Regulating Big Tech makes them stronger, so they need competition instead | Hacker News Reader

Regulating Big Tech makes them stronger, so they need competition instead

economist.com

316 pointsdredmorbius191 comments

Regulations have their purpose to be sure. But they have a dark side as this article points out.

Regulations lead to lobbying. And lobbying leads to corruption. I think one of our biggest problems is we have tried for years to have a pseudo free market while tampering with it so much to create the situation we are in now.

For instance the financial crisis. One big reason for this was regulations forcing banks to make awful loans in Bush’s “ownership economy”. This led to a situation where free market products (mortgage backed securities and derivatives) were corrupted with so many bad loans. The free market never had a chance.

We all blame the banks but it wasn’t entirely their fault.

We see it with college loans. You either make things like this entirely socialized or market based. Too much socializing the free market or free market socializing, depending on your point of view creates these problems.

Even before the lobbying step, regulations are barriers to entry. Established companies can afford them whereas small companies can not.

>Regulations lead to lobbying. And lobbying leads to corruption.

Capitalism is a prerequisite for lobbying. Regulations are not.

>For instance the financial crisis. One big reason for this was regulations forcing banks to make awful loans in Bush’s “ownership economy”.

This is bank propaganda. It's been debunked countless times:

https://www.forbes.com/sites/eriksherman/2018/05/06/the-lie-...

>This led to a situation where free market products (mortgage backed securities and derivatives) were corrupted with so many bad loans.

The bad loans were made by people who knew exactly what they were doing. It was a form of control fraud (sometimes called "bankruptcy for profit").

>Capitalism is a prerequisite for lobbying. Regulations are not.

I strongly disagree, or am missing your point.

Is not the purpose of lobbying to get favorable treatment from those in power? What does capitalism have to do with it? Or do you mean specifically registered corporate lobbyists in Washington DC?

The U.S. government sits on top of one third of the world's GDP, the largest military by far, dominating all corners of the globe, etc. Of course this attracts every type of corrupting influence possible. hardly nobody bothers lobbying the Somali government, right?

I wonder how do you protect the system from so many selfish interests...

> Capitalism is a prerequisite for lobbying. Regulations are not.

In order for lobbying to be effective, there must be a large and powerful government which can be lobbied to. The reason the farm lobby spends millions of dollars is because they get billions in subsidies in return. It would be more accurate to say that big government is a prerequisite for lobby, since a small government that merely enforces property rights wouldn't be worth lobbying to.

> This is bank propaganda. It's been debunked countless times

It's an empirical fact that Fannie and Freddie, which are government sponsored entities that buy the largest share of mortgages, lowered their standards significantly leading up to the crash in order to make artificially cheap loans more accessible to people who would otherwise be considered too risky to lend to.

> The bad loans were made by people who knew exactly what they were doing.

Lenders originated subprime loans because the government guaranteed to buy them via Fannie and Freddie. If Fannie and Freddie hadn't existed, these bad loans would have never been made in the first place.

> Regulations lead to lobbying. And lobbying leads to corruption. I think one of our biggest problems is we have tried for years to have a pseudo free market while tampering with it so much to create the situation we are in now.

I guess it all depends on how you define "pseudo free market" but the government has been intervening in the economy since the birth of the nation. It's just a bit of a myth that the market is a free market.

It's also a myth that lack of regulation necessarily makes the market freer. There are many tactics that a huge company or monopoly can carry out that suppress free market dynamics. Antitrust regulations are one example that promote free market dynamics.

As an example, only strong regulatory intervention opened up the EU telecoms market.

There's a very fine line between "regulating an industry" and "picking winners". Codifying existing industry best practices as regulations tends to have the effect of entrenching existing institutions in that space, in proportion to how difficult compliance with those regulations is (either in complexity or cost).

There's another fine line between regulating desired outcomes vs. regulating _towards_ desired outcomes. Using regulations to "nudge" towards a social good often means that the market, wiggly customer that it is, uses that nudge to push in directions that are not the desired outcome, or that achieve the desired outcome only in a technical sense.

The negative examples are rampant; the good examples are harder to find, because a good regulation is nearly invisible. Take building codes as an example of good regulations, although if you've ever done a remodel or been involved in construction, you know that they're not _actually_ invisible. But for the most part they just make sure that buildings are safe and support certain common conventions that make future maintenance and upkeep a little easier. The goal of the regulations is to make sure that new construction adheres to certain standards of quality, and so that is what they do.

They also increases the price of real estate since you can't actually build smaller homes, IIRC.

Nothing's perfect. It's generally possible to amend laws and regulations if a compelling use case comes up. Does anything prevent having one code for residential buildings over a certain size, and another for smaller buildings?

> Does anything prevent having one code for residential buildings over a certain size, and another for smaller buildings?

The building codes aren't the way they are because you need different rules for smaller buildings. It's because existing residents don't want smaller buildings. If you can build smaller buildings then people will, and then you have a bunch of new students in your school district whose education is paid for from local property taxes, only their parents aren't paying a proportionate share because they have a smaller house with a lower property value. Which means the existing residents would have to make up the difference, which they don't want to do, so they have the building code prohibit building smaller homes.

It's basically regulatory capture by existing homeowners of larger homes.

I think that's understating the complexity of the IBC. The nice thing about building codes is that the regulators are local, but the regulations are very widely (voluntarily) adopted by those independent jurisdictions.

Local jurisdictions will usually have addenda to the code, for local fire requirements, etc., but a lot of that flexibility is baked into the standards themselves. In here there may be regulatory capture from local builders, and at higher levels (state-wide) there may be some capture from larger construction companies, but there's very little in the way of a feedback loop to allow homeowners to significantly change the building code.

Rather than debate in abstracts, I'd be curious if there is a particular section of the code that you feel is a result of this sort of capture. The IBC is available for browsing online [1], and Chapter 5 has the base restrictions on building size, with some notes on justification (largely about at what size you require additional fire suppression, which is a cost that most builders want to avoid in residential settings).

[1] https://codes.iccsafe.org/content/IBC2018P3

You mean zoning codes and not building codes? Zoning codes have indeed primarily caused the lack of small buildings. Also a lack of understanding of property values and induced traffic. If I have a 40ft wide lot in a city and I want to build on it (I may not even be able to because of 'minimum width' requirements on lots), but if I do, I might only be able to build a tiny house on it in the very middle of the lot because of 10ft setbacks on either side. What do people do in this case? The lot gets purchased along with the one next to it by some rich people and then they build a massive house on it. The total value of the house may actually be less as a single house than two houses, but the zoning codes have forced it to a less valuable land use that is more spread out.

Both.

Zoning can explicitly set lot size minima or density maxima.

Building codes with specifications for door and corridor widths, accessibility ramps, minimum room sizes, bedroom counts, bath-bed ratios, height limits, basement exclusions, attached vs detached dwellings, "in-law" units, with or without seperate entrances and/or cooking facilities, etc., all indirectly efect housing size and density.

> Codifying existing industry best practices as regulations tends to have the effect of entrenching existing institutions in that space

In the long run, I'm not sure that's actually true. It really depends on the kind of regulation you're talking about (e.g. not so much with anti-trust regulation).

Ultimately, most people want some form of quality control. When I buy milk, I don't to have to inspect the dairy farm myself. In the end, you still have industry regulations and winner pickers, it's just that the decisions and processes that control them are behind closed doors. Trying to navigate that as a small player can be very difficult.

Regulations are a racket, but at least with government regulations, that racket is democratized.

> "We all blame the banks but it wasn’t entirely their fault."

I personally blame the people who thought it would be a good idea to buy a $350-400k home with a predatory mortgage, when their gross annual income was like $25k/yr.

Granted the banks made the instruments available for people to get into this mess, but I always come back to personal responsibility:

"Just because you can doesn't mean you should".

Because they were told over and over again that buying a house was a good investment, and that the value was going to increase so much they could sell it and make money later.

Why do you hold the people who took the loans responsible but not the people who have them? How can they not have at least as much responsibility? Can't you say "just because you can doesn't mean you should" to people pushing predatory loans?

The banks also turned around, repackaged those same predatory loans, and marked tranches of them as AAA-investment quality. Where was the responsibility in that activity?

