FTC Chair Lina Khan looks for allies and leads in Silicon Valley charm offensive
reuters.com
reuters.com
The core of her agenda for antitrust is not about being anti-merger or anti-bigness. Rather, her project is mainly about creating the conditions for pluralistic, bottom-up and more "permissionless" markets. Markets where founders can build successful businesses without necessarily having to rely on large 'gatekeeper' firms as partners. To the extent that large firms are required, Khan's vision is that they shouldn't be able to use their economic power to bargain unfairly or exploitatively with smaller firms.
Part of her agenda is strengthening the merger review process. Merger review is intrinsically hard, because authorities essentially have to try and figure out what the effect will be if the merger is allowed or denied. There is no crystal ball for this, and there are rarely 'right' answers. Yet the merger regime has been very favourable to large firms over the past few decades, and there's a reasonable consensus in the antitrust community that it should be strengthened. A tighter merger process might make startup exits through acquisition less common, but it should also make it easier for startups to grow organically into large companies. In terms of creating a bottom-up and more pluralistic Silicon Valley, that seems like a win to me.
(Source: I'm doing a PhD in Antitrust/Competition Law)
Serious question: what is the "antitrust community"?
Can you shed some light on the theory that making mergers more difficult would either a) make it easier for startups to grow organically or b) benefit society in general?
If the upside from working at or creating a startup is due to some combination of IPO or acquisition (this is of course a simplified model), and acquisitions are made more difficult, why do you assume that IPOs would become more likely or more lucrative? Once upside is removed from the startup ecosystem, how will potential employees and founders respond at the margin? I'm struggling to see an equilibrium here that involves more rather than less money and work poured into startups.
Not the poster, but I would assume it refers to the people who follow developments in antitrust law and the enforcement thereof (so antitrust lawyers, basically).
Well, and lawyers-turned-professor and/or treatise authors (who are typically professors). Often the experts turn towards academia if they're truly in it just to know everything about the field. So, Hovencamp, etc.
"Legal scholar" if you will
Khan's aim isn't necessarily to make mergers more difficult, or to prevent them per se. Rather, it's to make a more concerted effort to prevent mergers which on balance, appear not to be in the public interest. There are several reasons why a merger might be harmful.
First, some mergers are "killer acquisitions" whereby a large firm will acquire a "nascent" competitor and then discontinue its product (e.g. [2]). One danger here is that killer acquisitions nip start-up competition in the bud, such that new firms don't have a chance to grow and compete against incumbent firms. That's a problem because competition means that consumers, rather than incumbent firms, ultimately get to choose market outcomes. If there is no choice, then consumers can't choose. The ultimate failure mode here is some kind of command economy where monopoly firms get to make most of the decisions about how markets work and consumers get little say at all.
Second, mergers lead to market concentration because you're taking a market with n firms and moving to a market with n-1 firms. Market concentration isn't inherently bad, indeed, some markets are 'naturally' concentrated. That said unconcentrated markets are generally preferred to concentrated ones because concentrated markets can lead to things like tacit collusion (which has similar outcomes to a cartel) [3].
Third, if there is a real possibility for startups to grow organically and challenge large incumbent firms for the market, then theory goes that VC funding could be stimulated on the promise of a potentially huge return. For instance, a VC might be willing to fund a firm if there's a 5% chance that it will be the next Google, but not if there's a 10% chance that it gets acquired in a year or two.
You make a good point regarding acquisitions, IPOs and the personal incentives to work at a startup. I'm not assuming that IPO's would become more likely or lucrative; I don't have a view on that (except perhaps what I said in the previous paragraph). I guess if a firm was going to be successful, and a merger wasn't an option then it would eventually IPO instead, no? That might lead to delayed compensation, but it shouldn't affect the viability of a solid business. Fewer acquisitions might end up with some firms failing before IPO which would have otherwise been acquired. That's bad from the perspective of those at the firm, but isn't inherently bad from a social perspective. After all competition necessarily entails winners and losers. If all else fails, there is a 'failing firm defence' which would allow an acquisition if the only other option is the firm going out of business [4].
Finally, the lack of enforcement over the past few decades hasn't given regulators much opportunity to "learn" what is a good/bad merger. A more active merger review policy would entail regulators building up expertise and fine-tuning their approach. It's important to remember that merger control isn't necessarily adversarial. At its best, it's a positive-sum dialogue between firms who want to do business and regulators who are trying to provide public-minded oversight.
