I’m sure Chinese Tech co’s would absolutely love to have their Western competition knee-capped by their own governments. Will make it a lot easier for them to dominate the globe for decades to come.
For example, break up Amazon and you now create an opening for Alibaba to expand into the US. Spending billions in order to get customers to shift to Alibaba instead of Amazon.
Americans don't seem to be interested in using massive platform apps that contain the kitchen sink; WeChat is available but not popular, same for LINE, and Messenger never successfully became that.
Right now the most successful overseas strategy for a software company has been Tencent's games strategy (as opposed to their WeChat one), and in that respect they're mostly just a holding company.
I mean, Facebook's app is basically exactly that.
Facebook reported declines in daily active users in North America during Q3 2020: https://www.engadget.com/facebook-q3-2020-earnings-204642328...
https://www.statista.com/statistics/1100836/number-of-us-tik...
Because international companies wouldn't be exempt from US regulation if they operate in the US.
ps: fwiw, I’m against breaking up BigTech. It makes for good headlines but I don’t think it solves much.
International monopolies will be able to expand into the US and burn cash to acquire users and grow market share. Then when they've run all domestic companies out of business, they will raise prices.
The problem is not only competition in US or Chinese as markets; it is also about global markets.
Besides, everyone in the US benefits from increased competition between our domestic companies.
[1] https://www.npr.org/2021/04/10/986112628/china-fines-alibaba...
[2] https://www.reuters.com/article/us-china-internet-anti-monop...
I think China is okay with big monopolies. Just as long as they control them. This particular anti monopoly fine was part of a larger power struggle with Jack Ma:
https://www.reuters.com/business/chinas-ant-group-become-fin...
In some sense, it's a zero sum game, where if your country don't scale or allow companies to scale, they find the next most favorable country. Or another country's companies succeed because of the additional support provided.
But subsidies and government support have always been the biggest fracas in international economic politics for centuries for the same reason.
To which I'd reiterate not_exactly__'s point: although business-harmful actions look like shooting yourself in the foot, hampering competition and supporting companies for extraneous reasons ultimately makes your economy and your companies less competitive globally.
General point being that the US government will tend to avoid doing things that are bad for the US government.
We’re talking regulation here, so that should definitely be on the table.
This just feels like fear mongering. "Don't tamper with what we have now! The other guys will win"
With Bell, standard oil and past monopolies... the goal was to decentralise while keeping oil and telecom viable. We wanted what they made, and didn't want disruptions.
Do we want what FB makes? Is it scarce? I feel like we would have a sufficient supply of likes, shares, messages and posts regardless. There doesn't need to be a $trn company for those to be supplied.
Generally, I think the issues at stake have evolved. Many of the problems with today's monopolies are power related, rather than efficiency related. I think FB is enormously inefficient, but this is kind of besides the point.
Additionally, the privacy review process for new products/features is extremely stringent and time consuming. Product teams have been hamstrung significantly, with some engineers I know complaining that they're not even able to get half as much work done as they used to.
I think focusing on a rogue employee as the threat it missing the mark. The real threat is the ability for huge corporations to legitimize institutional access to data ("business reasons"), and to fight the legal fight if they are caught doing something wrong. Moral hazards of this mode of failure arguably has much more cumulative societal damage (e.g. Cambridge Analytica).
In other words, I worry less about an evil employee reading my messages than a scaled up corporate machinery milking all my data for dollars that feeds the machine back and also can fight any fight at the courts, DC and the public eye.
And not also sued and reported for criminal prosecution?
Because if someone didn't particular want a job at facebook, but interviewed for the experience and got the job or had been working there and wasn't happy there and was ready to quit-- the threat of instant termination alone may not be that much of a deterrent.
Facebook has nothing approaching a monopoly on attention, social media, messaging, anything really. All of their products have serious, billion-dollar, hundreds-of-millions-of-users competitors. Even if they disappeared in a puff of smoke I don't think any competitive landscapes would change much.
People want a social network that everyone else is on, that works on all their devices, and isn't full of spam bots or bugs. It takes a big company to do this at scale and the network effect makes useful social networks scarce.
Counterexample: email
Do they, though?
...not that you'd miss much, as they're usually spartan, but it's worth mentioning.
