, Warner Brothers-Discovery is splitting up after merging just a few years ago, and Meta’s chief technology officer Andrew Bosworth is now also an Army officer as Trump fuses big tech with the military.

The big story of this week, and perhaps for some time, is Israel’s attack on Iran, and the resulting conflict. Foreign policy isn’t my area of expertise or study, and as I noted last week, I got the war in Iraq wrong, which means I don’t particularly trust my judgment here. So I’m going to try and limit my observations to how this war, and other possible conflicts, intersect with market power.

American involvement in this war has many root causes, but one major element is that in the initial stages we have few binding economic constraints preventing such involvement. Some wars are like that. Unrest in Iran, Ukraine, Iraq, Syria, Israel, et al - that doesn’t really affect us in any negative way economically. We don’t really need much from these countries. Ukraine is a player in wheat, fertilizer and certain chemicals needed for semiconductors, but losing access to those isn’t massively disruptive. The situation is similar with Iran and Israel. Supporting an Israeli attack on Iran requires no actual changes to the way we organize our industrial capacity or financial system, which means we don’t have to question any of our political assumptions, at least not yet. We can just go along and pretend to be a hyper-power. If this conflict drags on, that will change, but for now, it is what it is.

Consider a different situation - China. With China, even the mere specter of changing trading relationships caused a complete panic on Wall Street, followed by Chinese coercion through the denial of rare earth magnets to most of our industrial and defense firms. Here’s one anonymous auto firm expert to CNN on rare earth metals: “People think it’s only EVs, but it’s not. It’s in everything in every car. It’s in motors that run windshield wipers..there are sensors in seat belts... there’s going to be production disruptions all over the place. China really has our balls in a vise.” That’s without a single shot being fired.

In other words, challenging China, even modestly, requires a radical rethink of our economic ordering. And rare earth magnets is as good a thing to focus on as any to illustrate why. I’m trying to write a more in-depth piece soon on rare earths, the short story is that China’s monopoly on these cheap and easily produced yet vital items is a result of us selling our technology to them, and then refusing to stop Chinese firms from selling below cost to eliminate all competition. We could have fixed this situation at any point over the last fifteen years; Biden did a small amount, and a reasonably sized magnet factory is coming online this year as a result. But the “free market” trolls at Treasury and Commerce, as well as corporate America, bitterly fought against doing anything. I first wrote about rare earths in 2019, but that was nine years after China threatened to deny these materials to Japan. All of which is to say, this problem has been obvious for a long time.

The second observation is that this war, as all wars are, is shaped in part by what the different countries can produce. Iran is slowly lowering the number of missiles it is firing at Israel, as its stockpile dwindles; it does, however, have robust drone production capacity that Israel is targeting. Meanwhile Israel is highly dependent on U.S. ammunition stores, as it has run through most of its quality munitions through its actions in Gaza and worldwide production is centering on Ukraine. Here’s Yehoshua Kalisky, a senior researcher at the Tel Aviv-based Institute for National Security Studies: "Our problem is not the price we pay for the ammunition, but its availability: World demand has reduced the availability.” That’s for basic shells, the more advanced stuff used for the country’s missile shield takes a lot longer to replace. One amusing part of this conflict is that both the cruise missiles coming from Iran and the Iron Dome defensive weaponry knocking them out of the sky likely use Chinese rare earth metals.

The third point is pretty basic. Oil still matters, and oil prices spiked as a result of Israel’s attack on Iran. Why? Well, roughly a quarter of global oil supplies and a third of liquefied natural gas production move through the Strait of Hormuz, which is the waterway between Iran and Oman linking the Persian Gulf and the Arabian Sea. Here’s the FT: “The world’s largest publicly listed oil tanker company is refusing new contracts to sail into the Gulf through the Strait of Hormuz following Israel’s attack on Iran, its chief executive has said.” That said, Iran, though it can threaten to close the straight, will probably not follow through, because the biggest victim of shutting off oil supplies would be China, with which it is loosely aligned. If it does close the straight as a tactic or last ditch effort, however, well, that would shut off production in much of East Asia and likely cause a global crisis.

And now, the round-up, after the flip. A bunch of blue states are passing junk fee bans, Meta is trying a large quasi-acquisition in the AI space because Zuckerberg isn’t good at building stuff, and Trump’s antitrust enforcer Bill Rinner gave a signal this administration is going to foster a lot of consolidation. Plus, McKinsey looks very stupid, again. Read on for the rest of the week’s monopoly related-news...