If you like startups you should love anti-trust
alexwrites.substack.com
alexwrites.substack.com
(That's with a pretty broad definition of "monopoly", including "user-specific monopoly" like you get with android / ios, notions that I would also try to explain in said blog)
One example:
> https://mobilesyrup.com/2016/09/27/why-blackberry-never-rele...
> I believe this one shows how a monopoly can prevent innovation. Blackberry with the Passport had a new form-factor. To make this phone worthwhile, it had to use a mainline OS. At the time, only Android with Google apps was available. However, Google rules back then couldn't allow this.
Would HNers be interested in such content? And in contributing to it? (my knowledge wrt monopolies is in my area of expertise, and let's just say I like being employable, so it's better if it doesn't look completely targetted)
Unfortunately, this subject area is full of strong emotions and opinions that make it hard for people to be objective.
For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work (edit to clarify: running BlackBerry’s own OS and software), and so did all my coworkers. Blackberry was the dominant mobile platform once. Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
I actually think it's not possible to be objective on that matter, hence it needs to be properly explained, to understand the limitations of one post (but the goal is to have many posts, so hopefully readers can reject the ones they feel is wrong)
> For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
Let's just say that I've seen a bit of first-hand, and a lot of second-hand of "Google working jointly with XXX", and in the vast majority, Google-side doesn't spend much engineering time on those issues. I completely agree this is not an objective point of view. This can hardly be proved, shown or explained, so I have no issue with you not taking my word for it. Hopefully if other people join this project, there might turn out /some/ people that you do trust?
> And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work, and so did all my coworkers. Blackberry was the dominant mobile platform once.
I wouldn't exactly call the replacement of BBOS by Android a "healthy competition", when the main reason Android won was that it was an OS completely free of charge, paid for by another recurring stream for the company. (I'm not saying Android was worse than BBOS, that I have no idea, )
> Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
That's irrelevant, and belongs to opinions.
RIM’s complacency and flat-footed response to the iPhone has been very well covered, and can be Googled. By the time they were trying to partner with Google, it was already too late for them. Android is not what killed the Blackberry.
The elephant in the room is the heavy natural monopoly on software compatibility/interoperability, and the above thought experiment only makes sense because Android is a purportedly open platform.
Effective tech anti-trust has to work around that and not merely police behavior aimed at restricting competition. Modern tech anti-trust should be focused around mandating open access to proprietary systems (for starters, anything a web user can do, a program running on the user's behalf should be able to do), and privacy legislation to make it so that customers have to be earned rather than everyone being treated as a data subject by default.
Other sources, such as Chet Haas's book, make it clear that what became the G1 was already on the roadmap. It was just prioritized.
It seems what you’re envisioning has a ton of overlap with his work covering monopolies.
I’m sure you two could work some magic together.
One issue I foresee, similar to how local business groups inevitably get overwhelmed with real-estate agents, is that this venture will get overwhelmed with complaints against ISPs and other utilities.
I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
For instance, trademarks are a monopoly, but I don’t think many of us want any company to be able to co-opt brand names. That seems pretty clear.
Getting less obvious, IP-protected interfaces like GoPro mounts or those dumb Kureig coffee pods. Nobody likes those proprietary interfaces, and they do give monopoly control, but are they economically bad?
And how about console games, where all of the makers subsidize low Hw margins (therefore higher sales) with monopoly control and a cut of game publishing. Would the market be better if that was prohibited?
It’s going to be pretty easy to dunk on obviously harmful monopolies. It might be more interesting to explore more nuanced cases.
Well, my current conclusion with my post is that wording is very very hard :-). What I said is "I want to show small-ish negative impact of a big tech monopoly". It will not prove it's all bad, even though it'll only give examples of where this is bad
> I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
Let's just say that the current tendency is to think that monopolies are fine, and I'd like to help reverting that. Yes your examples are worst discussing, and I have some of my own.
For instance, I definitely acknowledge that Android's monopoly helped whole unrelated sectors. But I also believe that innovation would be much better served if Android was opensource-in-spirit and maintained by something like the Linux Foundation.
> It’s going to be pretty easy to dunk on obviously harmful monopolies.
If it was, they would already have been ruled illegal? In Europe, I can't really name any "obviously harmful monopolies"
This is basically what he is doing except uncovering a monopoly in depth takes months, not a day. Amazing work.
E.g. here for cheerleading monopoly article he wrote
https://mattstoller.substack.com/p/how-a-cheerleading-monopo...
I don't think anyone disagrees that monopolies are cancer.
The hard part is coming up with a targeted cure that attacks monopolies without hurting innovation.
So far that seems impossible. Almost like monopolies are a natural result of innovation.
Do it and post it on here. Just be prepared to be flagged a lot.
> The bigger a tech company gets the worse it becomes at providing consumer and customer surplus, because it needs to eat that margin (of a sort) to keep growing. Growth demands that tech companies eventually consume that which first engendered them good will.
When that comes to Google, I think they are talking about "eating the margin (of a sort)" of the good experience for end users, people searching. But the reality is they are actually eating the very real margin of the advertisers, their "actual customers".
In the last ten years, through the excessive ingestion of data about the advertisers businesses, Google has sought to expand their bottom line by extracting as much revenue from advertisers as possible. The advertisers margin has become Google's target revenue. If (nearly) all advertising is via Google, their only way to grow that revenue is by extracting more of the advertisers margin.
When you advertise on Google (and FB for that matter) you now have to transmit to Google's algorithm all data about all transactions on your site. This is sold as training the algorithm to enable the targeting of customers. But what you are in fact doing is telling Google everything about your revenue, they know exactly how much you are receiving from all sales. The algorithm is designed to maximise the extraction of the advertisers margin, to squeeze it as much as possible.
This is going to come back and bite them. I believe advertisers are going to fall out of love with Google, if they haven't done so already.
Google are the ultimate beneficiary of the auction, but don't show how it operates, what the other bids were, and how they reached a value for the placement.
On top of that as the advertiser you have been forced to give Google your full revenue numbers in order to play this game.
In my opinion Google needs breaking up, they should not be able to operate as both the marketplace/exchange and the vendor when they have a monopolistic position. The advertising marketplace/exchange should also be regulated in the same way as financial exchanges.
This should just be codified into law, regardless of monopolistic intent. Any vendor that uses their position of power to limit the freedom of their customers should be hit with the full extent of the law - starting with FAANG, and then working our way down from there.
I’m worried more about Apple. Why? Because Apple has been a counterweight to ad-tech. They’ve been able to champion privacy and UX for actual end users, they have literally been forced to care. But now they’re expanding into ad-tech as well, that’s terrifying; there is literally only Google left, and they’re full-on ad-tech already. So that means mobile (by far the biggest and most universal computing platform worldwide) will have NO customer champions. (Caveat Apple treats customers bad already yadda yadda, but this point still holds). This will be a truly “advertiser first” world.
I’m no antitrust expert, but I can understand a company maximizing its core business (or “do one thing really well”), and I can even respect pure ad-tech. What truly sucks though, is these “expand into every crack of the market” faceless mega-behemoths that these companies all become. (In McKinsey speak, I believe this horror is known as vertical integration.) This always sucks for the consumer.
That doesn't make for a great democratic rule.
If that inflation wasn't part of the picture, companies holding steady would be more acceptable.
