I've come around and landed more on the opinion that we're now enabling our jailors.
Light tech regulation was exactly the correct approach in the 1990s (and arguably the 2000s). It enabled mind-boggling rapid and stunning innovation.
... However, the massive corporate fortunes built by the winners of those times are now primarily enabling rent seeking.
Google and Facebook's other work is interesting in the same way that Bell Labs was interesting -- great for a few, but funded by taxing everyone (albeit via tracking and ad market control in this instance).
And they've learned from their predecessors' demises that part of their winnings need to be continually re-invested in buying startups that might threaten their dominance.
IMHO, everyone will be better off if Facebook, Google, and Amazon are shattered into small enough independent pieces that (1) "get bought" is no longer the startup win condition & (2) they have peer level competitors in all markets in which they participate.
Apple and Microsoft? Mandate open app stores and devices, if an owning user so chooses.
Thinking back to the 90s... if anyone has guaranteed revenue streams out 10 and 20 years these days, the market as a whole isn't competitive enough. That should be enough time for the entire playing field to upend itself.
IMHO, everyone will be better off if Facebook, Google, and Amazon are shattered into small enough independent pieces that (1) "get bought" is no longer the startup win condition & (2) they have peer level competitors in all markets in which they participate.
I’m sure Chinese Tech co’s would absolutely love to have their Western competition knee-capped by their own governments. Will make it a lot easier for them to dominate the globe for decades to come.
I think it’s a somewhat false dichotomy that splitting up US big tech makes China big tech win. The reason being that splitting up US big tech allow for more competitive US mid tech to arise that can outcompete China big tech in areas where it matters. I suppose you also want to prevent China Big Tech to throw its money around at Mid Tech the way US big tech did in the last 10-15 years.
Why wouldn't an international tech co just be able to acquire domestic companies and/or launch products at a significant loss to gain market share in the US?
For example, break up Amazon and you now create an opening for Alibaba to expand into the US. Spending billions in order to get customers to shift to Alibaba instead of Amazon.
This is probably overblown if only because practice has borne out that the Asian platform model has ported very poorly to the US.
Americans don't seem to be interested in using massive platform apps that contain the kitchen sink; WeChat is available but not popular, same for LINE, and Messenger never successfully became that.
Right now the most successful overseas strategy for a software company has been Tencent's games strategy (as opposed to their WeChat one), and in that respect they're mostly just a holding company.
Dude. It’s a failed kitchen sink. We Chat was both my bank and my Amazon. I kept money on it and was the best way to go to the store. Heck—I even used WeChat as my Uber (Didi) because I didn’t have a Chinese card and the in-app WeChat app balance could pay for my ride.
ByteDance hasn't made substantial acquisitions since the launch of TikTok and it's not clear how they would leverage their current product's popularity into other domains.
>Why wouldn't an international tech co just be able to acquire domestic companies and/or launch products at a significant loss to gain market share in the US?
Because international companies wouldn't be exempt from US regulation if they operate in the US.
If we protect out markets from all monopolies, foreign included, we'd end up with tons of competitive companies all scrapping to be the best. Instead what we've got now are monoliths that will gradually ossify into cable-company levels of innovation and customer service. Breaking up domestic monopolies would be one of the best things we could do to compete internationally.
Breaking up domestic monopolies would be one of the best things we could do to compete internationally.
International monopolies will be able to expand into the US and burn cash to acquire users and grow market share. Then when they've run all domestic companies out of business, they will raise prices.
US monopolies couldn't penetrate into China without the Chinese government's say so. Xiaomi had its share of US and Indian sanctions (albeit temporarily).
The problem is not only competition in US or Chinese as markets; it is also about global markets.
China just fined Alibaba $3 billion for breaking anti-monopoly laws[1]. China also issued new anti-monopoly rules targeting its tech companies[2] in February.
Besides, everyone in the US benefits from increased competition between our domestic companies.
I think China is okay with big monopolies. Just as long as they control them. This particular anti monopoly fine was part of a larger power struggle with Jack Ma:
It's a valid point. Less so specifically to China, and more so generally to all countries with national champions (e.g. South Korea).
In some sense, it's a zero sum game, where if your country don't scale or allow companies to scale, they find the next most favorable country. Or another country's companies succeed because of the additional support provided.
But subsidies and government support have always been the biggest fracas in international economic politics for centuries for the same reason.
To which I'd reiterate
not_exactly__'s point: although business-harmful actions look like shooting yourself in the foot, hampering competition and supporting companies for extraneous reasons ultimately makes your economy and your companies less competitive globally.
Their services will just be banned and access made difficult enough to dissuade the average person. By that point I'm sure China will have perfected the technology enough that we can just copy them.
If we decimate domestic economic engines, then the internationals will figure out ways to push us into ever deeper economic dependency and subservience. We need the REAL hackers to paralyze monopolies.
FB is somewhat of an odd man out... I certainly think reversing acquisitions would be a positive, but...
With Bell, standard oil and past monopolies... the goal was to decentralise while keeping oil and telecom viable. We wanted what they made, and didn't want disruptions.
Do we want what FB makes? Is it scarce? I feel like we would have a sufficient supply of likes, shares, messages and posts regardless. There doesn't need to be a $trn company for those to be supplied.
Generally, I think the issues at stake have evolved. Many of the problems with today's monopolies are power related, rather than efficiency related. I think FB is enormously inefficient, but this is kind of besides the point.
I think if Facebook got truly broken up worse apps would take its place, particularly in communities outside US jurisdiction. Say what you will about Facebook, but I believe some random FB employee can't just dive through my personal messages without consequences. Having met several, I believe their data scientists go to great lengths to strip PII and generally secure data sets in transit between teams and outside parties. Don't tell me some 3 person start-up is going to get even remotely close to that level of control.
Facebook employee here. A significant chunk of onboarding is driving the message through that if you abuse your powers as an engineer to access personal user data, you will be insta-fired without warning. There are a number of checks in place to ensure that employees that don't need access to the data for their specific work cannot get it either.
Additionally, the privacy review process for new products/features is extremely stringent and time consuming. Product teams have been hamstrung significantly, with some engineers I know complaining that they're not even able to get half as much work done as they used to.
> A significant chunk of onboarding is driving the message through that if you abuse your powers as an engineer to access personal user data, you will be insta-fired without warning.
I think focusing on a rogue employee as the threat it missing the mark. The real threat is the ability for huge corporations to legitimize institutional access to data ("business reasons"), and to fight the legal fight if they are caught doing something wrong. Moral hazards of this mode of failure arguably has much more cumulative societal damage (e.g. Cambridge Analytica).
In other words, I worry less about an evil employee reading my messages than a scaled up corporate machinery milking all my data for dollars that feeds the machine back and also can fight any fight at the courts, DC and the public eye.
And not also sued and reported for criminal prosecution?
Because if someone didn't particular want a job at facebook, but interviewed for the experience and got the job or had been working there and wasn't happy there and was ready to quit-- the threat of instant termination alone may not be that much of a deterrent.
> I think if Facebook got truly broken up worse apps would take its place
Facebook has nothing approaching a monopoly on attention, social media, messaging, anything really. All of their products have serious, billion-dollar, hundreds-of-millions-of-users competitors. Even if they disappeared in a puff of smoke I don't think any competitive landscapes would change much.
> Do we want what FB makes? Is it scarce?.. doesn't need to be a $trn company
People want a social network that everyone else is on, that works on all their devices, and isn't full of spam bots or bugs. It takes a big company to do this at scale and the network effect makes useful social networks scarce.
Of course they do. Social networks bridge the gap between publishing and communication for the public in a way that has been absolutely transformative in many people's lives, and many people do want that and find that useful. People want to chat with and share media with their friends and affinity groups. They want to follow trending or interesting subjects. They want to post cat pictures and memes.
Of course outside the bubble. It's really only on HN that social media is assumed to have no redeeming value beyond acting as a platform for corporate mind control, propaganda and culture war, but for most people social media is just a way to communicate and stay entertained. My mother, who can barely even use a computer, keeps in touch with her relatives and gets pictures of her grandkids and keeps up with her COPD support group on Facebook. Obviously social media has value to her and many, many other people.
Some weird thing about Facebook is it now is basically the default web page for a LOT of small businesses. If you nuked Facebook, you'd nuke the webpages of millions of small businesses.
...not that you'd miss much, as they're usually spartan, but it's worth mentioning.
It's kind of annoying, because an actual webpage is much better IMO, but it is what it is.
Marketplace is basically a Craigslist competitor, taking advantage of their place on Facebook’s platform. I wouldn’t miss it if it were broken off (I’ve got a soft spot for Craigslist).
I find it very curious how facebook's advertisements (especially on instagram) seem to have a lot more products that are cheap commodity Chinese products, whitelabeled by a glitzy 'startup' brand, and add a 500%+ margin. Very often a quick search can find identical items (maybe without a brand label) on Aliexpress for a fraction of the price.
Google search and on-site ads can be annoying and of questionable relevance, but I rarely see items that are so egregiously ripping off consumers. I dont see this much on twitter promoted tweets either.