"Just because you can doesn't mean you should"

Indeed.

There are many, many people who deserve some blame for the housing crisis. Certainly, the people who took out loans they couldn't afford, but also:

- the loan underwriters who assured them they could afford the loans, because they had no risk, because they could turn around and sell the loans to:

- the banks who bought up the loans and repackaged them into mortgage-backed securities, which they could sell easily, because they were highly rated by:

- the credit rating agencies who gave those securities AAA ratings, which they did by completely ignoring systemic risk

- And we haven't even gotten to credit default swaps

In short: yes, there was a lack of personal responsibility on the part of buyers, but they were heavily encouraged to believe they could afford these houses, because the market conditions created an enormous demand for new mortgages, by convincing itself it could make money off of them with zero risk.

> Regulations lead to lobbying. And lobbying leads to corruption.

So instead we just give companies what they want in the first place to eliminate corruption! That "fixes" it! No, that's stupid reasoning.

> For instance the financial crisis. One big reason for this was regulations forcing banks to make awful loans in Bush’s “ownership economy”.

No, it wasn't. Regulations didn't force credit rating agencies to give AAA ratings to securities backed by subprime mortgages[1]. Greed did.

[1] https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...

But you can't "fix" greed. Even punishing greed doesn't make people less greedy. That's a bit like thinking that the war on drugs will make people want drugs less, or even seek them out less. Constraining an inflexible market only moves it to places you no longer control.

You don't have to fix the greed, you have to add oversight and accountability with things like mandatory reporting that make it not worth doing these activities on any profitable scale.

>But you can't "fix" greed. Even punishing greed doesn't make people less greedy. That's a bit like thinking that the war on drugs will make people want drugs less

Or that punishing robbing banks makes people do it less?

Cant fix murdering people either, even punishing them dosen't stop it. We just have to accept that sometimes people get murdered. /s

Drop the /s and you’re right! We can’t fix people’s desire to murder other people. We punish harshly as a deterrent but unfortunately someone who’s in a place where they’ll murder someone usually isn’t weighing the risk or making a list of pros and cons. So people get murdered. It’s inevitable and there’s very little we can do to prevent it in general.

The point it is isnt a justification to let people go around murdering others.

Punishing bank robbing doesn’t make people want to rob banks any less. It just changes the incentive structure such that it’s not worth it to most would-be robbers with normal risk tolerance.

Bank robbing is an activity where punishment actually moves the needle on the risk of doing it. When you try punishing marijuana use you find out that the risk of getting caught is so low that even extremely steep punishments don’t affect people’s willingness to do it. Same with jaywalking.

>That's a bit like thinking that the war on drugs will make people want drugs less That might have been possible if that was the actual goal

But regulations did force companies to accept credit ratings from and use rating agencies that, under other regulations, had explicit immunity from liability for bad faith ratings. Even if companies knew the credit ratings were fraudulent, they were required to use them per regulation.

The regulatory framework for credit ratings created a serious moral hazard out of whole cloth, and then actively shielded bad actors from scrutiny. It was a clear and obvious case of regulatory malfeasance, and while the subprime mortgage issue was a manifest consequence of that malfeasance, they did not cause it.

The government allowed this regulatory capture by credit agencies to occur because it directly benefitted the government as well, as they are required to rely on these same credit agencies for their own debt instruments.

So, the government benefited from the creation of the housing bubble in its own debt instruments, the same debt instruments that would go into the hands of the people who were being swindled by the banks that were the original cause of the bubble.

Saying "greed" caused X is surely just another way of saying that X was profitable?

So if regulations made X profitable, I'd blame regulation for X.

In my mind, greed is a human character trait that exists regardless of the political environment, much like breathing.

To people like OP, it seems to be... something else. I can't quite understand what.

Greed is a trait we dislike in humans. Rewarding it is a mistake.

One of my favorite interpretations of why capitalist/free markets have been so successful is that it channels human greed into productive use that benefits society.

So I think it's fine to reward greed when it does good things - even though it's not from the noblest motive.

I don't understand the mindset that believes that a poor regulatory environment helped cause the financial crisis and sees that as an indication that we should have less regulation. That is like seeing your deadbolt was broken when someone robbed your house and instead of investing in a better lock, an alarm system, or a security camera, you just decide to leave your front door open 24-7.

Yes, bad regulations exists. However the recipe to fix bad regulations is not no regulations, it is good regulations.

I think its more like suggesting you can't jump half-way across a muddy ditch. You either go for it with everything or you stay put. Anything in the middle is going to be a bad time.

Here's the mindset explained:

We think regulation will always be strongly influenced by the regulated entities, since they have by far the biggest skin in that game, and in the end, regulation will always end up "bad", much like a dropped $20 bill will always be taken.

This concept is called "Regulatory Capture" by economists, it has been extensively studied, and I'm sure you can find reading material by googling.

I am familiar with regulatory capture. I am not familiar with any well-respected economist who has argued that regulatory capture is a forgone conclusion of regulation. But either way, regulatory capture is not a symptom of bad regulation. It is a symptom of a corrupted political system. Putting stronger restrictions on lobbying and reforming campaign finance law would be a much better step to fix regulatory capture than widespread dumping of regulations.

I also want to point out that regulatory capture is completely counter to the example that nemo44x mentioned above in which they stated that regulation forced banks to make loans they wouldn't have ordinarily made. The idea that the banks didn't want to make those loans and only did it to meet regulatory standards is incompatible with the belief that the regulation was co-oped for the benefit of the banks.

> Putting stronger restrictions on lobbying and reforming campaign finance law would be a much better step to fix regulatory capture than widespread dumping of regulations

To me that's a naive view of how fundamental the problem is. Consenting adults who stand to gain a lot at the expense of a third party will always find a way to help each other out.

Just my personal feeling, of course. I have no proof to offer.

Besides, I think the main mechanism for Regulatory Capture is influencing the regulator directly, not the legislators. At least in the US, the law behind the regulation mostly just says that the new TLA agency is to issue rules that it deems are in the interest of some lofty vague goals.

> The idea that the banks didn't want to make those loans and only did it to meet regulatory standards is incompatible with the belief that the regulation was co-oped for the benefit of the banks.

Keep in mind that there is more than one lobby group. A big force behind "give more loans, everybody should own a home" is the National Association of Realtors.

So the banks don't want to give the loans (because they know there will be defaults) but the Realtors want them to; the "compromise" is to move the risk away from the banks.

The law was a moral hazard -- move the risk from doing something stupid risky onto somebody else and of course the banks are going to do it then. It was what we "wanted" them to do, which is apparently why the people enacting it didn't think too hard about why they didn't want to do it on their own.

Is that better or worse than allowing all sorts of unregulated crazy behaviour via free market incentives?

I'd rather imperfect regulation and tweaking lobbying rules than toxic waterways etc.

The better alternative in my mind is that you can sue for damages if some activity harms you or your property.

This is fundamentally different from regulation in that there is no regulator to influence.

The system also has a multi century track record that is pretty darn good. Certainly compared to the more recent regulatory system.

You're talking about two completely different categories of problem.

Companies polluting waterways is an externality. Many customers prefer the company that doesn't spend money abating pollution, because it allows them to have lower prices. To address that you need some kind of rule against polluting, or a property right by the people downstream to not have toxins dumped in their river.

The problems with tech companies are rooted in a lack of effective competition. If there was a company that provided the exact same services as Google or Apple except that it respected your privacy better or had lower prices or didn't leverage their platforms into monopolizing ancillary markets, customers would choose that in the market. The people being negatively impacted by their behavior are their own users, which means that all you have to do is make a better alternative available and that alternative would win out in the market. Which means that in this context, any rules that impede new competitors are counterproductive, as are the existing rules that caused the lack of effective competition to begin with.

Houses have gotten bigger and therefore less affordable and the government has had policies to increase home ownership such as mortgage deductions. In addition, local policies such as zoning have helped perpetuate urban sprawl, which helped lead to people building bigger houses (bigger lots on cheaper land).

Lobbying will always exist. Are you advocating ruthless anarcho-capialism?

If regulating a large bad actor ends up making it stronger, that is a sign that it needs to be broken up, not merely regulated.

