American tech giants are making life tough for startups
economist.com
economist.com
[0] https://www.nytimes.com/2018/02/20/magazine/the-case-against...
Whether Google should be punished for that, assuming it's true, or left to rank things as they like is more the debate.
We don't punish anyone for crimes that have not yet been committed either :-).
Microsoft weren't punished because they were going to be killed Google. They were punished for anti-competitive practices (specifically, for abusing their monopoly position), and they had to stop some of them. It's very likely that they would have killed Google in its infancy if they could have continued to implement these practices.
Protecting a market from becoming a monopoly is another thing entirely; punishment isn't a category here but the overwhelming interest to enable everybody to participate in a market within reason. Shielding individuals from the law of the strong (as in the jungle) and the natural tendency for monopolies is the entire point for a society to begin with.
1. The legal system [1], based on Roman law, that is common in former French colonies across the world (e.g. Quebec, Louisiana, France).
2. In common law legal systems, the branch of the law that deal with non-criminal matters [2].
[1]: https://en.wikipedia.org/wiki/Civil_law_(legal_system) [2]: https://en.wikipedia.org/wiki/Civil_law_(common_law)
As much as I don't agree with it in certain cases hypothetical very much apply. All sort so things that have a small but nonzero chance of a bad outcome are violations of civil and or criminal law (e.g a speeding ticket).
There's usually a speed threshold (15 or 20 over in most states) that make it an automatic misdemeanor. No mental state required.
I would call 20+ over garden variety speeding. There's several interstate and state highways in the Boston area where 20+ over is normal traffic speed. The traffic flows at 70-75 because that's the speed that everyone deems safe and reasonable and the highway is posted at 45-55.
Microsoft explicitly detected DR-DOS and pretended that the DOS crashed instead of starting Windows, which worked just fine on DR-DOS before then. This was ruled an illegal practice even though Microsoft had been far smaller at the time.
> Big tech firms are able to shell out huge sums to keep top performers and even average employees in their fold and make it uneconomical for their workers to consider joining startups.
Reminds me so much of the show Silicon Valley. A great satire!
1) We will give you a large sum of money for your startup. 2) we will pay our workers so much they won’t want to do a startup.
2) is fine .. unless there are secret no-poach agreements in place.
But ok, let's just create this fantastical narrative that "paying workers too little" and "paying people too much" cannot possibly apply at the same time to different segments of the population.
Hell, let's even use the loaded phrase "evil capitalists", a great term if what we're looking for is to deftly avoid any real criticism of capitalism.
I guess the current system isn't so bad.
I think over the last 20-30 years, the useful and helpful-to-society technological progress as a fraction of the technological industry is fairly low. Most of Silicon valley is figuring out how to extract as much ad value from consumers as possible; except for the single percentage renewable energy fraction, most of the advancements in the energy industry is a net negative for humans; medicine is stagnant because of the increase in complexity and economics; and the list goes on...
...and inequality is skyrocketing.
> technological progress is advancing at a rate never before seen in human history.
Compared to the growth between 1900 and 1950, we should have teleportation now.
I'm not making a joke: life-changing progress keeps slowing down. E.g. refrigerators, washing machines, cars, airplanes, x-rays VS internet and smartphones.
> I guess the current system isn't so bad.
Compared to what? That's a false dichotomy fallacy.
Certainly they have scale advantages, but there’s also diseconomies of scale that can work against them.
Rather the chilling effect - the firms themselves (may be) slow to perceive the next iteration of consumer needs.
Startups on the other hand figure them out - and build a product.
The big fish/spiders, with their larger webs, sense the new upstarts and THEN build those features - and then go back to whatever it was that they were doing. The cycle then repeats.
Never mind that MS had pulled something similar vs Novell some years prior, by bundling a client with Windows and then marketing their Exchange server as a drop in replacement for Novell's Netware. Just set up a NT box in the server room, configure the PCs, and phase out Netware.
when it's your startup it's 100%. But they don't need to score perfectly always. They can raise your costs by 100 fold if they want, and if they fail, so what, they try another thing. Time and time again and still have tens of billions in bank. The startup has 4-5 months of salaries, if lucky.
