The Monopoly-Busting Case Against Google, Amazon, Uber, and Facebook | Hacker News Reader

The Monopoly-Busting Case Against Google, Amazon, Uber, and Facebook

theverge.com

73 pointsTomte75 comments

"The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man’s making shall be the servant and not the master of the man who made it. The citizens of the United States must effectively control the mighty commercial forces which they have called into being.

There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done."

- Theodore Roosevelt, "New Nationalism", delivered at the dedication of John Brown Memorial Park in Osawatomie, Kansas, 1910

http://teachingamericanhistory.org/library/document/new-nati...

Less easy-to-use and more expensive products are a small price to pay for freedom and democracy.

>Amy Klobuchar (D-MN) has introduced a bill that would place an outright ban on acquisitions by any company with a market cap higher than $100 billion.

This is devious and simple. While I'm sure there are some crazy hoops companies will go through to dodge the prohibition, I think this is a great idea. I would prefer to see the market cap dropped to a lower value, and have the number expressed as a multiplier of the median household income.

That being said, I think a lot of these cases still need work. The uber one in particular stands out to me. Uber isn't part of a conspiracy to fix prices with their drivers. They simply hire the drivers for a short term contract to transports uber's customers. It's also difficult to imagine why uber is a monopoly, they still face plenty of local competition and in many cases have been driven out of markets by legislation specifically created to ensure that uber doesn't disrupt local monopolies.

I don't think banning the monopolists from buying other companies will work nor is it fair. It shouldn't be a thing at all, it should be considered as unfair punishment for natural monopolists. Not to mention, most startups will fail on their own anyway without being bought out.

One idea I have (or maybe I misunderstand the laws) is to modernize these patent laws to discourage buying companies simply for their patents. We need to reduce the length of patents, ban software patents, outlaw the patent trolls (patents need to be produced or lose it), and for both natural and non-natural monopolists, make patents globally licensable from them with no exceptions.

Apple grows and improves its technologies through buying companies, it would never be able to produce TouchID/FaceID without buying companies that has patents on the said technologies. If Apple has a hold on the market, it must be forced to license the said patents to anyone at a fair price.

I'm sure there are cons to this approach but it is not like the remedies shown in the article don't have problems either.

The intent of an acquisition ban would be to encourage companies to split themselves in order to maintain the ability to acquire technology.

The reasoning seems simple enough -- if you obtain a dominant market position through hard work and a superior product, you currently have no disincentive against using the proceeds of that position to expand into new products.

That superior companies should be able to obtain monopolies in one category is a debatable good.

That they should be able to use their monopolies to expand into new categories seems wholly without merit.

If Amazon Basics wants to compete against Diapers.com, or Google Docs with Microsoft Office, or Facebook against Snapchat, then they should do so on the merit of their offerings, not simply by how much of their parents' money they can burn to buy marketshare.

Recognizing that the largest corporations have an inherent, unfair advantage in expansion, disincentivizing them seems like a logical way to create a more competitive, diverse, and freer market.

I’m very curious about this idea, is there any good resource you can recommend on this?

How does splitting companies help? I don’t understand the value or the point of this, giving the history of Ma bell and they ended up being multiple larger bells in the long run.

Is the split intended to require regulation reviews when someone want to merge or purchase companies later?

Any split would be self-enforced. The ban on acquisitions would be the impetus to stay under the market cap.

The article specifically notes that the Bell split was a bad model, as it just created multiple local monopolies.

As a shareholder, I don't particularly lose as now I own stock in Google Search + Google Maps + Android (or whatever combo).

Or corporations decide they want to stay big... but can no longer defensively acquire prospective competitors.

Which seems to cleanly solve the problem of "No one aspires to be the next Apple / Google / Facebook, they simply want to be bought by them."

It would depress valuations (as there wouldn't be a reliable acqu-exit), but that might not be such a bad thing either.

The whole idea of breaking monopolies and now allowing a free market is that after a certain point, you don't want these companies improving their product, because their "product" just becomes "a whole market segment that large chunks of the population need".