Are you seriously claiming the 2008 financial crisis is an instance of _too little_ regulation?

This is an excellent piece by Cory Doctorow but I wouldn't say he argues against regulation:

> One exciting possibility is to create an absolute legal defence for companies that make "interoperable" products that plug into the dominant companies' offerings, from third-party printer ink to unauthorised Facebook readers that slurp up all the messages waiting for you there and filter them to your specifications, not Mark Zuckerberg's. This interoperability defence would have to shield digital toolsmiths from all manner of claims: tortious interference, bypassing copyright locks, patent infringement and, of course, violating terms of service.

Isn't that just calling for a different kind of regulation, one that forces interoperability? Which, btw, sounds like a good start, but OTOH I'm immediately thinking of how slowly changing APIs are being abused by big tech to create moats.

In general I find the headline problematic (although that might be editorial meddling). Yes, the current and upcoming regulation of tech is being abused by big tech companies for the worse, by exploiting loopholes that are in the regulations, and I would not be surprised at all if those loopholes are there partially or mainly thanks to lobbying by big tech companies and other vested interests.

But saying that therefore regulation does not work feels a bit like saying that some laws are unethical, therefore laws are inherently bad.

Plus regulation (in the abstract) can be set up in such a way that it encourages healthy competition. Take the Dutch Health Insurance system (which has tons of other issues but that's not relevant to this point). Regulation forces any health insurance company to offer a "core package" with basic coverage for most health issues, at a price per month that has a fixed maximum. This "core" package cannot be denied to any patient based on pre-existing conditions. Insurance companies can then compete by offering better deals for greater coverage. The point being that the regulation means that health insurance companies are limited in where they can cut corners and as a result are encouraged to compete by providing a better service.

In Germany, reverse engineering for compatibility reasons is explicity allowed.

Sounds great! This also means that there is a country with legal precedent, and data on how it works out in practice, so we're not just speaking hypothetical situations! Can you say anything about that?

So it is in the US too, under the DMCA (17 USC § 1201 (f)(1-4))... not that I would actually try pushing that claim in court.

See too the Oracle v Google case, currently pending certiorari before the Supreme Court, where CAFC has held that API is copyrighted, and you're therefore not allowed to independently implement it, even under fair use claims.

Can you tell more about this? What's the law and what does it allow? Has it been in effect for a long time?

I wonder if any small companies have moved to Germany or selected Germany specifically for this reason.

> Isn't that just calling for a different kind of regulation, one that forces interoperability?

Yes, but dominant platforms that ordinarily benefit from network effects should absolutely be forced to be interoperable, as any restriction to interoperability is tantamount to abuse of monopoly power. This is remarkably light regulation by any standard, and it comes with a very clear rationale.

Just to clarify, since my phrasing may have been a bit ambiguous: I am definitely on board with mandatory interoperability. It's just that at the same time I worry about the implementation of such policy having new loopholes of their own to be abused in a similar "only benefits big tech in the end" way. But that does not stop me from being in favour of trying it and improving it as we go.

> Isn't that just calling for a different kind of regulation, one that forces interoperability?

Quite the opposite; it calls for an exemption from the various restrictions that otherwise prop up the company being interoperated with. Every one of the things Doctorow names is a legal structure artificially protecting one company from its competition.

It is essentially a counter-regulation to try to undo damage of monopolistic protections. The better thing would be to strip away the anti-circumvention clauses entirely but that isn't politically viable unfortunately.

Really regarding loopholes I doubt it is because of any lobbying by tech companies so much as massive incompetence from grandstanders and trying to serve vested interests. Just look at the "link tax". Their paycheck and job security doesn't rest on understanding so are willfully ignorant. They gleefully skip to dystopia in the name of doing something because of feelings with no regard for "will it actually solve the goddamned problem?!".

A subtle but important distinction is that this does not "force interoperability", it only removes legal (rather than technical) impediments to someone selling an interoperable product. It does not require a company to expend any effort enabling interoperability that does not already implicitly exist in the products they are producing.

At a technical level, there is no non-vague definition of "interoperable". A large part of practical interoperability is observed behaviors of implementation detail, which can only be explicitly exposed to third parties by unreasonable exposure of implementation. There are many examples where the ability to export data, even in a widely understood format, does not produce practical interoperability because you also need to reproduce observed system behavior to make that data equivalently functional.

I remember learning in college ECON 101 that many companies strive for government regulation because it erects more barriers to competition. I was floored. But you see it happening all around you.

Doesn't mean it's wrong per se - depends on particulars of regulations being pushed for. Competitors aren't a force of good, from customer POV. They're as likely to introduce beneficial innovations as they are to cut corners and externalize costs to improve their competitiveness. The latter is undesirable. Would it be better for relevant regulations to exist before the incumbents became what they are? Sure. But even late regulation is better than no regulation.

Not all competitors are SpaceX. Many are Uber.

From customer POV uber is a godsend. From society as a whole it is not - especially where it has affordable, reliable and safe taxicab service.

I am hard to think of clear example of more competition that has hurt the customer.

Uber is mortgaging the customers long term for its short term. Not sure why it should have that right, nor why it should be considered a godsend.

The long-term solution is still competition. IIUYC you mean that in the long term everyone else fails, and now they can raise prices.

But if competition is allowed to flourish, then the point of monopoly never comes.

Uber has been doing damage to society ever since they introduced the rideshare option. They don't have to be the only player available to be a problem; being a monopoly would just be a cherry on the cake.

Competition is fine, as long as it plays by the rules. That it has to play by a stricter rulebook than the incumbents had when they were starting isn't a bad thing, just suboptimal. "Better late than never".

They don't have a profitable business, it is driving down prices not through any innovation just shit loads of investment. I can only guess the investors are expecting a return as per usual. So how the fuck is that going to happen?

Almost everything people complain about in air travel (other than security restrictions and inconveniences) is a consequence of the relentless competition over price. If we assume the customers are rational actors, then we must assume that this situation is optimal, and it is certainly the case that for a few bucks more on top of the lowest base price, you can often get an experience more suited to your preferences (not so easily, however, if you are taller than average.) Most people do not seem to see it this way, however.

At least regulation has broadly prevented a race to the bottom in trading safety for cost reduction.

People love to complain about airlines, but when it comes to buying the ticket, they always choose the cheapest one, even if it was no carry-on luggage, or a place to stretch your feet.

In Europe, I personally only use budget airlines because they have a variety of direct flights to different destinations, wheras nicer airlines tent to mainly fly through hubs, meaning you would have to have stopovers.

I think this is often the case for other people as well.

Airlines - the food was terrible and the portions too small

People have shown that they value the hard product most - being able to get from A to B fast.

That is optimal. If we increase service people that could afford air travel will decrease. Maybe a good thing for the planet ... but not according to the people being priced out.

First class is extinct beast - since business started to have full flats, there is just no reason to fly first.

except in many places you never had reliable taxi service. they would just drive past you if they did not like how you looked let alone avoid your area if they decided it wasn't worth their time.

let alone the fact many work under conditions no uber or lyft driver would.

if anything taxi companies had to up their game treating both their employees and customers better and they did not want to because they had the service locked down to themselves

Exactly what I thought when I saw the GDPR.

"Does any one else than big, established, companies have the means to really properly comply with that? Heck, I don't even know how to comply!"

It's really not that hard to comply with GDPR. The easiest way is not storing PII, and if you do, only do so with consent and have a way of deleting that data. That's already 80% of compliance.

That way of complying already benefits the companies who hold PII which proves GPS point.

True, and that's my default approach. But what about building a ML dataset and model?

Also, aren't we supposed to gather consent for every use, separately? And not prevent users from using the service should they refuse to share their data?

Or am I just confused, and should just spend more time looking into it, or pay some (supposedly expert) (expensive) lawyer ?

Have you seen new European Medical Device Regulation (MDR)? Especially classification rule 11 for software makes things interesting. Regulatory compliance is going to be difficult/costly for smes...

I was thinking the same thing. The regulation makes sense when purely looking at consumer/patient protection, but it really hurts competition and innovation. I would not be surprised if rule 11 gets revised. If you don't know: rule 11 states that all software that guides decision making on health issues is classified as higher risk. Basically any health related website or app is in scope and will need a certified quality management system. Very expensive to implement.

