Where Warren’s Wrong
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Most people in tech industry always strive to build monopoly and dominance. In their eyes, Warren's idea is of course insane. But viewing from another point, in order to protect competition and small businesses, her proposal is mostly sound. The concept of "Platform Utility" may seem arbitrary, but actually a very helpful check and balance.
The perfect solution is that the platform should be run like an open blockchain, trouble is no one has a clue how to build it yet.
Google on the other hand has close to a monopoly on search (and browsers). Facebook on social medias.
and, if you can prove it, predatory pricing is illegal. amazon is absolutely subsidizing a bunch of stuff with profit from elsewhere. if and what and how the government can do something about that is a huge can of worms with wide reaching implications outside the tech industry.
IF the government wants to get involved with separating product development from distribution, they should be going after splitting primevideo from aws (like saying movie studios cant own theaters), or trying to prove that netflix is being unfairly charged for resources different than primevideo (price discrimination.) they should go after amazon logistics.
amazon is a vertical conglomerate problem not a monopoly problem (if its a problem at all.) whatever amazon is, the law wasnt ready for, but whether amazon is a good or bad thing is more a matter of perspective.
Does that mean that HN should also come under scrutiny because it can price HN free? What if I wanted to start a competitor to HN? Should the government make it so there is an environment that makes that easier?
Don't forget "if it's free then you're not the customer you're the product" -- which means it's the users who are engaged in predator pricing by not charging for access to their eyeballs.
Of course, the users aren't giving their eyeballs for free, they're trading them for services. And the companies are trading services for eyeballs. There is no money because it's barter, not because there is no exchange of value.
And that's the case with all of this. Because the marginal costs for everything in tech are so low, the "cost" of providing something to the incremental user is negligible and nothing is ever really below cost because the ecosystem benefits to the company are worth more than the incremental cost of providing service to the user.
What creates these conglomerates isn't predatory pricing, it's the network effect. People use Facebook because their friends use it. They buy stuff on Amazon because the sellers are there, and the sellers are there because the buyers are there.
But allow me to disagree with your conclusion. The problem isn't predatory pricing, but the network effects problem is still a problem.
Now, granted, the problem is as much created by the government as anything. The law (CFAA, DMCA) makes it so that people can't create a Facebook "client" without Facebook's permission.
If they could, suddenly you've got a bunch of clients that consolidate many social networks into one interface, which makes it easier for users to switch to others. If Facebook is doing something you don't like, you install another back end to your client and transparently use that service with any friends who also have it. The more people Facebook offends, the more users they lose, without any specific other service ever having to reach some critical mass before most people can stop using Facebook.
That could be brought about by removing laws rather than adding them (though you could also pass new legislation to the same effect), but in either case it does require a piece of legislation to be passed to bring it about.
But it never has to leave your friend's device, and neither would it need to with some different client.
My browser doesn’t have access to scrape all of my Facebook information and all of my friends FB information.
How do we trust that Chrome or Windows isn't currently?
> How does Facebook give access to the customer’s information and ensure that the third party doesn’t abuse it?
It's the customer giving the software access to the data. Facebook has no more to do with it than gmail has to do with whether you use Thunderbird or Outlook.
> My browser doesn’t have access to scrape all of my Facebook information and all of my friends FB information.
Neither would this need to. It has your Facebook credentials and accesses Facebook as you. No special rights, just the ability to do use Facebook in a consolidated interface without ending up in court.
It couldn't do anything a malicious browser couldn't do with your Facebook cookie.
A “Facebook cookie” doesn’t have all of the information to all my friends information
That was Facebook giving a third party everyone's information without consent. This is your friends having the information you shared with your friends.
> A “Facebook cookie” doesn’t have all of the information to all my friends information
It allows you to get all of the information that your account has access to on Facebook, which is all such a client would need.
https://en.wikipedia.org/wiki/Predatory_pricing
http://signalvnoise.com/posts/1407-why-the-drudge-report-is-...
That is the purpose of all competition in a free market -- to achieve as large a market share as possible. In a stable market, this necessarily involves removing business from your competitors.
You argue that Apple does have competition, and that's nominally true if you are very coarse and sloppy with your comparisons, but due to marketing and their walled garden, they are basically a monopoly over the upper / more artistic portions of the market:
https://wccftech.com/apple-iphone-counterpoint-premium-smart...
Are you really saying that Apple has no competition in computers?
Apple has been competing against commodity PC makers for 40 years.
Or are you saying that Apple doesn’t have competition making MacOS computers? Apple competes with generic PC makers by making a differentiated experience. There was nothing stopping any PC maker from doing the same. It wasn’t like Apple was making massive profits in the late 90s when it bought NeXT and started developing OS X.
You argue that Apple does have competition, and that's nominally true if you are very coarse and sloppy with your comparisons, but due to marketing and their walled garden, they are basically a monopoly over the upper / more artistic portions of the market:
They out competed. Any of the PC manufacturers could have produced a differentiated ecosystem in the 80s or 90s instead of using Microsoft. Apple didn’t have a monopoly on marketing channels.
Of course not. A company need not have a monopoly in every market they compete in. For example, Apple produces an office suite (iWorks), but due to the competitive nature of that industry doesn't make money off of it.
Apple doesn't have a monopoly on computers, but it does not make much profit off of them. Most of its profit comes from smartphones, where they do have a monopoly on the upper portion of the market, and also within their own walled garden.
For example, in 2015, 50% of Apple's revenue was iPhone: https://www.businessinsider.com/heres-where-apple-really-mak...
They can have no competition for their computers when other people are selling computers. The reason the pricing power standard is used in antitrust is that a intuitively appealing descriptive category may not actually be a domain in which all products are actually considered against each other by purchasers and thus may not actually be a single market within which competition occurs.
> They out competed.
That's usually how younger a monopoly, other than a government grant or leveraging another existing monopoly.
It's not a contradiction to having a monopoly.
No, not every company has pricing power, which is the ability to raise prices without losing sales to competitors.
> Coke has pricing power on Coke
That's an interesting claim, but not one I've seen the evidence for.
> and can sell it at premium over Generic Cola.
A premium price alone does not establish pricing power (in fact, that the sustainable price is some additive or multiplicative premium of the price of competing goods would be evidence against pricing power.)
> Does that make Coke a monopoly?
If Coke actually had pricing power such that increases in price did not produce movement to competing products, then, yes, it would mean it was a monopoly, because the descriptively similar products would empirically not be competing with it.
Unless you have an essential good. No company has complete pricing power. If Apple tripled the price of Macs, no one would buy them. The Mac’s demand is far from inelastic.
> Coke has pricing power on Coke That's an interesting claim, but not one I've seen the evidence for.
Have you compared the price of a Coke to a generic cola?
A premium price alone does not establish pricing power (in fact, that the sustainable price is some additive or multiplicative premium of the price of competing goods would be evidence against pricing power.)
And this is different than Apple charging a premium how?
If Coke actually had pricing power such that increases in price did not produce movement to competing products, then, yes, it would mean it was a monopoly, because the descriptively similar products would empirically not be competing with it
And this is different than Apple?
Pricing power doesn't have to have an unlimited range to demonstrate a monopoly in the sense of interest to anti-trust law.
> Have you compared the price of a Coke to a generic cola?
Again, a price premium is not even a related concept to pricing power.
> And this is different than Apple charging a premium how?
I've never made a claim about whether Apple has pricing power or merely a premium price; I've only said the existence of other sellers in the descriptive category of “computers” is not inconsistent with he characterization others made of Apple having a monopoly, because monopoly is designed by empirical evidence of competition (e.g., whether or not pricing power exists), not by whether or not their are other players in a descriptive category.
So how does Apple qualify and Coke doesn’t? How do you decide what the “right” amount of pricing power a company should have?
I've only said the existence of other sellers in the descriptive category of “computers” is not inconsistent with he characterization others made of Apple having a monopoly, because monopoly is designed by empirical evidence of competition (e.g., whether or not pricing power exists), not by whether or not their are other players in a descriptive category.
What exactly does Apple have a monopoly on then? Computers? Phones? Lightning adapters?