The natural progression of any company is to get larger and buy up more and more of the market in order to improve its product, prevent its competitors from improving their products, and widen its reach. This is the basis of capitalism. The problem is that because these companies have so much money, they're able to buy legislation, solely determine market conditions, and generally stack the odds in their favor (which isn't "wrong" per say, but isn't always in the common good). They may even do this will continuing to produce the best product in their sector. The issue always comes down to the idea of "Who do you trust more to represent the general human population, corporations or government" and there's good arguments for/against both sides being the one who SHOULD be the determinate.

But you can’t be sure that splitting the companies doesn’t prevent them from doing it again alas Ma Bell > ATT + larger mergers of Bells over times.

I just don’t understand how it helps. It would be nice if you can recommend any resources I can look at on this topic.

Here's one possible case study, Standard Oil:

https://www.e-education.psu.edu/egee120/node/226

> because these companies have so much money, they're able to

This is the basis of capitalism. The more capital you have, the more power you have. So capital multiplies.

> generally stack the odds in their favor (which isn't "wrong" per say, but isn't always in the common good)

Once you have enough capital, you have the power to remove alternative options. This isn't a flaw in the capitalist model; this is the capitalist model.

Preaching to the communist choir here. At a certain point, I think you need to go out of your way and hobble a company or roll it into the State in order to keep it working for the Public if you're going to allow private ownership at all.

Interesting take on remedies, but I wish it had linked out to a serious exploration of why the consumer harm standard isn’t sufficient and what would be future legal grounds to justify regulatory action.

Just outright banning any big company from acquiring another company seems terribly distortive and unwise.

> ...but I wish it had linked out to a serious exploration of why the consumer harm standard isn’t sufficient...

Because being a monopoly isn't illegal and (from TFA) companies like Amazon benefit consumers through lower prices.

Basically they have to invent a crime to fit the deed.

Such is the fallibility of laws written by humans.

The writers of the relevant laws (~1900 - 1950, from memory) were all pre-digital networking, just as the writers of the Constitution were pre-corporation (~1850, royal charters ignored).

Amazon is almost the opposite of a monopoly - they literally seek out highly competitive markets with the slimmest profit margins.

Uber has plenty of competition in Lyft and current taxis. You can't simultaneously complaint about Uber driving down prices and then call for anti-trust regulation of them.

Yes and no for Amazon. If Walmart/Jet would offer some competition.

Facebook, not sure they can be broken up reasonably (what parts?) but perhaps they should be regulated as a utility, to some degree.

You could break off the network itself from all the other businesses, including the ad business. The network would then have to provide a regulated interface to all advertisers, with strong regulation of what data they are allowed share and target.

That’s not a bad thought, though i doubt it’ll come to fruition.

Amazon has a lot of individual web shops as competition in addition to sites like ebay and rakuten. Also any serious classical retailer has an online shop by now and search engines like Google shopping help them to compete on price. Amazon has a high market share, but they are far from a monopoly. They earned their market share through low prices, fast delivery and best in market customer support and they will lose it, if these three points drop considerably in quality.

Anecdotal I explcitly skip Amazon for lower priced shops, if I do not care about customer support and if products have a high reputation of arriving broken, because they made a reputation of banning accounts for bad return behavior.

While Facebook itself might be hard to break up, Instagram and WhatsApp can easily be independent companies and a strong point can be made that these acquisition shouldn't have been allowed based on anti-trust in the first place as these stopped emerging social network competition in other forms of communication (images, 1 to 1).

I think the author is specifically drawing attention to how current antitrust laws, which focus on a price model, don't protect consumers from more long-term anti-competition. I wish the article would dive into those problems more but I'm not sure anyone knows what the symptoms of this (mis)behaviour looks like.

But in terms of Amazon and Uber: - Amazon behaviour with diapers.com seems like predatory pricing, which is clearly illegal (and doesn't help consumer pricing after acquisition) - Uber wants to have it's cake and eat it too. If the drivers aren't employees, they're price fixing; if the drivers are employees, treat them like it, e.g. benefits, etc

The fact that uber does face competition of every sort means that they aren't fixing prices in the market. To attack uber (and lyft's) business model in a self consistent manner, looking at short term contracts seems like a better approach.

A much better article than the verge one

https://www.yalelawjournal.org/note/amazons-antitrust-parado...

And Apple doesn't make the list? The millennial rag says it is because the firm is "too much of a conventional retailer".

