Here we go, buckle up. With the amount of power democrats are likely to consolidate in the next few elections there could be some serious movement on this if it becomes a priority for the party.
I think the big three are way too powerful and need to be broken up, but doing so intelligently is a tricky problem that I don't have much faith in government tackling.
Zuckerberg integrating all the services yesterday seems to be a transparent attempt to short circuit splitting the company along these service lines, he knows this is coming. I'll bet $100 he'll soon be talking about how it's impossible to split out insta from facebook because of database keys and integrated AI or whatever.
I think that's very unlikely. Maybe in the far future, but unless there is some significant campaign finance reform first, the big tech companies have more than enough cash to prevent the "worst" possible outcome (from their perspective).
I don't think it'll be a priority because I'm not really sure if this is a real thing that Warren believes or if she's just throwing this out there to see if it has legs.
If someone other than Warren gets elected, it could very well get put on the back burner. But this is defintely what Warren believes. When she was a professor at Harvard or the head of the CFPB, cracking down on very large, very powerful corporations was always her focus, whether via anti-trust or other means.
This is another nonsensical plan, between ideas like this and 70% tax rates (that would certainly apply to people earning far less than $10M+ annually) there would be tanks in the street by 2026.
At this point in the campaign, I think people are just throwing out ideas to see what sticks. If this idea becomes super popular on, say, twitter, then it will probably enter into the rotation of things she talks about at rallies and become part of her platform. If it doesn't really catch on, I could see it not being brought up again.
Is breaking them up really a priority? What benefit would that have that we couldn't achieve via properly taxing and regulating them in the first place?
I think the general theory is that if we allow them to continue getting bigger and swallowing up all potential competitors, we’re basically saying these four or five companies will run everything, forever.
I think that wildly overstates the influence these companies have. Amazon is trivial to avoid. Just don't shop there or at Whole Foods. Facebook is a bit trickier because you might be forced there by a social group and they have a huge web of trackers.
Google is really the issue. They are dominant in search, browser, and maps, and they're half the mobile duopoly. It's very difficult to avoid using their products entirely and even if you did, their dominance allows them to dictate how the internet works, to a certain extent.
Not a huge disagreement here, but I think Facebook is completely trivial to avoid, while Amazon is much less so.
I couldn't care less about Facebook. Yet, while I certainly could live without Amazon (or Whole Foods), their service is very nice and WF has things I can't buy at other grocery stores around me.
It would help give China a fairer chance in the AI race. Due to economies of scale and the sheer amount of resources they command, Facebook and Google are able to conduct research that would otherwise be incredibly expensive (e.g. training AlphaZero), and offer incredibly high salaries to lure in researchers. Apparently 80% of all machine learning engineers work at Google or Facebook! Breaking this concentration of machine learning research power would give companies like Baidu, Bytedance and Tencent, which were not broken up and which enjoy strong government support, the chance to catch up and maybe even overtake the remnants of Google/Facebook.
I don't think its fair to underestimate China. Breaking up Amazon or Google would benefit China more than the west. Sure Amazon and Google are possibly too large, but their Chinese counter parts are equally as large and direct competitors. The idea behind breaking these companies up is to encourage market competition but that competition already exists and will not be broken up in China. Somehow Warren always has the wrong solutions but is generally correct in identifying a problem.
But presumably if other companies in the US got as powerful as Facebook/Google, they'd just be broken up too, for the same reasons, no? And if they weren't that big/powerful, they'd lack the economies of scale to do what Google and Facebook are doing now. So any other country with giant technology companies (which in practice right now is just China) would have an advantage.
There are industry consortiums and partnerships and the like. Surely some of these companies could find a way to work together. And surely the U.S. with the NSA could initiate its own Manhattan Project for A.I.
The original poster asked what benefit breaking them up would have, they didn't necessarily ask for a benefit that's something lots of Americans would see as positive. America and its technology companies aren't super popular in many parts of the world in recent years, and people unfond of it would welcome progress in AI technology becoming less concentrated in the US. Maybe a more left-leaning Senator like Warren might see some benefit in power being more evenly distributed globally, rather than concentrated in a few big US tech companies.