[1] Kwoka, John. "The structural presumption and the safe harbor in merger review: False positives or unwarranted concerns." Antitrust LJ 81 (2016): 837. https://heinonline.org/HOL/Page?handle=hein.journals/antil81... [2] https://news.ycombinator.com/item?id=38145568 [3] https://www.tutor2u.net/economics/reference/oligopoly-tacit-... [4] https://www.concurrences.com/en/dictionary/Failing-firm-defe...
No, most businesses don't grow revenue fast enough to be IPO-worthy (or, as with WhatsApp and Instagram when they were acquired, don't make enough revenue to even be viable standalone businesses).
But even putting all that aside, what about the personal freedom argument?
If a founder wants to sell their company because they're tired of running it (this is a job that comes with immense personal sacrifice), or wants cash to take care of family, or sick parents, etc, should the government have the right to force them to keep it running?
The societal implications of the above feel absurd.
With regards to personal freedom, we need to think more broadly than just founders. There's also the personal freedom of citizens to consider too; when powerful firms control large parts of the economy they essentially operate as private governments which can also impinge on people's personal freedom (see the below quote). Should a startup founder be allowed to sell a startup to monopolist/oligopolist if that contributes to more economic concentration? Maybe each individual merger isn't that harmful, but taken together their cumulative effect is. Besides, Khan isn't trying to block all mergers. She is focusing on mergers with already dominant firms; perhaps it's possible for the founder to sell a firm which isn't in a dominant position.
> ...power that controls the economy should be in the hands of elected representatives of the people, not in the hands of an industrial oligarchy. Industrial power should be decentralised. It should be scattered into many hands so that the fortunates of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men. The fact that they are not vicious men but respectable and social minded is irrelevant. That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it. [1]
No corporation forces me to do anything. They offer services and I’m free to buy or not from whomever.
On the point of consumers switching away from bad firms, you say that
> a corporation only exists if customers are happy with its services
I'm not so sure. There are many firms that exist despite consumers being unhappy with the products/services provided. The notion that consumers can take their business elsewhere is shouldn't be taken for granted. There are many times where that's not possible; maybe alternative firms don't exist, or they're not convenient, or they have products you like (even) less. Maybe you're "locked in" to the existing firm even though it's starting to provide a worse service, through a contract or because of some path dependency. Thus, we can't take it for granted that firms and consumers have equal bargaining power and that consumers can simply stop purchasing at any time.
I commend your exceeding politeness but it seems like this position is based on feelings of consumer harm and missionary zeal rather than rigour (including a lack of true acknowledgement of second order effects of this regulation - all regulation has costs). Yet here I am as a consumer speaking for myself otherwise.
Maybe this why Lina keeps losing her cases.
WhatsApp can’t figure how to make money -> Facebook buys them and can afford to keep them free -> consumers continue using them instead of losing access to a wealth-generating service (the third world is full of small businesses that run on WhatsApp and Instagram).
Still not clear to me why preventing this from happening is good.
I agree with you that regulation has costs. I never intended to communicate that it didn't. Yet, at risk of stating the obvious, the fact that something has costs doesn't make it not worth doing if its benefits are greater than its costs. The question then returns to the crystal ball; will society be better off if we allow or deny the merger? I get a sense that you are of the opinion that free markets generally lead to good outcomes. Me too! Central planning of economies is generally to be avoided. Yet at the same time, I view large concentrations of corporate power as an endogenous source of unfreedom in otherwise free markets. Big companies, if we're not careful, become mini central planners in their own right.
Are you suggesting that the only reason competition might not exist is because of government regulation? If so, that's not correct. Being free to enter a market doesn't mean that it's viable to do so. Barriers to entry are common in all kinds of markets so it's not as though people can always start competing against a weak vendor. Exclusive contracts, the threat of predatory pricing, increasing returns to scale, high switching costs, network effects, IP monopoly, geographic isolation, etc can mean that it's simply infeasible to enter a market and start competing against an underperforming incumbent. Local cable companies are a good example. If you want to start a cable company, you either have to lease cable from an existing owner or lay your own cable. The former is infeasible if your competitor owns the cable, and the latter may be prohibitively expensive. All that to say... merger control is an important tool which can help prevent markets from becoming more concentrated when barriers to entry are high [1].