Anyway I met the lawyer of the Free Software Foundation, Eben Moglen, with one question: how can I prevent the tech giants from cloning my open source software, while the indie shops can? He said AGPL. That’s the poison pill you need for those big guys.
“You just watch, we are gonna copy your open source software, roll it out it to our 1 billion users and release all the source code to everyone so they can build on top of it.. oh wait.”
Yes! Do that! It will help everyone
You see... an economic system of collaboration instead of competition eliminates a lot of these issues. The best architecture and code rises to the top instead of being killed off, and the profit motive isn't what drives progress.
Also Google: let's make the click through EULA as uninteligible as possible when we record our user's locations.
I think you mean "won't renew". They already took them.
https://joeyh.name/blog/entry/prove_you_are_not_an_Evil_corp...
Remember the guys building ARPANet for, well, the military's Advanced Research Projects Agency.
It's kind of strange how the query 'penatagon google' returns pages of uniform results, only articles containing variations of 'Google won't renew Pentagon contract'
From another Economist article ("How to Tame the Tech Titans", https://www.economist.com/leaders/2018/01/18/how-to-tame-the...):
> Two broad changes of thinking would go a long way towards sensibly taming the titans. The first is to make better use of existing competition law. Trustbusters should scrutinise mergers to gauge whether a deal is likely to neutralise a potential long-term threat, even if the target is small at the time. Such scrutiny might have prevented Facebook’s acquisition of Instagram and Google’s of Waze, which makes navigation software. To ensure that the platforms do not favour their own products, oversight groups could be set up to deliberate on complaints from rivals—a bit like the independent “technical committee” created by the antitrust case against Microsoft in 2001. Immunity to content liability must go, too.
> Second, trustbusters need to think afresh about how tech markets work. A central insight, one increasingly discussed among economists and regulators, is that personal data are the currency in which customers actually buy services. Through that prism, the tech titans receive valuable information—on their users’ behaviour, friends and purchasing habits—in return for their products. Just as America drew up sophisticated rules about intellectual property in the 19th century, so it needs a new set of laws to govern the ownership and exchange of data, with the aim of giving solid rights to individuals.
https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....
Then again one of the main reasons people start companies like Instagram and Waze is so they can be bought by these giants.
I don't know if a regulator would have had the foresight to see Instagram, which was still as much known for its filters as its social network as anything but a compliment? Look at how Instagram was seen as one of many similar products at the time:
https://www.engadget.com/2012/05/25/instacrt-puts-all-other-...
https://lifehacker.com/5970648/five-best-photo-filter-apps
An early rival, Hipstamatic, was named the Apple App of the Year in 2010: https://techcrunch.com/2010/12/09/apple-top-apps-2010/
Insta has taken on a life of its own over the last 2-3 years, but if they had chose to go their own way, whose to say Facebook wouldn't have clobbered them, in much the way they nuked Foursquare.
I'm not opposed to regulation, per se, but we should also be careful not to indulge in revisionist history.
Also, FB itself wasn’t what it is now at the time either.
This information asymmetry is a big issue. It means big platforms can detect competitors early and know when to offer generous acquisition deals to neutralise them. The people working in these competitors don't have this comparative basis to tell how well they're doing.
As a small player, it's very hard to see how successful your competitors are. For example, Google and Apple only provide vague statistics about number of downloads in their appstores, rounded very loosely. But they internally can track detailed metrics. Facebook and Twitter are used as distribution mechanisms, for login, and as sources of contact info. They can glean insights from that.
Facebook has even better insights through the Onavo VPN, which as it tunnels traffic from other apps, can even show which features are doing well https://techcrunch.com/2018/02/12/facebook-starts-pushing-it...
On another plan (not really related to the argument- but more as to what really made IG stand out), when almost identical services as you mentioned are similarly growing, the only difference is the endorsement behind closed doors. Instagram was endorsed by Adam D'angelo, Jack dorsey and Sequoia w $50M in its war chest
What do you think Microsoft would do to harm Github? I doubt it would be as bad as what became of SourceForge.
I don't have a stake in Github. I am a user with 2 distinct roles. In one role, I work for a company that pays for Github's services. Github has done a very good job hiring people who have maintained the service as it scaled to very high levels. I am concerned that Microsoft will be unable or even unwilling to keep those teams intact. They may wish to restructure the organisation. They may wish to change middle management in an attempt to make it profitable, etc, etc. Github has had a good track record with us. Organisationally we have no experience with Microsoft, so it's a risk.