What is it about facebook's ad business that encourages such a high proportion of overpriced garbage? Is it the mediums focus on pictures and video that makes these sales work? Is the audience just dumber/less savvy and so these platforms are the only places with enough suckers to do this successfully?
TikTok's sponsored videos seem to be falling into a similar trap to a lesser extent - the markup is less extreme for the few I've looked at out of curiosity.
Do Google and Twitter have some process for quality control to keep the garbage out that Facebook does not? Or is the medium the primary reason for this perceived difference?
The answer's probably a lot simpler than you think. Dropshipping is hot these days for the "I'm an internet entrepreneur" crowd and the "How To Dropship Guides for $19.99" are all pushing Facebook ads and buying from AliExpress. The readers likely don't even know that there are alternatives: they're just following a script.
The rapid churn when people realize it's harder to make money than it seems means that there is always a new set of people pushing whatever crap is hot that week.
In conclusion, I think facebook's advertising arm is likely much more societally damaging than other platforms, and - so long as it continues at current quality level - I would celebrate its demise.
Perhaps. anchor it wherever you feel it should be anchored, and ask the same question. Whatever it is that FB does isn't scarce.
We would also not lack for ways of selling whatever advertisers on FB are selling. They would be different without FB. Different parties would or wouldn't benefit... Connecting consumers to businesses is not scarce.
We need to be careful about breakups to prevent re-agglomeration. Although AT&T was broken up, the Baby Bells eventually merged back together again while nobody was looking. The winner was Southwestern Bell, which later renamed itself to AT&T. The AT&T we know today is really just Southwestern Bell with a new name. Fortunately they have competitors but not very many.
It was done while everyone was looking, and it was explicitly authorized because the market had changed.
Wireless had proliferated, and the value add segment of the vertical had moved (from circuit-switched lines and long distance) to the Internet, where (pre-Time Warner merger in laughably late 2016) ATT didn't compete.
There's also the two other surviving "small" clumps of Bells called Verizon (Bell Atlantic, NYNEX + GTE) & Lumen (US West + Qwest + CenturyLink).
If we want to gripe about the current state of the US ISP market, post-ATT re-mergers shouldn't be top of mind. Exclusive franchise agreements, lack of common and accessible conduit / poles, lack of community-funded competitors, and bundling are above it.
Even a hypothetical worst-current-case scenario where 3+ of the majors ATT, Verizon, CenturyLink, Comcast, & Spectrum were offered at every house, because they all had access to each other's last-mile at non-discriminatory rates would solve current issues.
Common carrier laws established in the 1996 Telecommunications Act were doing a good job insuring that ISPs were competitive, by requiring regulated, bulk wholesale access to local loop elements to competitive (non-incumbent) carriers. Most cities in the US had a wide variety of DSL options, which was possible because of this common carrier system.
Things were kind of going ok with that!
That all got royally hosed when pro-big-business Supreme Court activism sided with Verizon's stance that they Verizon should have monopoly rights to fiber, in Verizon vs FCC (2002). Now suddenly telecomms could go back to their nasty old ways, which they have.
I wonder why the DOD/FTC/whatever can't/won't impose specific restrictions on companies in order to correct anti-trust issues? That seems a lot less drastic and risky than a break-up.
For example, if Apple is forcing developers to use their payments SDK to collect 30%, why can't a government agency just force them to stop?
Maybe there was a long official investigation by antitrust regulators, and that kicked off a long bureaucratic process that ends in a mandate restricting Apple from doing a very specific thing, maybe with an appeal/review process, expiration date, etc.
No need to get a bill passed that changes the law for everyone. A smaller company could still do that same thing, but it doesn't matter because due to their size, they're not immune to competitive forces. If anything, they'll have a harder time pulling it off because developers can get a better deal with Apple thanks to the new restriction.
Idk how the law works and whether the relevant regulators are able to do something like this. So maybe this comment is stupid, but it makes sense in my layman head at least.
Being large is not illegal. Having a monopoly in a specific product is not illegal. The standard by which the antitrust officials judge companies is whether the company controls a sufficient part of the market such that the consumer is harmed. The problem with the current regulations with respect to Google/Facebook is that their products are "free" to the "consumer," and free can't be harmful (harm is higher prices). The state attorney generals complaint against Google tries to recast the "consumer" as advertisers. The reason Apple and Amazon get a pass is that within their "markets" they are still relatively small. For Apple, their market would be all cell phones (or in the Epic case the Apple lawyers define the market as all game platforms). Since they don't have a majority of these markets and consumers are free to switch within the market they can't be forced to change behavior. "iPhone" is not a market by antitrust definition. Amazon places itself in the total retail market where they are still less that 10%. As the law is currently written and interpreted most of what big tech does is not a violation of antitrust laws -- the laws do need to be changed for everyone.
> For Apple, their market would be all cell phones (or in the Epic case the Apple lawyers define the market as all game platforms). Since they don't have a majority of these markets and consumers are free to switch within the market they can't be forced to change behavior.
iOS has 60% of the US market[1], and Android 40%. The App Store has 100% more revenue than the Play Store[2], and the two are responsible for over 99% of all app sales. In the US, Apple has the majority of market share in the mobile operating systems market and the mobile app distribution market.
Both Apple and Google have a duopoly in mobile operating systems, and they leverage that duopoly to maintain their duopoly in the mobile app distribution market. To continue the chain, they then leverage that duopoly to dominate the mobile app payment market, as well.
Further, the colloquial definition of monopoly doesn't with regard to antitrust laws:
> Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.
To be more specific, the standard now is "whether the consumer is harmed" - which is notoriously hard to prove. It used to be "whether the competition is hampered" - which is much easier to prove, hence why anti-trust was much more aggressive back then. And why big biz gradually lobbied the new standard through.
That’s what Apple says, but isn’t it a bit early to conclude that Epic’s arguments (relevantly, that Apple is illegally monopolising the market for iOS app distribution) are doomed to fail?
> why can't a government agency just force [a specific business] to stop [doing a specific thing]?
(I am not a corporate lawyer) Hopefully didn't take editorial liberties with your quote, but wanted it to stand on its own.
My understanding is that the US, in contrast to many other advanced economies unofficially or officially, takes a dim legal view of singling out a company for any purpose.
Either a company is acting within the law, or they are breaking the law. What company doesn't (shouldn't) matter.
Which I think is wise as a standing order, as detailed specific-company intervention renders it more subject to politics, etc. Better to stick to the laws, and then allow the courts to apply them evenly.
I don't think that will ever happen as long as "free market" is sacrosanct in the US. I think it would be possible to push the idea of a "fair market", that is one that has the benefits of free market competition without the disdain for the concept of regulation, but nobody seems to have attempt that yet.
> Haven't we learned that the "break 'em up" fix for monopolies doesn't achieve the desired results?
Breaking up has achieved excellent results before, as far as I can tell. It's not a permanent solution to the problem, but neither is brushing my teeth.
It might be OK to have a process that needs to be periodically repeated when companies get out of control. It might even be preferable to large legislative efforts that significantly change what companies can and can't do. Are people really mad that maps show up in Google search, or are people mad that Google owns the world? I'm not sure, but maybe it's better to precisely target a temporary solution at the actual problem.
In general, I'm more on board with bills about vertical integration than I am with some other solutions people have proposed. But I'm also not necessarily opposed to skipping the whole thing and directly breaking up those companies instead. It seems to have had good effects in the past. And while I do think vertical integration is a problem, I'm not 100% certain that it's the biggest problem or that this is the best solution. I'm watching these bills kind of carefully.
Approached from a novelty perspective, I think the exception is size and profit margin. These companies are simply too big (in terms of cash on hand & ability to generate profits). That's always been the problem with monopolies -- they get there, and then no one can compete.
Which in this case seems a consequence of first mover advantage + capital-light tech scaling (aka large profit margins) + huge total addressable markets.
Compared to Saudi Aramco's total profits -- Apple makes 63%, Microsoft makes 44%, Google makes 39%, Facebook makes 21%, & Amazon makes 13%. [0]
And that's compared to a business that literally pumps money out of the ground.
Source: I use the Internet today and can see the effects firsthand, I'm part of an industry that exists pretty much because of that breakup. This stuff is pretty well documented.
> Haven't we learned that the "break 'em up" fix for monopolies doesn't achieve the desired results?
What do you think are failed examples of this?
Even though you had eventual re-consolidation, the post-breakup phone industry seemed like a much more interesting and competitive place than the one before it. The fix for re-consolidation, of course, could be pretty simple...
Very few people want to do the harder, more innovative, more interesting thing if they can make a comfortable living doing what they've always done. This applies to regulators as much as to companies. We haven't found any better tool to force companies to be in touch with their customers and do what the customers want than competition, but we also have an economic system that encourages consolidation (because competition is HARD!). So the role of government to break things back up to keep competitive incentives feels quite natural. The market isn't gonna do it itself.