Oh my. Just when I thought of getting into patient management systems because every doctor and med student around me keeps complaining about those

You still can. There is an exception to MDR rule that says; "Information systems that are intended only to store, archive and transfer data are not qualified as medical devices in themselves."

Subsidiaries of big, established companies.

Econ 101 as part of Gen Ed leads to lots of half truths which are then taken as gospel.

Not sure why they would omit to mention the role of regulation in maintaining competitive markets? Is this done on purpose?

As someone whose major was in economics, let me warn you that most of what you learn in ECON 101 is not directly applied as policy in the real world. It is not that the concepts are incorrect per se, they aren't, but they are rough approximations, with a lot of assumptions that are not necessarily true in the real world. Econ 101 thinking is generally a good starting point to understand the economics effect of policy, but it is far, far from being complete.

There’s some funny circular logic in this article and thread that businesses shouldn’t have regulation because businesses corrupt regulation therefore regulation is bad.

Reminds of me Zuckerberg’s argument that only Facebook is big enough to tackle the problems that Facebook has created by being so big.

How do you ensure competition when Big Tech can (and do) literally buy any and all potential competition? I'd say this is the biggest issue we have, and it doesn't seem like anybody is addressing it. After seeing countless interesting startups be bought up by Facebook or Google, it's time legislation was introduced to limit what Big Tech can do to distort the market with their obscene amounts of money.

Interoperability would be fantastic, but utterly pointless if they can just buy up somebody who's plugging into their API and gaining significant popularity.

Because Microsoft could have bought every startup in the early 2000s and yet..., it didn’t happen.

Also there’s something called innovators dilemma. Where someone like Blockbuster could have bought Netflix, but why would they do that when clearly renting VHS is making boatloads of money?

The tech industry has fundamentally changed since the early 2000s though. Microsoft was primarily interested in extinguishing competition. The new culture for the past 10ish years has been to assimilate. It's not an isolated case. There are too many examples to count. Are you arguing that FB/Google/etc haven't been on a crazy buying spree for years now because ... Microsoft didn't do the same thing 20 years ago? Or because Blockbuster didn't do it 25 years ago? We see the current tech giants doing it right now, probably learning from said mistakes in missing the boat.

Uh, yeah that’s what I’m arguing. They aren’t buying everything. It’s a tricky concept and you just demonstrated why it is so.

A thriving smart manager in a top company will only recommend the “obvious” and “great” companies to acquire. They aren’t going to suggest to buy a risky or “clearly dumb” company in X vertical. But it is those dumb and risky sounding companies that become the next big thing.

So why would GM worry about Toyota when those shitty Japanese cars are terrible and we can focus on the large vehicles where all the money is at?

Why would MSFT worry about this whole phone business when clearly it’s making hand over fist with the desktop/pc market?

Why would a bank want to get involved with the illegal activity and fraudulent market of crypto.... oh wait.

You keep picking these companies as examples that haven't made it a part of their model to buy potential competitors, that already made these mistakes and suffered because of it. I don't understand why.

The companies I've named have already demonstrated their penchant for buying potential competitors. They don't even have to be particularly successful companies - it's enough for a company to have a niche where they're beloved or interesting to people and they'll be gobbled up. It doesn't even matter if the company gets a bit bigger, because Big Tech can just throw even more money at it. That's the problem - they're buying up anything that even remotely looks interesting, subsuming the tech or the engineers, sunsetting the original projects and moving on to the next startup to buy.

There is no ever fountain spring of money and time which is exactly what buying a company is. You have to throw lawyers and time and effort into it. Assuming you did have Apple's cash balance, lets say you did try to spend it all.... what then happens to next years class of startups/smaller companies? Apple's $billions cash pile isn't all acquired in 1 year but over the past decade.

Furthermore, once you buy it you have to spend mental energy integrating the purchase into the company. Do you really believe all the shareholders and stakeholders are all down for that massive distraction?

There is a weird chain of thoughts that needs to be interrupted here. Someone I spoke to earlier this year was essentially saying the same thing about Rockefeller, "well he was buying up all the smaller oil fields and producers!". Well, if you did hear that was happening wouldn't you yourself go out and try to strike more oil fields to be bought out quickly? Furthermore, what do you do when the massive fields in the middle east were found? Do you expect Rockefeller to start heading over there buying up the entire region to shore up the U.S market?

This is quickly becoming an argument that defeats basic reasoning and basic reason.

> How do you ensure competition when Big Tech can (and do) literally buy any and all potential competition?

Don't let them. While a breakup would run into all sorts of complicated problems, banning new acquisitions would be relatively straightforward.

I agree. But I haven't seen anybody push this forward as possible policy anywhere. There's no discussion about it anywhere that I've seen.

In the US its literately already the law of the land. Its called anti-trust, and it gives broad authority to break up companies and halt acquisitions. The regulatory agencies have just narrowed the scope of their actions dramatically over 30-40 years by only looking at the easily gamble metric of short term consumer price impacts.

At least one of the US presidential candidates (warren) has already proposed using these powers to break up all of the big tech firms.

I'm not talking about breaking them up.

Also, while anti-trust law exists, it's not enforced. And breaking the tech giants further doesn't ensure that anti-trust is enforced in any expanded sense outside of "consumer price", which is the epitome of uselessness. I don't think I've seen Warren et al. talk about making sure anti-trust is applied how it should be (would they even have the ability to do so?). Correct me if I'm wrong.

> How do you ensure competition when Big Tech can (and do) literally buy any and all potential competition?

Heck, let them keep buying. They're literally paying for new competitors to spring up! And it also makes investors more willing to fund potential competition, as the prospect of an acquihire puts a floor on valuations.

That hasn't worked well historically though has it. Looking at you broadcast media ;)

Also, within tech/new media VCs are the ones feeding the beast, doing the initial investing and the reason for new competition to "spring up". Even if there is an acquisition plan in place, it's not the acquisition itself fueling new competition - it's a for-profit exit from competition.

Broadcast media platforms are not a contestable market, since e.g. broadcast frequencies, cable video capacity etc. are scarce and largely controlled by incumbents. New media is entirely different.

True, because of the way broadcast frequencies were regulated.

However the point remains the same with industry crossover into the new media space - TimeWarner x Verizon merger etc. Consolidation via acquisition and monopolistic behaviors tends to _reduce_ competition, not encourage it.

> They're literally paying for new competitors to spring up!

They're paying for competitors to spring up and then disappear, which does nobody but the investors (and maybe the founders) any good whatsoever.

Alternative idea: let them buy, but levy a 100% tax on the acquisition amount. The proceeds can fund development of truly open alternatives, or be paid to the users as recompense for their privacy loss, or perhaps just used to make regular people's lives better. That would discourage anti-competitive acquisitions, and even if they do occur at least somebody besides rentiers would get something out of it.

That hurts investments and tech advancement because it removes acquisitions as an exit strategy. It also favors the larger incumbents because they can afford the tax, thus moving markets more towards a tech oligopoly.

I'm not suggesting such a tax generally, just in the cases that people are already so keen to regulate in other (IMO even more harmful/ridiculous) ways.

There has to be agreement to sell on the other side. Since many companies successfully resist being bought, big tech can't simply buy all competition. There's lots of buying going on, sure, but also lots of refusing to sell. Taking away the option to sell from private companies will have dramatic rippling effects none of which I can imagine lead to a better world.

>How do you ensure competition when Big Tech can (and do) literally buy any and all potential competition?

Maybe you're using hyperbole with the word "literally" but just to level set ... they don't buy _all_ the competition. I previously try to explain why that's pretty much impossible: https://news.ycombinator.com/item?id=21419098

TLDR: startup founders have egos and many of them don't wish to become employees of Larry Page, Mark Zuckerberg, or Jeff Bezos -- even if you try to persuade them with billions of dollars.

Contrasting perspective: Founders like you describe are likely mythical. Don't exist. Not a single one in the world... at least if you mean founders of possibly competing firms.

