Comment by echelon | Hacker News Reader

Comment by echelon | Hacker News Reader

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The real problem with these giant companies is that they can move into entirely new markets, eg. film production, and afford to lose massive amounts of money. They can effectively lose billions of dollars while gobbling up market share and starving the oxygen out of all the existing players in that market who need profits to sustain themselves.

Amazon and Apple are undercutting Hollywood and losing money. They're subsidizing their Hollywood efforts with funds from unrelated business units (hardware, grocery stores, primary care doctors, etc.) You can get cheap (free) entertainment if you subscribe to Amazon Prime shipping, so why spend money on the competitor's product if entertainment is (at some gross sense and scale) fungible?

The thing that needs to be broken up is the ability of these giants to subsidize moves into healthy existing markets or even nascent markets. They push out the incumbents with their massive cash hoards gained from unrelated business unit activity. They don't even try to profit at first until they've captured the market and suffocated the existing players.

It's unfair that Amazon and Apple can make movies, buy out James Bond, Lord of the Rings, etc. off of their trillion dollar market caps, iPhones, and AWS profits. It's unfair that they can plaster free advertising on the side of their delivery vans or get free ad placement front and center in their App Store. That costs everyone else millions of dollars - a large percentage of the unit economics. Big tech has every advantage and is literally murdering entire markets with these insane, unfair advantages.

These giant companies are like an invasive species. They're like lionfish moving into the Caribbean, killing all the local fauna. No natural predators. Complete decimation of the local ecology.

Their behavior disconnects innovation, healthy and rational market monetization, and the actual rewards that should go to the investment and labor capital pioneering those areas. Institutional giants are snuffing out anything they see that they can expand into.

Big companies need to be broken up for the sake of healthy markets and innovation. Big companies are gravitational singularities that distort everything.

Over the years, I come across thought provoking comments from time to time on this platform. I usually take a moment to ponder what I just read. Then I ask myself who wrote this..? Then return to look at the username. More than once I find the name echelon. Echelon, you have a great mind and do a lot to further the HN commentary. Thank you.

Thank you so much for the kind words. There isn't a lot of that going around on today's internet with its ephemeral interactions, dopamine-driven engagement, and deep polarization. I too often allow this disposition to infect my own arguments and occasionally lean too heavily into emotion.

I feel like this line of argument is gaining broader traction. When I was making these points four and five years ago I was frequently downvoted. I feel powerless to affect change, but I'm starting to notice that many powerful players seem to be echoing this sentiment. Tim Sweeney, Marc Andreessen, and now YCombinator.

YCombinator hasn't had many centicorns lately, and the reason for that is that big tech is sucking out all of the oxygen in the room. You have to pay their tolls to play - discovery and distribution incredibly frictionful, and you're always in some manner paying the gatekeepers. They're bloodletting margin from the innovators and practitioners that need it the most.

VC firms are certainly thinking this over. Google, Apple, and the rest put a ceiling over what portcos can ultimately grow up into, and they can even force M&A when in a different world that would be a subpar outcome. These firms and mid-cap tech companies can be a powerful voice to help shape regulation.

I shouldn't even have to mention how this hurts the small business, lifestyle business, and mom and pop operations. Tech giants are finding every way to squeeze the lemon that they possibly can. If we can get enough of them talking about their pain points, that can be another set of voices to add to the angry cacophony.

Europe has gotten louder in beating this drum, and I'm hoping the wave is starting to come to shore domestically. It'll make the world better for all players - even the tech giants.

Google, as a sum of its parts, is frankly undervalued. They aren't properly monetizing all of their properties. If they were forced to break up and make each business unit anti-fragile, actually competitive, actually profitable, and wholly standalone, most of those business units would emerge stronger and better for customers. Shareholders would see benefit.

But the broader impact to the health of the overall market is what's most important, and that could be tectonically massive. Everything and everyone who isn't "big tech" - every industry, every individual - has been ensnared in this Pacific garbage patch of netting. The once-free Internet has so many artificial barriers that you have to pay to bypass, platforms are walled gardens that don't play together, and the companies that own the gates aren't good stewards. Their role is just to accrue power and tax.

Freeing the markets up again will make everyone collectively so much more innovative and profitable.

I hope we see change soon.

As a Googler I appreciate your Standard Oil view of the potential sub-businesses.

As an engineer I dread having to do all the toil required to disentangle them, should that be the DOJ and USSC mandate.

> Thank you so much for the kind words. There isn't a lot of that going around on today's internet with its ephemeral interactions, dopamine-driven engagement, and deep polarization. I too often allow this disposition to infect my own arguments and occasionally lean too heavily into emotion.

You’re welcome, I too find my disposition infected from time to time.

> VC firms are certainly thinking this over. Google, Apple, and the rest put a ceiling over what portcos can ultimately grow up into, and they can even force M&A when in a different world that would be a subpar outcome. These firms and mid-cap tech companies can be a powerful voice to help shape regulation.

I’m skeptical that this will happen in an environment of deregulation. However, it is possible that we’ll see change on a longer timeline.

> Google, as a sum of its parts, is frankly undervalued. They aren't properly monetizing all of their properties.

I couldn’t agree more. Every time I see Google kill a product line, it bothers me that it wasn’t spun off into its own company.

> Freeing the markets up again will make everyone collectively so much more innovative and profitable.

I’m not sure if I subscribe to the belief that markets were ever free. I do agree that we should do as much as we can to open them up though.

> I hope we see change soon.

Indeed, I simply hope we can see a return to reasoned discourse.

Thank you again echelon. May the winds ever be to your back, the sun to your face, and free markets on your horizon.

And also with their overvalued stock they can pay employees in stock and also buy competitors in stock. Amazon might not be that much better than Target or Walmart but the market prices them in much better.

Over sufficient time, a corporation eventually hits a tipping point where it becomes more economically viable to starve out and/or buy out your competitors rather than to innovate, and then to further entrench one's monopoly through special interest lobbying groups with their massive capital reserves.

Preventing the predictions of Marxists like Lenin around "Late Stage Capitalism" (disregarding the imperialist/colonialism overtones) from becoming a reality was supposed to be the job of trustbusting organizations like the FTC and DOJ but well... here we are.

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