I can think of some incentives that would prevent hyperconsolidation. Sliding scale taxation based on some formula including a
ratio of revenue to people employed. Maybe take away big company's litigation advantage by making them pay an amount somewhat proportional to their size into a pool that covers the total costs of litigation. Let them recover money on wins. I think such incentives/disincentives would be met with the usual: "but if we're hostile to big business and restrict growth, they'll leave the US for greener pastures!". Is that really so bad? Let companies that are hostile to the US public leave the US. Penalize their advantage away in tariffs or something for fleeing to weaker regulatory environments.
ISPs can't leave and yet we don't seriously regulate them into doing public good or having a competitive market, which is mysteriously somehow contentious politically. Many others can't leave because their talent pools aren't willing to go with them, and that would be even more true if the workers had a government that worked for us.
There is a problem with government being full of people who would rather stay on the receiving end of a money hose than pinch it off for anyone's benefit. All the other apparent problems seem to me to be excuses to protect that. Check greed or we all suffer. You can check greed without stifling ambition. It's a valid choice.
Because regulation, even when well-meaning, acts as a barrier to entry and keeps competitors from even getting off the ground. Stifling small companies stagnates the industry and smothers innovation.
You can play whack a mole with their bad behavior, but large companies can come up with new dark patterns way faster than you can regulate them with precise and well thought out regulation. You just end up with entrenched interests and an ossified industry.
Maybe I should go back and read up on it more, but I thought Bell was the poster child for the breakup of a monopoly creating a multi-headed hydra problem.
Also, wasn't Microsoft a huge waste of taxpayer time and money? AFAIK, Gates got away with his monopolistic practices and has since been recasting himself as a societal boon.
Despite any possible gains society could gain by breaking them up, it seems like a herculean task compared to simply having our elected representatives legislate away business practices that are a public harm. (and yes, this would require our representatives to actually represent the people, but so does monopoly breakup)
Microsoft never got broken up so it certainly didn't teach us anything about breaking companies up not being useful. We'll never know what would've happened had they been. It might tell us that our laws are too weak, though.
Even if we reduce the story of Bell to "they got split up, then Southwestern Bell/Cingular/AT&T and Verizon gobbled up the rest of the others slowly" then we can see a big win: the n broken-up companies had varying levels of success because they tried different things and executed in different ways. That's a massive A/B test of the usefulness and efficiency of business practices that never would've happened if they'd never been broken up in the first place! And we'd have even less competition than our current wireless market if that breakup had never happened...
One interesting side-note I happened across recently was that Rockefeller's peak wealth was after Standard Oil was broken up. So what's the arguments against breaking up megacorps? We all know the value of competition, and we don't trust public companies to look much past the next quarter if left to their own devices, so why wouldn't we want more competition and less giant monoliths?
> One interesting side-note I happened across recently was that Rockefeller's peak wealth was after Standard Oil was broken up.
According to whom? And compared to what? According to what I read the man had (from memory) 24 million at the time of his death, which seems so bizarre. The problem is the accounting is not only difficult, but that the richer you are, the harder it is to account for all of it, and the more expensive it is to do so. It's not like a regular Joe who can just check his wallet or banking app. By the time you've audited your own wealth, as a billionaire, you've lost millions of dollars. The cost of accounting impacts accounting.
>Google and Facebook's other work is interesting in the same way that Bell Labs was interesting -- great for a few, but funded by taxing everyone
I feel like this sentiment doesn't go far enough. "Oh we would break up the monopoly if not for the innovation". Bell Labs innovated far more than FAANGs. It actually produced R&D that benefitted everyone. Big tech is far past the point of Bell Labs.
I think that the startup culture and everyone wanting to be a tech billionaire kind of changed the amount of midlevel companies. Most of them get acquired by the big ones at one point - or aren't able to compete with them technologically. Everything gets absorbed into blobs of enterprises that do not give a single damn about the individual customer.
The ironic thing here is that this goal, being absorbed by corporates, is what startup exits are about.
And honestly, I don't understand it. I want to build something that matters. Morally and ethically, not financially.
I want to build a legacy, not some zuck or bezos weekend shopping item.
For a lot of people, the reward is money. Not legacy. Not vision. Money. Uber was built for money. Facebook was built for money.
The reason buy-outs are more common is because the tech giants have gotten large enough to offer so god damn much money that very few people have enough non-monetary drive to continue the risk. Incentives affect actions in a dose dependent manner.
> I want to build a legacy, not some zuck or besos weekend shopping item.
Yeah, keep that view and you'll succeed. Beware of: children, relationships that expect things from you, anyone that isn't within your reality distortion field.
I'm with you. I guess your in your twenties. Me, early thirties. It does get harder to say no to everything everyone around you is doing successfully, for moral reasons.
Zuck/bezos and your kid stops getting bullied at public school...
Also: money buys legacy. Bezos and zuck can scrub the web of their wrongdoings(not that there are any) with 0.00000001% of they're stash.
> Yeah, keep that view and you'll succeed. Beware of: children, relationships that expect things from you, anyone that isn't within your reality distortion field.
Why the sarcasm? Did I offend you?
If I don't stand up for my own values, am I not a fraud when I try to teach a kid what's good and what not? Would you rather live in a world where everyone gave up because the hurdles were too hard to overcome or live in a world where people stand up for their ideals and work for them?
I mean, we as "tech guys" have the luxury of being able to have work available wherever we go, and we can live off it very much above average when it comes to income. You can still live a good life with a family and working part-time...and you don't necessarily have to drive a Tesla to be happy.
I do realize that somewhere along the line we all make compromises, for whatever reasons. But when I'm in my death bed I wanna tell my children about what I fought for, and being able to tell them about my social ideals beyond capitalism or an "influencer life" and about what I imagined, what I thought the world could be.
Wasn't sarcasm. More like an effort to prepare for worst, while still hoping for the best. Sorry I didn't make it evident that I actually do agree with all of your sentiment.
The technology field has much deeper problems that increased competition alone won't fix.
One of the most pernicious effects of tech advances in recent decades has been the rise of surveillance state and surveillance capitalism, and the loss of privacy that comes with that.
This enabling of spying on everyone is not going to be addressed by more competition, and might even enable it further if innovation in that space increases.
Another major issue is economic inequality fostered by the internet and tech booms which, again, the breakup up (or even end) of these companies would not address.
> One of the most pernicious effects of tech advances in recent decades has been the rise of surveillance state and surveillance capitalism, and the loss of privacy that comes with that.
Exactly this! Two out of five of FAANG derive effectively all their revenue from global-scale dragnet spying, and all five of them use that kind of data collection as a highly effective moat against competition.
It should simply be outlawed. That should be step #1 for breaking the tech monopolies.
Yeah, that'd be the "moat" I mentioned, but maybe I didn't sufficiently emphasize what a huge advantage that is for them. Losing the ability to vacuum up and hoard data just wouldn't be quite as big a shock directly to the bottom line, in very short order, for the rest of FAANG (+M) as it would be for F and G, in particular. It'd hurt the others plenty, however.
How do you (and most other people, especially Americans) not realize how unrealistic this is? It’s such a common refrain to say “break `em up!” but it seems as if nobody stops to question why it never happens despite it’s popularity...
These corporations control the government because the same people demanding to “break `em up!” have also been demanding “small government!” for decades on end, which in practice simply means a government that works for the corporate private sector.
The morale of this story is that your solution is no solution at all, and to the extent that it is a solution the means to implement it are nowhere to be found.
So proposing these bills is more feasible, because... why exactly? Are you under the impression that corporations aren't allowed to lobby about bills?
What makes you think that legislating tech will be easier than breaking tech up? Complicated rules about vertical integration aren't going to be less susceptible to lobbying and corporate FUD.
> IMHO, everyone will be better off if Facebook, Google, and Amazon are shattered into small enough independent pieces that (1) "get bought" is no longer the startup win condition & (2) they have peer level competitors in all markets in which they participate.
Apple and Microsoft? Mandate open app stores and devices, if an owning user so chooses.
I doubt all this bluster in Congress is anything more than rhetoric and posturing. There might be some settlements and watered down regulations, but that’ll be it. This is DoJ vs MS all over again.
> Jeff Bezos, this one’s for you. This provision aims at Amazon’s practice of using data it collects from third-party merchants to enhance its own private label offerings. If it passes, the practice would be blatantly illegal.
Would it equally apply to physical stores like Safeway, Kroger, Costco's private labels like "Private Selection", "Simple Truth", "Kirkland", ...
What makes Amazon different in this regard? Is Amazon doing it differently? (Like go out on their own instead of partnering with the product company to produce "Amazon" branded version of theirs)
But as you can see from the gigantic list on that page, most grocery stores don't belong to those top 3.
I live in NYC, for example, and I don't know a single grocery store here that belongs to a national chain or even a regional one -- they're all local. (With the sole exception of Target, but that surely doesn't make up even 1% of grocery sales here.)
So the ecommerce market is entirely different. There's no grocery store equivalent of Amazon's 40% share. And people can easily visit different grocery stores, but Prime members tend to shop mostly exclusively on Amazon for the obvious reasons, so it's locked-in in a very unique way.