Although you wouldn't hear about it in the press; the hot companies are always the ones that are growing. There isn't much to say about companies that just sit there.
When you put the world's greediest individuals in charge of what your business should do next, don't be surprised when the answer is ALWAYS "give us more money".
I will sleep like a baby if their expectations of continued "being rich for no work" doesn't pan out for them.
Get a job, slackers.
Historically "growth" has just been a word for increased energy availability. If it is supposed to measure something else it is a bit meaningless (if some dude plays a game for 2 hours a day, then next year spends 2 hours a day playing a "much better" game on a faster XBox, what does growth as a % even mean? If he spends more hours on a game is that growth? These are profoundly silly questions to spend time on). The rough thinking is we should keep pushing for energy growth until we physically can't any more, because that helps poor people not starve which is actually important.
Are energy companies even really doing that much to grow their energy production? Are we seeing much in the way of producers materially investing in increasing their production thus flooding their markets in a race to the bottom? It feels like a lot of these things have stalled out at present, or am I being too cynical?
Not sure that's a good idea, see https://dothemath.ucsd.edu/2012/04/economist-meets-physicist...
Your comment is common but it implicitly assumes a stable steady-state in the business landscape. (E.g. phrases such as "profit _will_ continue to for the foreseeable future,")
That type of thinking can work for local businesses (isolated from global competition) such as a small family restaurant. The owner opens a new restaurant with 10 tables and then maybe the business modestly grows to 15 tables a few years later and then stops growing. The owner is able to maintain a steady-state business of repeat patrons at the restaurant for decades with predictable profits. Another example of somewhat predictable profits on a larger scale are legacy oligopoly/monopoly businesses such as railroad companies.
But unlike local restaurants, many businesses have to aggressively compete in national and global markets and if it stops growing, it starts dying. Predictable profits are not guaranteed for the foreseeable future. That's why giants like Motorola and Nokia got their mobile phone business killed by a (growing) hobbyist computer company named Apple. (Motorola and Nokia are still big but not as big as they once were.) The businesses in hyper-competitive spaces like technology etc are a basically in a Red Queen race: https://en.wikipedia.org/wiki/Red_Queen_hypothesis
E.g. Why can't Blockbluster Video stop worrying about growth and just pay dividends from profits? Because an upstart like Netflix competed away Blockbuster's rental profits. Using hindsight, we can see that assuming Blockbuster could just pay "dividends regularly and for the foreseeable future" is flawed. The same broken assumption is happening to Netflix today: Why can't Netflix stop worrying about growth and just pay dividends? Because Disney+ and HBO MAX are competing away Netflix's profits.
Growing revenue and profits allows adaption to new competitive threats.
It isn't just the investors who want growing businesses. The prospective employees find them desirable too. Many talented graduates of engineering would rather get a job with a growing Apple than a declining Motorola/Nokia.
And, in the case of Nokia specifically, maybe they would still be a significant player in the handset market if they had pursued profit by investing R&D into a smaller number of good handsets, rather than their growth strategy that, if memory serves, resulted in the release of one janky new handset every week.
It’s not like what Apple did was magic; it was mostly just hard work and vision. Motorola and Nokia lost their business by being unfocussed and stupid, not because they didn’t pursue growth.
You're laying out a cause & effect I didn't claim. I'm not saying "pursue growth guarantees success" -- which is unrealistic. A variation of your scenario is like asking, "Most novelists pursued growth of their audience but most failed so how do those failures explain why novelists want to grow their audiences?"
The # of failures is a different subject from the _motivation_ for growth.
My reply to gp was to dissect the flawed premise that profits are predictable and stable. It's that flawed assumption that makes it seem like growth is unnecessary.
In other words, even if you want to deliberately create a new company with a "no growth" policy, the outside world has its own freewill and doesn't have to cooperate with your goal. New competitors or changing consumer preferences can sabotage your "no growth" idea and erase the steady-state profits.
Not at all. You said,
> Why can't Blockbluster Video stop worrying about growth and just pay dividends from profits? Because an upstart like Netflix competed away Blockbuster's rental profits
And I simply don’t see the connection.
Blockbuster could have done any number of things to prevent their demise but pursuing a growth strategy in the face of an obvious threat to their business was not one of them. And their size - perhaps achieved from a growth strategy - did not protect them. It’s possible that their size, and the blandness that was necessary to get there - actually made them more vulnerable. (We used to call it “Lacklustre Video”)
The same for Nokia and Motorola. It’s a strategy of crap products built en masse to drive growth into every segment which makes a company vulnerable.
So I think novelists make for a poor analogy. And I think there are plenty of companies that pursue a sustainable profit strategy rather than a growth strategy.
It’s just that you don’t hear about them because they aren’t screaming for your business.
> And, in the case of Nokia specifically, maybe they would still be a significant player in the handset market if they had pursued profit by investing R&D into a smaller number of good handsets,
They picked the wrong horse, as the saying goes. At the time it was not so obvious which thing was going to win.
Companies need to grow in places because they will inevitably be shrinking in some places (as customers age or churn out, as competitors come in to compete in segments, as new substitutive goods compete for wallet share).
Even if you want to stay the same size, you will have some amount of growth in your strategy (or you’ll fail).
How is a company dying if it continues to make profit in a changing market?
> Growing revenue and profits allows adaption to new competitive threats.
Adaption to "new competitive threats" is done by humans.
Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.
Death takes time, and may not be apparent if you're only looking at profits. The company could be profitable, but less so every year. Or, the company could be growing its profits year by year, but by a smaller factor. In more general terms: your profit may be positive, but if any of its derivatives (first, second, N-th) is negative and you have no way to address it, then you're dying.
>> Growing revenue and profits allows adaption to new competitive threats.
> Adaption to "new competitive threats" is done by humans.
Yes, but having more resources lets those humans invent and execute such adaptations better - in the same way it's easier for individuals and households to adapt to changing life circumstances when they have savings and a stable income source, and the more of these they have, the easier it gets.
The poster child for this model, I think, is Zildjian: the biggest global maker of cymbals. They have been doing it for hundreds of years, never expanded outside of cymbals, and continue to do well.
Companies run on this expansionist idea must keep expanding to avoid death, however, because they operate at unsustainable levels of expenses otherwise, and they hire managers on the premise of making bold moves to get promotions.
This "grow or die" mentality is entirely a cultural phenomenon of modern western companies, and they can absolutely opt out of it.
Yes, I understand that and already provided several counterexamples. (Local restaurants and legacy railroads.)
>The poster child for this model, I think, is Zildjian: the biggest global maker of cymbals. They have been doing it for hundreds of years, never expanded outside of cymbals,
I actually own a bunch of Zildjian cymbals and saw several documentaries about the brothers' split into Zildjian and Sabian. In any case, Zildjian did expand into other products outside of cymbals. From wikipedia:
- In 2010, Zildjian acquired the Vic Firth Company and in 2018 acquired the Mike Balter Mallet company expanding the company's product offerings to include a full range of drumsticks and percussion mallets.
Zildjian also sells electronics like earphones[1]. The daughters that inherited Zildjian wants the company to grow. The growth has not been as fast as a tech startup but they do want it to grow.
But even without expanding product categories, the company can also expand markets to sell to. That was one of the motivations of Zildjian expanding their manufacturing into Canada as that export location allowed them to sell cheaper cymbals to Europe.