I have neither said that Apple does or thar Coke doesn't; I've never said that either of the two does or does not have pricing power.
> How do you decide what the “right” amount of pricing power a company should have?
It's not a question of “should have”; an anti-trust monopoly (which is not itself illegal, but may make other behavior illegal) exists where pricing power exists in any price range.
> What exactly does Apple have a monopoly on then?
I haven't said Apple has a monopoly, only that, again, the fact that other people sell computers doesn't mean that Apple's computers are not a monopoly (and the same would be true of any other product category besides “computers”.) Whether they have a monopoly is determined by empirical evidence of whether consumer substitution occurs between products, not as to whether products fit into some taxonomic category where there are other products.
Yes. It has a monopoly over its product.
In terms of whether we care about their monopoly power, two things matter: 1. Whether they are close substitutes to those products; and 2. Whether there is free entry & exit in the industry.
Given that a monopolist will only operate along the elastic portion of the demand curve it faces, availability of substitutes is almost a given. When the monopolist makes supranormal profits, other competitors see an opening for providing those substitutes which reduces the welfare loss from Coca Cola's monopoly over its products.
Yes this argument is silly. But it’s no sillier than the other arguments being discussed.
So charging too much is wrong (exploiting your power) but charging too little is wrong (undercutting competitors). Whats the solution? Centrally planned prices have been tried failed.
theres probably some argument to be made that uber/lyft and any of the venture capital products being sold with vc subsidization are kind of doing this.
The whole idea of most VC backed companies is to grow big and lose money until they get acquired.
I’m not saying that YC has ever done that. I’m just taking the argument to it’s logical conclusion.
And, of course, there is literally nothing inherently illegal (in the US, at least) about building a monopoly in any case.
Why should the government punish companies because they were able to disrupt incumbents?
Should we also punish Apple because RIM and Palm couldn’t compete?
But as far as being uncompetitive because of a previous business model is the entire premise of the “Innovator’s Dilemma”. It’s not the governments responsibility to protect old business models.
Should future competitors to [monopolistic entity] be punished because [previous competitors] were unable to effectively compete?
In any case, I don't think punishment is really an apt metaphor for breaking apart a monopoly.
Every company I named was once dominant. Even Spotify came out of nowhere and made the once dominance iTunes Music Store basically irrelevant without government intervention.
It wasn’t government intervention that caused the once The Beleaguered Computer Company that was about to be crushed by MS what it is today.
They were convicted of antitrust violations, sanctions were imposed, and they weren't dominant forever.
Since a key part of Warren's criticism of the past that has led us to the current state of internet giants is that it results from a complete failure to enforce antitrust laws along the way, there is implicitly a contrast with Microsoft where, even if it was fairly light touch in the US due to timely election of an MS-friendly administration, there was enforcement and sanctions.
Microsoft is still just as dominant in the PC operating system market and the desktop productivity market as it was in 1999.
The sanctions were on the way they illegally leveraged that (legally attained) monopoly to monopolize other markets. Something which they've been decidedly less prone to do since. Well, at least for a while, they are now pretty much following the lead of the companies Warren is complaining about and, to the extent the latter are benefitting from lax enforcement, so are they.
You really think they had a strategy meeting and said that their strategy was going to be to always be a strong second?
No, I think they were, at a minimum, more restrained in unlawfully leveraging their existing monopolies to do that thsn they were in the 1990s with the browser, not that they didn't try to dominate those markets.
Microsoft is a goddamed convicted monopolist. The conviction significantly changed their internal processes and they were much more careful after that point.
They tried to compete in both the media player, digital music, and phone market and failed.
They are still trying to compete in search.
Yes, they tried to compete, not just buy whoever they could and abuse the rest of the market which means the conviction had the intended effect.
They tried to buy Yahoo.
> It wasn’t government intervention that caused the once The Beleaguered Computer Company that was about to be crushed by MS what it is today.
The criticisms of Microsoft weren't that it was preventing Apple from selling computers; but that it was using it's monopoly in the operating system to prevent competition against its other software.
> Even Spotify came out of nowhere and made the once dominance iTunes Music Store basically irrelevant without government intervention.
And if Apple decided Spotify could not be on the App Store, how would Spotify do then? (Nevermind we're ignoring the "Apple tax".)
Spotfy is an example. Plenty of Apps do pay the "Apple tax." I'd get into the complexity of how the "Apple tax" affects Spotify even though it doesn't pay it, but you seem to have already made up your mind about all this regardless of the facts.
And you act as if most revenue from online stores is not coming from in app purchases of consumable goods.
Because retail stores have to provide shelf space with real estate cost, unsold inventory cost, etc. How much is that cost to Apple?
> It was 70% to be distributed in online app stores like the ones that Verizon use to run to distribute J2ME apps.
And it costs 0% to be distributed in a Linux package manager.
Possibly something to do with Verizon having the same sort of app monopoly over its device customers that Apple does.
Because retail stores have to provide shelf space with real estate cost, unsold inventory cost, etc. How much is that cost to Apple?
So now the government should also decide what is a “fair” amount of markup?
And it costs 0% to be distributed in a Linux package manager.
And seeing how little money you can make from Linux users, the value add for distributing packages on Linux makes the price about right....
In which case the lesson is that by charging so much in a competitive market, that business unit failed. Which leads to the real point:
> So now the government should also decide what is a “fair” amount of markup?
It's not a matter of setting prices, it's a matter of having competition. Apple gets 30% because it's the only feasible way to distribute to iOS. If Apple was charging 30% and there was a competing Mozilla App Store for iOS charging 5%, I suspect Apple would lose some business to it. And if some people still think Apple's store is worth 30%, no problem -- let them pay 30% while others pay 5%. But the 5% option should exist.
> And seeing how little money you can make from Linux users, the value add for distributing packages on Linux makes the price about right....
The point is that it shows the cost of providing that service. If Debian can do it at scale for nothing, what is Apple doing that justifies 30%, and where is the option to get just the thing Debian does for free?
There was nothing stopping Mozilla from making a “Firefox phone” and having a fully integrated experience. Well they did try and failed to execute. As did Amazon, Ubuntu, and Facebook.
Apple was nowhere near the behemoth it is today when the iPhone was introduced. A company shouldn’t come under government scrutiny because competitors failed to execute.
If app makers don’t think the trade off is worth it, they are free to only target the other 80% of the phone market.
I guess they think selling loot boxes with Apple taking a 30% cut is worth it. Don’t be mistaken, that is where most money being spent on the App Store is being spent - on in app consumables.
The other major market is subscription to third party services and companies can and do sell those outside of the App Store.
The whole issue is that you shouldn't have to succeed in the phone market before you can operate an app store. Tying the phone to a specific app store is the problem. "Integrated experience" is the argument Microsoft failed to convince with when it tied Internet Explorer to Windows.
> If app makers don’t think the trade off is worth it, they are free to only target the other 80% of the phone market.
In other words, Apple has a monopoly over 20% of the app customers, in the same way that Charter may have a broadband monopoly in 20% of the country even if there are other providers in the other 80%.
Notice that this isn't the same thing as saying that Walmart has a monopoly over its own shelf space, because customers can trivially switch from Walmart to Amazon or vice versa at any time but to buy a $1 app from Amazon or Google Play instead of Apple you would first have to replace your $1000 phone. To reach the same position as Walmart, the issue isn't that they control what's in their own store, it's that there are no competing iOS app stores.
Moreover, the problem with the App Store isn't just that Apple takes 30%, it's that they can reject your app for entirely opaque reasons without recourse, explicitly including because it competes with one of theirs.
I can walk into any mobile store and have a choice between dozens of phones. Most people can’t choose their homes internet service provider.
Notice that this isn't the same thing as saying that Walmart has a monopoly over its own shelf space, because customers can trivially switch from Walmart to Amazon or vice versa at any time but to buy a $1 app from Amazon or Google Play instead of Apple you would first have to replace your $1000 phone. To reach the same position as Walmart, the issue isn't that they control what's in their own store, it's that there are no competing iOS app stores.