For statistical purposes NYC basically isn’t America. It’s basically the only true city in the US, and is not representative of anything. Most other US cities become suburbs rather quickly, whereas NYC has an extensive urban built environment.
Walmart is the top grocer in the US and has a 27% market share. The top five grocery chains are about 45%. Top five ecommerce are about 53%. It’s not massively different.
> I live in NYC, for example, and I don't know a single grocery store here that belongs to a national chain or even a regional one -- they're all local.
1. Whole Foods
2. Trader Joe’s
3. Acme (subsidiary of Albertsons)
4. Wegmans (on GP’s linked list)
5. Fairway / Morton Williams (depends on how you define “regional chain”, but both are Shoprite affiliates and Shoprite is on GP’s linked list)
About the only truly “local” chain grocery stores I can think of in NYC are Gristedes and Westside Market, but I’m not an expert on the subject.
Ah, I wasn't thinking of more "upscale" stores like Whole Foods and Trader Joe's, good point.
But in my part of Brooklyn everything's extremely local -- FoodTown, Western Beef, Associated, etc. And in Manhattan I indeed always shopped at Gristedes, Westside, Fairway (which looking up their ownership, is at most regional if not local -- and even Shoprite is regional, not one of GP's 3 national chains).
But the main point stands -- across all 5 boroughs, the vast majority of grocery stores are local chains. Grocery stores are in no way concentrated in any way analagous to Amazon.
> But the main point stands -- across all 5 boroughs, the vast majority of grocery stores are local chains.
I’m not going to do like others and say your main point is irrelevant because NYC is unlike the rest of America (although arguably it is an outlier in almost every way), but the fact remains your main point is incorrect, the ‘vast majority’ of grocery stores in NYC are not local chains. I’m not invested in this debate enough to prove it by counting the number of grocery stores in NYC, but I’ve already shown that 5 (if not more) of the top ten grocery store brands in NYC are regional or national chains, so that disproves your “vast majority” claim without further effort in my opinion. YMMV!
Edit: even one of the ones you mentioned (Associated) is a regional chain... https://www.asghq.com/
Edit2: Foodtown is also a regional chain covering three states per their website. Further, Western Beef even has locations in Florida which stretches even the definition of regional to me!
Those 5 boroughs are pretty unusual compared to a majority of the USA. There are about 5,000 towns in the USA with more than 5,000 people and Wal-Mart has about 5,000 stores with $340 billion in grocery sales. Kroger and Costco both have over $100 billion in annual revenue with over 3,000 stores between them. Wal-Mart has over 40% of grocery stores in the country and these 3 stores together have over 70%.
There are less than 5,000 Wal-Marts. So if Wal-Mart is the largest grocery store, it's still less than 15% market share. Kroger has 2,800, and Costco has a little over 500.
The overall picture is clear: the long tail of supermarkets is long, and even the largest grocery chains command only a small percentage of overall market share.
I did not downvote you, but I see why you were confused. I should have clarified, but one of the links said total grocery sales revenue is $750 billion, so that's how I was calculating what fraction of the market Wal-Mart and other stores have. All those tiny grocery stores in dense urban areas account for much smaller slices of the revenue pie.
There are only ~16 Whole Foods and 9 Trader Joes. And only one Wegman's. And not even a single "Acme", so I don't know where you got that from.
So no, I stand by my claim that the vast majority aren't national chains at all. You haven't "disproven" anything at all -- to the contrary, your list is actually a perfect demonstration of just how tiny of a market share these chains have. And I don't really care about nitpicking between local and regional chains.
My whole original point was that there aren't 3 major national companies that control the majority of grocery stores, and therefore it's totally different from Amazon. And that point still stands entirely.
> So no, I stand by my claim that the vast majority aren't national chains at all.
Shifting goal posts (now it’s “not national chain” vs “everything is local”), dismissing factual information that doesn’t align with your views, yep, all classic signs of “I’m right no matter what” mentality. Have a nice day!
It's not clear to me how Amazon is even a "quasi-monopoly" as you put it. What are they doing to suppress competition? They aren't forcing exclusivity.
A few rich guys put together Jet.com ~7 years ago. A totally independent operation from Amazon and they sold all sorts of crap before being acquired by Walmart. So what am I missing?
Safeway/Kroger/Costco do not have direct third-party merchants, do they? They are just resellers. This is fundamentally different from what Amazon is doing.
I worked for Frito Lay as a salesperson and yes perhaps only 20% - 40% of grocery store inventory is maintained by the store staff. The rest was space that we were allocated to sell our stuff.
Stores would pay for the inventory, but we would rebate them for what would not sell as an incentive to make sure we put out products that actually sold.
But I would literally come in every day to the larger stores and put product on the shelf and argue with the manager about inventory and clean up our area.
None of the stores I worked at explicitly sold shelf space (I think), but our corporate worked with their corporate to determine how much space in each store would maximize their revenue. I am sure newcomers would have to do extra to guarantee they would make enough money for the stores to take risks on them.
Needless to say, they had all of our sales data when it came to developing store brands.
Also, continuing on, grocery stores are a very apt comparison. Foot traffic and purchase behaviors are very heavily tracked.
Firstly in an analogue ways - managers are always watching were customers are going/ what they are looking at/etc. The security team at a one co-op bragged that their cameras could read the time on your watch.
Secondly, there are all sorts of new tools stores are trying out to automate this. Software that analyzes footage to generate heatmaps. Or using the in-store wifi access points to generate heatmaps (even if you don't connect, your phone will give away your position when looking for networks). This is especially important in mall settings where they need to calculate foot traffic estimates as a way of pricing storefronts.
One thing I've always wondered is whether there's any interest in using in-store cameras for tracking the information people show on their phones, such as location, health, financial data, or even passwords.
Esp. since COVID I imagine a lot of people inputting their passwords in front of a camera at the register.
If you think that a supermarket buys products wholesale and then puts them on shelves for customers to buy, you don't understand how supermarkets work.
Agreed ;-). That's why I hang out on HN, hoping to gain some insight and knowledge.
The customer->FBA->merchant relationship is much clearer than in any supermarket I've been in. Maybe I'm really buying from a third party and the supermarket is just acting as the fulfillment center and payment processor, but it is well hidden. I'd love to know more about how the business end works.
Grocery stores are retailers in the traditional sense rather than a consignment shop or marketplace like Amazon. I think the person you’re replying to is alluding to “slotting fees” for new products and perhaps the more controversial “pay to stay” fees which are far more secretive and, from my understanding, are more of a grey area. Technically I believe the “fee” is considered a type of advertising expense: https://home.kpmg/content/dam/kpmg/pdf/2015/04/revenue-leafl...
Those fees might be an interesting factor but who bears the inventory carrying cost is what I suspect GP means. For FBA, it's not Amazon. It wouldn't surprise me if big vendors like coke/Pepsi who stock the shelves also own the inventory.
I'd love to read a good article talking about how inventory acquisition and management works at divergent super market chains... I suspect a lot of the interesting details are considered trade secrets though.
They take on the vast majority of the inventory risk, which is the fundamental detail everyone seems to miss. They own what they sell.
The complications come from trying to manage that risk - manufacturers who have better products or marketing can afford to pay for prime shelf space which also means it'll move faster.
I don't believe this is true in all cases. Maybe for some products, but at least other commenters here are confirming that some manufacturers refund the grocer for any unsold product. (So, Safeway only pays for the inventory that gets sold.) Seems risk-free for grocers on the products they have those sorts of deals with.
Not only in grocery stores. Bookstores can return books that don't sell, and since the books are heavy, the front page is often stripped only that is returned. That is why some pulp paperbacks have warnings to buyers to not purchase stripped books. In the world of fashion, clothes are often only paid for when they sell, and there are similar arrangements to book stripping.
Really the modern world allows many optimizations and creative contracts.
Yep they do that too but it's not risk free for physical stores because they take up shelf space. Anything that isn't moving off storefront shelves isn't making them any revenue - unlike Amazon they can't present every product through a paginated digital catalog while charging for warehouse storage.
Page space doesn't matter, at all. Anyone can produce more Amazon searches in 5 minutes than there are shelves in a retail store. Amazon makes money no matter which page you buy it from AND they charge all the merchants on page 30 for storing their goods in the Amazon warehouses on top of any commission. That's the exact opposite of inventory risk, that's an inventory gold mine. Retail stores can only sell stuff that is physical within arms reach of a customer.
We're talking about retail vs Amazon, not retail vs Alibaba reseller #39146527.
And also at the end of the day they take on liability for the products they sell. If amazon was liable for its 3rd party garage it wouldn’t be a problem
No they don't. Standard terms are suppliers get paid 90 days after Walmart takes delivery of the product. You also pay rent from the time a pallet arrives until it is broken down for delivery to stores - so if you deliver too many snow shovels in the middle of summer you might end up owing them money.
There is a whole industry of "supplier financing" that helps smaller players with bridge loans until the product sells.
This has been the model traditionally but retailers have been shifting to renting shelf/floor space to wholesalers and manufacturers. You may see certain fully-branded end caps in grocery stores, or kiosks in Best Buy, for example.