I'm definitely left-leaning economically. I also am very much in favor of giving developing nations a chance at competing with our economy.
However, I would go more or less the opposite direction of what you're suggesting. I support allowing American companies to produce jobs on foreign shores _provided those companies follow American labor laws_. I'm in favor of pro-labor regulation and I'm also in favor of free international trade, but not where the latter is at the expense of the former. A totally free world market would circumvent our protections at home.
All this to say, I wouldn't really call what you're suggesting a benefit by any view.
I think we should also consider that even if you do break up a large company like that, you'd need to make sure they don't pull an AT&T and start merging with each other to basically re-create their previous structure.
Yeah, I'm still amazed that when AT&T was split up, there wasn't anything in the ruling preventing them from just joining the parts back together again.
Yeah it seems ridiculous in hindsight. I think what enabled the mergers though was less someone with a brilliant idea that they could just recombine, and more the drastic change in the government's conception and enforcement of antcompetitiveness laws. That is, they wouldn't have tried to merge back together if the they didn't think the government might let them. The government can and does does block mergers, still, and it makes sense that that they wouldn't just want to ban a specific company from a specific market share for all eternity.
This is the exact issue. The DOJ's Antitrust Criminal Enforcement Division breaks up the companies by making an argument that's then directly contradicted by the DOJ's Merger Enforcement Division's (very outdated) policy on approving mergers. From the Merger Enforcement Guidelines[1] (last updated in 1997):
> By definition, non-horizontal mergers involve firms that do not operate in the same market. It necessarily follows that such mergers produce no immediate change in the level of concentration in any relevant market as defined in Section 2 of these Guidelines.
The Merger Enforcement Division's assumption may have been true in 1997 but it's difficult to argue that simply because Google and Amazon don't operate in the "same market" as their primary businesses that their combination would "produce no immediate change in the level of concentration" of the market for both online advertising and computing services. Yet, under these guidelines, if a Google + Amazon merger were proposed it wouldn't present any immediate issue for the Antitrust Division to oppose it.
Amazon and Google do operate in several of the same markets. Amazon sells Kindle/Fire devices. Google sells Android phones. Amazon does product search. Google has a product search engine.
Antitrust enforcement focuses on the "primary market" of the entities. Google's primary market is advertising and Amazon's primary market is retail products. The DOJ does consider the potential anti-competitive impact on tertiary markets the two entities operate in but it wouldn't be a barrier to the hypothetical merger because those markets have plenty of other competitors.
And the way Warren is describing splits, it sounds like GCP, Azure, and AWS would be spun out. Could you imagine if any combination of those three were allowed in the future to merge!
It's a major deficiency of TFA that telecom was unmentioned. The Daughters Bell are a far larger drag on our economy and society than Amazon ever dreamed of being, and have been since before Bell Telephone wrote the Communications Act of 1934. I'd have more faith in Warren if she had led with telecom, but since she didn't I frankly expect her proposal to include a big fat "loophole" for ATTVZN.
The way to look at the 1996 boondoggle is ask ourselves if FCC could have ever been expected to provide even a token enforcement of its terms. The answer is of course not, because FCC was created to protect Bell Telephone and that's most of what it has ever done. Given that, of course all the investments in competing telcos would fail and be gobbled by the incumbents, enriching execs and bankers in the process. Given that, what we've seen was only ever exactly what was planned. The 1996 Act has allowed Bell to shed money-losing rural exchanges, do away entirely with common carriage, pay for wireless infrastructure with money stolen from wireline investors, rearrange assets in ways that would have violated previous consent decrees, pretend that we ever tried competition in telecom, and burrow in even more tightly to its vampire-bite on the neck of USA residents. That was a pretty good con, that Bell execs ran on us, with the assistance of the corrupt in government and the credulous in media.
Even if it were beneficial (argument in itself), Big Government is unequipped to handle the break-up of these companies in way that protects their value to consumers.