>This "grow or die" mentality is entirely a cultural phenomenon of modern western companies, and they can absolutely opt out of it.
Not just Western companies. Also East Asia companies in Japan like Canon, Sony, Toyota wanted growth. Korea companies like Samsung and LG. And Africa companies in Ethiopia and Nigeria want to grow too.
But I do agree with the point you were trying to make: if you happen to pick a business domain that doesn't have cutthroat competition, there's less pressure to grow to avoid dying.
RIM Blackberry didn't get into the drums cymbals business (slower moving competition of hammering round sheets of metal) but the phones business (fast iteration competition of electronics). They grew until the 2007 Apple iPhone made their keyboard phones and 2-way pagers mostly obsolete.
If you're an entrepreneur who believes the "growth treadmill" is insane and stupid, you need to pick the type of business that aligns with that philosophy!
[1] https://www.google.com/search?q=zildjian+in+ear+monitors
Blockbuster is a different industry but again they were focused on financial growth at the expense of the company. Trying to hit those targets meant they opened marginal locations and it also meant things like reducing “costs” like staffing (but not strategic investments like C-level compensation, of course) which had given them something Netflix couldn’t easily match.
If you leave profit (growth, resources) on the table, someone else will pick them up and beat you with it.
The supposed analogy is biological. You may choose to check out of the always-do-more-with-less rat race, or even out of existence completely. But that choice will help populate the world with "not your successors". Similar with companies: your "sustainably making profit" premise is incompatible with "willingly foregoes growth / change" – at least in the long term, due to competition.
Assuming there's always some proportion of people who choose to do otherwise.
Humans are powerful enough now that, if we wanted to, we could stop this. It'd require collaboratively punishing defectors, of course – because some humans are greedy – but until (and if) we meet aliens, we don't need to live like this, provided we can learn to work together.
It's fortunate, then, that motivated collaboration can produce better results than competition. The collaborators might be able to win the Last Competition.
But the transition between growth and value is a bit tough. You need to stop hiring like crazy, intern promotions suddenly go more stale as a result, stock compensation is hurt a lot so your employees might not be super happy with it, the story is also appealing to a completely different kind of people, and your stock goes down a lot at first, all your financing suddenly gets a lot more expensive etc.
It is possible that we are witnessing that transition in some of the tech companies right now, as the symptoms match, but it really is too early to tell.
The car industry is a great example. If you're not growing (in the most basic sense - new products, new markets), you're dying.
That's even more true in tech.
The US in particular greatly disincentive dividends, putting larger taxes over them than over any other form of profit accumulation.
Sort of like a malign tumor, which in the end kills the host and itself.
It's just propaganda. Nothing grows endlessly, apart maybe from human greed and idiocy.
Also some growth is "mandatory" because of inflation. If you don't grow your profits but there is inflation, your profits in reality shrink.
They usually build something and price it at a loss, because big companies can afford that till start ups go under.
Or unfairly using their services to hinder competiton.
Amazon is a big prepetrator of this. There was a smart oven, sold on Amazon. Amazon was also an investor, who made their own into a basics product at a loss.
While I agree that startups can disrupt the big monopolies, past Uber, I now find them just as dangerous as big companies to the customers and the societies they live in. Perhaps more so, because big companies don't have to disrupt anything to extract their rents.
I feel startups are not like they used to be. Or maybe they always were what they were, and I became disillusioned only recently. Either way, today, this is a well-developed process of wealth transfer. In a sense, startups aren't something opposite to big companies - they're the means big companies use to frack an existing market and pump out all value. Startups are an integral part of the market ecosystem now, and from the POV of those at the top, it's arguably a symbiotic, not parasitic relationship.
--
[0] - I used to call it "strip-mining a market for all its worth", pointing at fast extraction of value with no concerns about sustainability, but I think "fracking" is better, as it also evokes the image of first cracking the market by a sudden, focused infusion of seemingly infinite free money.
I've had a similar epiphany over the last five years or so. Once you take money from the VCs, you are essentially just an R&D department of the VC collective with perhaps a bit more autonomy than you might have in a BigCo but you are still heavily constrained by the demands of your funders. This is nothing like the romantic two guys in a garage with a great idea taking on the world narrative that we've been fed for decades.
Not all markets are winner takes all or even close to it
The competition (or sometimes faux-competition) lasts until investors get bored, then the unsustainable startups slowly go away (often extracting more money from the public on their way out, by means of an IPO), leaving a broken market that needs to be rebuilt, if it's possible at all.
- the actual innovators are rewarded
- innovators have more skin in the game
- innovators live or die by their execution
Not so with the monopolies.
And so, the main innovation of the most successful startups in the last ~decade was in ways of breaking into and destroying (er, "disrupting") markets that before were just fine - not perfect, but at least sustainable.
AirBNB, by the same argument, put offline-only vacation rental services on check.
Neither of these is models is going to go away now. The companies may have to deal with debt, may need to increase unit costs, and may have to conduct layoffs, but they fundamentally changed their markets and will remain the dominant players.
Can't comment on Uber, because in my local market they lost against a community of taxi companies who have an excellent app.
But the pattern seems to repeat on so many levels, and at so many different time frames: pump in money in a manner that seems generous, so as to gain control of a market. Then use that control to maximize one's own profits.
history from Perspective Of The World:
https://www.amazon.com/Perspective-World-Civilization-Capita...
Gods murder their primordial parents. Republicans overthrow kings and crown a Napoleon. The liberator-opressor complex litters history.
The first step is to notice the cliche and expect it. The phenomenon exists. Next step, tread lightly. Any reason you think up is too specific. Your reason why Microsoft became IBM under Ballmer does not explain why Cronus castrated Uranus or why he wanted to eat baby Zeus.
That said... I think "you are what you eat" is inescapable long term. Wikipedia would not have been wikipedia if it had been a startup, IPOed, etc. If you are a giant software company deeply embedded into locked in customers across all industries... you will have IBM-ish tendencies. Ballmer is Thanos, inevitable.
Some examples to rattle off a few household names: instagram, whatsapp, youtube, tumblr, android, beats, audible.
Also Fitbit, nest.
YouTube had huge storage and bandwidth costs and was about to be sued out of existence.
Tumblr wasn’t exactly doing great before being bought by Yahoo and Yahoo wasn’t exactly a monopoly when it acquired Tumblr and its current owner is definitely not that big.
How do you think Android would have succeeded when better funded companies like Microsoft, RIM and Palm failed to make a dent?
Beats was already profitable before being acquired by Apple. No one can credible claim that Apple has a “monopoly” on headphones or in streaming music.
That said, afaik the beats acquisition wasn’t about headphones as much as the streaming service… digital music is a market that apple was the largest player in for a long time (may still be idk?).
Rim and microsoft were squeezed out by android, That wasn’t an inevitable outcome - it was the result of google buying android. Google staying entrenched as the top search engine may also have something to do with their ownership of android.
You can pick apart some of my examples, sure, but if even one of those is true then of the hundreds (thousands?) of companies acquired by faang you must know that a good percentage of those would be viable stable workplaces… they were purchased usually because of that exact threat! and then repeat that for every industry in the economy with large players in it…
> you must know that a good percentage of those would be viable stable workplaces
How many former unicorns that did go public in the last decade are actually profitable today?