It's still not the same as signing up to creating your own store on Amazon though.
What is the difference between selling something on consignment and getting a rebate when the product fails to sell, or only getting paid for those units that do sell? Whatever distinction there is, I don't find it to be a meaningful one.
Sure, but if they are the actual customers of their suppliers, it doesn't seem like what Amazon does. I don't walk into Kroger and buy Doritos from Frito-Lay with Kroger just doing the fulfillment and payment processing, do I? I'm actually buying product that Kroger owns.
At least this is how I understand it. I am 100% open to being schooled in how it actually plays out. I'm just a software guy, but I like to learn.
If you're curious, The Secret Life of Groceries is a good (and interesting) read.
One tl; dr thing is that the supermarkets are a _supplier_ to both end customers and those with products to sell. They supply shelf space and customer reach, in the very literal sense that companies bid for things like endcap placement (the end of the aisle being better than being in the aisle, since everyone making an orbit through, say, the deli section will pass your goods).
Thanks! That is an interesting aspect. I had not considered that it could be a two-way relationship, rather than the store just buying what they want to sell and putting it on the shelf.
I guess it seems a little obvious in retrospect that there must be a bit of that going on, I've long noticed that some suppliers have a lot of responsibility in the store beyond delivering product. Like the beer guy pretty much runs the entire beer aisle. And it's one of the big names supplying all the beer, not just their own.
I've seen similar action in some stores by the soft drink vendors and even the bread vendor. Non-store employees on the floor putting stock directly on the shelf.
Some of the stock is essentially fully managed by third parties. If you see a bunch of Coke products in a store, there is likely to be a "Merchandiser" that visits and restocks it. It's a strategy by brands to get their product into more stores.
Most of you remember Twinkies, its parent company going bankrupt and them being gone... Those products were delivered to stores, fresh every day(ish) by manufacturer employees and put ON THE SHELF by them... This still remains true for tons of products.
For some products grocery stores function like a merchant on amazon.
Data tracking... well that really matters to a grocery store, because people have "brand loyalty" and tend not to return (ever again) if their "item" is out of stock. These anchor items are often loss leaders (detergent is the massive example).
Amazon isn't any different than anyone else, and isn't even the biggest one (Walmart still has that crown).
Oddly I could make an argument that amazon, being allowed to be dominant and pushing large retail out of business would be good for everyone... a return of small retailers might happen on the back of that.
The sale of contaminated beef has happened many many times in my lifetime, leading to massive recalls, even lettuce has seen contamination and outbreaks. The liability has not been on the store, rather the supplier/manufacturer of those products.
The local ford dealer wast at fault for your pinto exploding of the tires blowing off your SUV.
You didn't get to sue the store that sold you cigarets or round up that gave you cancer...
Welcome to the concept of "joint and several liability". Say you were in a phone booth and a car jumped the curb and ran you over but didn't manage to kill you.
Your attorney would sue the motorist but maybe they don't have insurance. Maybe they borrowed the car - the owner would get sued. The city would get sued because the curb was too low. The gas station would get sued because there weren't protective barriers around the phone booth. The phone company would get sued because the phone booth was too close to traffic. The maker of the phone booth would get sued because it wasn't made properly. And probably other things that I can't think of.
Fortunately for gas stations there basically aren't phone booths anymore. But be careful loaning your car or gun to somebody else.
Yeah but if the manufacturer went kaput or the store was negligent in sourcing beef you could sue. Both of these are a problem with amazon. If target sold Chinese cribs that killed kids for example you can bet folks would sue target and not the manufacturer
The idea of negligent sourcing is interesting... you would have to prove that they knowingly bought and sold a bad product.
The idea of "blame the retailer" is, to a degree, protectionist. Your solving the problem of "can't sue the chinese manufacturer" by blaming the retailer. The reality of the world we live in has changed so drastically since those laws were made that we should probably revisit those.
Blaming retailers only serves to have fewer, larger retailers, not choice (and competition). This entire line of thinking presents a massive potential to lead to less choice, in retailers and products, leading to LESS competition.
You don’t want a lot of fly by night foreign vendors just dumping unsafe goods. It’s a good idea to just eliminate them by making it too expensive to deal with liability claims for anyone that resells that crap.
It's odd to say that the only company you had a direct business relationship with had nothing to do with it. Product liability does apply to the seller of that product, in addition to the manufacturer and distributor. That doesn't mean retailers won't fight it, or that it is easy to prove. It's just how the laws are in the US.
If I drink a coca-cola and it turns out it had rat poison in it, I'd likely blame coke, and not the grocery store, even though I have no direct business relationship with coke.
> ‘covered platforms’ (companies that have a half-million monthly U.S. users and more than $600 billion in market cap)
There are only 8 companies in the world that match the market cap. Probably 6 if you add "users": Apple, Microsoft, Amazon, Google, Facebook, and probably Tencent.
600B seems like a totally arbitrary made up number to target Amazon but leave out Walmart (which is close to 400B). Looks like Walmart lobbying dollars are bearing fruit.
They mention two key differences. The first is just that Amazon is arguably more dominant than any physical distributor, and has more power over offerings.
The second is that if you make a new product for a retailer, the retailer usually has to invest in you to some extent, by giving you physical space and buying your product for resale. So, there's some shared risk and for developing new products. Amazon, on the other hand, doesn't need to give you anything to see how a new product will play out, so it might have too much of a position of power.
I buy the first, not the second. Retailers often charge consumer packaged goods companies (CPGs) for preferential placement in aisle and carry no risk on inventory. The bigger the retailer (eg. bestbuy, walmart), the more likely they can assume no risk on inventory with a full return policy to the CPG. Best Buy just rents out space on their store floor to individual brands.
Trader Joe's is the closest to Amazon in this regard. They introduce new products as the name brand, the best sellers are cloned and then replaced with the store brands.
This does happen. Many regional chains do own there own factories however. Many of them produce both store brands and 'premiums brands under license. It's a complicated business.
They stock plenty of third party Wine in my area, although the beer is all Trader Joe labeled. There are a handful of other things that aren't Trader Joe store brand or completely generic (yet?).
Not that it would matter here, the law in question sets the market cap miles above where Trader Joe's is.
I had forgotten about the beer/wine, as the one I've been going to doesn't have that section. With the alcohol oligopoly it makes sense they can't make house brands so easily.
Aldi is similar, which is kind of interesting because Trader Joes is one of the Aldis. I always wonder how they get away with blatant trademark infringement. They come up with similar product design for the purpose of confusing consumers. I assume they have deals with most of the name brand products, or their parent companies.
I don't know about Trader Joe's specifically, but a lot of "Store Brands" are made in the same place as the name brand. It's just a giant game of price discrimination.
Agreed. I never worked there but have shopped there for many years, along with the other usual places like Whole Foods and Safeway. A game I used to play was "spot the TJ's store brand item under its own name at another store."
One example is TJ's French Village plain nonfat yogurt, which is very obviously Nancy's yogurt from Springfield Creamery in Oregon. Same exact taste and texture in the same packaging. (Nancy's used to come in clear plastic tubs like TJ's. A few years ago they switched to opaque white for their name brand, but it's still the same product.)
Another is some of the frozen Indian foods, which Whole Foods carries under the manufacturer's brand name.
Part of the agreement seems to be that the manufacturer goes out of their way to make a worse version for TJ's. Honestly they should be taken to task for flooding the market with fake competition, but that applies to the majority of brands in these days of megaconsolidation.
I don't think that is the case. As I noted in a sibling comment, many of TJ's store brands are identical to the name brand.
Buy a tub of the French Village yogurt I mentioned, and also buy the same Nancy's yogurt at Whole Foods, and you won't find any difference between the two.
Another difference between Amazon and physical stores is that Amazon has pagination. If a product ends up on the second or third page, it will likely not be seen by the vast majority of customers.
With physical stores, your options are always all right in front of you.
Stores are constrained by the limits of physical space, it's exactly the same thing as an Amazon "first page" except at least with Amazon you have the option to visit the second page. In a physical store anything that would have been relegated to the second page is simply unavailable.
The closest example I've seen used before is the notion that you get to the shelves and go to grab a case of Coca-Cola, but as you reach to grab it a voice beams at you from your side saying "Wouldn't you prefer <our brand> instead? Its $1 cheaper!"
Now, which kind of works as an analog to these companies prioritizing their products on the search algorithm, but I don't really think applies to the practice of gathering such data.
there is an analogous experience at physical stores, though. the proximity of items to entryways, cashiers, etc matters for sales. also, which height shelf a product is put on also matters. some at eye level, for example, and others at children's eye level, make certain products more prominent. if you are trying to place a product at a store, how much it would cost you depends greatly on where in the store it is placed.
Sure, but I would argue that that is more of an analogy to the first page of products only. Things that are beyond the third or fourth page may as well be in the back of the store, and not on the shelves.
Things that are on the third or fourth page would not be in the store period as it would be too costly to carry all that inventory in a retail environment.
The analogy is useless. Consumers are lucky that the internet even gives them a 3rd or 4th page.
"What makes Amazon different in this regard? Is Amazon doing it differently?"