It's kind of annoying, because an actual webpage is much better IMO, but it is what it is.
By which I mean that Facebook does not make $trn by supplying likes shares messages and posts.
Google search and on-site ads can be annoying and of questionable relevance, but I rarely see items that are so egregiously ripping off consumers. I dont see this much on twitter promoted tweets either.
What is it about facebook's ad business that encourages such a high proportion of overpriced garbage? Is it the mediums focus on pictures and video that makes these sales work? Is the audience just dumber/less savvy and so these platforms are the only places with enough suckers to do this successfully?
TikTok's sponsored videos seem to be falling into a similar trap to a lesser extent - the markup is less extreme for the few I've looked at out of curiosity.
Do Google and Twitter have some process for quality control to keep the garbage out that Facebook does not? Or is the medium the primary reason for this perceived difference?
The rapid churn when people realize it's harder to make money than it seems means that there is always a new set of people pushing whatever crap is hot that week.
We would also not lack for ways of selling whatever advertisers on FB are selling. They would be different without FB. Different parties would or wouldn't benefit... Connecting consumers to businesses is not scarce.
It was done while everyone was looking, and it was explicitly authorized because the market had changed.
Wireless had proliferated, and the value add segment of the vertical had moved (from circuit-switched lines and long distance) to the Internet, where (pre-Time Warner merger in laughably late 2016) ATT didn't compete.
There's also the two other surviving "small" clumps of Bells called Verizon (Bell Atlantic, NYNEX + GTE) & Lumen (US West + Qwest + CenturyLink).
If we want to gripe about the current state of the US ISP market, post-ATT re-mergers shouldn't be top of mind. Exclusive franchise agreements, lack of common and accessible conduit / poles, lack of community-funded competitors, and bundling are above it.
Even a hypothetical worst-current-case scenario where 3+ of the majors ATT, Verizon, CenturyLink, Comcast, & Spectrum were offered at every house, because they all had access to each other's last-mile at non-discriminatory rates would solve current issues.
Things were kind of going ok with that!
That all got royally hosed when pro-big-business Supreme Court activism sided with Verizon's stance that they Verizon should have monopoly rights to fiber, in Verizon vs FCC (2002). Now suddenly telecomms could go back to their nasty old ways, which they have.
For example, if Apple is forcing developers to use their payments SDK to collect 30%, why can't a government agency just force them to stop?
Maybe there was a long official investigation by antitrust regulators, and that kicked off a long bureaucratic process that ends in a mandate restricting Apple from doing a very specific thing, maybe with an appeal/review process, expiration date, etc.
No need to get a bill passed that changes the law for everyone. A smaller company could still do that same thing, but it doesn't matter because due to their size, they're not immune to competitive forces. If anything, they'll have a harder time pulling it off because developers can get a better deal with Apple thanks to the new restriction.
Idk how the law works and whether the relevant regulators are able to do something like this. So maybe this comment is stupid, but it makes sense in my layman head at least.
iOS has 60% of the US market[1], and Android 40%. The App Store has 100% more revenue than the Play Store[2], and the two are responsible for over 99% of all app sales. In the US, Apple has the majority of market share in the mobile operating systems market and the mobile app distribution market.
Both Apple and Google have a duopoly in mobile operating systems, and they leverage that duopoly to maintain their duopoly in the mobile app distribution market. To continue the chain, they then leverage that duopoly to dominate the mobile app payment market, as well.
Further, the colloquial definition of monopoly doesn't with regard to antitrust laws:
> Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.
[1] https://www.pcmag.com/news/ios-more-popular-in-japan-and-us-...
[2] https://www.businessofapps.com/data/app-revenues/
[3] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
(I am not a corporate lawyer) Hopefully didn't take editorial liberties with your quote, but wanted it to stand on its own.
My understanding is that the US, in contrast to many other advanced economies unofficially or officially, takes a dim legal view of singling out a company for any purpose.
Either a company is acting within the law, or they are breaking the law. What company doesn't (shouldn't) matter.
Which I think is wise as a standing order, as detailed specific-company intervention renders it more subject to politics, etc. Better to stick to the laws, and then allow the courts to apply them evenly.
Why not simply get our government to do their jobs and REGULATE away practices that are not in the public's interest?