To be able to compete with the likes of google, you're going to need considerable scale - there's going to be a lot of up-front investment necessary to get there. And that means they need to "sell out" to outside investors to get anywhere. The kind of people that are really fundamentally opposed to any kind of takeover by any large tech firm probably won't pass this hurdle. The people that do pass that hurdle probably are more successful precisely because they're more pragmatic. And in any case they'll be giving away some amount of control in the process, and may need several rounds of funding... it's pretty far-fetched to assume any business that survives that kiln will really have the (self-harming!) principles to oppose a lucrative takeover and retain the control to too.

It's always possible somebody will find some really overlooked niche, grow big there, and then expand from there... but it's a really, really long shot, and certainly unlikely enough that this is never going to add up to significantly increased competition in the sector. Even if by some surprising happenstance one or two new competitors emerge like that... that's still a very, very inefficient basis for a market. We need hundreds of competitors (or at the very least no barriers to entry for hundreds of potential competitors) - not just a handful - for a market economy to do its optimization magic. A few plucky founders just don't matter.

>Founders like you describe are likely mythical. Don't exist. Not a single one in the world... at least if you mean founders of possibly competing firms.

If that were true, both Larry Page and Mark Zuckerberg would have said "yes" to billion dollar offers from Yahoo and therefore both Google and Facebook would have become subsidiaries of Yahoo. Well, we know that didn't actually happen and Jerry Yang is not the boss of Larry Page and Mark Zuckerberg. Startup founders saying "no" to potential acquirers is not a myth.

Saying "no" is only possible if you haven't taken significant VC money yet and excercise full control over the company. Otherwise your investors will often force you to say "yes" to aquisition because they want to cash out.

EDIT: I think it is also highly dependent on the market you're trying to enter: if you are creating a new niche for yourself, like Uber did back in the day, then investors might be willing to take you all the way to IPO. If you try to compete with the existing market giants, like Facebook, they will chicken out, and see aquisition as only viable option ("if you can't beat them, join them").

If they had started a business in 2019: then yes, indeed, that likely would have been the outcome. But they didn't, did they? The barriers to entry are much, much higher now; and the vested interests seem more keen on acquiring new ventures before they becomes threatening.

Okay, now you're focusing on one part of my argument that isn't airtight. But missing the forest for the trees. They don't have to buy all or every single company in order to have anti-competitive effects on the market, which we see today.

I'm not sure if buying companies would have the same effect in a world where APIs are mostly open.

For example, Facebook buying WhatsApp: The value in WhatsApp was the network effect of having 500mil+ users all tied into the same proprietary server infrastructure. Switching to another service means losing the ability to cross communicate with anyone still on the platform. If Whatsapp's API was open, it could have allowed the users to fragment onto different servers while still cross communicating.

Break them up. It's the only self-executing solution to the problem of a consolidated, concentrated industry.

> How do you ensure competition when Big Tech can (and do) literally buy any and all potential competition?

The obvious answer is to subject such acquisitions to regulatory approval, and change the practices around such approval to make it much harder to acquire a competitor.

There's always going to need to be some regulation, at a minimum. I think the question is what regulation will be the most effective at accomplishing the goal?

In fact, above a certain size there is basically no benefit to society in allowing companies to acquire other companies. Mergers and acquisitions by extremely large organizations should simply not be permitted, unless they can demonstrate a clear benefit to the public good (with a very high burden of proof).

Doing that without first breaking up these giants would be a disaster, though.

I am all for interoperability, and personally I wait for a Facebook API to write your own news feed filters, that will open so much new possibilities. But I am afraid that, at least in the beginning, it will only make "hateful, extreme bubbles" worse, because of two things.

The first, most fundamental, is that these bubbles are created not by the business model, but by connectivity alone - we crave extreme content, and now we can get it all time because of https://www.gwern.net/Littlewood. That craving is quite similar to our craving for calories, extreme news are 'high bayesian calories' and used to be useful for quickly updating our Bayesian brains, the problem is that now the probabilities of these news are completely outside of the ranges our brain evolved around.

The second is that if the new commercial Facebook filter startups use the same advertising business model as Facebook then they will do the same engagement maximising as Facebook itself.

The thing with APIs is that I have a feeling that companies only offer them as a way to externalize costs.

They offer an API, someone else builds something with it on their platform for them. Then of course they can tweak the API to make sure only things they want on their platform are being built. Or what also happens is that they wait until a community grows around those many tools other enthusiastic people build on top of the API, and there is enough of an invested userbase that they can remove the less profitable parts bit by bit.

This is why I personally think APIs are often moats in disguise.

Treating the idea of regulation as a binary operation makes this problem seem artificially harder than it really is. If regulations scaled proportional to market impact/value, then you can still have smaller companies that can afford to innovate without clamping down, because the impact of their usage is small. Similarly, you can expect more from larger companies with massive influence, because firstly, the vastness of their influence matters more, and secondly, because of that influence, they also have much higher revenues and can afford to make those changes.

We need to enter an era of more fluid and dynamic regulations.

Since I started to work for big tech myself this is what I tell people most of the time: Stop thinking about complaints, start thinking about solutions to problems that everybody has. That is where the power of big tech comes from. I mean, facebook knows all our social contacts because it's the best way to communicate over long distances and having different live situations. Gmail can learn how we write and think because it's the best and most flexible mail client out there. Google and Apple can spy on us via smart phones because these devices have gave us so many opportunities like navigation, translation, communication, photos etc.

Start building a better future and you can be part of defining what it will look like. Doesn't even have to be a competitor. Employees inside the big tech companies also have more push towards their personal goals than people outside.

This is where the power of big tech used to come from. Now it comes from the ability to use the wealth generated by innovative products to buy the market for non-innovative products.

An issue not talked about enough if the type of regulation.

Think about plumbing and electrical systems. There is a great amount of interoperability within a region which enables competition. We mostly can't imagine having to have your appliances coupled to the company where all the parts for the electric wiring in your home are from. Things are interoperable.

Interoperability in this sense is good for competition and people. It's also a regulation type that's mostly not talked about.

If big tech is going to be regulated it should be no surprise that their lobbyists work to have regulation that is more likely to benefit them.

There is a type of regulation that could be very useful that's not getting enough airtime.

>Think about plumbing and electrical systems. There is a great amount of interoperability within a region which enables competition. We mostly can't imagine having to have your appliances coupled to the company where all the parts for the electric wiring in your home are from. Things are interoperable.

The overwhelming majority of that interoperability came from a battle of competing standards that left only a few standing. It was a situation is a lot like the state of PC hardware in the 80s through mid-'00s but spread over a longer timeline.

If you go buy a $15 machinist/tool room desk reference from the early 1900s on eBay and it will be chock full of specifications for various thread forms for fasteners of which a few now dominate. Even today hydraulics and plumbing suppliers publish multi-hundred page catalogs of the various widgets used to control fluid and gas flow. Much has been written about the various competing standards and ways of doing things for electrical and I'm not very familiar with that history so I'll omit it here.

Most of the regulation we have is in the form of this or that regulator body saying things need to comply with this or that code. The only reason this forces interoperability is because most codes just take the industry default and apply that. For example we use NPT for gas plumbing not because it has some magical properties that make it good for that, but because we always have and that's just what the trade groups trying to write building codes wrote about which then got codified into law. So codes and standards do sort of force interoperability but only as a side effect of the circular cause and effect pattern leading to those codes having the force of law.

I'm all for interoperability and portability in tech but I'm not sure how we get there quickly without botching it. I have heard of many little proposed regulations that would be steps in the right direction but it would take time to see if that would solve the current problem of too much centralized power.

I think this is an issue that just doesn't have a solution anymore. No company wants to work with each other to create a platform/standards that benefits the end users, they all want to undercut each other, or lobby the shit of governments to create barriers of entry for competition.

Equally important: it doesn't help that working in the public sector pays less and is loaded with bureaucracy. All the smart minds go to the private sector because that's where the most immediate personal incentives lie.

Interoperability and preventing them from buying competitors after they reach certain market share would do the trick. Facebook bleeds users, but they are moving to Instagram bought by Facebook.

The problem with current initiatives for regulation is that they are attempts to regulate how Big Tech does business.

Outside of some specific limits on business transactions, such as forbidding tie-in sales, antitrust does not limit the way companies do business. So breaking up Google into 8 companies, like the Bell System, would not limit the behavior of the Baby Googles.