And in a proper anti-trust environment, the app store (which Steve Jobs really resisted anyway) wouldn't have been permitted to act the way it did and probably make the iPhone too restrictive for most people to adopt.
So other consumer-driven solutions would have come about. It's not rocket science.
Same, Youtube might go down, but the idea was out of the box now, someone else would do that. Technology (ContentID) was there as well. As a consumer, I don't mind if it'd be called differently done by different team. It might have been better or worse of course.
https://www.fastcompany.com/3019351/will-instagrams-vogue-li...
> On Thursday, the company announced that it would begin introducing photo and video advertisements on the service, its first attempt to generate revenue since Facebook acquired the startup for $1 billion.
> ...
> It’s a sentiment Systrom has repeated to me for years–and an idea that many revenue-free startups have begun parroting. For entrepreneurs without a business model, it’s become almost fashionable to declare that they’re simply creating a new model altogether: Whatever it is–by god–won’t involve pesky traditional ads. No! The ads won’t be disruptive or annoying–they’ll be wanted and loved! (I’m waiting for the call, SnapChat.) But when push comes to shove, more often than not, the ads turn out to be nothing more than, well, traditional advertisements. See: any Promoted Tweets.
Yes, it was on track to be something big... but it wasn't on track to be able to make any money and was more likely to flounder once it ran out of VC interest and get bought for cheap by Twitter.
https://www.businessofapps.com/data/instagram-statistics/
There's a reason that chart only starts listing revenue in 2015.
While Instagram might have been keeping Zuckerberg up at night with nightmares - one shouldn't pretend that it had a path to making money and being able to keep running.
It also means the 2010s may have perhaps seen investors print billions into businesses that actually matter and deliver real innovation
Facebook's not all that good at building new things, though. Most big companies aren't. Partially because they don't need to be.
If you haven’t noticed, Microsoft and Apple have both been around for over four decades “creating new things”.
Or it would have just hired all of its founders to recreate it.
Do you now also want to stop acquihires?
YouTube’s issue wasn’t just being sued, the storage and bandwidth costs are huge and YouTube was losing billions. Rumors are that YouTube is still not profitable.
It could have been profitable earlier, but it would have been much smaller and faced stiff competition. That isn't what Google needed from it.
Is every company that is not immediately producing a profitable product “price dumping” - including every startup YC funds?
As for subscriptions... Well, they tried that with Youtube Red. And then Youtube Premium. And then Youtube Music. Every time people turned it down, because the benefits weren't worth the cost each month considering all the features touted could be found legally for free elsewhere. And when video creators outed Red by showing they'd get a paltry amount of that revenue, despite Youtube saying the money from subscriptions would be used to pay them, even more of the viewing audience turned against it.
When you're in the uniquely precarious position of hosting high cost user-generated content, it's very easy for outside forces to break you over their knee and send you into a death spiral.
Wearing my “enterprise architect” hat, I love stability. I don’t want to choose a technology that just might be the silver bullet but probably isn’t, and will in fact be abandoned and need replacing in 2 years.
But with my “Hacker News reader” hat on, stability is boring. Constantly inventing and testing new ways of doing things is how we progress as a species. Anti-trust speeds that up and so I love it.
I guess I want a constant churn of innovation with other people bearing the risk. Perhaps if anti-trust were more aggressive it would at least level the playing field - at the moment, most innovation is from companies who can afford to drop $10B as an experiment. (And they get a tax refund either way.)
Startups will bring translation layers to fit inside an existing system, and as a big client you can often send them the exact interface they need to adhere to and they’ll deal with it.
In that sense, the switching cost can be minimal (and you might keep your existing system running in parrallel), and if you’re big enough you’ll have the option to outright buy the smaller business if it were to flail.
It’s more complicated I think on the B2C side, where you have to buy more trust and establish a brand for people to give your their data and/or money.
This changed my attitude quite a bit. In particular in the US the debate is often framed from the perspective of the very few individuals adverserly impacted by anti-trust. "If you break X apart, who will want to be the next Y? The answer is quite literally: hundreds of people gleefully waiting to take even a fraction of that market.
If there is a void to fill, someone will always do it. I think of all the measures one can take, anti-trust is one of the least disruptive things to the ecosystem overall, because it not only doesn't diminish, but strengthens market dynamics.
> [...] Oracle became a company more famous for its legal department than new innovation.
Just like most other regulation 'anti-trust' is just another weapon that those with a big enough legal department can wield against the competition.
We need more competition, not less. Eg we need to allow Wal-Mart to open bank accounts.
I'm not trying to defend the author.
But there's no "mental leap" here; that's exactly the real-world, observable effect of anti-trust legislation when it is enforced. And what we're seeing now with the FTC is precisely the enforcement, for the first time in decades, of existing anti-trust legislation.
If your point is "legislation isn't enough", you're right, but trivially and uselessly right. Of course the real effect comes from enforcement, just as making murder illegal but then not charging and arresting murderers would, obviously and trivially, not decrease the rate of murder.
The problem is that it's selectively enforced, which makes the legislation dubious at best. There are hundreds of monopolies or quasi-monopolies out there that will never be challenged.
Not having anti-trust legislation isn’t going to increase competition. Say you need more competition, also isn’t going to increase competition. Real markets naturally tend towards monopolies, only governments putting a thumb-on-the-scales to prevent monopolies keeps competition alive long term. Something the US seems to have forgotten in the past couple of decades.
I don't think it is an issue with enforcement alone, but with laws that do not sufficiently obligate enforcement. Such laws are not created because politicians are corrupt.
Concluding that regulation dosn't help when what we're observing is non-enforcement is a bit disingenuous. If I'm being charitable.
But they haven’t been used for decades, because regulators have decided not to use them. There are of course many reasons for that, including political pressure and regulatory capture. But to say the laws don’t exist, is just wrong. They exist, they just haven’t been used for a long time.
Also writing law to obligate enforcement is tautological. All law is meant to be enforced. Who’s gonna enforce the enforcement of enforcement laws? And why would they not be subject to same pressures to under-enforce as well?
> Concluding that regulation dosn't help when what we're observing is non-enforcement is a bit disingenuous. If I'm being charitable.
Why do think I came to that conclusion? My comment argues quite the opposite.
See eg https://fee.org/articles/the-myth-that-standard-oil-was-a-pr... or https://www.econlib.org/archives/2013/01/great_moments_i_6.h... or https://www.econlib.org/library/Columns/y2017/Hendersonpreda...
> Furthermore, and also in contradiction to monopoly theory, Standard Oil’s share of the market had declined from close to 90 percent in the late 1800s to about 65 percent at the time of the court’s ruling. These facts, however, did not faze the judiciary. The court ruled that because Standard Oil had consolidated some 30 divisions under one single management structure it counted as a monopoly. In other words, Standard Oil did precisely the opposite of what monopoly theory maintains—it reduced rather than raised prices, it increased rather than cut production, it lost rather than “controlled” market share, and it paid its employees more rather than less than its competitors—yet the theory that Standard Oil engaged in “predatory practices” and “exploited” consumers has prevailed in our history books.
Are you suggesting that all legislation is equally prone to abuse through selective enforcement? That's wrong. Legislation differs a lot in how straightforward it is to enforce universally.