People can choose whether they want to spend money on an iPhone or an Android phone knowing the trade offs just like people can choose whether to buy an Xbox or PS4.
it's that they can reject your app for entirely opaque reasons without recourse, explicitly including because it competes with one of theirs.
Seeing that there are competing products for everything that Apple sells, this is a boogeymen that doesn’t happen anymore than it happens for the console makers.
You do realize that no software can be sold for consoles without the approval of the console makers - including physical sells.
No, but they can choose their home, which is the relevant analog. If you don't like Charter, just move to another city. If you don't like the Apple App Store, just buy another phone.
If the thing you have to buy to get a choice costs 1000 times more than the thing you're choosing, it's not a real choice.
> People can choose whether they want to spend money on an iPhone or an Android phone knowing the trade offs just like people can choose whether to buy an Xbox or PS4.
"People can choose whether they want to spend money on a house in Charter's service area or Comcast's service area knowing the trade offs..."
And it being no different for consoles only means that the same rules should apply there as well.
> Seeing that there are competing products for everything that Apple sells
What is the competition for Safari then? Notice that "Firefox" on iOS isn't even real Firefox because Apple requires it to use Safari's engine internally.
Also, the App Store is an app.
Yes it was one of the deciding factors when I bought my house was the internet service available.
But if I don’t like Apples policies it’s a lot easier to buy another $500 phone than a $400K house.
What is the competition for Safari then?”
Opera Mini....
Also, the App Store is an app.
Apple “sells” the App Store?
If Facebook were to lock Apple users out of new critically important Instagram filters because they wanted to sell the FacePhone. One could argue that they shouldn't be allowed to abuse their market position in social media to make unfair inroads in the phone market.
IMO, these things are hard to regulate, and most of our walled gardens are surprisingly interoperable :)
This is not true, despite being repeated extremely often. See https://en.wikipedia.org/wiki/United_States_v._Alcoa
I think the modern test is is it possible for someone to compete with Amazon? Costco and Wallmart certainly do. If you break up Amazon, I think online retail will just move to the next biggest player.
> A monopoly (from Greek μόνος mónos ["alone" or "single"] and πωλεῖν pōleîn ["to sell"]) exists when a specific person or enterprise is the only supplier of a particular commodity. [1]
1. https://en.wikipedia.org/wiki/Monopoly
The legal definition implies a tremendous advantage such that consumers would have no alternatives if the company raised prices:
> courts ask if the firm has "monopoly power" in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices [2]
2. https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
I don't think Amazon can raise prices substantially without negatively affecting their market share. Costco, Walmart and Google Express are big enough players that they could handle an increase in volume if Amazon tries to raise prices beyond what the market is willing to bear.
As a followup, should that definition remain the legal definition of a monopoly? Do we need a modern appraisal of that definition?
While having a huge market share is a given in such a situation, it's nonetheless not the definition
For vendors, the situation looks different - and Amazon certainly does abuse their position towards vendors often enough, e.g. with the AmazonBasics program where they take bestselling stuff, produce it at Amazon scales and then outprice the "competition".
All use sales data to determine what sells best and copy it. I did this for a decade, designing store brand medical devices for all the major retailers.
There are plenty of legitimate critiques of Amazon. The "private label" one is by far the weakest.
With physical retailers, I have to hope I can convince the retailer to stock it, often have to pay up front for shelf space, and then have to continue to pay co-op fees for advertising services of dubious value.
Moreover, with Amazon, I know exactly how many units have been sold at any time and have the ability, for a fee, to get feedback from the buyers. With retail, you only get a rough estimate of sales, usually lagging by a quarter, and have no easy way to survey buyers.
I'm not saying that Amazon is acting like a great corporate citizen, but having worked with Amazon and most of the major national retailers, I'd take Amazon in a heartbeat.
It might be that personalization is in effect here (or some sort criteria), but I sometimes would like to better filter marketplace offers I don't even trust.
Amazon controls a large but minority of pretty much any market their in, until you start making smaller and smaller market definitions to the point of being ludicrous. As such, not being a monopoly, they're perfectly fine to do all this they want.
I believe Warren's argument is that Amazon is abusing their position as the marketplace platform owner by listing their own goods at prices that undercut marketplace retailers.
And then the argument is that the marketplace (where it is easier to get listed) should be regulated more than the retailer (which often uses control over sales to push prices up)?
I'm not onboard with this.
How profitable is Amazon Basics anyway? I bet it's small numbers. If dropping it was enough to get regulators to go away, I bet Amazon would drop it in a heartbeat. Other aspects like Prime and AWS are worth fighting over, both in terms of their value to the company and their potential to harm markets.
In many cases, the Amazon Basics products compete with essentially brandless (or relatively unknown brand) importers. The Amazon Basics brand works in these cases by having significantly more credibility than (insert random name here) USB cables.
Its really the opposite way that store brand products have worked with traditional products in B&M stores, where the branded product generally has a higher natural reputation.
That's not actually how retail works. Products are shipped to stores first, then are sold, and only 1 to 3 months later are the vendors paid.
Unsold products are simply returned with no risk to the store.
On top of that vendors will PAY stores for better shelf space, and will even be willing to stock the shelf, for free, for the store.
Whos books the capital sits on while its in a warehouse is absolutely the most arbitrary distinction in all of this. Amazon provides warehouse space, and the product provider takes the risk of unsold product. Its a fair trade that allows exposure companies wouldnt otherwise get, unless they convinced amazon to BUY their stock.
If anything is anti competitive, its walmart/apple etc forcing companies to drastically ramp up production, and then leaving them high and dry unless they accept low ball offers. It's exactly what Apple did to GT Advanced Technologies (forced a furnace company to turn into a manufacturing company, a deal they "couldnt refuse", and when they backed out / failed to deliver the company ended up ~90% smaller.)
What would it take to sell that product at Walmart?
What would it take to sell it on Amazon?
So Amazon might preference another product, while Walmart both preferences other products and doesn't even accept most. Walmart preferences other products online as well.
Yet Amazon is a monopoly? So if Amazon greatly restricted their product offering, they are good to go?
I'm not certain why we seem to be debating the merits of Walmart versus Amazon. I would be willing to venture that Warren supports regulations and potential antitrust action against Walmart, too. Just because she's proposed antitrust action on one type of organization doesn't mean she won't also support another - indeed, she wants the same of many organizations on Wall Street, and previously sponsored legislation to regulate Walmart to prevent poor labor practices [0].
[0] https://thehill.com/policy/finance/224535-warren-puts-pressu...
Totally agree. The reason I bring up Wal Mart is to illustrate how this is essentially click-bait legislation.
Wal Mart tore through main street providing retail space for products they liked, also making their own versions and selling for much cheaper, preferencing products, etc. Dominating the marketplace and forcing businesses to close. We called that good capitalism. To my knowledge, Warren has not submitted or voted on a bill in her tenure to break up Wal Mart.
However now we are presenting Amazon as a unique type of problem and asking to break it up. With the one chief difference being the perception of fairness in presenting products equally because you can upload the listings yourself and it's on the internet.
I'm just trying to figure out why these relatively young, trendy companies, instead of a whole host of other monopolies that are far more important.
If the legislation comes down to semantics around an internet "marketplace" vs a retail store, then that begs another question of whether or not that is actually fair, and what the functional difference between the two actually is.
Basically, it's not a problem if you happen to be the best in computers. But it's a big no-no to try to force resellers into exclusive contracts and so on. (If you continue to just buy up newcomers to the market that's not a problem, after all investors can just keep funding new competitors and you have to waste money.)
But of course this is a very difficult problem at the intersection of economics, politics, law and sociology.
However, as search becomes increasingly important in our lives, and as past search data becomes more important to ranking algorithms, Google might be at a point where no company ever stands a chance to compete with it.
By using Google, you make it better. It's already the best, and it already captures 85%+ of searches. How is anyone ever going to compete?
Bing even offered to pay people money to use its search engine for a while, and still it got hardly any traction.
