CEOs of Amazon, Apple, Facebook, and Google prepare their antitrust defense
techspot.com
techspot.com
The article says it best at the very end.
Wherever you lie on the spectrum of blaming these tech companies for doing obvious things to continue to drive the bottom line to their investors, the problem here is that this is just a show. And everyone involved knows it.
There are no mechanisms in place for making competent adjustments at this scale, ESPECIALLY in the United States government. If you’ve ever tried to watch any of these, it’s clear the legislatures either aren’t competent enough in the field to challenge these prepared talking points.
There’s more of a chance of legitimate, competent discussion in a forum like Joe Rogans podcast where he gets people like [1] Jack Dorsey and Tim Pool in a room (albeit with the babysitter counsel) to have a back and forth.
I think the key to moving forward as a decision making body of any kind is to merge the two. Clearly, nothing can come of the Joe Rogan show of note, but imagine: what if it could? What if there could be more transparency and accountability for these huge companies and we could objectively examine what they actually do rather than just hear their talking points and move on?
I guess I’ll end my rant here. It’s just very discouraging that, despite the fact that this hearing is occurring, there’s a next to nothing chance that anything useful for the advancement of our country’s liberties will come.
IMO this is the root cause. If our legislatures can't even login to said website then how could they possibly understand the depth of the power these companies wield? If there is a lack of understanding then there is no way a real solution can be derived from these hearings.
Writing a modern OS is almost impossible from scratch, but there's nothing preventing you from hiring enough people and making Windows or Azure.
But the problem with Facebook and Google is that they started by scraping stuff for free and without limitations, but if you try to do the same thing with them they bite you with Terms of service, paid data graphs and API quotas. How do you build a index of businesses/venues and people? No matter how many people you hire you cannot achieve the same snowball / network effect.
Instead of breaking them up, make them release open data.
But yeah, drives me nuts. Innovation happens due to the initial openness... then everyone closes down and takes their ball and goes home
RMS explains this much more eloquently than I do. He doesn't have a Facebook account, but he's all over Facebook, without any control, desire, or influence.
Many people set up Facebook accounts to have some control over this. Without an account, I can have nasty things about me on Facebook. To have controls over that, I need to agree to a contract with Facebook which gives away other stuff.
Their shadow profile on me was very solid, it seems.
The idea that Facebook is bigger than Exxon was back in 2010 (even with the rate of inflation), when electric cars were still a wet dream, crazy. Even more, the amount of "usefulness" as well. I'm not arguing that we should keep oil as a fuel source, but you have to admit, right now, if a big player (like Exxon) in the field just vanished, it would have a painful impact. At least fuel supply would be a bit crazy for a while until the competitors can ramp up to meet demand depending on reserve supplies being used. If Facebook just suddenly disappeared... meh. I mean, second and third order consequences... meh. Small business ads would need a new place, but that's not crazy bad. More inconvenience. Advertising companies would need a new supplier, but no really likes them anyways. Well, a lot of job openings, that's a problem. But I'm thinking beyond that, because no matter what the industry, a large player just folding suddenly causes a significant job shortage. That's a common denominator. But a hampering access to fuel supply vs. a social media wall for the general publish... one is more important than the other. At the very least, the other Faang companies have... useful significance?
Edit: I'm aware of the limits to market cap. There's no perfect way of figuring out the size of a company. My point, there's a large level of monetary value in these companies and a difference in how they are significant in daily livelihood for the everyday person. It's just interesting how large Facebook is by a metric but how incredibly useless it is compared to another company using the same metric. It's the same how theres an interesting difference between the market cap of Tesla and Ford. Tesla is larger but they make a fraction of the amount of sellable goods. It's one thing to know this, but to see significant numbers, that makes it more interesting.
Exxon’s raw material (oil) was expensive, had high price volatility, didn’t scale, and required (relatively) more people. This capped gross margins, and made growth expensive.
Facebook’s raw material (bits/electricity) is much cheaper and has Moore’s law at their back. It scales well, as does their (relatively) lower headcount. They get valued much higher relative to revenue or employees.
This makes the market cap a weaker proxy for usefulness.
For example, by revenue, it's Walmart with 500B, Amazon at 280B, Exxon 264B, Apple 260B, CVS 256B, ... Alphabet 161B at 11th, Microsoft at 21st with 125B, ...
By employees it's Walmart at 2.2M, Amazon at 800K, ...., Microsoft in 21st place with 144K, ....