Personally, I spent a chunk of my career working in the MS world (working with gold/platinum level partners). This is ancient history by now (10 years ago), but my experience with MS support was abysmal. Essentially "support" amounted to having a telephone number where I could report issues. No follow up allowed. No notification if the issue was ever resolved. Upgrade to the next version when it comes out and check for yourself to see if it has been fixed. Hey, that's why we pay for those MSDN subscriptions! Though, if you have about 1000 seats in your license, you can get real support (if you are lucky). Maybe that's all changed and they are fantastic, but once bitten twice shy as they say.
In my other role as a consumer with Github, I have my personal repositories there. I still vividly remember MS's push to create a division between "hobbyists" and "professional developers". The idea was to provide different levels of access based on the idea that "professional developers" work for large companies that will pay for high licensing fees and extensive support contracts (which only really seem to count if you have at least 1000 seats... see above). "Hobbyists" are intentionally crippled by giving them just enough access to seem like they can do something, but denying them crucial things.
With the release of VSCode, etc, I can see that the company has changed, but old ideas die hard. 10 or 15 years is not enough time for me to feel like I can trust the company. Will they slowly screw me over by using their dominant position to "boil the frog" -- slowly crippling their "hobbyists" without ever doing anything overt enough to cause them to jump out of the pot? Only time will tell, but yes I'm quite concerned. To be fair, MS is not the only potential purchaser who would concern me. At least it isn't Oracle!
Lay off employees until they're profitable.
Tech companies tend to invest ahead of growth, because tech markets tend to be winner-take-all and if the market grows when you don't, somebody else will take the market. They're effectively using their employees as insurance to make sure nobody else can catch them in the market.
As a result, they often have orders of magnitude more employees than is necessary to keep the lights on, the product operational, and the money flowing in (at least in the short term). Google, for example, really just needs datacenter ops technicians and SREs to keep the product up, which is maybe 2% of their current headcount. If they laid everyone else off, they'd eventually become vulnerable to a competitor or lawsuit or public opinion or unhappy/indifferent customers. But until that happened, they could maintain quite hefty profits.
GVFS. I believe Github will only deploy to Microsoft's GVFS sometime after acquisition. This is one of the more obvious plans, I thought shrug
Keep the money moving.
In order to even apply to be a Partner we have to have a "backer" within Facebook who will vouch for us.
Weve been trying to find such a person since February and we're still not any closer to being able to apply.
It's a hugely anti-competitive approach and makes it impossible for non Silicon Valley startups to get a foothold in the market.
I am a software guy, and I have heard other hardware guys make similar statements as well.
An example is a physical car engine (hardware), vs a video game rendering "engine" (software)
and mech engineering doesn't have its clients demand 5 months before a new engine delivery you now make it a rotary Wankel engine as that's the new hotness :-)
Ex BTEC A1 (Thermo Fluids ) Eng Tech BTW ;-)
If this is no longer the case my BTEC's are going to get a prominent position on my CV.
All but one of us worked at the bleeding edge in research for the scientific civil service or in related civilian organisations based at Cranfield.
I did do a spec pitch a few years ago to a small engineering company RBR racing - I recon I could saved them a F1 win using the basic skills I learnt at my first job
BTEC A1 is introductory level from all sources I can find.
https://qualifications.pearson.com/en/qualifications/pearson...
https://university.which.co.uk/advice/a-level-choices/what-a...
Software has the dubiously nice property of its foundations being invalidated every 5 years or so, though. You can still make a lot of money in crypto or AI, for example. Ethereum is full of smart contracts that are doing the same things microcomputers did 40 years ago, millions of times slower, that nevertheless have raised hundreds of millions of dollars for it because they redefined money in a way that somehow convinced people to pay for it. And now all of the nice properties of software like "can process more than 15 transactions/sec" have to be rediscovered, which provides plenty of fodder for entrepreneurs.
Hardware doesn't usually invalidate the laws of physics on a rolling 5-year basis, by contrast. That gives firms an ability to build up large stores of domain knowledge which can't be easily replicated by startups, so it's correspondingly harder to get a new hardware startup going.