Nothing, and they aren't. Except they're maybe the biggest.
The intellectual foundation of this new movement isn't specifically anti big tech. It's anti all kinds of anticompetitive business practices, many of which have had huge negative effects outside of tech. Grocery stores are one of them, but one can point to any area of the economy and find businesses engaging in what is currently standard practice that the new movement is seeking to outlaw, or in many cases just restore the teeth to laws that have been ignored for years, or just so narrowly interpreted that they're meaningless.
I see it the other way; What's the point of designing something that is affordable and usable by everyone if Amazon is just going to rip off the design and market theirs over me?
Whats the point in making a budget ketchup brand if Safeway has their own? I can't compete with their margins there especially with that level of competition.
I give a bit of a pass here to kirkland stuff cuz it never feels like a race to the bottom nor do I feel like costco just advertises the hell out of it over other goods.
Patents and trademarks exist to give designers the ability to reap profits from their creations. If you are not able to patent your design, then either the patent system is not working or whatever was designed or trademarked is not very valuable.
The patent system is probably fine, it's the COST of going after Amazon. They'll bury you. If you're a small studio that makes maybe 200-300k of revenue a year, how are you supposed to go after Amazon?
Then you disagree with the folks advancing these policies! :) Their perspective is that Amazon, Kroger, Wal-Mart, and a whole host of other businesses (including things as seemingly boring as cheerleading supply companies) are engaging in anticompetitive practices that cause a variety of harms.
Depending on which case you look at, they allege different harms. In some cases they allege harm to suppliers or to employees, but in others they make the case for anti-consumer harm.
Hopefully folks won't continue to downvote me. Whether you agree with these folks or not (and I'm not trying to make their case for them here), that is what their position is. It is wise to understand them, even if we don't agree with them.
Safeway, Kroger, and Costco's market caps are all under the 600b limit. Even Walmart is under this.
What makes Amazon different is Amazon controls 38% of all online retail sales in the United States[1]. No company comes close to their dominance in the market.
I've had the same thought about Google promoting its own products over competitor's in search results. Isn't that the same as Whole Foods putting a stack of their 365 brand cereals at the front of the store?
i don't see what the big deal is about google promoting its own products on the results page. All that means is one less slot for wikipedia/pinterest/amazon/ebay/nytimes or some other big site.
Somewhat OT, but I love how this "kitchen sink" idiom has become so warped over the last several years.
As far as I know (native AmE), the original expression was "everything but the kitchen sink", which evokes the idea of taking everything in the kitchen and using it all in a recipe, only stopping short of dismantling the kitchen itself.
Whether through mishearing or laziness, the "everything but the" part has been dropped. I only noticed it in the last few years, but maybe it's been happening for a lot longer than that. So it's now totally the opposite: the only thing in the expression is the kitchen sink, i guess suggesting that there's a bunch of junk in the sink?
But this title is even better. We have abandoned all pretense of caring about the meaning of the expression. In 2021, Chuck Schumer is going to call Mark Zuckerberg in to testify, and he is going to physically hurl a big metal sink at him.
I know that language evolves and stuff, but it's pretty funny to see such a silly corruption of an already-kind-of-silly idiom in a "serious" title.
One expression still is "everything but the kitchen sink", which means all reasonable effort.
But that means the kitchen sink is now the metaphorical "last thing", i.e. the full extent of our effort, the theoretical maximum.
So to "throw the kitchen sink" at something is to put in all your effort, literally everything you've got. (And there's no need for junk in the sink...)
It's a different expression with a different meaning but derived from the first.
And of course metaphors are very often silly... that's why we love using and abusing them! :)
Your idea would make more sense if congress had tried everything but the kitchen sink already. But afaik congress has been doing very little to regulate "big tech". Now let's say it's a year later and the 5 draft bills are passed, but congress decides to create another bill to regulate tech, what will the new article say then? Kitchen sink was not enough, another kitchen required? No, I think the expression is just misused in this article.
By the way the original expression was popular during WWII when describing the effort to fight the enemy[1].
What do you mean using it wrong? The article is using it in exactly the way I described. "Throw the kitchen sink at something" is a widely used, valid expression these days. People are using it to mean expending every effort, so people seem to be using it right.
And the wonderful thing about language is that however most people are using it is by definition what it means:
Wonderful to academics? Yes, academics study what is, but at any given moment there are prescriptive rules and norms for what should be, Elements of Style if you will:
Such take downs are often lamenting a lack of rule following in the style guides!
“What’s wrong is that the grammatical advice proffered in Elements is so misplaced and inaccurate that counterexamples often show up in the authors’ own prose on the very same page.”
> at any given moment there are prescriptive rules and norms for what should be
But according to who?
That's an entirely serious question. Because different "authorities" disagree about the rules and norms, and on top of that people disagree on who the "authorities" are or should be.
They combined them. Throwing the kitchen sink means you're literally using everything you have, since you're even going to throw the sink too. Combine this with the "throwing the book at them" idiom, and you arrive at "throwing the kitchen sink".
Funnily enough, in the TV show "Prison Break", the main character's brother's prison nickname is "Kitchen Sink" or "Sink". We're told that he got this nickname because if you get in a fight with him, he will come at you with everything but the kitchen sink!
The USG has a codependent relationship with its telcos and ISPs, just like it does with big tech. You can point to these bills as evidence that the USG intends to control tech giants, but remember how long people have been complaining about some of the issues these bills address, and that they still need to be voted on. Also remember that all these companies sell services to the USG.
>Bill 4: Merger Filing Fee Modernization Act of 2021
>This bill from Rep. Joe Neguse would increase fees for mergers and help fund the regulators.
>Text: “There is authorized to be appropriated for fiscal year 2022— $252,000,000 for the Antitrust Division of the Department of Justice; and $418,000,000 for the Federal Trade Commission.”
Isn't tech specific, let alone big tech specific. Huge fan here.
I remember reading once that tech companies, on average, lobby less that traditional industries, such as fossil fuels and finance.
I wonder if the lesson they will take from this is that, rather than reform, they should invest more in lobbying. Considering how much money and influence on the public opinion they have, that's a rather scary thought.
I read that Microsoft never did any lobbying before the anti-trust suit. Once you're big enough to be a target, you have to spend money on lobbying, and contribute to campaigns.
A graph shared on Slashdot at the time made a big impression on me. It shows that until the antitrust pressure started ramping up [1], Microsoft didn't lobby (as I recall).
The graph showed a huge spike in lobbying money after antitrust. Of course, this makes perfect sense in terms of incentives on both sides. Perhaps this [2] was the graph.
> Once you're big enough to be a target, you have to spend money on lobbying, and contribute to campaigns.
Absolutely not. You do the opposite of that. You go at layer zero. At the population level and enter the culture wars arena with the goal of winning.
Some of these companies are structured in a way that the founders are poised to retain control of their companies till they retire (Google, Amazon, Facebook, Berkshire).
If you are Zuck or Brin or Dorsey and you want to do this until you are 95 like Buffett then you are better off barking and biting back, acquire a reputation of a fighter so that people like Sanders and Warren would leave you alone. There will be consequences such as employees criticizing and leaving but in the long term you are better off fighting.
When a politician comes after you and your company, you just attack back, if you are not prepared to do this you should simply not start a proper company and opt for a carrer in a hedge fund instead, where you can make money in the dark.
Founders and CEOs should not be the first offender but when they are called out they should absolutely attack back.
Sanders is pouring manure all over corporate America since 2015 and all he had to endure was Michael Bloomberg attacking him back for half a debate, and wouldn't have happened if Bloomberg didn't decide to run.
If a guy like Bezos or Zuck were to tweet back at Sanders something to the tune "I've started a company in a garage and now it has the same credit rating of the US Government, what have you done with your life?"
That would be fair game, politicians prey on weakness, they smell it and keep biting till you lay there unconscious
You’ve also got to read the room. The mood in the US is not in favor of hard charging mavericks of industry. This approach today would likely backfire spectacularly.
Big Tech should be locating large employment centers in strategic locations around the country. And by strategic I don’t mean where the talent, resources, or customers are located but rather where influential Congresspeople, Senators, and Governors are located. Then wield your soft power with these folks, e.g. “You can break us up but it’s just going to cost your district/state massive job losses”.
Next, meet with other agitating politicians to find out their underlying motivations and help them to achieve those things - doesn’t even need to be real, just help make them look good for their next re-election campaign. So Bezos should work out a public deal with Bernie and AOC to raise Amazon’s minimum wage to $20 an hour. Bernie and AOC will look like progressive heroes but would be effectively defanged in continuing to attack Amazon (to a large degree).
Big Tech should be locating large employment centers in strategic locations around the country. And by strategic I don’t mean where the talent, resources, or customers are located but rather where influential Congresspeople, Senators, and Governors are located.
I thought this was one of the problems of a Soviet style command economy. They would locate production not where it was more efficient and made economic sense, but where it was politically more beneficial.
If these companies start doing this they could lose to more efficient competition. Hope they aren't that stupid.
