Elizabeth Warren’s simple case for breaking up big tech | Hacker News Reader

Elizabeth Warren’s simple case for breaking up big tech

vox.com

50 pointsluu53 comments

I would take Warren more seriously if she started out by talking about ATT/VZN/Comcast. The "big tech" companies have the potential to harm consumers, but telcos have been harming consumers for decades.

To her credit, she gets net neutrality: https://www.warren.senate.gov/newsroom/press-releases/senato...

"...under this administration the FCC has become a puppet for giant internet providers."

If she actually believed this, it would be a fundamental misunderstanding of FCC. FCC helps monopolies and hurts consumers because that is its purpose, since 1934. Neither Democrats nor Republics have ever done anything to change this. Net neutrality is a fine network policy, but it wouldn't need to be mandated by regulation if actual competition existed in this market. FCC throughout its history has acted mostly to prevent such competition.

That's an oversimplification that ignores the fact that spectrum allocation is useful. very few things in politics are completely black and white as you presented them.

By harming do you mean on price? Big tech has the potential to harm through externalities (privacy, control of the media, etc.). A sufficiently free market - with appropriate safeguards to ensure competition and prevent regulatory capture - tends to deal with price just fine, but not with externalities.

Warren's argument here is a straightforward free market one: free markets only work when there's a free flow of information. If Amazon both runs the market and participates in it, it's an inherently unfair playing field. Her argument is not that we should break up companies that we don't like or even those that hurt consumers; her argument is we should break up companies whose intact existence threatens the fundamental nature of free markets.

All that said, as it happens, she opposed Comcast's attempt to buy Fox https://thehill.com/policy/technology/396559-senate-dems-urg... and the T-Mobile / Sprint merger https://thehill.com/policy/technology/429618-dem-senators-ur... — opposing both on the grounds that they're anticompetitive.

Telco’s have harmed privacy by sharing location data tracking, and adding injections to web traffic

> adding injections to web traffic

to substantiate this point: https://news.ycombinator.com/item?id=15890551

The Amazon argument is that they shouldnt be able to sell a store brand and rank it higher than a competing third party product.

Should grocery stores and Wal-Mart not be able to sell store brands?

Should Xbox Live and Playstation Network not be able to sell first and third party titles?

I think the argument is stronger against hardware manufacturers locking down their devices to only first party app stores, than against regular shopping. If I buy a phone from Apple I can only run the apps they approve, and when they stop supporting the OS, the phone doesnt unlock and allow me to install my own OS. Apple can obsolete hardware by strongarming a lack of updates to crucial banking and communication apps.

As a foreigner, I'm amazed by how little weight Americans seem to put on international competitiveness. I mean, I guess I should be gleeful that you have presidential candidates that want to blow up the only companies that give you a competitive edge. But really, isn't Warren at all concerned that the ones to pick up the pieces after her plan is implemented are very unlikely to be American?

It seems like this sort of thinking would lead to a "race to the bottom" where every country gives maximum leniency to its biggest companies. I'm not sure that's good for anyone.

Exactly what we German did with the big automobile companies. It's incredible unhealthy. Once you start listening to their every whim, big corps start to rely on politics to solve their problems. Obviously it's then that they stop to perform, like a spoiled child.

Why do you think Korean companies are so powerful?

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

I wonder how "American" a multinational company really is, or what it even means for a company to be "located" in a particular country. A company probably puts its headquarters in the location where its executives want to live, where they think that they might be able to hire people readily, or something along those lines. Those things wouldn't be dramatically changed by breaking up the big tech companies. Where they pay taxes, if any, is already independent of where they are "located."

> I wonder how "American" a multinational company really is, or what it even means for a company to be "located" in a particular country.

The cynic in me thinks the acid test is whether the NSA can lean on them.

I don't see any obvious foreign competitors that would be likely to take over in the US and Europe.

As a very crude and not entirely accurate rule of thumb, large US corporations operate with a monopolistic mindset which is inherently developed-Western-going-on-global.

Competitive countries operate with a more explicitly nationalistic mindset which makes it harder for them to operate in the same market spaces in the same way. (Not impossible - just harder.)

And the language barrier will always be a problem.

So no - I don't expect non-US corporations to take over.

>So no - I don't expect non-US corporations to take over.

I do. Why not? It took a little over 2 decades to move the entire high-tech electronic supply chain to Asia, and now Apple couldn't manufacture iPhones in United States even if they wanted to. The problem is that at that scale, once inertia takes over, even if you see it coming there will be nothing you can do about it.