Regarding WhatsApp & Instagram, we don't know what the counterfactuals are if Facebook didn't acquire them. It's not a dichotomy where either WhatsApp was either acquired or would cease to exist. Indeed, there could be another world where Instagram (a startup monetised via ads) merged with WhatsApp (another startup without a monetisation plan) to challenge Facebook. Perhaps that additional competition would have led to all sorts of innovations that we haven't thought of yet. Of course I can't prove that, but again, we're back to the crystal ball again ;)
Finally, it's important to acknowledge that antitrust is political. That's because public power (the state) is used to discipline/reshape private power (privately held firms). Furthermore, it's asking a very political question: who gets to coordinate economic activity? [2] Many other areas of law are similarly political (e.g. taxation law, electoral law), so antitrust isn't special. Yet it does explain to some extent why there are strong disagreements. That's okay :)
[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1999829 [2] https://heinonline.org/HOL/Page?handle=hein.journals/uclalr6...
Yes, you point to another fundamental problem: central planning has a consistent record at making most of the populace poorer. It’s precisely because you don’t know the counterfactual that you should leave decisions to those with knowledge and skin in the game (ie market participants).
If Silicon Valley’s best VCs have a 30% success rate at picking winners, I don’t see how bureaucrats in Washington (whose salaries, modulo election season, aren’t even subject to consumer preferences given that they’re extracted by force from our taxes) feel so confident.
Finally, of course there is a fundamental axiom that is the root of the disagreement. I view government bureaucrats as our servants given we pay their salaries. I would rather consume services with private service providers as I please and involve the government to arbitrate disputes that come up.
PS The UK government did a nice job opening their cable market.
So not surprising at all that the "antitrust community" on average would be pro an FTC witchhunt whatever the basis may be on paper.
Absolutely not.
I want to get antitrust enforcement right not to just “do more of it”
Members:
- lawyers who work in the agencies on antitrust
- lawyers who work in competition practices of major law firms
- lawyers who work as competition counsel in-house at large firms
- legal scholars (in law schools) who write on these issues
- economists who work in the same agencies (FTC and DoJ)
- economists who work in the litigation consulting industry
- economists who work in academia on antitrust and competition issues (anyone in an economics department who lists “industrial organization” as a research field).
Plus our various groupies and hangers-on, who are numerous, because our parties are amazing…
Lina Khan's direct actions of regulation-by-the-hip , and continued losses in the courtroom, will weaken actual anticompetitive powers, and ultimately favor monopoly generation by big entrenched players [1]
I dont want the govt to make up rules on the fly. Even if its going after monopolistic companies. Because I know its only a matter of time until the govt uses the same pretext to come after me, too.
Sorry, where do you think laws come from? They’re not written on stone tablets at the top of a mountain. They’re written by people for people. If you prefer Robert Bork’s hands off approach to markets that’s your prerogative but we can’t separate laws and regulations from their consequences. There’s no question in my mind that Amazon’s market share allows them to push their weight around in ways that raise prices for consumers as well as stifle competition and make workers’ lives worse.
Luckily they're more aligned with consumer welfare, which is good, as opposed to Khan's hippie "everything big must be bad" standard. This only supports small business owners and VCs, who are probably the most evil people in the US.
> Antimonopoly does not mean ‘big is bad.' The New Brandeisians—like Justice Brandeis—recognise that certain industries tend naturally towards monopoly. This is especially true of networks. In such cases, the answer is not to break these firms up, but to design a system of public regulation that prevents the executives who manage this monopoly from exploiting their power. A second goal is to ensure that executives face the right incentives to provide the best service possible to everyone who relies on the monopoly to sell or to buy a particular product or service. In the past Americans have used both direct government regulation, and various forms of antimonopoly law and policy, to achieve these ends.
Every State Attorney General could have gone after the Amazon sales tax avoidance game, yet it went on for over a decade even after it was well-known. We need people in government who are willing to equally apply existing laws. It's up to the people to pressure each State's top attorney to take action on various laws.
Is this what you're referring to? https://www.npr.org/2021/07/01/1011907383/new-ftc-chair-lina...
Oh no the trillion dollar tech giants have to undergo some scrutiny, how ever will they continue to pay their executives and shareholders millions.
We have no evidence that the implementation of her policies or whatever she is pursuing has or will "make the worlds most innovative place completely barren of innovation, vitality thus dooming her society" (what a bloviating fucking diva you are).