Eg legislation about what people do in the privacy of their own bedrooms is almost impossible to enforce. Legislation about which side of the road cars should drive on almost enforces itself: you don't need the police to write you a ticket to figure out that driving on a different side of the road than everyone else in your country is a bad idea.
Would really like to see a credible source for this statement. There are industries where this happens (natural monopolies which is stuff like raw commodities, as competitors cannot mine at the place where you mine) but I don't think this holds in general at all.
given that all industries consolidate and end up with 2-3 major players in every field, your assumption does not seem to hold at all.
No because the legislation does not clearly define what a monopoly is, making it easy for politicians to hijack it for any reason they want.
Some of the purpose of antitrust enforcement is to establish a baseline to "warn" other companies. They've only really interfered with a handful of tech acquisitions in the last year, but it sure sounds like everyone doing M&A is being very careful right now.
Sometimes a credible threat of enforcement is enough.
My point is that 'anti-trust' legislation is at best pointless and at worst counter-productive to actually do anything about 'trusts'.
Did you know there's a huge cheerleading monopoly [0]? There is essentially one company that runs the competitions, sells the uniforms, and sells the equipment. A quote from the article:
> The most interesting aspect of this case are not the legal arrangements, but the fear that I found in interviewing people in the cheer world. Virtually every interview I did was under the condition that the person remain anonymous for fear of retribution. Often people would email me saying that I had no idea the depths of the scandals in the sport.
How about monopolies in port-a-potties and MMA? [1]
The alternative seems to be that you do...nothing? And just let them keep consolidating a market? That can't be good.
Antitrust needs enforcement so that we can have competition.
[0]: https://mattstoller.substack.com/p/this-is-not-a-democracy-i... [1]: https://mattstoller.substack.com/p/a-land-of-monopolists-fro...
To posit a real world example, when the predator overkills, the ecosystem dies.
To cite just a handful of examples:
https://blogs.scientificamerican.com/extinction-countdown/wo...
https://en.wikipedia.org/wiki/Surplus_killing
Top down pressure on monopolies keeps competition healthy and active. A neverending arms race, which is good for innovation. It prevents lethargy, malinvestment, stagnation, and mere taxation.
Huh? What does a biological predator/prey relationship have to do with economic competition?
Because it sounds highly unlikely to me.
The whole point of anti-trust is to provide a check on only the most massive companies that over rent-seek their market and cannibalize competitors, before the startups are able to get off the ground, literally crushing competition.
Anti-trust fosters competition by design.
>
One of the most worrisome statistics in antitrust is that for every case brought by government, private plaintiffs bring ten. The majority of cases are filed to hinder, not help, competition. According to Steven Salop, formerly an antitrust official in the Carter administration, and Lawrence J. White, an economist at New York University, most private antitrust actions are filed by members of one of two groups. The most numerous private actions are brought by parties who are in a vertical arrangement with the defendant (e.g., dealers or franchisees) and who therefore are unlikely to have suffered from any truly anticompetitive offense. Usually, such cases are attempts to convert simple contract disputes (compensable by ordinary damages) into triple-damage payoffs under the Clayton Act.
> The second most frequent private case is that brought by competitors. Because competitors are hurt only when a rival is acting procompetitively by increasing its sales and decreasing its price, the desire to hobble the defendant’s efficient practices must motivate at least some antitrust suits by competitors. Thus, case statistics suggest that the anticompetitive costs from “abuse of antitrust,” as New York University economists William Baumol and Janusz Ordover (1985) referred to it, may actually exceed any procompetitive benefits of antitrust laws.
See the linked article for more details.
Walmart is allowed to offer bank account in the US. They can even buy an existing small bank and spin it up tomorrow.
We could implement my suggestion by making this more tax favorable for everyone involved. Liberate the cash!
You're right that antitrust cases will never be won at the scale needed to have a material impact on the economy. Plus, big companies will never allow reforms anyway, and will lobby their way out of any loss. So what do we do? What are some ethical and amicable solutions that can be applied evenly and fairly to all citizens?
* Tax all property, not just homes. The US national property tax averages 1.1%. So we should tax stocks and other assets at around 1% also. Stockholders would choose to give up 1% of their shares each year, or pay their cash value to keep them. The current US stock market cap is $46 trillion, so 1% of that would be $460 billion. We paid $4.8 trillion in taxes last year, so this property tax would lower taxes for the rest of us by about 10%. The average income tax paid is $20,000 per year, so that would be about a $2000 savings per year.
* Charge sales tax on all property sales, including stocks. 5% might be a bit high, and some states don't charge sales tax. So a national rate would be needed to establish a baseline on stock trades, something like 0.1% to 1% per trade. Losses could be used as a tax write-off, so a final sales tax could be charged at the end of the year, which might equal the property tax. This could reasonably raise savings to between $2200 and $4000 per year.
* Fund UBI with the wealth taxes stated above. $2000/yr is $167/mo, but $4000 is $333 (about the cost of health insurance or a student loan payment or rent in rural areas). Instead of working to make rent, we could get back to getting real work done.
* Organize. Tech could move to a cooperative model where gains/losses are split across teams, and form unions to provide actual resistive power against concentrated wealth: https://www.npr.org/2023/01/04/1146861998/video-game-microso...
* Change the culture of tech. We could make the "I've got mine" mentality of tech bros uncool. Wealth concentration makes property a zero-sum game by forcing 90% of the population to subsist on 10% of the wealth. So we could openly criticize people who have assets above what they would need to retire (perhaps $10 million). Wealth beyond that is an effective theft of the time and resources of workers, who are forced to work to continue paying dividends on that wealth. The opportunity cost of that has grown to consume all of our time, giving us a lower standard of living, less leisure time and less upward mobility (by far) than we had before tickle-down economics which started in the early 1980s: https://www.weforum.org/agenda/2020/09/social-mobility-upwar...
Now to me, everything I said above is obvious. It's self-evidently the way to fix the problem. Any child could understand it. The real difficulty is around de-programming the so-called thought leaders who currently benefit from the wealth inequality status quo. We could and should call them out and challenge them at every opportunity.
Tech is interesting example, of course, but it's like a tempest in the bowl right now. We should permit to innovate everywhere, not just in web search space and e-commerce.
Actually its not even a sector anymore. "Big tech" is hardly selling tech products or services anymore, its core profit is from selling ad or product marketplaces
The finance example is illustrstive. Big tech would love to expand into that space and "disrupt" that sector (double the size of conglomerates) but so far at least it has been pushed back by other equally entrenched oligopolies
The truly difficult thing about monopolies is that their power and strength in the marketplace grows exponentially.
1. Apple
2. Google
3. Amazon
> finance, medical education and law
Each of the above companies reaches deep into finance. Google and Apple capture real world payments on their devices, take 30% on top of any app software, limit or own the web, etc.
They're each trying to break into medical, with big medical endeavors underway right now.
Forget textbooks. Look at the fight between Google and Apple for the classroom.
These companies have their own film studios, for goodness sake. How the hell did we let that happen? Lord of the Rings is Amazon -- What?!
I think they understood that you can't both have a process that delivers the fastest progress in human history, and dislike the vanishingly few participants who succeed at it inordinately well.
Fastest progress in what? What you smoking mate?