BS. It didn't make the list because the guy writing the column probably has an iPhone and iPad. Amazon is far more of a conventional retailer than Apple.

Agreed - a ridiculous omission. Imagine if Microsoft in the 90's tried to exert an appstore level of control over all software that could be installed on Windows? And took a 30% cut of revenue!

They even bring up MS trust busting efforts as a reason to go after Google. The article falls all over itself in multiple places (also Amazon) to reach its ends.

Android exists in the same space, and has more users, so it doesn't make sense to consider Apple a monopoly.

Microsoft had a monopoly on the PC market in the 90s. Apple doesn't have a monopoly on the smartphone market today.

How about premium smartphone market? Apple is worth a trillion for a reason, it is a monopoly.

Apple isn't a monopoly. You can very easily avoid using their products and services if you want to.

It's much more effort to avoid Google, Apple and Microsoft all at once.

Is there a word for the strange behavior many have around defending large corporations? I know there's Stockholm syndrome but this appears to be more nuanced.

tribalism + Billions of $ in branding

Stockholder syndrome?

Thanks for the chuckle

It's not defending large corporations, it's the reluctance to see the largest and most powerful "corporation", the state, to wake up and interfere.

As shoddy as many of their products are, the corporation that is the state provides far more goods, services, and dividends than any one other company does.

Often at far less efficiency but yes I agree, given that, at least in the US, their mission statement is "make things nicer for the citizens."

I saw Reuters on Twitter today say "the social responsibility of a company is to increase profits" so quite a different MO if you buy that.

That's the crucial difference: the state's primary aim is something other than “gather money for self and keep it away from others”.

Maybe we should break up that monopoly? Is there a word for people who defend every action taken by the state? I know there's Stockholm syndrome but this appears to be more nuanced.

Tax-payer?

I'm a tax-payer and I don't defend everything the government does.

There is only one organization in the US that is forcing me to pay a massive chunk my income towards things I don't even support.

Maybe once Google is capable of doing something like that we should consider breaking them up.

As with everything else, there is a market for states. If you don't like this one you can patronize a different one. The right of exit still exists.

In a participatory republic you have the option of actually engaging in the process and changing policy. Maybe you ought to vote with your dollars accordingly.

Also, there's no action being "defended" here. The American state is not actually prosecuting tech companies for antitrust. The EU is.

> break up that monopoly

You can avoid creating it. Look at Switzerland. But stable, well-run confederations are rare.

The US, and many other federated states (like e.g. India) do alleviate some of the problems of centralization by allowing different places to be run partly by local rules, and it does make a difference.

I heard many for-profit corporations are run in a federated way, too, because a huge monolith is not very adaptable.

Is this summarily, or per worker, or per unit of money spent?

Please note that, unlike corporations, governments usually can print money ("quantitative easing" anyone?) and normally finance their expenses by taxing everyone, that is, their services can't be opted out of.

The state has provided me far more value than Google, Facebook, Amazon, and Uber have.

If they want to regulate them, regulate them. If they want to dissolve them, dissolve them. I at least get a vote with the state; I get no such say with large tech corporations. If you would like to opt out of the state, you likely have the skills to emigrate to another country.

Consumer?

Nah, you can be a consumer and not give a shit about the company that produced it. i think the things I use are good, but if something came along from a competitor, I'd be willing to buy that instead. Brand loyalty doesn't make sense to me personally (cool, you used to make something good. Is the new thing you made good? If yes, will buy. If not, will buy elsewhere)

I think OP is talking about the sort of blind fanboying that happens for some of these brands. "Every apple product is always better than every non-apple product because apple makes good products"

A great example of this are console "fanboys". Not only will they defend the multi-billion corporation that makes the console they bought, they will get upset if a game is playable on a "rival" console. Another aspect of this phenomenon is people using the products they purchase as part their personal identity.

I own a Mac, I'm a hip techie

I own a Xbox, I'm a hardcore gamer

I think there's some basis to brand tribalism. If the purchase involves a substantial time or money commitment, you want affirmation that your investment is justified. As well as the usual social signalling that comes with having a product that's supposedly superior to the ones that others use.