If either there is very strong economies of scale or there is a need to control the behavior of the companies, regulation is the more effective tool. The chief objective of regulation is to limit the return on investment that the natural monopoly can earn in order to prevent monopolistic price gouging. However, regulation can also govern some aspects of business conduct as well.

Tech companies aren't regulated at all. Nobody knows how to regulate them. They're also afraid of making google and other american tech giants noncompetitive with entirely unregulated chinese companies all vyying for AI/quantum computing supremacy.

The problem is when the regulation doesn’t accomplish anything, but also costs a lot.

For example imagine a hypothetical email safety law that says you must keep everything encrypted and have multiple audits over all of your processes and systems. Such a law doesn’t do anything to protect users, but audits will suddenly result in a massive flat cost to start a new email company.

In reality look at the “privacy” legislation pushed by Facebook and google: mostly it reduces/removed their liability if they do a few relatively cheap things but doesn’t require them to stop spying on you or stealing your data. But relatively cheap for Facebook and google isn’t cheap for anyone else.

Aah, the good GDPR!

It does change the way we culturally view the practices relating to privacy though.

I think a lot of the net effect of legislation like GDPR, can be viewed through the lens of 'in essence'. Ultimately, it's setting in place a culture where companies need to think twice before monitoring users without consent.

The smaller companies are more likely to build their companies with a view to good practice, while the larger companies can be brought closer to an acceptable line through punitive measures.

or like how the part of GDPR about cookies ended up being the new Y2K gold rush.

I think Doctorow is missing the elephant in the room: Monopolies can only exist without competition when there is Government power behind them that inadvertently (or not so inadvertently) defend them/prop them up by regulation.

A natural monopoly can be challenged by any market entry competitor - Unless barriers to entry are created by regulation.

Remove the regulation overhead/government enforcement and the next entrepreneur-type that sees a market opportunity will challenge that monopoly. And if that new entry is better, there goes the previous monopoly.

I read though a bunch of your post and thought I would reply to this one. Are you not aware of network effects and economies of scale? Do you actually think monopolies are only a product of government?

Good question. I attempted to draw attention to the government-enforced part. Natural monopolies will occur over and over again. If a good product or service is offered and little effective competition exists, that company/person offering it will likely enjoy a de facto natural monopoly.

What I was trying to point out was that when government organizations get involved, monopolies may end up with protection from competition, the most obvious being barriers to entry, typically through legislation/regulation that favors the current position holder.

When entrepreneur-types see a profitable market occurring due to that "good product or service" it tends to attract them into wanting to compete to earn some portion of that market. And if the competing product is a better "mouse trap," then the previous monopoly is likely going to be broken up. Those who make up said market are likely going to act in their own self-interests (i.e. better price, quality, availability, etc.).

Thanks to very economical communications (the Internet, as the biggest example) a single person with motivation and the appropriate skill (which can be learned from existing examples) has the ability to present themselves as legitimate as other large companies that may be made up of many people - A leveling of the playing field, to me.

My bias is that I come from a "voluntaryist" point of view. All who have the opportunity to voluntarily enter into trade agreements with others stand to benefit according to their own values.

Does that make sense?

Edit: And the economical communications would be a method for combating existing network effect/economies of scale challenges. Ford and Standard Oil have been cited by others as examples of perceived natural monopolies that existed without the assistance of government regulation/legislation.

https://fee.org/articles/41-rockefellers-standard-oil-compan...

Sure but it feels like only half the story. Yes new law could favor existing position holder but the more democratic the institution the less likely this is to happen (for obvious self interest motivations). There are some kinds of legislation that almost seem directly targeted at the current position holder, like legal requirements for Interop. Would you be in favor of those kinds of laws?

What is an example of a "more democratic institution"? And what are the "obvious self interest motivations"?

I would like to make sure I am answering the question you are asking...

To answer your general question of whether I am in favor of "some kinds of legislation... ...targeted at the current position holder", my general answer is "only for the smallest municipality possible against that entity."

First, I am assuming that harm can be proven to have been done against someone(s) within that municipality by that entity.

Second, I am making the assumption here that the municipality involved (City? County? State?) is enforcing the will of its constituents as obtained by their appropriate mechanism (i.e. voting or other delegation of power). They are authorized to wield this power over their territory, but no other (scope definition).

If an entity spanned multiple territories (Cities, Counties, States) here in the US, or multiple nations, then agreement/consensus must be sought to convince those other municipalities to concur and to mutually enforce the decree at those levels.

If the other territories choose not to support the effort, then the legislation can only have effect within the territory that approved it.

Power should always be determined and enforced at the smallest possible level, requiring consensus all the way up any possible authority-chain of command.

This allows the entity to move its operations to a territory that agrees with the activities, assuming one can be found.

This also allows for the most possible satisfaction of the residents of the respective territories.

I also hold the opinion that current behavior of US States and of the General Government (Federal) have strayed far too much from the original design of individual sovereigns granting limited powers to representative government. And this is likely the reason for so much of the polemic disagreement (unfortunately to the point of virtriol in many cases) that I witness today.

A solution to that (granted, not that you asked for one :) ) would be to reduce the General Government to a tenth of its current size to start, and see if that is enough to have a more satisfied populace. With the understanding that it is immoral to enforce my own ethics upon any other under any measure of coercion; Only through consent between all parties involved.

The power hierarchy below this level (State, County, City, Township, etc.) would choose to incorporate that legislation that was formerly being wielded/enforced at a higher level, that is approved by their constituency. Think local, act local.

Again, if it is not already obvious, my bias is much more anarcho-capitalist, working towards a voluntarist society. Individual people coming to agreements to conduct trade and agreeing to delegate limited power to representative government.

Maybe too much caffeine for me this morning ;)

Hmm that sounds like "Geomocracy" which is a video my brother made. https://youtu.be/ZVroI2_o5QA

I found the idea to be to be silly an naive but perhaps he was on to something I didnt understand.

As for voluntarist society. I dont think such a think is really a coherent idea because the concept of voluntary is ill conceived. To give you and example I could totally argue that you already live in a completely voluntary country. You had a choice of N places to live and you choose that one. It may not have been a real choice but the lack of choice does not enter into the narrow conception of what voluntary is! So long as there was no direct physical coercion you are contractually obligated to be a citizen of your state.

Physical coercion could be used to describe the action taken when property taxes are not paid, loitering or vagary gives offense, etc.

I never signed the contract, either. Nor did my parents, and I would bet that goes back a few generations.

So rather than generalizations that can get out of hand, I prefer to focus on smaller, one-on-one and one-on-a-few situations where different choices of conduct can be employed - I prefer non-coercive, voluntarily entered-into agreements.

I hope to check out the video, thanks for the link.

Here is a summary of network effect involving general government I agree with: http://charleshughsmith.blogspot.com/2019/11/corporate-ameri...

It's odd because this article really doesn't have much to do with government.

Currently there is not much in the way of government regulation that makes Facebook or Google dominant. And in the case of the opioids crisis it's actually a lack of oversight and regulation.

I watched the video - I prefer personal freedom resolved at as small a level as possible, rather than ideas submitted to experts/researchers (who chooses the experts?) then managed over by administrators (again who chooses this roster?).

And why is "the concept of voluntary ill conceived"? Taken at face value, that sentence means people should not have freedom over themselves or their property... Also known as a definition of slavery.

Yes but serfdom is compatible with a voluntary society so in the end what's the difference? Serfs were born with nothing and had to bind themselves to a Lord to live. There was also no land that was not parseled out to an owner so there really was no where to go except to choose between hard masters.

This article is just catnip for hacker news. There are good reasons why 'big tech' exists, as Schumpeter explained many decades ago (or Tyler Cowen recently in his book on big business), large companies are productive, innovative and essentially more dynamic due to capital they accumulate than some bazaar economy that writers like Doctorow imagine. Small is not beautiful. Large scale complex problems can only be solved by institutions that are sufficiently complex and large to deal with them. Monopolistic competition produces better outcomes than a sort of hyper-competitive market of small players who are constantly squeezed to produce short-term results.

Competition and lack of regulation do not necessarily result in more safety or higher standards as a look at the 'crypto-economy' proves, and consumers will probably not benefit from having big tech broken up, and it would hurt regions like the EU or the US internationally to stifle their own businesses.