Breaking up has achieved excellent results before, as far as I can tell. It's not a permanent solution to the problem, but neither is brushing my teeth.
It might be OK to have a process that needs to be periodically repeated when companies get out of control. It might even be preferable to large legislative efforts that significantly change what companies can and can't do. Are people really mad that maps show up in Google search, or are people mad that Google owns the world? I'm not sure, but maybe it's better to precisely target a temporary solution at the actual problem.
In general, I'm more on board with bills about vertical integration than I am with some other solutions people have proposed. But I'm also not necessarily opposed to skipping the whole thing and directly breaking up those companies instead. It seems to have had good effects in the past. And while I do think vertical integration is a problem, I'm not 100% certain that it's the biggest problem or that this is the best solution. I'm watching these bills kind of carefully.
Which in this case seems a consequence of first mover advantage + capital-light tech scaling (aka large profit margins) + huge total addressable markets.
Compared to Saudi Aramco's total profits -- Apple makes 63%, Microsoft makes 44%, Google makes 39%, Facebook makes 21%, & Amazon makes 13%. [0]
And that's compared to a business that literally pumps money out of the ground.
[0] https://fortune.com/global500/2020/search/?fg500_profits=des...
Source?
Source: I use the Internet today and can see the effects firsthand, I'm part of an industry that exists pretty much because of that breakup. This stuff is pretty well documented.
What do you think are failed examples of this?
Even though you had eventual re-consolidation, the post-breakup phone industry seemed like a much more interesting and competitive place than the one before it. The fix for re-consolidation, of course, could be pretty simple...
Very few people want to do the harder, more innovative, more interesting thing if they can make a comfortable living doing what they've always done. This applies to regulators as much as to companies. We haven't found any better tool to force companies to be in touch with their customers and do what the customers want than competition, but we also have an economic system that encourages consolidation (because competition is HARD!). So the role of government to break things back up to keep competitive incentives feels quite natural. The market isn't gonna do it itself.
ISPs can't leave and yet we don't seriously regulate them into doing public good or having a competitive market, which is mysteriously somehow contentious politically. Many others can't leave because their talent pools aren't willing to go with them, and that would be even more true if the workers had a government that worked for us.
There is a problem with government being full of people who would rather stay on the receiving end of a money hose than pinch it off for anyone's benefit. All the other apparent problems seem to me to be excuses to protect that. Check greed or we all suffer. You can check greed without stifling ambition. It's a valid choice.
You can play whack a mole with their bad behavior, but large companies can come up with new dark patterns way faster than you can regulate them with precise and well thought out regulation. You just end up with entrenched interests and an ossified industry.
That's not even touching on regulatory capture.
Also, wasn't Microsoft a huge waste of taxpayer time and money? AFAIK, Gates got away with his monopolistic practices and has since been recasting himself as a societal boon.
Despite any possible gains society could gain by breaking them up, it seems like a herculean task compared to simply having our elected representatives legislate away business practices that are a public harm. (and yes, this would require our representatives to actually represent the people, but so does monopoly breakup)
Even if we reduce the story of Bell to "they got split up, then Southwestern Bell/Cingular/AT&T and Verizon gobbled up the rest of the others slowly" then we can see a big win: the n broken-up companies had varying levels of success because they tried different things and executed in different ways. That's a massive A/B test of the usefulness and efficiency of business practices that never would've happened if they'd never been broken up in the first place! And we'd have even less competition than our current wireless market if that breakup had never happened...
One interesting side-note I happened across recently was that Rockefeller's peak wealth was after Standard Oil was broken up. So what's the arguments against breaking up megacorps? We all know the value of competition, and we don't trust public companies to look much past the next quarter if left to their own devices, so why wouldn't we want more competition and less giant monoliths?
According to whom? And compared to what? According to what I read the man had (from memory) 24 million at the time of his death, which seems so bizarre. The problem is the accounting is not only difficult, but that the richer you are, the harder it is to account for all of it, and the more expensive it is to do so. It's not like a regular Joe who can just check his wallet or banking app. By the time you've audited your own wealth, as a billionaire, you've lost millions of dollars. The cost of accounting impacts accounting.
I feel like this sentiment doesn't go far enough. "Oh we would break up the monopoly if not for the innovation". Bell Labs innovated far more than FAANGs. It actually produced R&D that benefitted everyone. Big tech is far past the point of Bell Labs.