This exactly what I was going to say. Except not quite exactly as the words were chosen and arranged in a superior fashion.

If you go by net income on a tax return, or by taxes paid, none of the companies you're talking about are American at all. 0%.

You're also misunderstanding the effects and purpose of breaking up larger companies, which are: to restore and increase competitiveness.

>I'm amazed by how little weight Americans seem to put on international competitiveness

Embarrassment of riches. There's an attitude in America that being in the lead is just the default state because America has been a leader in tech for decades now. Meanwhile most international multinationals are jealously guarded and protected by their respective national governments and are seen by the respective populations as their national pride (e.g. VW in Germany)

A good example is the vilification of the Silicon Valley tech scene by local governments (looking at you San Francisco) while every other nation is desperately trying to recreate it within their own borders - because who doesn't want thousands of high-paying / high-tech jobs in their region? Or how Amazon had their new HQ driven out of New York by local activists and local 'progressive' politicians.

Embarrassment of riches indeed.

I mean...how is having one or two massive oligopolists (sp?) good for the US' international competitiveness? That seems to be something you just assumed would be true as given, which is odd. Yes, there will be less economies of scale, but on the other hand there will be more competition and innovation. The least innovative companies out there are major market makers who don't have to improve to grab that sweet sweet dollar. Like, is the US more internationally competitive because your internet provider is massive and charges you ever increasing prices for ever decreasing service? Clearly there are trade offs.

>> But really, isn't Warren at all concerned that the ones to pick up the pieces after her plan is implemented are very unlikely to be American?

Well Trump or whoever is the president then can instate a national security emergency and kick out that foreign company. I know this sounds like a broken record but it looks like this is how trade works now.

Yeah they might defend the domestic market by protectionism measures but they won't be able to do anything about international one.

It looks like they can. Look no further than Huawei and ZTE.

If being competitive internationally comes at the cost of exploiting workers then I don't want it and neither should any other modern country.

This feels like an masterfully written propaganda statement to me, made to sneak in a lot of hidden / unjustified assumptions and stir up feelings.

- As a foreigner, I'm amazed by how little weight Americans seem to put on international competitiveness will certainly rile up a lot of readers. Those who don't like the plan and thus disagree with it being equated as "American" just like that who don't think it will ruin everything.

- The second sentence overtly states "US competitiveness == Big companies (and nothing else)" while painting the politicians as intensionally harmful

- The last one again presupposes the plan to fail, and now also for it to necessarily crush the "post-breakup pieces".

- There also seems to be a general sentiment that non-american must be bad for America.

And this are just the ones I spotted. The post doesn't justify any of those. In a verbal conversation, this would certainly harmful to the exchange of ideas and likely be used by people wanting to further their agenda by driving the other side into defending positions (if lucky with those facts included). I hope the effects in text are not as bad.

We're just a few steps away from a dystopian future ruled by mega-corporations. Regardless of how competitive it might be, I don't want to end up there under any circumstance.

I think Warren is fantastic but I feel like her argument for Amazon is flawed and I'm curious to hear counter arguments.

In her example of Amazon being a platform and information aggregator, wouldn't a brick & mortar grocery chain like Safeway/Vons/CVS be guilty of the same anti-competitive practices when they sell "Safeway Brand Fruity Os" next to Kellogg Fruit Loops?

Businesses seem to have been able to be platforms and information aggregators for a very long time and we've had plenty of innovation and competition

IMO there's a difference of scale - Amazon has quasi-monopoly power in the "buying things online" space, so much so that e.g. Anker, which makes cables and chargers and competes directly with Amazon Basics, has no distribution channel other than Amazon.

If I make Unprovable Loops ("Part of this Turing-complete breakfast") and I'm not satisfied with the distribution deal I get from Safeway, I can always call up Von's or CVS or Target or Whole Foods or Walmart and see what they'll do, and in most cities there are multiple such options.

I do wonder if the problem here is inherent to being an online store. If there's a Safeway in one part of town, a new Walmart in another part of town will sell roughly as much cereal as a second Safeway. But if Amazon.com exists and is generally useful, why would people go to another site? So perhaps some of the traditional/historical safeguards against any one store becoming a monopoly on the market no longer apply.

Amazon e-commerce market share 2016: 38%, 2018: 49%

What's the US market share of the largest offline retailer?

Also, consider this chart: https://www.thebalancesmb.com/worlds-largest-us-retail-chain...

Walmart, Costco, and Kroger are bigger than Amazon in terms of revenue. (Kroger only just.)

> But if Amazon.com exists and is generally useful, why would people go to another site?

Why wouldn't they? What's stopping them?