The problem with big tech isn't the size, it's that many company's goals are not aligned with the interests of society at large or the state. The thing to do is to regulate them, provide incentives and rules to fix their problems even if it comes at the cost of competition.

The best results don't come from stagnant monopolies or ruinous price competition. They come from winners winning big but only as long as they continue to do good.

A major component of that is antitrust. AT&T gave us Bell Labs, but it's good they don't still own the internet. Microsoft commoditized PC hardware, but it's good that still don't own the internet. Apple and Google gave us modern smartphones, but they shouldn't be allowed to own the internet either.

But that's what you get from antitrust enforcement, not from FDA-style "entrench the incumbents forever" rules. The laws need to promote competition so that when, as is the rule with large bureaucracies, the incumbents stagnate, someone new can give them a kick in the butt and pick up the ball when it's necessary.

What folks like Cowen advocate imho is that there are huge benefits. That's it.

But are you prepared to have just one online vendor for everything (Amazon), or have just two major phone OSs (Android iOS) forever, or just one search engine? Just one streaming service grouping netflix, disney et al (that will eventually arise and be the cable 2.0)

The fashion industry is fragmented, hugely fragmented, and I don't see people claiming everyone should wear just Adidas or Nike.

What big corps are creating is just this plutocrat monopsony where about 100-200 families control the planet finances. So here's where I and my love for the big corp tend to go sour.

But when you say:

>many company's goals are not aligned with the interests of society at large or the state. The thing to do is to regulate them, provide incentives and rules to fix their problems even if it comes at the cost of competition

You go back to where we are now.

The solution for the big corps isn't to regulate them, is to regulate their commodities.

People need to be able to create. That's what we do as humans. Big corps are blocking us here. Big automation is coming, so what then?

Wanna keep Nestle accountable for bottling our water? Regulate access to it.

Wanna curb Facebook data monopoly? Make them erase all their data and start over, now any company can make a new Facebook.

Wanna curb big pharma? Stop acting like fools with the patent trolling.

We have all means in the world to promote healthy economics, everyone is just too busy getting richer while enabling big corps to promote their entry deterrence as business as usual. No.

A stellar pitch for breaking them up instead

Companies should automatically be flagged for a breakup audit once they hit a certain revenue number. A thriving ecosystem of smaller entities is much better for everyone.

I am unconvinced by this. There are economies of scale that you're denying yourself by acting like so.

Imagine having an Intel broken up, for example.

Split fab off from design, and you have two major players in a configuration like AMD/TSMC. They seem to be doing quite well, and I don't see why the intel fragments couldn't compete

I said audit. Not straight away splitting them up. The audit should assess if the monopoly is a bigger destruction of value than the economy of scale is a production of value from the perspective of society.

That sounds like an unnecessary accounting headache that leads to a nominal company for every new iPhone would fail to lead to true competition's virtures.

Remember these aren't some game company AIs or subservient robots - they engineer loopholes to protect their interests. Expect Hollywood accounting but even worse.

Hollywood accounting to fly under the radar would hurt the share price. Double edged sword.

Instead of having one Facebook abusing people's privacy, we get 5 Facebooks that do so. Breaking up a company does not ditectly address the issue of its conduct.

Facebook's abuse of privacy is only part of the problem, the much more pressing issue is that it's become a publisher and news network de facto.

How? Sorry to snap but I am sick of seeing "they are monopolies break them up" from a tortured definition of monopoly mindlessly chanted towards Google and Amazon while massive black hole olf media conglomerates like Comcast, Disney, and Sinclair Media and their ilk walk by whistling.

There is no explanation of the harm, no plan for division, how subentities could be viable in competition, just gaped mouthed sloganeering. All of the virtual and real ink spilled and not even a bad plan. It is like Brexit all over again but with even less of a plan all over again - "just do it and trust us to come up with a plan latter and ignore our transparently terrible motivations!".

I see Facebook as a net negative to society. If a clumsy breakup plan instead destroyed them entirely... good.

It absolutely does make it easy for me to propose plans to break them up as a result, yes, because no, I'm not worried about how the parts may be viable afterwards.

I will admit this is not necessarily an appropriate attitude for a bureaucrat in charge of the breakup to take, but it's a valid attitude for Congress to take.

That's not really the question. You kinda missed the whole point.

These companies exists because they serve a need. There's proven demand; killing Facebook will create a Facebook-shaped hole, which will immediately be filled by the most capable alternative.

In today's climate this almost certainly means that any American tech firm you destroy or break up will be replaced by the Chinese state-controlled equivalent, because at the moment they're the most capable existing competitor in most cases.

There are a few alternate potential outcomes, but all of the likely ones are just as bad or worse. The "break up tech giants" concept is very much like the "war on drugs" from years ago; it sounds like you're doing something good, but the end result can only be unmitigated disaster.

Spite is a terrible way to run systems. It sets an even worse precedent that recalls the "Devil and Daniel Webster" speech about how you want laws protecting the devil himself for your own safety.

A bad break up would just be "Facebook split into Facebook, Bookface, and CountenanceLibre each with their own forks of related products" - the division which retains the domain names or the most memorable ones win.

I want Facebook to die off but not through giving politicians power to threaten companies into being enforcers of their whims.

Why wouldn't someone who wants Google and Amazon broken up also want Disney and Comcast broken up? That's a massive strawman.

Very few actually talk about them though and they seem like almost after-thoughts judging by the sheer volume of emphasis and timing. Those who want them as well would actually be honest.

It is basically one statement in the primary from Warren and Sanders, and one article vs the deluge of hearings, articles, and sloganeering comment spam.

Whatever the reason - be it propaganda campaigning, vested interests reflecting their bias, or emergent some memetic reason like fear of change, or finding them transgressive of social hierarchy - there is a vastly different emphasis.

While it may seem like he is against regulation until he for it, the principle behind his message is clear: opening up competition. Expensive regulations favor big tech -- but in contrast, if people have a right to interoperability, it doesn't require anything new of companies. It only prevents them from suing to stop interoperability efforts.

Slightly off-topic, but I find it interesting that Google has been taking out two-page ads in The Economist for the past few weeks pushing the message that you control what data you share with them, and that it's really easy to decide what is and isn't saved by Google.

No specific mention of any Google products, paid or otherwise, just a pure PR exercise.

You control it but it’s not presented in an easy way to set the limits you want etc...

I just interpreted as Google trying very hard to make sure that it isn't the Walmart/McDonald's/Uber of the industry - the huge lightning rod that has to deal with the public dislike of the consequences of that industry.

It has been successful in many ways, since Facebook is largely the one taking the hit. Zuckerberg is the famous CEO having to deal with the politicians, but most people probably don't even know who the CEO of Google is.

Of course, behind the scenes I consider Google as damaging, if not more damaging.

So take them into public ownership. Then their strength can work for everyone instead of just some billionaires.

http://archive.is/1adpc

Big Tech paying/obeying Regulations is their version of Certifications. It costs them a bit of money but it also appears to the customers that they're "doing the right thing" (akin to buying integrity?). Unfortunately, while the ideals may be correct behind regulation, I don't think the results match the intent. Humans are too good at gaming things.

Also, the "regulators drawn from their ranks" phrase in this article is quite apt. We tend to think of companies and governments as distinct, exclusive entities when in fact they movement of people between them is fluid. I see that all the time even from my neck of the woods.

I think he doesn't quite "close the loop" on how this proposal would work. Requiring open API access doesn't just create competition. It gives that competition a bit of an advantage, in the sense that the platform would still have to bear the considerable cost of providing the base infrastructure - storage, user management, at least some privacy enforcement, etc. This is, I suppose, to offset other advantages that the platform would unavoidably retain.

Is it fair? Would it work? I'd have to think about that some more, but I think the cost factor is a necessary part of those analyses.

An open API triggers that other fear, a bigger attack surface to a closed-source system that was built in a hurry with less regard for security, and more room for exploits.

No doubt. Every mistake (or "mistake") once made by the platform would almost inevitably be repeated by many API users, until some of them become platforms themselves. there might be some technical measures that can improve things somewhat, but overall I suspect it will make the security/privacy situation worse. Instead of keeping an eye on one shark, individuals and regulatory bodies would have to apply the same level of vigilance to each of a thousand piranhas.