60 years after Wright Brothers we landed on the moon! We went from a flying bit of cardboard to real space rockets.
Now another 60 years have passed, and we achieved fuck all.
It is amazind that free market advocates do not understand their most important feature. - competition
What a lot of people don't understand is that companies that compete also cooperate. All through my career I have been working along side companies that I also compete with for customers. Innovation often happens in isolation, but often it is with cooperation that innovation become the norm.
Glad you just survived a global pandemic enabled by competing companies creating vaccines in record time, with your life made easier in the interim via streaming and video calling services enabled by competing companies.
Your example of going to the moon is the opposite. That was funded by taxpayers. Most or all this progress has been done by individuals and groups choosing to do it, not by presidential assignment of taxpayer money.
Why do modern Americans hate market competition so much?
I'm not American, and I'm not just talking about tech.
I'm talking about the general process of progress and effort.
I don't mean this as a gotcha question: I really don't understand what people are claiming when they say this.
All three of those companies are now large conglomerates with a lot of power (perhaps too much), but calling them "monopolies" is counter-productive (except Google search), especially in the context of regulatory or legal framework, where the facts have to fit a very precise pattern to take action.
Poor little Walmart is much larger than Amazon in terms of revenue and profit.
If you go on Facebook or Instagram you can find thousands of small merchants who advertise there and ship directly to consumers.
> There's nothing stopping Amazon from building a physical store next door to a Walmart and selling its products there.
And there is nothing stopping you from building a website and doing targeted advertising that is reachable by anyone. Wouldn’t you say it’s a lot easier creating a website than building a physical store?
Anyone can set up their own online store and many do using services like Shopify.
I am no expert on corporate structures, market structures, anti trust, accounting or economics (or anything else OP apparently is AND is the only one who sees this). But I know enough to know it's complex and there are no easy answers and anyone saying there are is either ignorant or lying.
In reality the policies we talk about are the proactive nurturing of a healthy economy. Systems thinking instead of systemic capture. Diversification as a fundamental risk management strategy. Keeping them small to keep them honest. Fostering competition that will unleash creativity. Etc.
I have a strong (but hard to prove) feeling that had the past decades in tech not been so dominated by a tiny number of conglomerates, the contribution of tech to society would have been materially much more impactful.
It's illegal to teach critical reasoning in Texas. Until things like that get fixed no name change will immunize the public from corporate propaganda
https://www.washingtonpost.com/blogs/answer-sheet/post/texas...
"Pro-innovation" maybe?
Say I make a search engine better than Google. If I market it, I get some share of Google's users. The better my search engine is, the more of user base I “steal”.
What's wrong with that? Is there something Google can (legally) do to stop me?
What are you going to do other than close your business when you've been effectively blocked from the internet?
OpenAI isn't one person starting a search engine in their garage. But they acquired the reputation and resources to protect them from the behavior you describe through conventional means. And others can do the same.
Be that buying the competition, dumping to kill the competitors business, slapping them with lawsuits or making their competition illegal through lobbying.
Google will find some plausible excuse, something deep in ToS they broke, competitor will not be able to work around it or reach someone within Google to explain to them what exactly need to do to restore that part of service.
We'll all suspect Google has done so intentionally and maliciously, but nobody will be able to prove that beyond doubt.
And without antitrust, what would those conventional means be? norhing
How do you buy a non-profit?
Now, once you have discovered that this very normal and routine process literally does not exist, you might spend a little time researching how in the world this could be the case: even if you’ve spent thousands on that Google Workspace account, your only options are A) community support forums full of unpaid users helping users (Aw, isn’t that altruistic of those kindly users?) or, B) go away and deal with your problems yourself.
Anti-competitive practices and wielding a de facto monopoly position are perhaps not the singular or direct cause of this frankly astonishing lack of respect for their users, but it is absolutely tightly correlated with such open distaste for the people purchasing and using their products.
Lastly, not for nothing, but Google’s own origin story and wildly successful history are literally the result of anti-trust actions taken against their establishment competitors in the late 1990’s/early 2000’s.
Anyhow, there's a lot of Google Workspace competitors, switching to one of them shouldn't be a problem (at least for internal communications; sharing a self-hosted OnlyOffice link with somebody expecting a Google Docs document would be mildly weird).
Very bold assumption on your part.
Google's not #1 because it's orders of magnitude better than anything else anyone could come up with. It's #1 because Chrome's #1, while #2 (Safari) and #4 (Firefox) receive millions each year to keep it as default.
Your alternative, even if objectively better (whatever that means for a search engine) will never take a significant chunk of Google's market share because you can't outpay Google to get it into people's pockets by default. That's what anti-trust is about.
That was the assumption in the OP article – at least, that it was better than competitors at first. Of course, being the default plays a significant role in it keeping its popularity nowadays, but I still believe it can be worked around (and will be, but it'll take time).
TikTok is the only example I can think of of something succeeding in the past decade that's not from a company that also offers like a million other products. That's the power of having a monopoly.
If it gets regulated a bit (example: you get a prompt to choose your default search engine when you first open a browser), Google/Apple/Microsoft/Amazon might lose a dominant position in a category or two, but they have a dominant position in so many other categories that it'll mean nothing to them.
The only possible solution is regulating them hard, forcing each of those to dissolve into a dozen smaller companies and preventing them from buying up the competition even further. Then and only then will startups have a shot at snatching up a significant number of categories to really endanger what we now know as the Big Four.
What I am trying to say is in practice big corporations have many ways to get rid of their competion. For them there is no need to be better.
https://www.businessinsider.com/google-apple-search-deal-doj...
Only if you have investors that can force you to sell. I know that “just bootstrap your own search engine lol” is not an answer, but I do think there's some middle ground.
If you are a fan of disruption, innovation and advancing the world, you are definitely part of the minority that loves anti-trust.
I am personally aware of a few folk in FAANG, that pull ~1-3M a year currently and are busy touring asia to set up their "startup" with plans to make 10x their current renumeration. I cannot see these as people who 'love anti-trust'.
The only reason the internet has been the biggest growth sector for more than 2 decades now is that it has been new enough to be less regulated than other industries, but as the giants (Google, Facebook,…) both settle new cases and push for self serving regulations, the barriers grow tall again, and innovation will stop.
In the past decade, only one tech company has made a dent in the market and become consistently profitable - AirBnB.
"The core reason that companies generally, and tech companies more specifically become the very sort of corporation that they once hated and took on with vigor is the need to keep growing, forever."
Small startups and companies don't hate large corporations. If they take on large corporations with vigor, it is only to take on a segment of the market, not the corporation itself. The only purpose of startups is to maximize profit like everyone else is doing, and if they can do that by being bought out or by becoming behemoths, of course they will do it. If anything, people in startups LOVE corporations because when they're bought out, they can retire early with a ton of cash.
The people who dislike large companies and who should favour anti-trust legislation are consumers. But founders of startups? Nah, they operate on the same profit-maximizing principles as the CEOs of big tech. It's all about money.
It says if you like small startups you should like anti trust laws.
Those are separate claims.
Is there another place in the article that says it specifically? I didn’t see one on a quick second read, but I could’ve missed it.
For most of the article the focus os on consumer surplus relative to rents sought, so the article seemed pretty clearly to be describing consumer preferences to me
Small start-ups which cannot grow are not start-ups, they’re small businesses. This article is, if genuine, an anti-growth pitch. It ensconces the status quo.