> If a guy like Bezos or Zuck were to tweet back at Sanders something to the tune "I've started a company in a garage and now it has the same credit rating of the US Government, what have you done with your life?"
Aside from whether or not this is good to do, do you remember the Amazon News incident? Amazon tried to "fight back" on Twitter and it just made them look bad.
The amount of lobbying you need is going to depend a lot on what your industry is.
If you're building mines or manufacturing plants that take years to build and then another year to get running right and then another five to be profitable and your margins are thin you have a much larger interest in ensuring regulations don't change or at least not fast because a few percent change in profit could mean you never recoup your investment over the lifetime of the facility.
It can still take years to build stuff but rarely is it 3+yr and tech margins are fatter and once you have something your can scale up and down much more rapidly.
I think the "natural" amount of lobbying is going to be lower in tech than for industries that do physical things because tech has some things that make working with regulatory uncertainty less terrible.
More critically, "tech" is concentrated into a small set of voting districts. Whereas traditional industries are spread throughout the country.
Amazon's warehouse network is their most valuable political commodity. They are often the highest paying entry level jobs wherever they are put, represent a huge local bump in payroll and property taxes, and they are being placed in voting districts all around the country.
They're the only industry that is on the bad side of the extremes of both political parties.
The left because of anti-trust and anti-ultra-rich sentiment, and the right because of perceptions of social media censorship.
If they were acting properly in their own cronyistic self-interest, they would've cozied up to the right. But the demographics of their employees precluded that.
Don't know why you're being down voted. You are correct. There are many Republicans sympathetic to business but by making them the enemy, you alienate the entire political system. Oops.
>The bills may change before they’re introduced, and they’ll inevitably go through a political process that will water them down. But even if only a portion of what’s written gets passed, the tech giants will lose several advantages they’ve exploited in recent years.
Yeah that is the rub.
It's like in 1998
"we're gonna break up Microsoft!"
2002: "ok Microsoft will agree to make some some changes to their business but otherwise whatever"
Big tech is going to get bigger. Congress does not want to risk destabilizing the economy and and losing reelection as a result by being too hard on tech. These companies employ a lot of people and generate a lot of econ value even if there are a lot of reasons to complain about their business practices.
Normally I'd agree with you, but I've been thinking on this for a while and when you look at history this is not the case. Prominent examples are Southwestern Bell and Standard Oil. The elected officials in the US government are happy to take campaign contributions and play the game and let the monopolies run wild, but when their behaviors threaten the monopoly of power the US government has or threatens political stability the US government acts, sometimes very heavy handed and often effectively.
Well, you have to make an assumption either way. I'd say it's more likely they'll do what they've done in the past than not, particularly where the status quo of power structures is threatened.
Good reporting! Congress is made of people, the process of lawmaking is just group text editing, and they answer their phones. If you think any of these ideas are good ones and would make good law; call your Congresspipples and tell them so.
Otherwise the only people they hear from are the sleazy lobbyists speaking paid words, and the silly beltway denizens who wouldn't know the real world if it shat on their desk.
Given the current state of the Senate, it seems unlikely there is going to be any big legislative changes before 2024. 2022 is still eons away (in political timescales) but a fairly likely scenario seems to be that the GOP will narrowly gain the House and the Democrats will pick up 1 seat in the Senate.
So we're largely arguing academic situations. And the thing about that is you then have a lot of people who are virtue signaling rather than genuinely arguing a position because they know their rhetorics, even their votes, won't change anything. It's why opposition parties always vote for campaign finance reform.
So I'm highly skeptical of the need for any government action here, be it sweeping legislation or antitrust. There are several reasons for this:
1. Big tech companies are more fragile than you might think. Government action is slow. As we've seen from Myspace, Yahoo and the like, big companies can disappear almost overnight. If a company can face an existential threat and possibly disappear within a few years then, by definition, it's not the monopoly you think it is. It's certainly not Standard Oil.
2. Western companies have been largely excluded from Chinese markets while those companies have far less restrictions elsewhere;
3. Chinese companies are essentially an extension of the state. US companies are not, not to the same degree anyway.
What we actually need is company-agnostic action that protects consumers, their data and what you can do that with that data. This is sort of happening already thanks to the EU (eg GDPR). The US needs to start extending those protections to US consumers. And that needs to apply to both domestic and foreign companies.
Whenever these discussions about breaking up or regulating Amazon, Facebook, Google, etc come up, I often wonder how much of it is that these are nice big, visible targets that make politicians look good to demonise, rather than that it would genuinely improve lives and society.
And leading from that, which much less visible behemoths and industries having a kitchen sink or two launched in their direction would generate societal improvement.
I spoke to a commission of congressman about this topic. (they wanted to talk to small startups). It seems really difficult to effectively regulate this.
- acquisitions are part of what make the startup ecosystem work. It's not at all clear which acquisitions you should block
- the bundling approach that google uses makes things like android free
- you dont want apps on iOS and android running their own payment infrastructure since some will abuse it
There definitely needs to be regulation, but its not at all easy to see what shape it should take.
> There definitely needs to be regulation, but its not at all easy to see what shape it should take.
How do you draw the conclusion that there definitely needs to be regulation if you have no idea what you would be regulating?
Everything about this pan-societal debate has been disappointing because it boils down to: “how do we draw up Bills of Attainder without calling them that and without completely wiping out the free flow of money and capital in the Valley?”
> acquisitions are part of what make the startup ecosystem work.
That's such BS. A startup whose only business plan is to get acquired doesn't deserve to succeed in a competitive market. If that route becomes nonviable and a bunch of silicon valley startups go under, then good riddance.
The US economy needs startups with sustainable business practices and highly competitive products and services. Not acquihire schemes.
I'm not who you're replying to, but I don't think that's what he said. They should be allowed to succeed, but building a product under the guise of competing in the market with the end goal of getting bought is grimy. It's one thing if you make something new and valuable and you take an offer for it, it is entirely another to make something that deliberately competes with google for the purpose of getting bought to stifle competition.
In the article they talk about a bill designed to prevent tech companies from buying competitors to squash them, but with the potential consequence of stopping startups that have that as a business model, and that is framed as a negative consequence. They're saying this is a positive consequence, and I have to agree with them. If what you made is really a competitive product then it should be able to be profitable on its own. If it can't be it isn't actually competitive and should fail.
You don't think that the huge start up acquisitions market has a negative distorting effect on tech entrepreneurship and innovation? I feel like it prioritizes growth at any cost and deprioritizes the disruption of the established tech players.
None of the proposed bills are that severe. Most of the behaviors in Bill 1 are already illegal under current law. The FTC has been out to lunch on enforcement for years.
Bill 2 is broader, but not well defined.
Bill 3 is about data portability, a feature nobody actually uses even when available, as it is in Europe.
Bill 4 is about getting the FTC and DOJ enough money to do their jobs. These jobs are hard because Congress hasn't enacted a "bright line" standard that can be easily enforced. Amy Klobuchar, in her book, "Antitrust", suggests defining 30% market share as the point beyond which antitrust enforcement should start. None of these bills go that far.
Bill 5 is about stopping mergers which increase tying. But they're not about really stopping tying.
None of these do any of the following:
- Force Google to pick one business and split off all the others. They could keep search with ads, but would have to sell off third party ads, YouTube, and the data center business.
- Force Amazon to take on all the responsibilities of a seller for all merchandise on their platform.
- Force Facebook to sell off Instagram.
Also, none of these bills address AT&T or Comcast, which have real monopolies, not just market dominance.
This set of bills is thus mostly PR, not real change.
That is probably one easy way to encourage competition. Eliminate the egress fees.
If it costs nothing abnormal to use services across clouds or on premises, then you can likely pick and choose best of breed anywhere as long as there is a decent network.
I can see some app store regulation coming (which will have minimal impact on big tech's profits), but there just isn't enough political support for breaking up America's success-story companies. It's not gonna happen.
But part of me wonders, if it did -- might the broken-up companies turn out to be more valuable in aggregate than the original ones? Remember, when the gov't split up AT&T that's exactly what happened.
Copyrights, patents, and legally-enforceable trade secrets are government-granted monopolies on particular inventions and works of authorship. Granting such monopolies may be good public policy in many cases, though it is never without its deadweight costs. However, it always carries the risk that the grantee will overexploit their monopoly, to the detriment of the public. In this case, there are at least two possible public policy options:
1. Reduce or eliminate the monopolies.
2. Continue to grant such monopolies, while attempting to limit their overexploitation through other means, such as prohibiting the forms of abuse that were most egregious three or four years ago.
Unaccountably, Congress seems to have chosen option #2. I doubt it will be effective.
They pissed off the left by being sociopathic big businesses that treated people poorly. They pissed off the right by exerting perceived control over public discourse. They've pissed off government in general by swinging around their power when called out on these things.
It wasn't a question of if the feds would screw them it was a question of when.
That's not really why they pissed off the left though. What other industry treats its workers better than tech?
They pissed off the left by moving in on their turf. Big tech is a direct threat to universities, journalism, media, and entertainment industries. It's not a threat, and even a benefit to transportation, oil/gas/mining, and agriculture, which are more republican industries.
