Where were you in Fall of 2012? What were you doing? As I walked around the halls of my middle school, braces in my mouth and acne covering my face (I was still cool though, fret not), some students at UVA were analyzing rent seeking in the world around us. Indeed, a post by a student boldly named “Unknown,” rent-seeking by major tech companies faced tough analysis. Citing an article from 2012 (which still has the user interface of 2002), Mr. Unknown suggests Google and Apple spending more on patents than R&D is a prime example of rent-seeking. I think many of us would be inclined to agree.
I researched to see how see how this rent-seeking has changed by these firms
since my friends (not I) have gotten taller since 2012. Funny enough, the
change has been nearly minimal.
The article I found highlights how top tech firms such as Google has spent
countless dollars to fight off patent infringement cases. In fact, in 2020,
Google was the defendant in 48 different patent cases. While the exact costs of
battling these cases was not mentioned, anyone who has googled the salary of a
patent lawyer can appreciate the astronomical costs of this rent-seeking.
Similarly, Samsung faced 42 patent lawsuits in 2020. Thus, these combined
90 lawsuits from the two firms alone imposed countless legal costs on the other companies
as well as the court system – undoubtedly a suboptimal use of resources due to
the rent-seeking behavior. In line with the direct mention of
legal costs as a subsection of monopoly costs in class, it is easy to see how easily
these costs add up. However, the most interesting piece may be the continuity
of these issues over time. Ever since some of us were shoving kids into lockers
(or in my case, getting shoved into lockers), these few firms alone have spent
countless dollars in an allocatively inefficient way seeking economic profits.
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