I agree we may need to reconsider some of our laws to better take into account online behaviour. But Amazon should not be penalised for mere success. They ought to be penalised for abusing market dominance if that is indeed what they are doing. No abuse, no penalty. Questions about tax payments on the other hand… Amazon have nowhere near the quasi-monopoly in their sphere that Microsoft has in desktop operating systems, Google has in web search, and Facebook has in social media.

IMHO, your analogy is exactly correct and if Safeway was as big as Amazon, Warren would be calling for them to be broken up too.

On the other hand, maybe the analogy isn't good because safeway displays products side by side while Amazon can more easily promote their own products. Level on a shelf has much less effect than a product being out of sight at the bottom of a webpage or even the second page of search results.

Grocery store margins are razor thin though, they compete with each other a lot.

That’s not a reason to break the groceries or platforms up. Just ban them from producing their own brands if they’ve provided a similar competitor product for years. Although ironically, then the govt would be anti-competition

that's not how anti-trust issues are dealt with in the US, conglomerates are broken up so preserve the value of the existing buinesses but break the monopoly, not just legislating a business line out of existance, Bell telephone into a bunch of smaller providers for instance.

> IMHO, your analogy is exactly correct and if Safeway was as big as Amazon, Warren would be calling for them to be broken up too.

Walmart does this too and has double the revenue of Amazon. Warren has not called for Walmart to be broken up.

But as a percentage of their perspective markets Amazon is larger. The grocery/homegoods industries are very competitive. Think about how many alterantives you have to walmart.

How many places do you routinely go to order things online? How many places do you go for groceries? I bet you have at least three options. Walmart, Regional grocery store, and Target or some other alterative place like trade joes.

Amazon's ability to affect customer behavior is much stronger than walmarts I would argue.

edit: and maybe Walmart _should_ be broken up, just not as high visibility an issue.

> long time and we've had plenty of innovation and competition

I beg to differ with data:

https://concentrationcrisis.openmarketsinstitute.org/

Just pick industries industry and compare numbers.

Random example: Home Improvement Stores

2003: Market share of largest 3 Firms: 47%

2017: Market share of largest 3 Firms: 87%

Hilarious. The icon for the _entire category_ of social-networking-sites uses Facebook's logo. Unless I'm mistaken. No other category uses the logo of just one brand to denote its category. Now that's mind-share. Category penetration in 2012: 61%, in 2018: 70%. Oh dear, oh dear.

Do nerds remember back in the day when many were calling out for Microsoft to be broken up? Into two parts: OS division, and Apps division.

The idea was that time and again Microsoft's OS division would anti-competitvely design internal APIs in DOS and Windows that its App division would leverage. There were also instances where Microsoft subtley broke DOS (and maybe even Windows, but definitely DOS) for competing applications. People used to talk about "undocumented" API calls.

In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux. Microsoft helped a key competitor (Apple) off its knees and look where we are now – Apple has a mobile OS, Microsoft has none. Microsoft didn't board the internet/web train quick enough, didn't forsee how big search and social media would become (in fairness, a vanishingly small number of people did) and so now they have Google and Facebook to compete with. Amazon parlaying their experience from a building an at-scale marketplace to a cloud-computing platform took everyone by surprise.

Back in the day I lamented Microsoft's stranglehold on the software industry. They are still a behemoth but they no longer have the stranglehold they once had. Amazon has competition. Does Amazon unfairly leverage its marketplace monopoly to crush competitors? If they do, prosecute them. If they don't, out innovate and out compete them!

Will Google's stranglehold on search ever be broken? Maybe we'll have to think laterally. Like distributed open-source search. Will Facebook's hegemony over social media (FB, FB messenger, WhatsApp, Instagram) ever be challenged? Do we have the luxury of finding out in a decade or two like we did with Microsoft? Microsoft never amassed the data on their "customers" that Google and Facebook and every Tom, Dick, and Harry do now.

Of all these companies I intuitively feel that Facebook should be broken up. Into its constituent social media parts, that is. Either that or legally mandate interoperability so that we can move to a federated social media landscape to encourage genuine innovation and competition. We need the global equivalent of the ITU but for social media.

Amazon are scary but that's only because they are bad-ass. If they break the law, fine. If it turns out in a decade that it hasn't been possible to unseat or challenge the enormous tech incumbents with FOSS challenges then maybe we ought to take a serious look at the economics, social dynamics, and network effects involved.

edit: clarity

edit ii: could people who have downvoted my comment explain why please?

There's an implicit assumption in this argument that the law as it stands is fine and not in need of changes itself.