>What other industry treats its workers better than tech?
There's a bit of a disconnect between what a FAANG company considers an employee and what the colloquial definition of employees are at a company.
The large corporations have shed every worker they can that's unrelated to their core business, such as by contracting out security or cleaning. Then the large corporations say they treat their employees better and point at the ones remaining who get all the nice perks. The average person however, sees someone who goes to work every day at the same corporate campus and views them as employees who are not treated well
It's really weird that you attribute this to "FAANG" for some reason when contracting out your cooking, cleaning, and security is almost universal among modern American companies. It's especially weird when you consider that physical security at Google is actually inside, not contracted out. So FAANG may be different but in the opposite way that you meant.
i think what pissed them off is trump winning in 2016. Which they then blamed on facebook and "disinformation".. (instead of hillary being the worst candidate in history) and the left decided they needed to take control of these companies so that doesnt happen again.
> Text: The bill would make it unlawful to do anything that "conditions access to the covered platform or preferred status on the platform on the purchase or use of other products or services offered by the covered platform operator."
> Analysis: This is very clearly aimed at advertising on Amazon, potentially Google as well, where merchants often must pay to gain visibility in the search results.
Doesn't this basically outlaw ads? Aren't all ads "preferred status on the platform"? If I offer a product on amazon, and there are already hundreds of other people offering the same thing, who already have a lot of sales and reviews, how else should I be able to gain visibility other then by buying an ad?
My take is to compare how ads are displayed today, vs maybe 10 years ago. Ads today are almost indistinguishable from organic content, and are typically at the top of any results. I would think that ads could still exist if organic results were still prioritised, and probably that the ads are clearly marked.
>> Ads today are almost indistinguishable from organic content
> If that's the problem then there should be specific rules addressing that.
Honest question, why? If ads make the experience worse for users then the page owner will suffer and be vulnerable to competition. If they make the experience better (possibly by raising money to fund unrelated improvements) it's pro-consumer.
Is the problem that it's deceitful? That it's fraud? That users are tricked into clicking a link? IMO the barrier to regulation should be pretty high, and I'm not sure this is something where the government needs to get involved.
(Now, if the ad content appears to be attributed to someone, I guess that person could consider it defamatory. And if it's untrue or illegal I could see the page owner being liable. But "not clearly an ad" is too thin.)
I don't have a view on that. My point is just that specific rules addressing a specific problem are better then vague rules justified by a specific problem.
Create a monopoly tax that incentivises large companies to "right size". E.g., if the company is larger than X and has captured a market (like google with search) then tax all revenue above a threshold percentage of the market. For example, the market is $100B and the company makes $90B revenue, then tax away everything above $40B in revenue. This may take away the incentive of a large company to take too much market share and may encourage them to enable competitors. The parameters (company_size, marketshare_percentage, tax rate, etc.) may be adjusted to maximize performance
The 'market size' part seems squishy and game-able.
I've always liked the idea of revenue-neutral progressive taxes on corporate revenue. Tax economy of scale.
Ex.
Zero corporate taxes on the first 100k of revenue. For every order of magnitude above this revenue is taxed at ~1% more.
$1M in revunue -> 1%
$1B in revenue -> 4%
$100B in revenue -> 6%
Then reduce other corporate taxes to make it revenue neutral. In the most extreme case, the 1% figure or the curve could be tuned so that this is the only tax corporations pay.
This encourages companies to split: if your economy of scale isn't yielding enough to justify the tax, you could spin off multiple smaller companies that would each be more profitable. The capacity for corporations to do evil is directly proportional to concentration of power. Smaller companies won't be able to afford as many lobbyists, their threats to move their businesses will be less existential for municipalities and they'll get less-sweet sweetheart deals. Being "Too Big to Fail" is unsustainable and wasteful.
This would be a massive boon for competition. Small businesses would be easier to start. Businesses may choose to stop growing: if you're making a healthy profit, don't jeopardize your margin in a perpetual struggle to amass the most power, leaving room in the market for competitors to coexist and meaningfully compete on quality.
To think there might be legitimate fear in the Congress, that going too hard on big tech, might lead to losing elections shows how much the locus of power has shifted from elected representatives to corporations.
Why should the federal government unilaterally regulate US big tech and do it openly? Do they want to trigger massive wastes of money in commissions to analyze the problem, hiring consultants to generate reams of bs, legal fees, etc. It would be a much fairer and economical solution to get the NSA to plant ransomware in every large company with monopolistic practices across the globe. Why single out FAANG? What about Alibaba? Tencent? Siemens? And all the others I do not even know about?
And right below this story there's a link to how Amazon got provisions that would have affected them removed from a bill that actually passed the Senate[1].
Discussing 5 separate bills sponsored by Democrats in the house like they might actually go anywhere seems ludicrous.
> This is very clearly aimed at advertising on Amazon, potentially Google as well, where merchants often must pay to gain visibility in the search results
I'm a little confused here. Are they saying that this would prevent a business to pay to be listed at the top as an ad for some specific searches in those results?
in the past it was antivirus and window promoting there own. later they have the best antivirus and other ones are ads and targeted as cloned adware. then it was the browser war. obviously firefox is the answer but it is the same as chrome. minus a few algorithms but in the end they are neck and neck with features. They will end up making a superior product. minus the distributors ie slack, discord, and whatever next gen tech companies.... (Ycombinator)......politicians want kickbacks and favors.and the giant 5 will continue to put out superior products that the general masses will end up consuming. or services and data will be stored on their infastructure. this bill does nothing. besides pander to a red base and make polititions some kickback bucks, and free advertisement for the big 5.
I think this can be easily defeated by breaking companies into a cartel of smaller companies which effectively operate as is. This $600B cap should go down significantly to prevent this, something like $50B but I don't expect that to happen thanks to Walmart, Verizon and Comcast.
Tech has been a huge deflationary pressure since the 90s. I believe that heavy regulation in this space can cause a scary amount of inflation given the monetary policy that was used to combat this deflation.
Hopefully they'll also be able to do something about the massive profit-shifting by these companies where they extract massive profits from countries and contribute virtually nothing back in tax.
Its also laughable how they loudly advocate for E2E encryption to "protect people's privacy" whilst they themselves, monetize and invade people's privacy on a scale never before seen in human history.
Big tech truly are the robber-barons of the 21st century.
If past efforts are any indication, whatever regulatory scheme they come up with will cost these companies a good deal of time and money without doing anything to effectively solve the problem.
I usually have a libertarian bent, but I'm finding it hard to muster much sympathy here. If these companies have generally angered the "small government" crowd, I don't know who they expect to protect them from the "big government" crowd.
What if the FAANG companies were paying taxes like ordinary businesses do, wouldn't this be enough to fund free medical services for every US resident?
Your first source does not cite revenue. For reference, just Amazon's total revenue for 2020 was 386 billion [1]. Apple's was 274 billion [2]. I think your point still stands. FAANG alone obviously won't get us there, but taxing corporations generally would help (since other nations are able to afford state funded healthcare on a level of taxation only slightly higher than the US, despite having less income).
Most businesses don't pay corporate income tax. Income is passed through to the owners/partners and it shows up on their person income. C-Corps (where corporate income is separate and taxable) account for only 5% of businesses in the US.
Also, the Medicare for All proposal (which seems to have gotten the furthest) would require ~ $4-5 trillion dollars a year. Completely taking Amazon for all it's worth would fund it for 1/3 of a year.
Reminds me of what Machiavelli said about coming to power using mercenaries and auxilieries the way the current crop of politicians have used tech today: "Captains of mercenaries are either able men or they are not. If they are, you cannot trust them, since they will always seek their own aggrandizement, either by overthrowing you who are their master, or by the overthrow of others contrary to your desire."
What did these companies think would happen if they became partisan mercenaries? Future reference: always back underdogs or nobody at all because when they win you still have some leverage. The platforms just made themselves disposable stepping stones and now they are being disposed of. I'm untroubled by it because it was staggeringly naive on their part to compromise themselves, and we need fresh platforms anyway, but they really walked right into that one.
Light tech regulation was exactly the correct approach in the 1990s (and arguably the 2000s). It enabled mind-boggling rapid and stunning innovation.
... However, the massive corporate fortunes built by the winners of those times are now primarily enabling rent seeking.
Google and Facebook's other work is interesting in the same way that Bell Labs was interesting -- great for a few, but funded by taxing everyone (albeit via tracking and ad market control in this instance).
And they've learned from their predecessors' demises that part of their winnings need to be continually re-invested in buying startups that might threaten their dominance.
IMHO, everyone will be better off if Facebook, Google, and Amazon are shattered into small enough independent pieces that (1) "get bought" is no longer the startup win condition & (2) they have peer level competitors in all markets in which they participate.
Apple and Microsoft? Mandate open app stores and devices, if an owning user so chooses.
Thinking back to the 90s... if anyone has guaranteed revenue streams out 10 and 20 years these days, the market as a whole isn't competitive enough. That should be enough time for the entire playing field to upend itself.
At least, it used to be.