I don't think Facebook's and Google's monopolies are too concerning other than the impact they have on online advertising. Google basically made CPC ads 10x more expensive like 10 years ago, and ever since, that's been the price of a click.
Facebook having a monopoly on social advertising clearly had no interest in starting a price war with Google to win ad dollars. They compete in separate spaces. They can each charge a premium.
I'm not sure that this, in and of itself, is a problem. Someone has to be the best, and google's product will still be the best even if you break the company up. It's not as if people will start using bing if search were broken out into a separate company; if anything I'd guess that it might increase market-share as that new company would put all their efforts into making search better rather than on broader initiatives that cut across google as a whole.
Google’s monopoly is on resources required to be a search competitor. It has a giant stash of patents related to search, and it also has an enormous collection of historical data that can never be obtained by a new competitors. On top of that it continues to extract behavioral and structural data about both users and the web from things like analytics, Android, etc. with gigantic reach.
These are gigantic barriers to entry and Google created them.
Now it’s reasonable to argue that there they did nothing insidious or unfair in order to create them.
However just because they didn’t do anything evil to create the barriers to entry they now enjoy doesn’t mean they didn’t create them or that they now enjoy a monopoly position as a consequence.
Patents are not an antitrust violation. Breaking up google doesn't revoke their patents.
> On top of that it continues to extract behavioral and structural data about both users and the web from things like analytics, Android, etc. with gigantic reach.
Breaking up google doesn't mean all this insight disappears. We need better data privacy laws to address this.
> These are gigantic barriers to entry and Google created them.
You haven't described a barrier to entry, you've described a product that is so far ahead of the rest of the market that it's difficult to compete, but there is nothing preventing a competitor from giving it their best shot. If somehow a group of genius polymath programmers developed a superior search product, nothing about google's current business practices (besides brand awareness) would hinder their success.
I have clearly described multiple of those. It’s not just difficult to compete. It is impossible for competitors to acquire the insight that Google has amassed, since it is based on historical data that is not available anymore.
Breaking up google wouldn’t make this insight disappear, but the fact that you acknowledge it exists proves my point that barriers to entry are present.
Your claim that I haven’t described a barrier to entry is therefore false based on the implications of your own statements.
I am not arguing that the remedy should be the breakup of Google, and your complaints about that remedy are irrelevant to what I am saying, and do not refute the contention that Google is in a monopoly position.
Nevertheless I am arguing that Google has critical resources that cannot be replicated by this mythical group of genius polymaths because they are now owned by Google exclusively, and that this is certainly a consequence of their market position, power and business practices.
It is ridiculous to suggest that the only thing preventing this is ‘brand awareness’. It’s hard to believe you are serious about that.
This is 100% incorrect. By that definition every company's private source code is a barrier to entry for their competitors. Clearly this is wrong.
> It is impossible for competitors to acquire the insight that Google has amassed, since it is based on historical data that is not available anymore.
I'm sorry but you are just plain wrong about what constitutes a barrier to entry. "The product is so advanced that nobody can compete" is not a barrier. "All you have to do" is produce a better product; just because that is hard does not make it a barrier.
> I am arguing that Google has critical resources that cannot be replicated by this mythical group of genius polymaths because they are now owned by Google exclusively
I am just going to repeat myself with emphasis since you don't seem to be understanding that patents are not an antitrust violation. I am going to repeat it again: patents are not an antitrust violation. If you want to discuss the ethics of software patents that's a different topic where I likely agree with you, but within the context of anti-competitive behavior owning patents does not qualify. By your logic I suppose you want to break up Tesla since they are a market leader with a massive patent-warchest. If not, why not?
> it is ridiculous to suggest that the only thing preventing this is ‘brand awareness’.
This is a misreading of what I wrote. I'll assume it wasn't deliberate. What I said was that if a group of engineers produced a better product, the only thing that would prevent their product from being successful is google's ubiquitous branding, there is nothing about google's business practices that would prevent a superior product from being successful. Your argument is that google is so advanced that nobody can produce a superior product, but even if thats true, producing a superior product is not anti-competitive.
Nope.
In the case of source code, a competitor has just as much opportunity to solve the same problem in either the same way or a better way.
In the case of data which is no longer available, there is no equivalent way to reproduce it. You either took advantage of it when it was available, or you never can.
These are two different things. Google’s code may be replicable, but their data and access to data are not.
You place "The product is so advanced that nobody can compete" in quote marks as if it’s what I’m saying, but in reality, nobody is saying this. It’s just a straw man that you can keep railing against, as if it’s what other people are saying.
You can repeat your misunderstandings again and again with additional emphasis if you like.
Same is true of google source code.
> In the case of data which is no longer available, there is no equivalent way to reproduce it. You either took advantage of it when it was available, or you never can.
The data is available through the same mechanism that google used to acquire it, i.e. by tracking user behavior; it's a common practice for just about every business with a web presence.
> Google’s code may be replicable, but their data and access to data are not.
True of literally every software company.
> It’s just a straw man that you can keep railing against
It's not a straw man, it's your semantic equivocation in order to make the claim that tracking user behavior to improve the product is somehow disjoint from the product itself. Based on that reasoning we should stop every company from tracking user behavior because that somehow creates a barrier to entry for their competition.
Before you move the goalposts any further away from patents into data collection, any answer for my Tesla question?
It seems like you have a problem with basic comprehension.
You say “Same is true of google source code“ as a retort to my first paragraph. Can you not see that I am actually saying that? Notice that the first two paragraphs are actually connected as part of an argument.
The argument is that although a competitor can potentially produce code that competes with Google’s code, a competitor cannot collect historical information about the web and searches.
Why do I say they can not collect this information?
Because it’s historical - i.e. it was available in the past, but is no longer available.
Google has the advantage of having not only a huge head start, but all the data available up to how about the structure of the web and user searches.
Patents are a separate issue, I did mention them in my original post, but it doesn’t matter whether we agree or disagree on that, since there it only takes one barrier to entry for you to be wrong.
Google isn’t just an algorithm.
It is also data. Data which is not available to competitors because it isn’t present anymore.
Your statement that we should ban user tracking is another example of you creating an absurd remedy as a strawman.
Nobody is proposing that remedy.
That doesn’t mean we have to deceive ourselves into believing that there are no barriers to entry to compete with Google.
It's moving the goalposts because when I countered the argument you dropped it, ignored it, and redoubled on data collection.
> Because it’s historical - i.e. it was available in the past, but is no longer available.
Every company that collects data collects "historical" data.
> advantage of having not only a huge head start
A headstart is not a barrier to entry for your competitors.
> all the data available up to how about the structure of the web and user searches.
Data collection is not a barrier to entry for your competitors. Google isn't stopping you from crawling the web to determine its structure. Just because google collected data on user searches in the past doesn't mean you can't collect data on user searches on your own platform today.
> Your statement that we should ban user tracking is another example of you creating an absurd remedy as a strawman.
I did not propose it as a remedy, it is a deliberately absurd conclusion meant to illustrate the flaw in your reasoning, i.e. the fact that every company collects user data and nobody ever views that practice as barrier to entry for competitors.
> That doesn’t mean we have to deceive ourselves into believing that there are no barriers to entry to compete with Google.
For someone that deigns to project insults about reading comprehension you sure are bad at it yourself. Re-read what I wrote. I never said there are no barriers to entry, I said that google's business model does not create barriers to entry for their competitors. If we're using every single competitive advantage as an example of a "barrier to entry" then the term is meaningless because it applies to every market leader.
But earlier you said:
> ‘All you have to do" is produce a better product; just because that is hard does not make it a barrier.’
Which is it - are you claiming there are no barriers to entry, or do you concede that there actually are?
As to your dismissal or the argument about collecting data. That’s also a false comparison.
Lots of people collect data yes, but they don’t have what Google has, and they aren’t trying to use it to compete with Google.
It’s not relevant, and it’s another example of you creating a straw man.
The point is that the corpus that enables Google’s search quality to be so high is not available.
Just thinking out loud, really.
Amazon has 70%+ market share in many sectors of retail, such as books. But because it's only a fraction of their business, it seems like nothing.