Zero growth means zero-sim games. Pre-modernity. Sucks to be poor if you’re born into that world.
For example, a society could grow in other ways such as being restructured or even using less.
This is not anti-growth, it’s different growth. We generate more GDP per unit of physical resources or energy than before. That is good and still growth.
Big tech should win based on velocity and bringing value to customers. They shouldn't be able to just coast. And little companies should have a way of getting in without surrendering all their margins to, eg., the App Store.
Edit: The comments so far have given me some perspective. It was a genuine question to understand.
Precisely. And that is a good thing.
Why do we like the free market? Because it has proven to be able to drive innovation, increase standard of living, and make life, in general, better.
But the free market also has problems, that need fixing. If these problems remain unfixed, they grow, and choke the things we like about the free market out of it.
The concentration of power and control in a few entities, and the subsequent effects these entities have on the rest of the market is one of these problems. And anti-trust exists precisely to reset this problem to a manageable state from time to time.
The free market is a great system. It's fair to say that it's currently the best system we know how to run the economic side of a society.
But it's also not a perfect system, and, like every imperfect system, it cannot be left running unchecked. Even the best server requires maintenance from time to time. If it isn't done, it stops working at some point.
[citation needed], especially in environmental terms and for countries outside the first world
If you read a lot of the original liberal thought behind the "free market", it actually spells out something probably more aptly named "competitive market". A "free" as in "you can do whatever you want" market does not provide the same theoretical benefits as a competitive market (e.g. you can make models/derive theorems that the long run profits go to 0 due to competition, etc.)
Even the wikipedia page for "Free market" today includes:
"For classical economists such as Adam Smith, the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities.[2]"
I believe that interpretation can come from the following line in Wealth of Nations:
"People of the same trade seldom meet together even for merriment or diversion, but the conversation ends in a conspiracy against the publick [sic], or in some contrivance to raise prices."
> I understand it from a socialist point of view though.
I hope this provides further understanding from a liberal-capitalist point of view :)
I've spent years working towards having this motorbike why can't I use it in the Tour de France?
Google got into trouble for doing this with their terrible shopping thing. They didn't compete on having the best shopping tool they just forced theirs to the top knowing it was worse. This is bad for consumers as the assumption is that things get better as companies compete.
Things like Local Loop Unbundling (back when ADSL was a thing) and allowing/encouraging municipalities to run FTTH would improve things a lot, but the incumbents have lobbied hard against such policies that would force more competition.
(The US absolutely adores vertical integration. A company can own the land, the infrastructure, the access to that infrastructure, the services that run on that infrastructure AND strip your rights to the court by forcing you into accepting binding arbitration instead, and the US will point and it with starry eyes and proclaim it a shining example of success)
It's quite clearly beneficial to consumers to do this, but companies hate it of course.
If you love competition you don't take away the ability of the biggest players to enter "hard" markets and disrupt large entrenched incumbents.
And if you are in favor of both startups and competition you fight government regulations which corrupt markets, protects incumbents and grants monopolies.
That language has disappeared from the political discourse, because almost all markets are at best cartels, at worst outright monopoly.
Antitrust died with the Microsoft trial, an open and shit case with blatant public statement and evidence galore, and the court system failed us, likely by design.
Best you can hope for now is denial of merger.
Maybe you seek rent when you have non negligible costs to maintain past (think maintenance and tech debt)
And of course, it is also necessary to restrict the powers of the state to end the possibility of a government that can do anything.
That's the dream of things like Uber And twitter
For example, part of the reason US costs for healthcare are skyhigh IS because of US govt regulation. IF the only applied it to healthcare giants, but they won't, because they're not the companies the govt dislikes, also $$$.
All this will do is end up giving more power to the govt to break up the only thing that actually has the capability endangers their power-hoarding : big companies.
Ultimately, Govt IS the biggest company, and you rarely have a choice to switch. If I don't like Amazon, I can go to walmart, or local store. I can't just willy nilly pack up and leave the country.
People support regulations (or hell, $MeasureX) until the govt comes for the thing they like, despite people like us telling them that eventually the govt will do just that. (Eg, abortion in the US : People like us were telling others that if they stampede on our rights, they will stampede on yours too, given the chance).
"democracy" also depends on others wnating the same change as you. You alone can't do jackshit.
I alone can choose not to shop at amazon and choose walmart intead.
First, startups are deeply intertwined with monopoly. Financially, a startup is a small chance of huge success. The ultimate win scenario is becoming a monopoly like Microsoft or Amazon did. The next best thing is being acquired by one. If they can't become monopolies, there's a lot less reason to fund, found or work at a startup.
A startup that plans to participate in a competitive market is low potential. Making great apps isn't a good startup goal. A proper startup goal is to make the appstore.
Do startups, as we know them, even exist without monopolies?
Second... Abstract economics is abstract. Creative destruction doesn't exist in the way that economic theories want it to. It's almost non-existent at the enterprise/monopoly level. How many S&P 500 really become defunct? Creative destruction doesn't exist here unless you really squint. It exists in some places. Restaurants rise and file rapidly. So do barbers and many types of small business. Creative destruction definitely happens to startups. Most die.
Overall though, if take a cold empirical look... Creative destruction is orders of magnitude stronger or weaker, depending on sector. It's effectively a non existent dynamic for Microsoft, Loyds & such. You could argue that creative destruction is out of control in other sectors. The theory though, the theory abstracts all of this away. A firm is a firm. Parts manufacturer, energy supplier, record label or software company. The gradients of reality outweigh the abstract description.
This is true about a lot of economic concepts. "Normal" economics like market determined prices, broadly representing marginal costs in an industry... those are inapplicable concepts to most tech giants. They're not really applicable to government adjacent industries, creative industries, financial industries...
I don't mean that you can't use "normal economics" to describe these industries. I just mean that it's less describing a textile or commodity electronics manufacturer this way.
One striking difference between many monopolies of today and those of the past is the alternative. The alternative to Twitter or Facebook is simply "no Twitter or Facebook." If Toyota stops making cars, either someone else makes more or everyone has less. If facebook stop making facebook... social media is not scarce. People will still consume as much social media as they want.
This isn't like Bell. A court will never have to analyze Facebook's business in order to reorganise it into viable smaller companies.
The point of anti trust is not to allow more competition. The point is to stop monopolies that hold customers captive, charging monopoly rents (high prices) and stop innovation.
There is a classic paper by Alan Greenspan on the breakup of Standard Oil [1]. He makes the point that supreme court was wrong. The breakup was just for competitors, not for the benefit of customers. This is the worst of capitalism where big business use the government to fight competitors.
This is the applicable case with today's tech giants. They are providing often a free product to consumers and continue to innovate. The low barriers to entry provided by digital goods and the internet mean that startups have never had it better. The last thing that is needed is government involvement to break up these companies for "anti trust"
While we could all be enjoying a Windows phone whose OS could be freely torrented and installed by individual users with Fortune 500 companies subsidizing the whole experience.
We kind of see these mechanics in our market but nowhere close to enough.
The distortion in our model of crony capitalism is that our centralised government gives unfair advantage to existing corporations in the form of bailouts (hey, too big to fail!) and regulations (easy to implement when you're Amazon, a business killer when you're small).