There are interesting differences between US, Chinese, and European anti-trust/anti-monopoly laws. You make a very good point that we should consider if the current legal need changing.

Definitely something is broken if Facebook can acquire not just Instagram but WhatsApp as well. One or both of those deals should have been blocked by regulators on at least one side of the Atlantic. And there's an argument to be made that Microsoft should not have been allowed to buy Skype.

> In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux.

Are you sure? Microsoft's monopoly was mostly on desktop PC operating systems, and almost all desktops are still running Windows. Most people have never heard of Gnu/Linux and wouldn't want or even know how to install it if they had. MacOS is exclusive to one luxury brand, and I really don't see it much outside of developers and college students.

At least there's genuine-ish choice now. Chromebooks, Apple desktops and laptops, Linux desktops and laptops. Not to mention that Windows has stiff competition in the server space.

But I take your point.

I think its a correct statement if you see Android/Chrome as having displaced Windows/IE as the way the majority of the word consumes the Internet/Web.

Sure, but the fact that the desktop became less important compared with mobile/web doesn't actually solve the problem of Microsoft having a monopoly on PC operating systems. Gnu/Linux is almost unusable for non-techies, not because it's deficient, but because almost all third-party software and hardware is built with Windows in mind, because that's what people get when they buy a computer.

In a well-functioning market, all you would have to do to beat Microsoft would be to make a better operating system. In the current market, to beat Microsoft, you have to make a better operating system, target a new category of device, and own one of the biggest companies and several of the biggest websites in the world.

> Either that or legally mandate interoperability so that we can move to a federated social media landscape to encourage genuine innovation and competition.

The Facebook API providing "interoperability" is exactly what got 100 million people's data leaked and a $5 billion fine from the FCC. These companies shouldn't be allowed to provide an open api, as we keep seeing there's no way to make it secure.

But… we know that federated systems can be at least somewhat secure. Do you use email?

E-mail is very far from secure. The overwhelming recommendation for private 1:1 communication is "use WhatsApp or Signal". But you're right that a federated and private 1:1 platform is possible /in theory/.

However Facebook, a 1:many communication platform, is likely impossible to federate while retaining privacy.

Email.

The postal service.

Telephone network.

None of which is secure, and e-mail is the least secure of all of them.

(Upvoted, even though I disagree with you.)

Yes, I still think that breaking up MS still would have been a good idea. It took three unexpected developments for MS to be as docile as it is now:

- The rise of Linux and F/OSS more generally. There are all sorts of reasons it didn't have to happen.

- The failure to execute competently on mobile (making a scaled-down Windows instead of a mobile-first OS) at the exact same time that Apple, almost out of nowhere, was executing competently, and Google, not previously an OS or hardware company, acquired Android, which depended on Linux and other FOSS being ready and robust for consumer use.

- The failure to execute competently on the internet. They certainly had the positioning (IE, ActiveX, IIS, Hotmail, MSN, etc.), skills, and compute capacity to have won on everything from personal cloud services like email/docs to cloud computing infrastructure.

FOSS was a miracle and the other two mistakes. We can't write laws as if we assume that miracles and mistakes will happen.

You make extremely good points. (And I'm not just saying that because you restored my karmic balance.)

I'm sure others (like myself) would be interested in your opinion on present day Microsoft. do you think they have enough competition in the desktop marketplace now? Do you think they warrant regulating as things currently stand? How about the rest of the Gang-of-five (Amazon/Apple/Alphabet/Facebook)?

side note: Maybe newer HNers don't realise but downvoting on HN is _not_ to express disagreement (you do that by replying and expressing your opposing opinion), downvoting here _ought_ to be used to express disapproval of behaviour. I'm correct in this, no?

Microsoft overreached by giving away IE to killing Mozilla. That's what really caused the consent decree to get issued. I find it hard to believe that you would have gotten Amazon/Google/Facebook if Microsoft had a stranglehold on the desktop.

I don't agree with your take on Amazon. We can't trust the US government to police the large companies. The large companies are too good at (a) walking right up to the line or (b) buying off the people who make/enforce the laws.

Don't understand the downvotes either.

Yeah, giving away IE was super sketchy given their market dominance. Same goes for Chrome when you think about it.

>Microsoft never amassed the data on their "customers" that Google and Facebook and every Tom, Dick, and Harry do now.

They caught wind of their "mistake" and "corrected" that error in Windows 10 but have since slightly changed course under pressure[0].

[0] - https://www.theverge.com/2017/4/5/15188636/microsoft-windows...

Reply on news.ycombinator.com