I don't have any insight into the rationale behind the HQ2 search beyond what was reported in the media, but I've long thought that planning for a potential government-forced break up was part of it. A preemptive segregation of business units will help their case if/when this gains some steam.
windows was never dependent on internet explorer to operate. MS put a simple DLL with HTML and other web tech in the OS, making it easier to serve up help and other content. What they did (IMHO) was completely reasonable in terms of OS integration. Look at ChromeOS today- it's the same idea, taken to its logical conclusion.
> And Windows was dependent in Internet Explorer to operate.
I mean it was and still is dependent on MSHTML for rendering things like the help system as well as rich text in many pre-XAML apps. You don’t want the icon on your desktop, fine, but it certainly is a core part of the OSs rendering system.
Not really; chrome and Android are far more independent.
YT is integrated at every level from infrastructure on up. It depends on Google-internal libraries which are in turn integrated with other parts of the infrastructure... It would pretty much amount to a full from-scratch rewrite of almost the entire product.
Moreover, I'd question whether other providers even have the available public resource capacity to support YT.
I can't really see how. It would literally cost billions of dollars, be extremely wasteful in terms of duplicated efforts, consume millions of SRE and SWE hours, and the result would be slower and worse in many ways. Then people would complain that youtube sucked even more.
Not at all. It's to split Amazon retail and AWS. Not that I'm opposed to that or not, but it is the most obvious. If you look at templates of prior antitrust action, you'd probably see roadmaps of splitting ad presentation/platform from ad brokering/targeting in all of the companies mentioning.
AWS has plenty of viable competitors. They should split Amazon-the-website and Amazon-the-supplier-logistics-and-physical-retail-company, and force Amazon-the-website to accept listings from competitors fairly and openly.
I think you're getting downvoted because the "AWS has plenty of viable competitors" is not really material - it's just that Amazon gets anticompetitive advantages as a combined entity.
And that's really a shame, because you're also dead on about the logistics/product point. I almost mentioned that, but it's complicated by competition from Walmart, Target, et al. Upvoted you on that basis. That similar to my point of "ad distribution / ad sourcing" split on FB and Google.
I know that Facebook has instagram and whatsapp, but wouldn't breaking Facebook up leave the still monolithic but waning Facebook proper together? I'm not saying WhatsApp and Instagram aren't massive, but am I wrong in assuming that Facebook is still a monolith regardless if it loses it subsidiaries?
Just off the top of my head, maybe FB Markeplace and Messenger get split out into their own companies? Maybe their Live feature get's split off into it's own thing too.
That makes me think that Amazon might have to give up Twitch too
Comparisons will be made to Microsoft and Internet Explorer but to me the really crucial part of this isn't market dominance in the "what app are you using" sense, it's data.
Facebook, Google and Amazon really do have an unprecedented amount of data on us. And keep vacuuming up more and more of it. Facebook should never have been allowed to buy WhatsApp (and maybe not Instagram though I'm less concerned about that one). Google should never have been allowed to buy DoubleClick.
Question is how you'd effectively roll that back now. I'm concerned that the government doesn't have enough people with the technical knowledge to really tackle the data question, but I'm still glad Warren is starting the conversation. And she's got some interesting ideas:
> Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.”
> These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
Android is perhaps the closest in comparison to Microsoft/Internet Explorer. Spin off Android into its own company, including the Play Store. There would be nothing stopping Google from keeping their apps in the Play Store, but they would sit on the same level as competing mapping and search apps, and users would choose which one to use instead of have it preinstalled.
I would download all those, but there's also a lot of Google stuff pre-installed on my phone that I wouldn't have downloaded: the Google search bar, Google assistant, Google music, Hangouts, Google+, just to name a few.
You have the option as an Android provider to use android and provide your own services OR ship the device with Google Play services. Amazon for example does the former.
I actually think Android is a really bad example precisely because all the useful google apps ARE separate from the OS. Its just that what people think of as android is actually mostly Play Services now.
You need to remember that android's customers aren't the end users of the phones, its customers are the OEMs. Spinning off android into its own company separate from Google wouldn't mean the end user gets a preference of which mapping or search app to install, it means the company selling the phone (either the phone brand or the cell network) gets to choose.