Which are both free products/services. How do you have a monopoly on a freely provide service? They have a monopoly on the supply (eyeballs) of the digital advertising market.
But Andrew Yang could end up making waves here. His approach seems more productive - proposing a VAT on big tech and a "Freedom Dividend".
It is sort of admitting that tech has “won”, but the power of data at scale is imo fundamentally a part of reality and denying it in the US just means China will develop AI technology faster.
Either way I’m glad to see these ideas being discussed more broadly.
The article may seem like nitpicking the history of Bing and Google at the beginning of his article. However, if one were to read through the whole thing, he is showing how Warren is coming from an inadequate frame to make an effective policy. The author analyzes this from the Aggregation Theory he has been working on for years throughout other articles on his blog.
The biggest takeaway is that, the FAANG aggregators get their market power because consumers voluntarily use their product. While promoting competition can help a market, the current US standard for antitrust is around consumer welfare, and modern-day aggregators do no meet that standard. The concern here is that developing antitrust policies without addressing these deeper concerns will not solve the problem (dominant companies that grow increasingly more dominant over time), and may end up exacerbating it.
To be honest with you, I didn't read the whole thing. Instead of spending many screens of texts in the beginning to show how Warren's wrong, the author could instead promote his own theory right at the start, then we will have a better idea where he's coming from. Right now, from the structure of his writing, it feels nitpicking.
However, according to (what I understand) as the author's frame, there is a fundamental misunderstanding of how the tech companies gained power and market dominance. The nitty gritty details about Bing and Google was meant to demonstrate that.
Also keep in mind: this author has been writing a blog related to Aggregation Theory for a long time. Years before Warren had raised this issue to the nation. He had analyzed each of the FAANG companies, including Amazon, in depth. Many of his readers would already be familiar with Aggregation Theory. The key insight here is that the FAANG companies are not like the monopolies of the old.
These are probably a better introduction:
However, as a bit of schadenfreude, its nice to see the leftist big-tech receive the unintended consequences of their beliefs.
Sadly, the realities is that they will just hire ex-regulators as 'consultants' to help enshrine their businesses into quasi-state protected monopolies.
You are being charitable to the author. Usually Stratechery articles are decent, but on this one, the author has many ignorant remarks.
> Bing
Microsoft, if not checked with antitrust investigations, could have shoved Bing (or Live, or MSN Search) down everyone's throat. Just like Google tried to do with Google+. So to credit Warren's point, without antitrust case, we could be living with Bing (or Live or MSN Search).
> of course a browser should be bundled with an operating system; a new computer without a browser would be practically useless (for one, how do you install a browser?).
Hasn't the author heard of floppy disks or CDs with software, which was the popular way to install softwares in 90's? In fact, without Microsoft's free offering, browsers could have remained a software worth paying for and we wouldn't be living with an almost monoculture.
> Google would have emerged with or without antitrust action against Microsoft.
I read a wonderful article a while back, which stated that the real effect of antitrust on Microsoft was that every minor decision was heavily scrutinized internally, with lawyers vetting the major decisions, thus dampening the velocity of the company. So it is debatable whether Google could have emerged without the antitrust lawsuit.
Bing started in 2009. Google was already amazingly dominant at that point. What did the previous antitrust cases have to do with Bing's success or failure?
Where Warren says "America’s big tech companies have achieved their level of dominance in part based on two strategies: using Mergers to Limit Competition,..." he argues that they achieved dominance by making good products and were already dominant when they started making major mergers, and that Warren doesn't understand this.
It sounds like he's missing the whole point here: google, amazon, and apple of course did achieve dominance by making a good product, but then they leveraged that dominance over one product to dominance over the whole tech sector with a combination of more good products and anticompetitive moves. Warren does not argue that companies that make good products shouldn't be allowed to get big - just that they should be scrutinized and not allowed to make anticompetitive moves. Indeed, all of the tech companies she has proposed breaking up would still be huge companies with "dominating" products (including control over their respective platforms - search, app store, amazon store); but hopefully the ecosystem on those platforms can flourish without competition from the platform companies.
Amazon and online purchases, again, there are so many choices that you never ever have to visit Amazon to buy anything. If they were preventing resellers from selling elsewhere then we would have an issue. Like when Intel was trying to force Dell not to sell AMD. Amazon is in truth their own worst enemy now with so many bad products that venturing off known brands is a risk.
She is doing what politicians do best, using resentment, jealousy, and more, to gain more power and money. Not just at the voting booth but by intimidating companies into contributing more the PACs and political campaigns. We see this all the time and sadly people buy into it because using market tested phrases has become standard operating procedure for politicians. They pay to find out how to divide people.
An example of why PACs are truly bad is a recent political office run revealed that one candidate, who could not see fit to pay their taxes on time, nor their school loans, had been on the part time pay roll of a PAC for nearly 200k a year. Seriously, you want to see how politicians roll in the money look how the shake down really pays them.
Perhaps it is better to learn about Elizabeth Warren's history and check publicly available data about her funding before throwing up your hands and lazily announcing that "both sides are the same"? [1] Alphabet employees gave her almost $50k but the company itself has given her nothing, through PACs or otherwise. In the 2018 cycle, she received less than 1% of her campaign and leadership funding from PAC sources, with less than a third of that coming from business PACs (grass roots orgs like Emily's List make up the majority).
Her entire career has been built on doing the exact opposite of your allegation.
[1] https://www.opensecrets.org/members-of-congress/contributors...
The main issue with the App store (in terms of antitrust) isn't one of consumer choice but rather of taking advantage of network effects to enable rent seeking behaviour. App developers face little real choice, this inhibits the development of new app markets which would otherwise create value for consumers/developers beyond the value lost by Apple shareholders. It's economics 101.
> She is doing what politicians do best, using resentment, jealousy, and more, to gain more power and money.
If these were her goals she would surely fair better with a carrot rather than a stick (tax breaks perhaps). Her current proposals would drive business owners to support her political opponents - hardly a recipe for power and money. The proposals may be somewhat symptomatic, but it is a far stretch to conclude the agenda which you outline.
You seem to have a misunderstanding about the purpose of antitrust regulation. It is not simply a matter of consumer choice or outcomes (a widely perpetrated view) - there are considerations of prices, coercion, competitive barriers and other outcomes, not only for consumers but for competitors, suppliers, workers, investors, citizens, etc.
Even when there is no evidence of a company actively exerting market power regulators still need to consider the potential that they might do so in future.
If Apple could rely on network effect alone then they could have a hidden setting to enable 3rd party apps to run on the device like Android does. The retort to this is that you're increasing the attack surface of rogue apps but I don't buy that personally.
https://www.cnet.com/news/just-as-critics-feared-fortnite-fo...
it might be a minor detail but it absolutely breaks how operating systems and deep links work if i cant set file and protocol associations. Im FORCED to either use Apple Mail OR avoid clicking email addresses and physical addresses and copy and pasting them into fields instead. Like I said, a minor detail on the surface, but I would argue massively anti competitive. Same goes with Microsoft forcing edge on people with alternative PDF viewers, or asking ARE YOU SURE when you try to switch default browsers. you should not be using your operating system position to force first party apps on people trying to switch. promoting them at the top of the app store list is one thing (which we can argue about being competitive cheating or not) but disallowing alternate defaults or dark ux patterns to trick users into new defaults is absolutely scummy.
Amazon has complete dominance over books in the US and are on their way to abolishing book ownership outright.
Amazon is abolishing book ownership because they invented a better way to read books (kindle and audible). How is breaking them up going to make people want to own books again? The only way that would happen is if you make kindle and audible worse. How would that help society?
This is hyperbolic. There has been a resurgence in small bookstores, and Amazon sells quite a few physical books themselves.
I fail to see how you see the above scenario as some flavor of monopoly.
The problem here is that Warren was arguing in either ignorance or bad faith by implying these orgs need to be broken up because they are too big or monopoly’s. They are neither. I could sit down today and create a new Facebook, Instagram, or Amazon and release it. There will be no consequences or jackbooted thugs coming to shut me down.