The large tech companies are based out of Silicon Valley and Seattle. The majority of their employees and economic activity will be in those areas.
A decent house is $150,000 to $200,000 where I'm at. That's 2,000-2,500 sq feet, 0.75 to 2 acres of land. The murder rate here is almost zero, violent crime is very low, and I have access to high speed Internet and normal shopping / consumer goods. I can day trip to multiple major metros. Public housing here is actually nice, safe, clean. The homeless rate is nearly zero. And I spend zero time in traffic.
Put your $50,000 down on the home. Your mortgage payment is now $725 to $750 or so.
Make $6k, $8k, $10k, whatever per month doing Go, Python, JavaScript, etc. remote contracting. Or just take a decent remote job.
Your take home is ~$54k on $85k income contracting, before any deductions. Your bills are $2,500 per month. You can easily pay your house off in seven or eight years.
And that's not a crazy scenario or a high-end outcome in terms of contract work. That's doable for anyone in the top 50% skill wise.
You can pull off that scenario all over the US.
Or make $150,000 in Seattle, and that same house costs $1.2 to $1.5 million. Somehow figure out how to come up with your $325,000 down payment. Now your mortgage is $5,000 per month. Your property tax is over $10,000. Your take home pay is $9k to $9,500 per month. Your house, for just the mortgage and taxes, is going to cost you around ~66% of your take home pay, versus ~16% in my scenario. That house is going to cost $2 million total - minimum - over 30 years of mortgage payments, plus another $300,000+ in tax payments.
I feel pretty bad for engineers making ~$150,000 or less in Seattle or San Francisco. Telecommuting will set you free.
Not a bad deal today, but I'm still questioning if 1 trillion dollar companies exist or are overvalued.
The $1.3m house in Seattle will cost you $2m in SF.
Now you need $500,000 for a down payment. Your mortgage + taxes will cost you $110,000 per year, out of your $158,000 take home on a $250,000 income. You'll burn $3.8 million over 30 years on the equivalent of a typical middle-class house, before accounting for any repairs/improvements or tax increases.
You have $4,000 per month left to cover basics like: car, utilities, homeowners ins, food, home repairs, savings, life.
That's all assuming a $250,000 salary, which few people make in SF. The average is a lot closer to $200,000 total compensation, the median is even lower.
$250,000 salary is a helluva line to have to perpetually stay above for 30 years just to barely afford a modest middle-class house, while saving almost nothing besides that.
(kidding. I think).
It's called geographic arbitrage or geoarbitrage, and factor's in more than just salary. You can actually make less in many places and live better.
Also, when a smaller company does somehow manage to get known in the industry, it's usually under pressure to raise money or be acquired in order to compete with some other huge competitor.
I think this is mostly a regulatory fail in letting some companies grow so large and acquire smaller players. I think past a certain point, they shouldn't be allowed to do it. Finding out what that point is might be a little difficult, but probably not impossible.
Do you mean WhatsApp? I think they "only" paid $1 billion for Instagram.
This scales down to small things like parking lots. Real estate guys will buy and operate little surface lots at a loss for years to deny competitors the ability to develop properties that compete with them.
Right, but IBM used to comprise almost the entire hardware and software market. Over time, they failed to consistently deliver the best experiences to consumers and clients, so they definitely declined from their glory days. I understand your comparison about real estate developers, but I don't think it applies here. IBM can buy competitors, but if they can't make sure their acquisitions remain the best in the market, then the acquisition loses profitability, or even becomes a writeoff.
As an anecdote, I used to work on one of their analytics products, which they acquired in one of their biggest acquisitions ever. Nevertheless, we were competing for clients with smaller, leaner, and sometimes better teams in the same field. We had no inherent advantage in development over our competitors either. Sure, IBM could always buy them, but then they'd have another x billion dollar investment to turn around, and still no way to stop new competitors from taking the clients, other than creating the best product - which would be net beneficial for society anyway. In many cases though, IBM's attempts to exert control by acquiring other companies backfired because they failed to provide client value, and the company has had to write off a lot of losses by trying.