She also isn't the only one who thinks the market dominance of these big tech firms has been an impediment to innovation and disruption because smaller startups can't compete, get bought and squashed early, etc.
Like, maybe her policies are bad, I'm not sure, but the other poster a) just went for baseless accusations against her that are not only not supported by any evidence, but actually undermined but facts as they exist; b) acted as though the hyperbolic consequences they ascribed to her policies actually do in fact exist.
That is massively anti-startup in my book.
Time is money. Thats why lottery winners often take a lump sum payment instead of an annuity.
There is nothing wrong with cashing in your chips now vs gambling your winnings for an uncertain future.
> only exit left for many companies
Quite the injection of hardline ideology in what was otherwise a rather reasoned discussion on economics in the real world.
Meaning, if Big Tech can't buy startups because Big Brother doesn't let them, then how does that impact VC which is based on the principle of there eventually being some liquidity for their investments (which increasingly, are not IPOs).
With that caveat, I think it's plausible that some startups are/were getting VC funding not because they were good businesses, but rather because they presented enough of a competitive threat to a big tech firm that there was a good chance of a large acquisition. The net effect of those acquisitions is probably to transfer some of the surplus from Big Tech companies into the VC/founder ecosystem. Is that good? Maybe for the founders and VCs. From a social perspective though, we want to ensure that startups can meaningfully contest incumbent firms' market positions, and that can't happen if all the startups get acquired before they get a chance to do so.
https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...
For a concrete reference regarding small business, see this recent speech of hers [1,2].
[1] https://www.ftc.gov/system/files/ftc_gov/pdf/remarks-chair-k... [2] https://www.ftc.gov/news-events/news/speeches/remarks-chair-...
That's a whole different ball game where you have to play many-sided gorilla wrestling with the USPTO, the CAFC, and a lot of pharma money.
Not at all. 0% related.
>> Does she see her office having influence on that, at least tangentially, to anything happening at USPTO?
If she does she really shouldn’t.
She’s also ineffective. What she believes may be noble. But the track record of execution has been so poor, you couldn’t have done better if you were trying to plant a stooge at the top.
Borkism has been the law of the land & figuring out to how take a judicial system which has been winnowed to just a small narrow view & make it reconsider mandates it used to have, long long ago, requires not just good casework but courts that have re-developed some appetite for ruling in businesses.
In this recent podcast, Lina Khan explicitly mentions deterrence as a tool in FTC's arsenal and the overall recent setbacks.
I do think that getting companies worth $1T to behave is going to take multiple attempts and here we give lots of leeway to Founders and others to iterate and refine.
I would like to give Lina Khan the same chances to iterate and refine as I very strongly support the grand parents views of how important this is to innovation and for startups.
https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5ucHIub3J...
That’s cute. In the real world, most executives will take a few months of mean words from a largely-ignored regulator in exchange for a deal. Deterrence needs to be backed up, in the end, to actually deter.
Facebook’s woes predate Khan. Her contribution has largely been fumbling the ball in court, e.g. forgetting to calculate market share.
Amazon is still acquiring [1], the latest in August [2].
[1] https://en.m.wikipedia.org/wiki/List_of_mergers_and_acquisit...
[2] https://techcrunch.com/2023/08/29/amazon-fig-command-line-te...
OPs take is correct. It is the opposite of “insanely misinformed.”
She has lost her big cases! She is ineffective. That’s the metric which matters.
This whole idea of “we’re going to send a message” or “we’re not afraid of losing cases” is ridiculous.
She has not moved the needle on antitrust law at all and is unlikely to, even in a hypothetical second Biden term.
Microsoft paid their lawyers maybe $10-20 million in legal fees and still acquired Activision, bc the FTC brought a crappy, implausible case.
Google will pay their lawyers a similar amount and the FTC is likely to lose again bc their case is weak!
You need to try cases under the antitrust laws as they are, not as you want them to be.
Filing these speculative long shot cases wastes the FTC’s valuable time.
There are important mergers which don’t get attention bc Lina is wasting her time with Microsoft and Google.
Her entire term is characterized by poor execution. You are the one who is misinformed.
Especially in the non-big-tech sector. I would really like more options when it comes to grocery stores or eyeglasses or ISPs...
If America could get their shit together we'd pass stronger antitrust laws that make winning these cases easy. It is unreasonable that it takes so much work to fix things that are obviously horrible for almost everybody.