Regulation is not a predicate. It cannot, as a whole, cause anything. The set of types of regulation has nothing in its intersection. Using the word in this way is 80s propaganda.

The real problem for privacy are behavioral profiles, credit scores, consumer scores, social scores etc. because they all lose context and picture you as someone you are not.

Paid services won't scale as ad based services. And context ads won't scale as personalised ads. So the money will flow first to behavioral profiling tech companies and privacy by default tech will never be able to compete with personalised ad tech.

So there will never be privacy for the masses.

I agree that these companies need competition but how do we achieve that? The article doesn’t really address how we create competition for these companies. Who here is will start a company that competes directly with Google or FB? Who would fund such a company? How would it make money? How can we convince investors that investing in such companies is important and they can make money doing so?

Problems solved by computers are easy to scale. So the bigger the company gets the more profits it will make. The entry costs are high, eg. pay 10 engineers for 3 years to build a product that you are not sure people want. And even if its better in every aspect it will be hard to get people to switch from products they are already used to and solves the problem good enough, and is also free.

Is there room for a company that provides managed services that take care of the compliance aspects (don't know how, but say if this were possible) and indemnifies their clients? Would that rekindle the creation of smaller firms that may aspire to compete with Google and ilk? Should, perhaps, the EU or such bodies take on the task of creating these services at running costs?

Regulation doesn't need to apply equally across platforms. Regs could be made to kick in at certain sizes of users, or other quantifiable measures of impact and revenue and views.

...kind of like we do in lots of other places, like taxes. It isn't a wild idea, but this author forgets.

How about, the larger the company gets, increasing the tax bracket/percentage?

The problem today is that the larger a company gets, the more influence and power it has - both in financial and political terms.

The most helpful thing for competition right now would be breaking up the FAAG. Alas, the US wields a lot of power with them across the world, so that won't happen.

In some cases aren't big companies also involved in the actual writing of regulations? I seem to remember that happening in other industries.

It's really nice to see an article on HN that shies away from the usual "the govt oughta do something about this" tack.

I'm at a bit of a loss on the premise of this; as the main focus is on social networks, search, and ad space - which I'm pretty sure aren't the only companies effected by things like GDPR.

I work in high ed. and previously worked for a small genetic software company and I know both of these spaces are effected as well; and quite frankly in both cases and many others, these regulations just create a middle industry for dealing with the regulations and regulators that a small company or less technical institution could and would work with to make sure that their information is in compliance.

A mix of regulation and cracking FAANG like we did with Bell, Standard Oil, Anaconda, and many others is the route to go. Rebuilding our patent/trademark system would also go a long way to correcting some of the more egregious issues around intellectual property & content... just don't tell "The Mouse." And, as to lobbying, if a company isn't large enough to lobby for itself, it actually will need to go through grouped channels for representation and maybe need to think of more folks in the industry than themselves (take Tavern Associations, various SBAAs, etc etc etc).

Cracking FAANG and Wireless Telcos is possible, but it starts with the big voices like Doctorow not going "it's too darn hard to do, woe is us."

TIL: Anaconda Copper Mining Company.

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

Montana and Wyoming are a treasure trove of the ills of both government and business ran amok. Our high school history classes were always super interesting due to this.

Ayup.

I think I'd heard of Anaconda in that context, though didn't make an immediate association with your original comment.

It also raises some interesting questions about the prominant featuring of "D'Anconia Copper" in a popular if grossly flawed bit of popular juvenile fantasy literature.

The Johnston County War is another personal fave:

https://ello.co/dredmorbius/post/xwjjk1bh7yki6ja4lrg7ka

Best laugh I've had all day; I hadn't thought about it, but I'm sure it's no coincidence.

Random trivia that the wiki article leaves off... The Anaconda Company essentially single-handedly helped get rid of state legislatures electing Senators due to having bought off most of the Montana state legislature - which was obviously bad enough for the federal government to step in and give a big nope to things.

Which is an odd thought in the land of big business lobbying and I'm sure has absolutely no parallels to today's situation. Nope, nope, nope.

> While there is much to like about these rules for privacy, the cost of implementing it has meant consolidation in Europe’s ad-tech market. The American giants have emerged as the clear winners.

I'm in the European ad-tech market and I'm confused about what he's discussing here, consolidation where? Which countries? Google and FB were already the largest players because they have always had the most personal information about users, and the most ubiquitous and unblocked tracking cookies.

Nevermind GDPR, what's screwing over European ad-tech currently is the moves by browser makers on blocking third party cookies by default, especially Firefox which is up to 30 - 40% of the market we see - the industry has been addicted to them for years and has refused to move away from them despite warnings from engineers that sooner or later they'll be blocked by default.

I'm not sure that it's a bad thing that regulation has made it hard to compete at surveillance capitalism. Arguably, a few accountable, regulated companies is better than many judgement-proof, unregulated ones, with zero being better than that.

The GDPR applies to all companies, and it makes it hard for a startup to do what Google does, but it doesn't make it hard to do what DuckDuckGo does.

One vivid example is Microsoft after the inception of GDPR. They released a lot of conformitiy tools and implied their new security tools to be helpful (and needed) for compliance. Using them would immediately lock you into their eco-system.

They probably sold a lot of licences from the panic alone.

By codifying the limit of unethical behavior, regulation also ensures every participant operates at the limit.

This is not true, in my experience. For example, the EU roaming charges regulations for mobile data allows service providers to apply a lower cap to the data if the home tariff is cheaper than €2.25/GB; but almost no providers actually do this, and they instead give the user the full data allowance, at least for providers based in the UK. Before the regulation came into effect, roaming rates were much higher for almost every provider, and an EU tourist would have to buy a local SIM card (or just accept the roaming charges).

Not necessarily, though that's a risk.

As Eric Schmidt famously said, Google's "policy is to get right up to the creepy line and not cross it."

http://allthingsd.com/20110120/talking-schmidt-googles-ceo-i...

A quote memorialised in a documentary whose title is take from it:

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

The problem is that such lines are not static, may move, and particularly in dynamic areas of evolving awareness and policy, do. Much as one can be caught by quickly approaching tides or sneaker waves at a coast, Google and much of the FAANG monopolists (as well as other tech and surveillance capitalists) are finding themselves in unexpectedly deep waters.

Which itself is a real and quantifiable business risk.

Why don’t we have our governments fund the development and maintenance of infrastructure and platforms that enable competitive products and services?

We know governments aren’t good at innovation, and they have little incentive to provide great products or services. But, we know they’re well capable of building roads and bridges.

> Why don’t we have our governments fund the development and maintenance of infrastructure and platforms that enable competitive products and services?

I agree with you, however for social networks this is dangerous as hell. You can bet it will take only five minutes for the first law-and-order idiots to demand real time access to all data and especially private messages to mine for "terrorists" (=everything that challenges capitalism) or "child porn", and that in reality it will only be another piece of the surveillance state.

Apple, Facebook etc. can at least put up a fight for privacy in the legal system.

No one has any innovative ideas on how to do both? Disappointing

Why not do a global block chain where each state hosts a node? Someone’s got to have some ideas on how to use cryptography to prevent abuse

> No one has any innovative ideas on how to do both? Disappointing

Because it is literally impossible to run a social network with encryption. It is possible to run a messenger but the demands of police/secret services are already enormous on private companies, what do you think will happen with a government-run service?

There are counterexamples on both sides of this argument.

Government-provisioned messaging services, that is, the post office, offers in many cases strong privacy protections.

Privately provisioned telegraph and telephone systems were long exploited for surveillance (and worse) activities. Protections now taken for granted were not achieved until specifically fought for and won. And of course, the recent expansion into mobile devices has created entire new venues for surveillance, both capitalist and government varieties. You have governments deploying "Starfish" and other mobile-based tracking systems, the infamous Room 641A (https://en.wikipedia.org/wiki/Room_641A), and direct collection and selling of real-time phone location data (https://www.zdnet.com/article/us-cell-carriers-selling-acces...).

Private control doesn't create an automatic privacy interest on the part of citizens by corporations.

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