Not sure why people would go to bat for amorphous trillion-dollar corporations that readily offer their services for "free", though.

Speaking from my own position as a person who owns a console and does not play games on PC (unless they work on OSX, which is rare). I haven't seen much Xbox/Playstation fanboyism... I don't doubt it exists in some sect, but it can't be as pronounced as say: google advocacy.

There is a more general backlash against the "console peasant" statement though, because, speaking personally; I don't like being insulted just because I refuse to waste an x86 on Windows.

Yes it's called a 'difference of opinion'.

I like how the Google products I use work together and worry that a broken up Google would worsen my user experience.

Also, if you cut off things like youtube and maps, I'm pretty sure they would collapse in bankruptcy as they are almost certainly not net profitable by themselves.

Do we want company's to dominate an industry because they are pumping in money from their domination in another industry? A unprofitable business is a failure and should be replaced by other firms with better business models

It's almost as if antitrust is pro-competition and pro-capitalism!

> pro-competition and pro-capitalism

Surely those two are incompatible.

Capitalism is the principle that you need capital to pay for things. If you have more capital than a competitor, you can sustain losses for longer, until your competitor runs out of capital to pay for things like food and has to stop competing.

The principle of capitalism leads to competition, but it's necessarily only temporary. Eventually, capitalism inevitably leads to lack of competition.

If they do their job after being broken up, they'll make sure integrations with other services are tight enough this won't be a problem.

They won't.

Fortunately, the market will provide as there is an entire industry of platform integrators from MuleSoft to IFTTT.

Greed motivates all kinds of behavior. On one hand, people who work for large corporations and don't want to lose their unvested stock awards. On the other hand, some people are envious of the big money in tech. In both cases, they'll rationalize what they think is good for the market accordingly.

Kind of related, you might be interested in reading some Thorstein Veblen. Precuniary Emulation is an interesting concept[0].

[0] http://wiki.dickinson.edu/index.php/Conspicuous_Consumption_...

Well I wouldn't care normally, but the current administration and its supporters are tying up these challenges to major companies with gaslighting and red herrings and all sorts of confusion with attacks on net neutrality, preventing the ability to talk negatively about the administration, the free dissemination of information, etc.

Basically I don't trust the motives right now, so for now I defend Facebook and Google and Amazon until a government I trust to limit them for the right reasons steps in.

I can clearly see how these corporations benefit me, I don't see how they harm me. Not only do I use almost every product they offer for free, the salaries they offer boost the wages of all tech workers across the US. If these companies didn't exist I suspect I would be getting paid EU market rate salaries rather than what I am currently being paid.

If said companies are broken up how would that change what you've stated? There are plenty of small companies that pay a lot and offer free products that are not monopolies (if you believe they are, anyway).

> If said companies are broken up how would that change what you've stated?

Google is only able to offer services like gmail and google maps for free because of their massive ads business.

> There are plenty of small companies that pay a lot and offer free products that are not monopolies (if you believe they are, anyway).

Name one, I can't think of any.

Red Hat, Canonical, and Mozilla, I'd imagine.

There are many other companies that offer free email without relying on a "massive" ad business. Without knowing what you mean by a lot, but Dropbox, twosigma, most "unicorns" have an order of magnitude or more less headcount and offer similar pay.

Lots of people on this discussion board probably make money in some way from one or all of the companies discussed or potentially in that category. This makes it a difficult ethical question if ever confronted as such - who could one work for if that were a filter for companies one could choose for which to work?

I was always intrigued by the word antitrust. It was first used in 1890 in the US. Is it possible that someone screwed up and didn’t realize the word for this is distrust?

A trust is a thing. Antitrust is a contraction of anti-trust.

https://en.wikipedia.org/wiki/Trust_(business)

It's also helpful to understand history, and therefor the origin of antitrust law.

https://en.wikipedia.org/wiki/History_of_United_States_antit...

In the annals of corporate history, you'll find that before ~1875, "corporations" were intrinsically intertwined with their sponsoring governments.

Viz British / Dutch East India Companies, Hudson's Bay Company

Early American corporations were no different, and required the legislature's consent for establishment.

Consequently, Carnegie Steel and Standard Oil were both formed as an alternative... a trust... to avoid being beholden to government power.

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