It sucks that the FTC fighting uphill battles is the only way to make the changes we need. In a better world, the citizenry could make it happen through class-action suits, but the laws we need to have a better world don't exist yet.
https://www.whitecase.com/insight-our-thinking/mid-year-2023...
Wall street is increasingly worried btw that Google might lose its case:
https://seekingalpha.com/news/4027809-antitrust-suit-against...
This only deters small firms. If you can afford to fight, it’s currently worth it. The FTC will show up unprepared [1], and you will win. Wall Street loves Lina.
[1] https://storage.courtlistener.com/recap/gov.uscourts.dcd.224...
However, in the past, that was an empty threat, the FTC would only take cases to court that they would win 100% - which vastly errs on the side of caution. It also meant that you could basically expect never to be challenged on a merger.
That has changed now. Now, there is a real chance that your mergers and anticompetitive behavior will get examined and THAT is the deterrent. The new FTCs behavior causes ripples long before an actual court case.
There is a difference between „I will never get taken to court“ and „I will probably get taken to court, and then I will probably win but honestly, all bets are off“.
I cannot claim to the same prior knowledge as you, but I can read a news article as well as the next person. I am not sure how you can interpret this case as a loss for the antitrust bar, no matter whether Google wins or loses.
* Set Google's claims that default search placement is not a meaningful barrier to entry next to the fact revealed in litigation that they paid 26 billion dollars for default search placement in 2021
* Google seriously made the claim in court that AA.com is a competitor for them in the search market; this was even pushed back on by the judge: https://twitter.com/superwuster/status/1720499941225677240
* Communications with Apple have revealed a company so cozy with Google, that the tone is of two major players effectively dividing up the market. Even Apple partisans like John Gruber have called out Apple's hypocrisy in benefitting from this arrangement: https://daringfireball.net/linked/2023/10/27/google-aggregat...
* Internal communications were revealed that show Google choosing to goose ad rates without the slightest concern for a decline in sales — a clear sign of market power.
Of course, I don't think Judge Mehta has a great track record on this? So whether Google will lose the case is no sure thing.
But without Khan, these facts and figures are simply not here, and we are not having this debate. So while I can see some basis for your claim that Khan is a failure, I can't actually line it up with reality as I see it very well. The conversation around antitrust has changed, without a doubt, and while there a myriad reasons for that, we have to give Khan her due if we are to acknowledge that anyone has any impact on the course of human affairs at all.
I posted this above, but I am going to repost it just to make sure the point is made (sorry if it feels like I am spamming).
From [1] > You wouldn’t realize this success if you listen to the conventional wisdom in politics, because Wall Street is pushing a public narrative that antitrust agencies are losing in courts, and therefore they are losing their ability to stop deals. But this isn’t true, because if it were, you wouldn’t see regular reports from business publications lamenting the decline in deals, and writing things like “The average size of mergers completed is now at the lowest level in 20 years.” And you wouldn’t have deal-makers on CNBC calmly describing how hard it is to get mergers done.
So what you claimed as the only metric that matters isn't true, but why let facts get in the way of a good soapbox.
Also since you are an economist and clearly misinformed about how law works, let me add this bit of nuance. You cannot win cases when judges will deliberately misinterpret the law Congress passed. From [2]
> And yet, this epiphany, that markets are politically structured and don’t have a will of their own, hasn’t made it to one very important place: the judiciary. The same week Sullivan gave his speech, a panel of three D.C. Circuit Court judges struck down a monopolization case against Facebook on the grounds that markets self-correct. "Many innovations may seem anti-competitive at first but turn out to be the opposite,” wrote the panel, “and the market often corrects even those that are anti-competitive." The D.C. Circuit Court panel was bipartisan, and included Republican appointees Karen L. Henderson and Raymond Randolph, as well as Obama appointed judge Robert Wilkins.
> These words undermine Congressional statute, and may devastate the ability to use antitrust law against digital platforms, at least in the D.C. Circuit. The specific procedural question was on the right of state attorneys general to bring an antitrust case over a violation that happened years earlier, as Federal enforcers can. Three judges made a policy decision to disallow that, even as Congress had just passed a law a few months earlier to make it easier for states to participate in antitrust enforcement.
> In other words, the power of judges is massive, and judges openly and often thwart the will of Congress. And this power is not necessarily based on partisan or traditional ideological affiliations.