Just because you don’t like something doesn’t mean you should be able to use scary words to shut it down.
The reality is that people like Warren want to dictate winners and losers in the market. If you feel privacy or business practices aren’t to your liking, you don’t have to use Facebook or Amazon. Don’t like that Google is censoring (or not censoring) something? Use Duck Duck Go, or Ask. But don’t pretend to be Teddy Roosevelt when you’re really just trying to project your personal biases on the market.
Even where market power is not being overtly used to stifle competition there are strong and well established economic arguments for why the breakup of large incumbents can be net beneficial.
Regulation can also cut both ways - one of the main advantages enjoyed by large incumbents are barriers created by regulatory capture (e.g. regulations like GDPR) - small businesses simply do not have the resources to comply and remain competitive. In a sense all regulation has an element of picking winners - to dismiss it on this basis is foolish/disingenuous and completely mischaracterises the debate.
The point is to realise that corporations are private/public institutions and there is a trade-off in interests between the parties involved. Regulation is the art of balancing these interests at the socially optimal level.
Look at what happens when a state officially becomes purple. The amount of money that flows in to make it go one way or the other is sickening.
One thing I didn't get about Warren's comment was her assertion that if you provide the store for others to sell in you aren't allowed to sell because you have access to data and product placement that gives you an unfair advantage. Okay according to that line of reasoning Wal-Mart and all major grocery chains should be broken up because they all sell private label merchandise. Or none of them should be allowed to sell private label merchandise because they can give it the best placement and know which products are best to make. Obviously that argument quickly falls apart because a consumer who goes to a grocery store is quickly going to become frustrated and go elsewhere if all they can find are the store's own versions of products that they are shopping for. Amazon and Google have demonstrated a very clear understanding of this since they started, knowing that giving the customer what they want quickly and conveniently is the most important thing. If it happens to be Amazon's own brand of duffel bag or Google's own restaurant reviews based on the search then so be it. But I seriously doubt Google is withholding Yelp results to be anticompetitive. The far more likely explanation in my mind is that a searcher would rather see a Google Map with all of the restaurants and pictures and reviews quickly and reliably and Google knows that. That they might profit by it is a happy accident not because they control the means of search. Sooner or later the better product experience is going to win out regardless of whether it is made by Google or somebody else. Google has tried for a decade to compete in social and has failed despite having far greater resources for most of that time.
In short, I think "monopoly!" is a convenient scapegoat for the Yelp's of the world so they don't have to admit that Google simply built a better product experience than they did.
The entire reason for almost any investor backed company to exist is to be acquired. You don’t have to look any further than YC. In its entire history only one company that it has invested in has ever gone public.
I mean the core of the whole idea is that no one should both control the platform and simultaneously participate in it. Is the author against that? The pushback seems to be that it would lead to lawsuits which is almost a cliche from anyone trying to dismiss an idea.
Maybe, just as one idea, new anti-network effect legislation is the right way to attack monopolies of the present and the future.
He agrees with her for raising this, and does think that some regulation should be in place, but sufficiently understanding the underlying nature of the problem is important to do less harm than good.
Government, like medicine, means making decisions based on insufficient information. More and better information should be preferred, but it's important to recall that doing nothing is also a decision. Its being a default decision does not make it exempt it from the possibility of doing more harm than good.
We want to make the best decision possible, but that needs to take into account that any multi-dimensional problem is easily diverted into taking no action even when there is widespread belief in favor of some action. "Belief" is one of the ways we cope with the absence of information: we just ask people and do what the majority wants. So it's very easy to take a complex problem and present multiple competing solutions, any of which would be preferred by a majority but no one of which will be the single best choice for more than half.
Sorry that that went into an abstraction, and you probably know all that. It just raises a red flag for me when somebody says "It's complicated" but means "Well, not doing anything just happens to suit me, so I can continue to declare that it's complicated indefinitely, because it is."
First phrase: "Senator Elizabeth Warren deserves credit"
Rest of article: Giving Warren no credit, merely quoting her proposal and refuting parts of it.
It's clear this is a proposal, it's like Green New Deal or Medicare for All. There's almost zero chance anything like these policies would not get heavily changed in a legislative process. Politicians just release these to market themselves and guide the policy discussions pre-election.
If the choices are ”we must do something, even if it’s the wrong thing” (a fallacy) and doing nothing because we aren’t sure - I prefer the latter. Anyone with government experience should understand this.
In this case, the truth is Warren isn’t sure. No one is. This entire thing isn’t Standard Oil, it’s just a hollow campaign bulletin point to get her name used.
”Let me reiterate a point I have made twice now: I appreciate Senator Warren raising these issues; they are indeed critical not only for the world today, but also the world we wish to create in the future."
And
"This is why I have called Facebook’s acquisition of Instagram The Greatest Regulatory Failure of the Past Decade, and called for an end to social networks being allowed to buy other social networks."
The article does raise an interesting point though about not thinking of these companies as "tech"; the Amazon argument can be applied to any private label I guess, hence the point about unintended consequences.
It is an interesting concept though, almost like the logical extension of the net neutrality argument. DirecTV, HBO and ATT merging would be something that directly runs foul of this. You either get to provide the platform (be an ISP) or be a content producer, not both.
Is she going to stop physical retailers from having store brands that “compete unfairly”?
https://techcrunch.com/2018/10/15/sneaky-subscriptions-are-p...
That's not the point. The point is that Netflix, HBO, Spotify, et. al. have to pay the 30% Apple/Google tax while the movie, music, etc. products from Apple/Google don't.
Warren's proposed rule is, effectively, you can produce something or you can sell something, but not both. Apple would need to decide if they want to be an app maker or an app seller.
However, US monopoly law is based on consumer harm, so...
I think on a mobile platform, with plenty of competition to not buy an iOS-based phone, a walled garden absolutely benefits consumers more than it hurts. There is so much PII on phones now. Given the total lack of InfoSec knowledge, especially at the mobile-user level, a walled garden is crucial: see every Google Store vuln that hasn't hit Apple.
the harm isn't consumer oriented, since it's somewhat diffuse, it's about concentration of market power in the industry.
we could live in a world where you target one distribution platform, and phone vendors compete to police malware, but instead we have walled gardens that police content & economically lock you to their environments and don't even do a good job about malware
That's true, but that's not how anti-trust law works in the US unfortunately. It's consumer-harm based.
Also - having a security policy is different than taking a 30% cut of all commercial activity on the platform.
Hardware is a key part of security, too, but Intel doesn't have to run the marketplace.
https://politics.stackexchange.com/questions/8383/u-s-presid...
No, not entirely, but it absolutely can and does factor into one's decisions in life, including who to contribute to politically.
> I'd imagine the vast majority of people see their employer as the means to pay bills rather than a political entity whose goals they explicitly support.
The vast majority aren't the ones typically contributing to political candidates/PACS. Contributions tend to be from those with wealth, which are inherently not the majority. In this particular case, that wealth is at least in part derived from the employers these employees work for. It's also not coincidence that those higher up in a company, and thus more invested in the company doing well, are the ones getting paid more.
The fact that Comcast can institute data caps on broadband while offering a similar service, on-demand video over cable, without caps is absolutely insane.
Alphabet happens to be number 9 on your list, so what's your point?
The "Comcast" amount is $31K out of over $8 million, and is 100% from individuals, not Comcast itself.
You're implying Warren has been bought-off in some way, but your own link clearly refutes that.
Will you explain?
(It's Alphabet, parent of Google)
The list you linked shows the common employers of the individual contributors to her 2018 campaign.
I'm not seeing a significant difference here. They couldn't afford to say "no" because MS was so dominant.
Someone may want to revisit this argument.
1. The same way Netscape achieved its original dominance?
2. Integrating a browser engine with the core operating system increases security...how?
In particular, how process isolation and Just-In-Time compilers work. Since mobile phones are extremely resource constrained, there's a tradeoff between security and performance that is more difficult on mobile than on the desktop. That means the way things were sandboxed on mobile was different on the desktop.