The ironic thing here is that this goal, being absorbed by corporates, is what startup exits are about.
And honestly, I don't understand it. I want to build something that matters. Morally and ethically, not financially.
I want to build a legacy, not some zuck or bezos weekend shopping item.
The reason buy-outs are more common is because the tech giants have gotten large enough to offer so god damn much money that very few people have enough non-monetary drive to continue the risk. Incentives affect actions in a dose dependent manner.
Yeah, keep that view and you'll succeed. Beware of: children, relationships that expect things from you, anyone that isn't within your reality distortion field.
I'm with you. I guess your in your twenties. Me, early thirties. It does get harder to say no to everything everyone around you is doing successfully, for moral reasons.
Zuck/bezos and your kid stops getting bullied at public school...
Also: money buys legacy. Bezos and zuck can scrub the web of their wrongdoings(not that there are any) with 0.00000001% of they're stash.
https://www.grunge.com/143621/the-dark-truth-about-amazon-fo...
Why the sarcasm? Did I offend you?
If I don't stand up for my own values, am I not a fraud when I try to teach a kid what's good and what not? Would you rather live in a world where everyone gave up because the hurdles were too hard to overcome or live in a world where people stand up for their ideals and work for them?
I mean, we as "tech guys" have the luxury of being able to have work available wherever we go, and we can live off it very much above average when it comes to income. You can still live a good life with a family and working part-time...and you don't necessarily have to drive a Tesla to be happy.
I do realize that somewhere along the line we all make compromises, for whatever reasons. But when I'm in my death bed I wanna tell my children about what I fought for, and being able to tell them about my social ideals beyond capitalism or an "influencer life" and about what I imagined, what I thought the world could be.
(also, I am slightly older than you :P)
One of the most pernicious effects of tech advances in recent decades has been the rise of surveillance state and surveillance capitalism, and the loss of privacy that comes with that.
This enabling of spying on everyone is not going to be addressed by more competition, and might even enable it further if innovation in that space increases.
Another major issue is economic inequality fostered by the internet and tech booms which, again, the breakup up (or even end) of these companies would not address.
Exactly this! Two out of five of FAANG derive effectively all their revenue from global-scale dragnet spying, and all five of them use that kind of data collection as a highly effective moat against competition.
It should simply be outlawed. That should be step #1 for breaking the tech monopolies.
These corporations control the government because the same people demanding to “break `em up!” have also been demanding “small government!” for decades on end, which in practice simply means a government that works for the corporate private sector.
The morale of this story is that your solution is no solution at all, and to the extent that it is a solution the means to implement it are nowhere to be found.
So proposing these bills is more feasible, because... why exactly? Are you under the impression that corporations aren't allowed to lobby about bills?
What makes you think that legislating tech will be easier than breaking tech up? Complicated rules about vertical integration aren't going to be less susceptible to lobbying and corporate FUD.
I doubt all this bluster in Congress is anything more than rhetoric and posturing. There might be some settlements and watered down regulations, but that’ll be it. This is DoJ vs MS all over again.
The people who built these companies in the 90's and 2000's are not the people running the ship now.
The new folks have very different personalities and motivations.
Light tech regulation was exactly the correct approach in the 1990s (and arguably the 2000s). It enabled mind-boggling rapid and stunning innovation.
... However, the massive corporate fortunes built by the winners of those times are now primarily enabling rent seeking.
Google and Facebook's other work is interesting in the same way that Bell Labs was interesting -- great for a few, but funded by taxing everyone (albeit via tracking and ad market control in this instance).
And they've learned from their predecessors' demises that part of their winnings need to be continually re-invested in buying startups that might threaten their dominance.
IMHO, everyone will be better off if Facebook, Google, and Amazon are shattered into small enough independent pieces that (1) "get bought" is no longer the startup win condition & (2) they have peer level competitors in all markets in which they participate.
Apple and Microsoft? Mandate open app stores and devices, if an owning user so chooses.
Thinking back to the 90s... if anyone has guaranteed revenue streams out 10 and 20 years these days, the market as a whole isn't competitive enough. That should be enough time for the entire playing field to upend itself.
At least, it used to be.