Im not comfortable with the edge places like facebook, google and reddit have over other companies, knowing what they know about with loosely named propietary data.
Im not too concerned with them buying companies: microsoft used to do that and didnt stop any of these.
If two songs are sold on an iPhone for $1 each, one by Apple and another by [insert music sales app], the small app makes 0.70, while Apple makes 1.30. Lets say each has to pay 0.50 to the label for the sale. The small app profits 0.20 while Apple profits 0.80. That's a 4x advantage for essentially the same purchase.
Unless you mean that you could have made a competitor, but that's inane -- that's a completely different market, with huge barrier to entry.
Apple is using its huge market position in one area (smartphone OSes) to give itself a huge advantage in another (music apps). That's the sort of thing companies have got huge fines for in the past, or were broken in parts for.
And at some point you could jailbreak iPhone and iPod Touch and crack apps but no real alternative market rose up
In fact, it's worse. Payment & fraud disputes are also bound to the marketplace. What are the chances that app devs will end up being the ones eating big losses just to continue to exist?
There's also an argument to be made that big tech giants have some benefits for startup ecosystems. The option of being bought out, for example, acts as a safety net, so that even if your company doesn't have explosive growth that lets it go public, well at least you'll get something out of it. Similarly, having tech giants nearby means that even if your startup just implodes, you can probably still get a decent job in the area (going from big company to startup to back again is really common in the bay area, for example).
Disclaimer: I work at Google, my opinion is my own, etc.
Using a bit of imagination to think of risks these giants face :
* Antitrust - could happen when it's politically advantageous to publicly bash tech giants
* Stock market - a recession could reduce tech giants’ leverage by a lot
* China - competition from Chinese companies or the Communist party imposes an embargo
* Technology - another AI winter or maybe some other company gets the edge in quantum computing for instance
* Demand - their products today are better versions of what they were ten years ago, not completely new things. What if users turn away from these tech companies as they become the ‘old way of doing things’?
* Startups - Google grew on Microsoft's watch, Amazon on Walmart's, Facebook on Google's, Apple on Nokia's, Snap on Facebook's. What's next?
* Crypto - ethereum, bitcoin, etc. could usher in a whole new internet experience where giants on the 'old' internet find it hard to gain a foothold
While working on a startup today might feel like picking pennies in front of a bulldozer, tech giants face a number of risks of their own. Startups would better focus on internal excellence than fret about tech giant monopoly.
My interactions with start-ups have rarely been pleasant. As an employee, I was underpaid (and wildly so on a risk-adjusted, expected value basis when comparing the lowered salary with what could be earned elsewhere), overworked, and felt the management was not informed either on the business side or the tech side, but instead came off as people with wealthy parents who viewed starting a company as the modern day status equivalent to what socialite children used to think about non-profit work or humanities graduate school.
If we’re being honest, there’s a lot of dysfunction with the way start-ups are operated, and plenty of misaligned incentives that lead to running a business more to drive hype than to actually find a product-market fit or empower employees to be productive.
Before I would start thinking, “won’t somebody think of the start-ups!” — I’d expect them to be a lot better behaved, a lot more concerned with ergonomics & healthy work places, more sincerely interested in productivity, and more eager to pay competitively. If they’re doing all this right, then I might have more sympathy when a bad actor displaces then for real anti-competitive reasons.
Added: I will say that I am not comfortable with some of the state powers that allow other businesses to mangle the legal system around you to sabotage you, but the solution to that is less state control (thus less reason to lobby), not more.
The software is simple, the idea has existed forever, there were competitors in the space. But the thing that really drove the space forward was Slack raising hundreds of millions and marketing the shit out of their software. Only after that have the big guys gone "oh, shit, we have to get in there".
I'm not really impressed by Slack as an engineering/innovation company, but it provides a very interesting perspective on business.
Perhaps startups should look at changing that. Offering more actual money, better options, and stop with the fuckery that makes most people believe that their options would be totally worthless even when the company is acquired/goes public.
I'm not sure what that implies. We could say war and the strong robbing the weak aren't news, but we've developed societies and rule of law to limit those catastrophes and promote justice and opportunity for everyone. As a result, people have time, freedom, resources, and security to acquire skills and develop software, among other things, rather than having to fight for survival.