I would love to build a fintech startup and do what banks are doing for cheaper, but regulations in the banking sector make it a very expensive endeavour.
Anti trust is not the solution, it's merely a small patch which gets applied incoherently and used as a weapon by governments to steal more money from massive companies.
I argue that no regulations would have a better effect on disrupting large monopolies, once there is enough money to be made with little risk.
A "start-up" is a commercial company, intending to make money by selling products and services, and typically invested with large sums by individual or institutional capitalists.
In other words, it is the opposite of anti-establishment; at most, it might be antagonistic to the established providers of the relevant products or services.
That said, there were (anecdatally) a large number of people on here (founders?) for awhile (maybe still?) that subscribed to the Thiel school of ~"first to the monopoly wins!" which is good potentially for a business, but absolutely terrible for any sort of ecosystem (including, say, the earth). I'm not sure I like startups with the goal of monopoly at the outset.
> "their pursuit of endless growth…"
Let me paste the first headline I can find today:
"Layoffs are sweeping Corporate America to kick off 2023"With anti-trust, it’s defining monopolies. Maybe a company like Google dominates search advertising. But they don’t compete economically in search, they compete economically in digital advertising - or is it all of advertising? Isn’t Amazon and Apple eating their shirt in new spend on search ads? By the time the anti-trust case works itself through the courts it’s often that the “monopoly” has fallen quite a bit from their perch.
Now to get to start ups. Startups being acquired WANT to be acquired - otherwise they wouldn’t be sold. There is no gun that makes them be sold - their shareholders agree to it. If you love startups, you should be pro-founder, and that means letting them be sold if they want it. Otherwise it’s simply coercion and authoritarianism to prevent an owner to do what they want with their company they put their blood and sweat into.
If any person wants to have no restriction on their business in terms of size, anti-competitiveness etc, then they are welcome to do so - provided that they can build their monopoly without incorporating. Hire as many workers as you want, expand as much as you want - but you have full personal liability for everything that your business does, as it is under natural law.
OTOH if you want a fictitious legal entity to shield yourself from liability, then the society is happy to accommodate - but it comes with strings attached, and one of those is anti-trust.
We all put our heads together and say "how much money should you be able to make before you start needing to give a lot of it back?" (or alternately, "how much market share should you be able to get before you're broken up?") and then that's the number. Some people will want that number to be higher, some people will want it to be lower, but ultimately we (mostly) agree that it's better for all of us if we follow these rules around that number.
What I don’t understand is progressive taxes, which make you pay more once you hit some arbitrary threshold. Very illogical.
Yes, the brackets are arbitrary. But if everything is working in a democracy, then it should be set by the majority to follow the curve of what the majority of people make in some reasonable way. But, it’s not in america, because money is speech apparently so rich people buy votes and keep their progressive taxes lower than they would otherwise be.
You pain doesn't mean anything,you cant even assign it a number
What, you want strong painkillers for your surgery? What does 'a lot of pain' even means?
If you can't precisely define how much pain you have I wont give you a prescription. So illogical!
Sure, it’s arbitrary, but so is the flat tax percentage you’re talking about. Tons of laws are arbitrary. Speed limits aren’t some emergent property of the universe, or etched onto stone tablets by Adonai himself, but that doesn’t mean we should let people do 90 in a school zone.
It’s not the bundling that’s the problem, it’s dropping prices of a single product in a single market to destroy competition in that space while staying afloat with VC or other revenue streams/products.
The same could be said of open-source software. Most open-source software are clones of commercial products, supported by free labor, and provided at $0. The most successful ones undermine their commercial counterpart and may go so far as to destroy a previously commercially-viable industry.
As an example, do you think Linux should be regulated out of existence because its provided at a unsustainably low cost with respect to the competition? If Linux didn't exist, commercial Unix could still be a competitive market. Linux's expansion has also resulted in the deterioration of the consumer OS market, where there had previously been AmigaOS, AtariTOS, VMS, Solaris, BeOS, etc. Linux is also backed by a cartel of commercial supporters that influence what gets added, what gets supported, and what gets kept out. Obviously, these decisions affect what hardware and software consumers would consider purchasing/supporting.
Amazon bundling a service and providing it at reduced cost to capture the market is neither free nor is it open.
If we banned ice cream trucks from selling cones, surely an independent cone business would spring up if market demand existed.
This contrived example is to prove my point - you claim I’m speaking absurdities, but if I claim bundling a database (or caching solution, or search engine, whatever) is merely a convenience, you cry foul. Nothing is logical here
That is antithetical to competition. There should be limits or a prohibition on subsidizing horizontal or vertical business integrations. The limits should be related to the long term consumer value proposition.
I wish there were more startups that just keep operating standalone without being bought. Having the often passionate founders staying in control and evolving their company.
Of course, if they can sell than they get more money out of that and maybe have time for something else/new. But at the same time, how does it impact society if passionate founders leave all the time? Maybe that isn't really great for the overall progress.
On the other hand, were there less startups if they can't be sold/bought as easily? I'm not sure, but I imagine the impact wouldn't be so huge, since I expect for most people, selling their company is more the icing on the cake and not the major reason why they start something on their own.
You say you wish more startups operated standalone. Is it possible that the same person who can build a company from zero to 100 people isn’t qualified and / or wanting to take it from 100 to 1000 people? Shouldn’t it be her right to sell her asset, and start something new?
Some people believe that society has some claim on companies, meaning the government should be able to arbitrarily coerce any company of any size to do anything. Less-logical people claim that society has a claim when a company reaches some threshold of size (which makes no sense as no one can explain what that size is except “eh I guess a billion dollars in revenue”).
The only defensible logic is to let the owner do what they want. Otherwise it’s authoritarian.
The reality is that if the owners do what they want they will buy competitors, rent seek and not innovate. If the government seeks to meddle they will buy lobbyists. Additionally firms that have their market cornered will squeeze workers and their vendors. Finally close ties between concentrated industry and the government leads to more authoritarian rule.
https://www.weforum.org/agenda/2021/07/top-100-companies-usa...
America has 4% of global population. This tiny country population-wise is beating the shit out of everyone else by 1000x in economic and military might. Maybe you should see our system in a better light.
You should also consider that we don't serve the economy. The economy should serve us.
Of that economic output you're so proud of, the vast majority of it ends up in the hands of rich people. Why would the average person want to defend that system?
Well, they don't have to sell the company to start something new. They can hire/appoint someone to take care and essentially only roughly supervise them which really doesn't take much time. The only difference is really the ownership part.
I still get your point and yeah, it is a disadvantage. But individual freedom has to be balanced against the needs of the whole society too.
> The only defensible logic is to let the owner do what they want. Otherwise it’s authoritarian.
Not really. Look, the owners of companies benefit from society as well. They get infrastructure, stability, especially laws and their enforcement and so on. This is not a given. The society doesn't let random people do what they want, e.g. steal from the owner of the company. Would you call that authoritarian? Certainly not. Neither is putting boundaries of what you can do with the stuff you own.
As social animals humans are exceedingly skilled at determining fairness if they decide as a group. They will never get it perfect but they will get close enough. Your argument is a schoolboy argument: if the pie can't be divided exactly then you get most of it because you're bigger.
Progressive taxes don't need the precision you're demanding. It's a strawman argument.