Deliberate or not, a large part of the judiciary has been brought up in an environment where mergers are good and markets will magically correct this otherwise. That obviously needs to change and will take more time. Also Biden nominating judges that worked to get mergers done doesn't really help.
[1] - https://www.thebignewsletter.com/p/never-seen-anything-like-... [2] - https://www.thebignewsletter.com/p/all-rise-how-judges-rule-...
>Filing these speculative long shot cases wastes the FTC’s valuable time.
You know what a bigger waste of the FTC's time is? Being completely unwilling to take on any big players for years at a time because you might lose, regardless of how blatantly the flout the spirit of the law. The public loses trust in and the business community loses respect for the institution, and society suffers as a whole. It's a free pass for abysmal behavior at the highest levels.
>There are important mergers which don’t get attention bc Lina is wasting her time with Microsoft and Google.
What are these mergers and how can you be sure they didn't get any attention? Were they yet another handful of guaranteed winners that would not move the needle whatsoever when it comes to societal effects of blatant abuse of monopoly power?
To the degree Khan has been successful, it’s in the former. She has been performative, which makes the public feel good. But also ineffective, which makes business happy. (Two corporate lawyers at national firms, familiar names in Silicon Valley, have advised me to rush mergers under this FTC. You’ll get sued. But they’ll drop the ball or settle, and then the deal is done.)
Given she has been a net boon to M&A, anyone. In the last years, I’d flag the Illinois, California and Massachusetts legislatures, as well as Warren and Wyden, federally. Several state attorneys general come to mind, too.
Sending a zealous rookie into the field may placate the base. But it’s a gift to experienced players; it’s why you’re seeing her acceptance from Wall Street, the folks paid to close mergers. Khans ideas are solid. As a Congressional staffer, or even Congresswoman, she’d be great. But spending a year learning to manage a team is a dead giveaway to corporate interests.
> You wouldn’t realize this success if you listen to the conventional wisdom in politics, because Wall Street is pushing a public narrative that antitrust agencies are losing in courts, and therefore they are losing their ability to stop deals. But this isn’t true, because if it were, you wouldn’t see regular reports from business publications lamenting the decline in deals, and writing things like “The average size of mergers completed is now at the lowest level in 20 years.” And you wouldn’t have deal-makers on CNBC calmly describing how hard it is to get mergers done.
You heard the news about Microsoft-Activision and assumed that all mergers that were challenged are going through. There is a lot more to antitrust than what is showing up in HN readers' typically tech-focussed news.
[1] https://storage.courtlistener.com/recap/gov.uscourts.dcd.224...
His journalism covering monopolies and related litigation is nothing short of phenomenal.
I recommend it to anyone who wants to learn more about how big business works to suppress employees customer and regulator power.
I used to subscribe, and read carefully, for years, so this is not a drive by sort of view ;)
He certainly appeals to a certain group of people, but I would not call it particularly accurate or correct. He will frequently leave out facts to make a point, even when the facts literally point in the opposite direction. The more I dug, the more obvious this becomes, but it only really takes comparing a single opinion or two to his take on them to become disillusioned with his view.
I gave up completely when his view of why the DOJ keeps losing literally became "the judiciary is corrupt"
You see - it can't be that the DOJ is wrong, or sucked, that he's wrong, or that his theories are wrong, or anything like that. No, you see, it's everyone else that's the reason.
I think he's drunk a little too much of his own koolaid.
There are better newsletters if you are looking for a more objective view. If you want subjective but good, that's harder, but Matt ain't it.
Why is that your view if that is what literally happens in a court of law?
> The best way to explain Bidenomics is to listen to a judge Biden recently appointed to the D.C. district court, Ana Reyes, who was hostile to the Antitrust Division when they brought a case against two smartlock makers. Last month, Reyes sat on an American Bar Association panel where she attacked the idea of stronger antitrust enforcement, focusing specifically on her skepticism around labor-related claims. She bragged to the audience of defense attorneys that during the antitrust case she heard, she 'pranked' government lawyers by spending three minutes pretending to dismiss their key witness, before saying ‘April Fools. "I have never in my life heard stunned silence," she later said gleefully.