By profits, it's Berkshire Hathaway at 81B (massive growth), Apple at 55B (shrinking), MS 39B, Chase 36B, Alphabet 34B, BoA, Intel, Wells Fargo, Citigroup, .... FB 11th at 18B, .... Amazon 22nd at 11B....
https://en.wikipedia.org/wiki/List_of_largest_companies_in_t...
https://fortune.com/fortune500/2020/search/?f500_profits=des...
Doubly so when comparing companies like Exxon and Facebook, which have very different operating costs.
In that sense, revenue is more of a measure of “how long and costly is your supply chain, and how close are you to the customer facing side of it?”
Both - read about consumer and producer surplus in econ.
> The way revenue is measured seems to imply ....
Revenue estimates how much buyers were willing to pay for the product, but each buyer retains their surplus, so revenue undercounts the value to the buyers. But it's a decent representation of value added.
I’d say earnings are a better, but still not great measure of value added.
Apparently they add at least $1 in value to every transaction, otherwise buyers would not use that service, and simply buy the $99 product.
In fact, they probably add more than $1 in value since they were selected.
If they have massive revenue, as you posited, then they added massive value to buyers in total, exceeding their profits.
Read about consumer and producer surplus.
and
> Thereby comparing revenue of a platform against a traditional business model doesn't make sense
When two entities trade, by far they do it because they both benefit. There is no difference between platforms and other businesses. Each provides value to customers, and the sum of the benefits each gains each trade (often called consumer and producer surplus in economics) is the net gain to the pair.
Revenue is a very good measure of how valued these trades are to customers. In fact, almost all customers would pay more for the benefit (up to but not exceeding their consumer surplus).
This is where you are wrong, how many paying customers does Google have VS users?
Platforms that are value aggregators decoupled value production from internal capacity.
Exponential, many-year growth is enough to explain those market caps.
They are significant in people’s daily lives. Their future expected profits are enormous because they can do the work of so many with so few, hence their super high profit per employee.
Software lets you infinitely scale, so it’s almost impossible to compete with the market leader. Email, calendars, smartphones, online retail, video streaming, etc have reduced demand for the labor for the vast majority of people, which has certainly impacted their livelihood.
Camera companies, tv companies, advertisers, travel agents, secretaries, movie rental, retail, map makers, education, journalism and news, book publishing, and I could keep going on about businesses that have been negatively impacted because they can’t possibly compete with a FAANG.
Software can also obviate people much quicker than in decades past, where people might have had time to retrain as new technology was deployed.
Personally it would definitely improve my life if Facebook went down and people around me stopped scrolling their Instagram.
You can commit a crime multiple times, you just can't be punished for the same instance twice. Maybe I understand this wrong though.
Moreover, Microsoft doesn't have a flagship product which they're using to abuse their monopoly position. The other four do: Apple has its app store, Google has its search+ads vertical and its app store, Amazon has its delivery service, and Facebook has its social+ads vertical.
It's a common sentiment that Sherman Antitrust was a prerequisite for prosecuting and breaking up trusts a century ago; we needed powerful legislative tools in order to even define and understand the abuses that those corporations brought upon us. Similarly, I have heard many people suggest that we will need new legislation in order to properly describe what Amazon has built in terms of systems which deliberately abuse labor, control shoppers, and grift the public.
EDIT: And I think I know the reason why. Imagine your kid has a birthday party and invites Alice, Bob and Charlie from school. All is fine. Imagine now that he invites everyone from his grade. Everyone except David. That is bound to piss David off a lot.
Oh and I think game deals are cleared in advance, while app removals happen after you've already done the work.
They've also helped pay for the console with hardware sold at a loss (near-loss nowadays after the PS3 loss mess). So it was seen as a necessary "evil" by most.
The one being seen nowadays as bad -- which answers your "everyone except David" metaphor -- is Epic Games buying "everyone except Steam" exclusivity deals. But that topic is too deep to go into here.
And there was some hoopla a year ago about the windows licensing terms changing in a way that made migrating Windows workloads from on prem to cloud difficult for the main cloud providers except for Azure.
https://medium.com/@teamwarren/heres-how-we-can-break-up-big...
But why Apple? Android has a very substantial market share and provides a good hedge against Apple iOS, same for the MacOS/Windows market.
The real answer to why is that it is a grandstanding joker jury and all of their reasons are stupid and dishonest.
... or directly on YouTube https://www.youtube.com/channel/UCVvv3JRCVQAl6ovogDum4hA