Michael Crichton once pointed out an unusual quirk in human thinking – something he called Gell-Mann amnesia, after his friend Murray Gell-Mann. Chrichton said:
In short, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on a subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see that the journalist has absolutely no understanding of the facts or the issues. Often the article is so wrong that it presents the story backwards, reversing cause and effect. I call these the “wet streets cause rain” stories. The paper is full of them.
Either way, you read with exasperation or amusement the multiple errors in an article, then turn the page to domestic or international affairs and read as if the rest of the paper was somehow more accurate on Palestine than the nonsense that you just read. You turn the page and forget what you know.
Crichton was primarily concerned with journalism. If you see news stories covering an area you know well, which are often riddled with basic errors and are written by someone who appears to lack even a basic understanding of the subject, you should at least suspect that the news stories on d Other topics are also riddled with elementary errors. errors and were also written by journalists who also lacked a basic understanding of these topics. Yet we rarely seem to do this. But more than journalists, I feel concerned about what this topic says about legislators and other politicians. I find that in areas I know well, legislators are even more likely than journalists to demonstrate a lack of understanding in the areas they are so eager to exert control over. And lately I’ve been seeing a lot of this regarding technology.
I’ve talked about this before on the blog, but I’m a huge gadget and technology enthusiast. This, in addition to economics, has kept me intensely interested in following the news on lawmakers’ various attempts to insert themselves into technology. The US government recently attacked Apple as monopoly and denounced various aspects of Apple’s business. And in almost every case, it’s clear that the person making this statement is someone who simply doesn’t understand the world of technology at all.
I could give many examples, but for now I want to focus on a claim from the Department of Justice blaming “barriers to entry” for the failure of various smartphone companies:
Many large, well-funded companies have attempted unsuccessfully to enter affected markets due to these entry barriers. Past failures include Amazon (which launched its Fire mobile phone in 2014 but was unable to sustain the business profitably and withdrew the following year); Microsoft (which stopped its mobile activity in 2017); HTC (which left the market by selling its smartphone business to Google in September 2017); and LG (which exited the smartphone market in 2021). Today, only Samsung and Google remain significant competitors in the American market for high-performance smartphones. The barriers are so high that Google comes in third behind Apple and Samsung, even though Google controls the development of the Android operating system.
There is a lot to unpack in the cacophony of errors. On the one hand, the Amazon Fire phone didn’t fail because of “barriers to entry.” It failed because, frankly, it was a really bad product. It was missing key features, its hardware was subpar, and it was overpriced for what it offered. You can search the web for reviews of the phone when it was released, and I can’t find a single example of a reviewer actually recommending it to anyone. Companies with far fewer resources than Amazon have managed to break into the smartphone market by offering products that are good, cheap, or both (OnePlus comes to mind).
Furthermore, it is simply absurd to attribute the failure of Microsoft, HTC or LG to “entry barriers”, because all of these companies were well established in the smartphone market long before their eventual demise and even before ‘Apple is not entering the telephone market. . When the iPhone was first announced, Microsoft CEO Steve Balmer literally mocked it and predicted it would fail, confidently pointing out: “Right now we sell millions and millions and millions of phones per year. Apple doesn’t sell any phones per year. Before the iPhone came along, Microsoft was deeply established as a smartphone maker and had huge sales. The idea that their phone business couldn’t compete with Apple due to “barriers to entry” can only be made by someone who is completely unfamiliar with the history of mobile technology.
Likewise, HTC and LG were also very successful smartphone manufacturers. HTC made the first Android phones. For several years it was the largest maker of Android phones, and by 2011 it was the largest maker of smartphones. period – even bigger than Apple and the iPhone. There are many reasons why HTC declined and its smartphone business failed, but “barriers to entry” are not on that list. The same can be said of LG: they ran a very successful smartphone company for years, releasing phones that sold millions of units and earned solid reviews and a dedicated fan base. There are also several reasons for LG’s decline. (Tech YouTuber Marques Brownlee offers a variety of thoughts hereif you’re interested!) But to reiterate the main point: LG, HTC and Microsoft have been in the phone business for a long time. Before Apple came on the scene, and all of them were at one point bigger and more successful in the smartphone market than Apple. Saying that they ultimately failed to compete with Apple because they ran into “barriers to entry” fails to get in touch with reality.