> Having a corporate lawyer bully turned judge appointed by Biden killing an antitrust suit brought by Biden officials is a great example of Bidenomics, because it shows the lack of coherence of this administration’s policy. I’m a big fan of Federal Trade Commission Chair Lina Khan, but another Biden judge - Jacqueline Corley - let through the largest big tech merger of all time, when Microsoft bought Activision, after Khan challenged the deal.
[1] - https://www.thebignewsletter.com/p/strikes-and-bidenomics
This is not to say that he's a good guy or a bad guy, but his newsletter is just another of the hundreds that are published by Donor Organizations for lobbying related reasons. [3]
Edit: downvote me for tone, not for content. I'm a Democrat myself and I've helped people pass some legislation we all love when I worked on the Hill.
[0] - https://www.politico.com/news/magazine/2023/04/21/matt-stoll...
[1] - my network on the hill
[2] - https://www.influencewatch.org/non-profit/american-economic-...
[3] - my experience doing this for a living before leaving
This is a contradiction.
If the likelihood of acquisition goes down, so does the likelihood of startup funding. Which means the likelihood of growing into a large company goes down too.
I don't think it's a good idea to want a world where companies like Google are less likely to come about.
Google cannot come about now. There is literally no need to have the world's most used search engine, mobile OS, browser, video streaming website, maps application under the same corporate umbrella. Only one of these was built in-house, every other one was acquired.
I, as a consumer, would rather make that decision myself. If you don't want to use Google Maps that's up to you. I don't see why you'd force me to do the same.
As it stands, Maps falling under Google means that I and many others on this planet, from Africa to the Middle East to Asia and others, get to use it for free because it's subsidised by Google's search ads.
A standalone maps company would have to charge money to run the service. People around the world (along with businesses small and large) would be poorer if this were the case.
I defend your choice to dislike this state of affairs. But it's rather difficult to defend a proclivity to take choice away from the rest of us.
Yes. That is typically how businesses work. That cost is being subsidized by an uber-entity that is slurping private data of its more economically valuable customers at every turn. Why is it fair to do that?
> But it's rather difficult to defend a proclivity to take choice away from the rest of us.
Where is my choice to step out of this Big Brother ecosystem? If Maps was so awesome, why did Google acquire Waze? And why was it allowed to?
I'm kinda hoping we're getting to the lessons learned point of easy debt burn it till you make it startup culture.
Historically, this situation has been managed through intellectual property laws, not antitrust. But patents as applied to software are a kludge, both tying up tech that should be free (particularly when that technology is a file format) and failing to protect innovations that should reward their developers. And copyright just doesn't cut it.
I wish we saw more action on that front. That feels like the remedy to the status quo being so well entrenched, like a precondition for a competitive digital world. Just trying to block Mergers & Acquisitions might some day allow new giant powers to arise & compete, but we need a system where competing & growing a presence isn't so outright impossible.
Link from 2020 with a roundup of competitive compatibility news, https://www.eff.org/deeplinks/2020/12/competitive-compatibil...
I rather hate the gross over-characterizations of SV as being VC-led (or destroyed). There are plenty of old fashioned network hippies still there, very concerned about the destruction of the formerly egalitarian ideals of the internet being ignored by the current ethos, people that still work on GPL'd and open source code, living in pain or poverty due to lack of credit, respect or support from the current regimes. The internet is a vast, shared resource that we hoped would benefit all personkind if we continued to understand the benefits connectivity brings to us all. I still remember and cherish the ethos that setup multiple non-profits to be its stewards - the hundreds of IXPs, in particular, but also isoc, arin and the other RiRs, places like isc.org, the internet archive, and wikipedia - all struggling to be heard over the latest grifter-driven-fad.
There is still room for entrepreneurship and innovation in SV and the world, but preferably greener and more self sustaining than it has been for the last decade.
[1]: https://www.businessinsider.com/instagram-first-13-employees...
To the extent that VC produces genuine innovation, they should be able to extract profit by either drawing dividends from the profitable company they own, or selling their share on the open market to other investors who anticipate being able to collect dividends.
That we have a whole class of investors whose strategy is to sell to a few monopolistic firms seems like a clear indication that the market is not healthy.
Can you explain this part? Do you mean it's prohibited, as in the FTC's actions/policies mean small companies are not allowed to compete? Or do you mean that it is difficult, as in small companies are not able to compete?
Part of the reason big tech does so many acquisitions is to reduce the amount of competition they face from what they see as competitive threats. We might not see startups with broken/unsustainable business models anymore, but that's a good thing.