For example, the ability to allocate memory that is both writable and executable, one of the features used by Javascript JITs, opens up a huge attack surface area. Apple basically solved this problem by making JavaScriptCore the only blessed Javascript engine able to do this, and for a long time, only Mobile Safari itself could leverage the JIT.
Granted, modern phones can relax this, but there's definitely benefits to controlling the entire stack. For example, some functions of the browser could leverage enclaves or enclave-like containers for privacy oriented calculations.
"...a new computer without a browser would be practically useless (for one, how do you install a browser?)."
He's confusing network access with a browser, which seems an atrocious mistake. You don't need a browser to support http:// links in the OS.
When I read this, I realized that no computers can have browsers!
We see this here, with fans of Warren saying getting things wrong is irrelevant, because we all know FANG is too powerful and she says it. Thus, quibbling over details is nitpicky pedantry. This tactic is also used by Trump fans, who keep telling us we must "take him seriously, but not literally", where any random nonsense he says is re-interpreted to hint at a larger truth.
In this world, Birtherism for example, has absolutely nothing to do with racism and we shouldn't be so nitpicky, because it hints at the larger truth that Obama's life-arch is very different from that of the average American, and they are thus correct to feel that he is more "foreign".
Whoever you support, you should not let your guy/gal off the hook like this. Once you start, there's no feedback mechanism to hold you back, you can justify any nonsense using only bits of clever rhethric.
It's worth asking which of those it will be because that is what determines how effective her efforts will be. It's not certain in my mind which one she'll do and as written her proposal does fail to account for some of the causes of the current crop of large scale goliaths in tech.
Also, you should go back to 2015/2016 and read the things said about Trump at the time. The idea that he'd hire a cabinet full of super competent people to run everything while he connects with people and sees the larger truth was very popular. Scott Adams is one of the people who took this line very seriously that I specifically remember.
This is part I find interesting. If there is a difference between the titans of now vs old, its that they behave like Kronos, swallowing any potential threat for fear someone may disrupt them as they themselves had done to the original mammoths, not brushing off the threat they know is there, no matter how small.
But, on a separate note, I think that the current anti-trust philosophy isn't equipped to deal with companies whose business isn't driven by physical products, or behaves a certain way in highly competitive markets (i.e. Apple).
Matt Levine often talks about how practically, modern anti-trust in the US isn't there to regulate bigness, but protect consumers via promoting price competition.
I can see that they have a lot of power, and some of the effects that power can have, I just struggle to see how potentially impacting the way these businesses operate leads to better outcomes for consumers and citizens as customers.
(Now, it's also pretty easy to imagine breakups going horribly horribly wrong for consumers, precisely because consumers are pretty happy with the state of play. I would hate paying for a calendar app at this point in history, and I would also hate having to comparison shop for one that didn't suck...)
I'm old enough to remember when Michael Dell said Apple could never compete with giants like Dell and should just dissolve itself and disburse whatever money it had left to shareholders, and almost every business pundit in the world agreed. (I'm sure Michael Dell could tell stories about pundits who said he could never compete against the giant among giants, IBM.)
I'm also old enough to remember when pundits said Amazon would never be able to compete with giants like Barnes & Noble and Borders (Borders is a company that doesn't exist anymore, but twenty years ago it was a giant — look it up).
I also remember when tiny little Google was nothing more than a feature (search, how boring) that giant Yahoo would obviously just buy or duplicate.
And I remember when Netflix's stock price was so depressed you could have bought the entire company for less than the production cost of one summer blockbuster, and everyone was sure it could never survive competing against Blockbuster.com. (Blockbuster is a company that doesn't exist anymore, but fifteen years ago it was a giant – look it up.)
It's obviously hard to compete with entrenched giants, but I'm skeptical of any notion that it's any different now than in the past (if anything, it's probably slightly easier these days).
And I know of no human who would be able to accurately price access to parts or all of their data. "Its just data. How much am I really worth?", is a common refrain. And then, well, its freeeeee....
For example, this paragraph:
> There is certainly an argument to be made that Google, not only in Shopping but also in verticals like local search, is choking off the websites on which Search relies by increasingly offering its own results. At the same time, there is absolutely nothing stopping customers from visiting those websites directly, or downloading their apps, bypassing Google completely. That consumers choose not to is not because Google is somehow restricting them — that is impossible! — but because they don’t want to. Is it really the purview of regulators to correct consumer choices willingly made?
The truth is that most consumers will not find alternatives because that involves much work and the platform putting the offerings just in front consumer eyes wins. Stratechery writes about this which is basically about UX, attention and search economy. Google, for example, is making users believe that they are showing the best results based on "an alhorithm" and not hardcoding parts if the results to benefit them. This is a kind of dark pattern that cannot be tolerated.
The reason people tend to use Google over Yelp as in his example isn't really choice, but a lot of times because people don't know. My mother as an example has no idea of the difference between Google and the internet, they are the same thing to her if Google promoted Yelp and other restaurant review sites over their own, she might use them, but she only knows what google shows her. This is a lot more common than people with an understanding of tech realize for the average consumer.
Google's business should be that, advertising and showing accurate search results. But they need people to stay on their pages longer, so that they get more ad dollars, so they start duplicating other popular sites to maintain the user's attention. They are in a position of power that no other company has, and when they decide they are going to compete with your idea, they have a completely unfair advantage, strictly because they have become, to many, the Gatekeepers of the Web. They also provide the most popular Web Browser, which defaults to Google. Think that's fair? Think the average consumer knows any better.
His discussion of the Microsoft Antitrust is also a little dumb, while a computer coming bundled with a Web browser does make it more useful, it was the way that Microsoft did it, to ensure their only competition had no real way of competing by using their dominance to make the web a IE only land. Proprietary Web API that only worked in IE that didn't follow the standard meant a lot of early developers only targeted IE because it was too hard or expensive to target Netscape too. This was the heart of the antitrust, and while Google may have emerged non-the-less, we would not have Firefox or probably even chrome and they Web would definitely not be what it is today, because Microsoft didn't foster innovation on the Web, that was thanks to Mozilla and other open-source browsers. The web might have eventually become what it is today, but most experts agree Microsoft is a large part of the reason we aren't farther ahead because they killed competition at the drop of a hat. The author seems to forget how bleak and shitty the web was when IE was the only choice and Microsoft didn't update IE from version 6 for almost 5 years, when they finally released the garbage that was IE 7.
Tech is a much different beast and while Warren could certainly use some help to clarify her reasons for wanting to break up these tech giants, she's not completely wrong either. However, big tech isn't where her focus should be completely. Comcast, ATT, Version. These companies essentially control the internet backbone and are monopolies in many areas. Consumers have little to no competition for how they get internet access and that's one of the biggest issues.
Even Microsoft itself couldn't reboot its browser (Edge) and compete with Chrome. And Chrome wasn't even a from-scratch rewrite, it was a fork of WebKit, which was a fork of KHTML.
There's no money in the creation and sale of web browsers, and given the tremendous engineering complexity in making a modern one, I highly doubt there will be any more "from scratch" entrants into the market besides Firefox, simply due to the fact that there's no great money in it, even for Microsoft.
Is anyone could to rewrite Unix from scratch and not use the Linux kernel or GNU userland (or BSD userland)? It would be insane. At best, people can fork and replace small pieces, like a JIT, or the Kernel, or UI.
https://birdhouse.org/beos/byte/30-bootloader/
Yet here we are, and windows is not at all the dominant consumer os, and is not the dominant general purpose os any longer.
Are you sure about that?
You can't just take mobile and give it equal representation to PC, servers, workstations, etc. It's it's own thing. Did Windows lose mobile, of course. Do mobile users exclusively use Android or IOS and not use Windows - no.
Not all people sit down to do work, and even those that do have more devices than they do desktops.
What's hard to disrupt is their amazing logistics network for delivering impulse purchases on the cheap and fast.
But while I have nothing but contempt for sponsored products, enabling Amazon arbitrage like it's eBay, and for deleting keywords to increase the size of search results because that defeats my spearfishing for specific products, it doesn't seem like something someone else couldn't build.
Start by addressing all of the bad customer experiences with counterfeit products, badly shipped items, and lousy customer support. What makes this difficult is that (beyond the challenge of execution itself) I don't think traditional venture-capital would invest in this so you have a chicken and the egg problem that I suspect will never be solved until someone manages to come up with a business model better than Amazon's at a time when Amazon is too large and inefficient to respond properly.
And I think they're getting there. I worked there for six years and left recently. I'm never going back. The culture in my opinion is horrible. And that's a second area where you could do better than Amazon and brain drain them. I'm sure there's more.
This seems like a FUD (fear, uncertainty and doubt) argument. How is breaking up a tech giant going to create more of these problems than breaking up AT&T did? We lived through that.
I care about being able to install an alternative browser engine on my devices.
I think the reason we're today debating the risks of large social networks and the tech titans in general is that there were finally enough voices of concern that we could no longer be ignored. That had to start somewhere, and it did. It started with a smaller group who have been raising concerns about these companies centralizing user data and surveilling on their users for years. So dismissing a potential future battlefield (browser consolidation versus browser engine choice) seems an echo of those who dismissed concerns about social network overreach five years ago.
That said, I personally favor promoting alternatives and educating people about those alternatives. I don't use Facebook and yet I am able to easily communicate with friends and family. Do I want to destroy or break-up Facebook? Meh, not really. I'm fine with Facebook simply not being a part of my life. That includes blocking its domains via DNS. Improving the ability for laypeople to fully block the various surveillance tools of these firms is where I'd like to see more effort spent, not in application of government power.
Looping back to the point above, the tough one right now is mobile: You either choose the surveillance apparatus called Android or the walled garden called iOS. There are some fringe options, among which Purism 5 looks particularly promising.
It's that if they are going to control the App Store they can't also participate with their own apps.
For instance, Apple Music, which has gotten over 50 million paying users not by being the best music app but by being pushed heavily by Apple as the platform owner.
In Warren's plan, Apple Music could not be controlled by Apple. It would have to compete in the App Store on its own merits.
Apple Music has more music, a longer free trial and integration with iTunes which lets you upload your own music and sync it to all your devices among other features. By one estimate it converts free users into subscribers at 3X the rate of Spotify.[1] That’s a sign of happier customers, not just being pushed by the platform. Worth mentioning they pay artists more too.
And what are you saying, Warren would let Apple run the store but would have to break off Music into a separate entity? All their other bundled apps too like Maps? I didn’t get that from the proposal.. and it doesn’t strike me as consumer friendly.
[1] https://bgr.com/2018/09/25/apple-music-vs-spotify-paid-subsc...
I'd argue that the main point of the article is to drive to first-principles: How did these giants get so big? What is fundamentally different about tech companies that makes current antitrust legislation ineffective?
Antitrust legislation and enforcement has had several "generations" of philosophy in the United States:
- 1890s-1970s Sherman Antitrust Act targeting American Standard Oil. In this era enforcement focused on how a company practiced its business, with a chief goal being maximal competition.
- 1970s-now After The Antitrust Paradox [1] was published by Robert Bork, enforcement shifted to "consumer welfare," with the chief goal being maximal welfare.
(Planet Money is currently doing a series [2] that covers this)
I believe Ben Thompson is advocating that a new generation of philosophy needs to begin, because "consumer welfare" cannot be directly applied to these companies, their unfair advantages, or how to prevent the next "wave." Indeed, their size is a direct result of their serving "consumer welfare" (ie, consumers choose them because their offerings are best).
Nitpicking or not, I'd prefer the result of the current discussion to result in actionable change, and I believe the points in this article (ie, the "nitpicks" it makes) are required for such a result.
[0] - https://en.wikipedia.org/wiki/United_States_antitrust_law#Th...
[1] - https://en.wikipedia.org/wiki/The_Antitrust_Paradox
[2] - https://www.npr.org/sections/money/2019/02/15/695131832/anti...
Bullshit. If you don't have VC investment under your belt, no corporation would use your services. I have seen this first hand. They refuse to deal with small bootstrapped players. It doesn't matter how great your tech is.
Consumers today are fat and lazy. Whatever small part of me is a consumer, I don't care about that part. We should care about producers and their right to participate in a fair and open marketplace. The biggest problem in people's lives today is not related to a lack of options in terms of what to consume, it is related to a lack of options in terms of what they can produce and how they can produce it.
>> Start with the most obvious error: Bing was not even launched until 2009
Actually, her statement makes perfect logical sense. OP is the one who doesn't understand history. If the antitrust lawsuits against Microsoft did not succeed, Internet Explorer would have been the only internet browser which could run on Windows (which itself was a near total monopoly in the personal computing space) and therefore, through their control of IE, they could have created Bing and made it the only search engine in the IE address bar. Maybe they could even have blocked google.com completely if it started to become a threat or maybe they could have added an overlay on top of google.com so that they could replace Google ads with their own ads... The possibilities of what Microsoft could have done to stop Google would have been endless if it wasn't for the antitrust cases brought against Microsoft.
If anything, her point is too clever and too insightful for some people to comprehend.
Basically Elizabeth Warren seems to actually understand how the world works and she understands the huge impact of goverment policy on the economy instead of pretending that there is no impact.
And to be clear, this applies to people who are pro-dismantling and anti-dismantling.
I’m much more afraid of government power than private corporations.
Markets would need to become more fragmented or more fluid to mitigate winner takes all. I don't have any notions on what to do about that.
Had MS not been pressured by anti-trust scrutiny, they may have bought out early search startups. Therefore, MS may have been "late" to search due to anti-trust pressure, and not because they fumbled, as the author suggests. (We may never really know because this would have happened inside of Bill Gates' head.)
Ironically, MS may have gotten its start by the fact that IBM felt pressured to make an open-architecture PC due to anti-trust scrutiny. Otherwise, they would have prefered to hard-wire their system for their own PC operating system (created or purchased).
Re: "of course a browser should be bundled with an operating system; a new computer without a browser would be practically useless"
Including and bundling are not necessarily the same thing. An OS can include multiple browser brands and/or make it easy for new buyers to install another brand.
Re: "but rather the entire web; what ties things together are not APIs, but links."
But standards are needed for links & browsers to work right across brands, and standards and API's are pretty much the same thing.
Re: "Google would have emerged with or without antitrust action against Microsoft"
We don't know that. See above.
Re: "Facebook was dominant before it bought Instagram and WhatsApp, Google before it bought DoubleClick or YouTube, and Amazon before it bought..."
True, but they were even more dominant after. It's a winner-take-all economy these days, reducing competition. They may have got big being good, but that alone is no guarantee they'll stay good. It's human nature to slack when competition fades. It's why the Gov't is not efficient. (Google Maps has been slipping in quality of late I've noticed.)
Re: "the app market on PCs died in large part due to security concerns"
Come again?
Re: "Google, Facebook, Amazon, and Apple dominate because consumers like them. Each of them leveraged technology to solve a unique user needs"
True, but once big they start using other tricks besides being good. Oligopolies and monopolies almost always jack up prices and limit choice once competition goes away. MS left blatant bugs in MS-Access for several years once they flattened the other desktop databases. Good capitalism is based on competition. Competition shrinks, and corporate jerkification and slacking goes up. They shift focus from making a better mouse-trap to keeping others out of the mouse-trap business.
Warren's argument may not be perfect, but lack of competition clearly stifles the market in my observation of several decades dealing with the likes of Microsoft and the big telecoms, let alone the history of airlines, IBM, AT&T, eyeglasses, etc.
The "Aggregation Theory" is perfect example of this. It's like the author is not aware that the idea he came up has not been under study for decades and has well developed concepts, terminology and research subject.
Immediately assume it is wrong, then work backwards proving it, using minute details.
Would be more interesting to assume we're doing it, then think through the consequences. Or, define the stated end goal (fairer marketplace) and then see if the break up helps.
Super irony: In the NGINX gets bought by F5 thread, people complain about AWS being killer competition, ruining the market for open source.
The emotions here are also nationalistic, as it hits US companies. Breaking up Ali or TenCent would get a different reaction.