If big tech can't buy out their competition, they will need to actually compete. History has shown that entrenched monopolists can't compete with smaller and more innovative companies. Consumers and the economy will benefit more from those types of companies growing into their own things rather than merging them into the existing big tech behemoths.
What would the world look like today if Facebook (or any other giant) wasn't allowed to acquire Instagram? Instagram could've continued to grow, they could've acquired more funding, poached users from Facebook, etc. That could've inspired some other social media startups, and they'd be fighting it out with Instagram/Facebook too. Everybody (except maybe Facebook) wins in that situation.
Alternatively, imagine where TikTok would be right now if they were an American company and Facebook actually had the opportunity to buy them out early?
Are you saying that's a strategy that we should try to preserve? As a user of tech, have you never been screwed when a company suddenly got acquired by a tech giant and then went to shit/got shutdown/etc? This kind of thing leads to unsustainable bullshit companies that always end up harming consumers and markets in the long run.
Sure, by enforcing this you decrease in expectation the maximum payout for a startup, but you plausibly increase the viability of small/medium payouts and viable non-VC models like bootstrapping.
I suppose it's a great technique: turn the screws, file lawsuit after lawsuit and fail to win, and then turn around and ask for donations (the implied outcome is that the lawsuits will stop)?
"I think it's really important for D.C. to begin engaging directly with the founders with startups, and getting a better sense of what are the risks you see," Khan said at startup accelerator Y Combinator on Friday.
Was this sarcasm? Very confused by this passage and feel like I'm missing context.
Makes her very likable.
And if we need to learn how to succeed, the initial heuristic of applying the law is the only starting point. Failure was the expected initial result.
She can fail for the entirety of her term. We lose nothing from the status quo. But if she can stick to it - then after she's taken enough of the initial beatings, someone else can come and succeed with the learnings she provides.
> And yet, this epiphany, that markets are politically structured and don’t have a will of their own, hasn’t made it to one very important place: the judiciary. The same week Sullivan gave his speech, a panel of three D.C. Circuit Court judges struck down a monopolization case against Facebook on the grounds that markets self-correct. "Many innovations may seem anti-competitive at first but turn out to be the opposite,” wrote the panel, “and the market often corrects even those that are anti-competitive." The D.C. Circuit Court panel was bipartisan, and included Republican appointees Karen L. Henderson and Raymond Randolph, as well as Obama appointed judge Robert Wilkins.
> These words undermine Congressional statute, and may devastate the ability to use antitrust law against digital platforms, at least in the D.C. Circuit. The specific procedural question was on the right of state attorneys general to bring an antitrust case over a violation that happened years earlier, as Federal enforcers can. Three judges made a policy decision to disallow that, even as Congress had just passed a law a few months earlier to make it easier for states to participate in antitrust enforcement.
[1] - https://www.thebignewsletter.com/p/all-rise-how-judges-rule-...
It doesn't matter to what degree someone is informed if they're pointing out objective facts.
In theory, they could abuse their market position by not selling games for the PlayStation, but you can't sue someone because they might do something. In fact, scrutiny from the FTC and the UK CMA seemed to motivate statements by Microsoft that they would not limit their titles (particularly Call of Duty) to their platforms. These statements were cited by Judge Corley when he denied an injunction against the merger. So even in this case there may have been some benefit.
As for Amazon and Facebook, the cases are ongoing; the former is very recent.
She also doesn't appear to actually understand the startup ecosystem at all, if she thinks that blindly opposing all M&A is going to help it.
She needs to find her John D. Goeken / MCI, and I hope she does.
Previous generations of Americans experienced how shitty monopolies are for everybody and made laws and agencies and legal precedent to prevent it. We should be aiming to do that again, for the new era of shitty monopolies ruining everything.
The newly-revealed problems are not the same problems as railway companies and stuff from a hundred years ago. They may well be legal now (hence the difficulty of winning court cases), but they still suck for the country, and we can in principle legislate them out of existence.
The great frustration of my (millennial) generation is that we grew up at the tail end of an era in which everyone evidently gave up on using government to make the world they wanted to live in and settled for getting rich, and we're .... slowly... trying to reclaim the fact that, no, actually, letting people exploit, manipulate, and degrade us is not something we have to put up and we are actually allowed to fix it democratically --- even if that notion had been mostly forgotten for a few decades.
This is a kinda pathetic plan B.