The end user would get a choice by buying a specific phone, though, no? The Android device market, at least, isn't heavily monopolized, and there are many options, including devices that are explicitly advertised as open and cruft-free.
OK but Android is a loss leader for Google's search business. If you spin off Android and Android is no longer subsidized by the search business doesnt that either
1. Raise prices for customers since now someone has to pay for Android development/upkeep/progress, or
2. Starve and kill Android and leave customers with just one major app store (Apple)?
That would be great. Android has a competition-destroying business model: giving away the OS for free, while subsidizing OS development with ad revenue from unrelated services. It killed companies like Symbian who just sold you an OS in exchange for a license fee, without trying to marry that to services you can't easily switch away from because they have all your data.
So basically big companies will no longer have any reason to work on open source projects anymore if they can't fund them with "unrelated services?" You can head over to github, clone the AOSP tree, and do whatever the heck you want with it. Separately, Google has developed the Play ecosystem, and several of its own apps for Android. If you want you phone to have that stuff, you tell Google and you join the Open Handset Alliance or whatever its called now. If you don't, you start from AOSP (as does Amazon, for example) and don't give Google the time of day. So they give away a massive boost to anyone who wants to make a mobile device, and somehow that's a bad thing?
Possibly true. But the direct exchange of money for a product or service creates a salutory incentive structure. And unfortunately, the rise of open source has been associated with the rise of indirect monetization models that aren't as beneficial, especially in the consumer space.
Painting this as an unintended consequence of open source is really interesting. The rise of free open source alternatives to proprietary products has encouraged companies to provide products free, but these companies aren't going to be motivated to provide these products without some avenue for profit.
> Losing IP to what would become a 'public utility' would discourage me from ever trying to develop beyond the 24.9bn mark.
(it wouldn't be a public utility but) I feel like that's kind of the point? Encourage dozens of smaller (if multi-billion counts as "small") businesses to thrive rather than one 25bn+ business. And if you do want to go big, you have to do it in a way that lifts up significantly smaller businesses.
PG&E is fine with this model and they don't have to give up their IP or profits. Essentially it would turn Google and the other tech platforms into legal monopolies. That being said, I think this is probably the best way we can keep getting awesome technology from Google while at least having some government oversight. I kinda feel like were getting to the point in human evolution where we need giant giant groups of people to work together to solve really big technical problems. While problematic on many levels, a government sanctioned and regulated monopoly around google could potentially accomplish those things.
That works to some degree, but there's some point at where it is more beneficial to just spin the platform into its own company and let it be regulated while all your other services can operate freely without having to hide most of their revenue.
Sure, some of your IP moves to a new company that is more restricted in how it can operate. But at least your marketplace doesn't hold back everything else your company is doing.
This is also the first idea I've seen that tries to deal with the free speech problem on the internet. A lot of platforms today apply varying amounts of censorship (like youtube's copyright takedown mess), but there isn't really anything we can do because it's a privately owned platform and they can do whatever they want. But when they control such a large amount of mindshare, we end up putting the idea of free speech at risk.
Perhaps the platform utility designation will let us enforce a kind of "content neutrality" instead.
Just because something has a lot of mindshare doesn't mean you have any business silencing their choices. People who don't agree with the policies of private companies like Facebook can simply not use it. Try Gab if you want a private company that is anti-censorship.
It seems like you are just repeating the same specious point that OP was refuting.
Right now, it feels like companies like Google are mostly silencing hate speech, violent extremists, and pornography, but there is no guarantee that their censorship will remain that way in the future. In a not-so-hypothetical future where a single private company has taken almost whole control over online media and starts imposing heavy censorship over non-offensive speech, are we going to continue saying "it's a private company, and if you don't like it, you can just share your opinions on this platform that nobody reads"?
Yes, that's exactly what I'm going to do. Your opinion has no right to exist on any platform. Don't like it? You can move off of it. Bring other people to a platform that goes by rules you like. I don't use Gab, I am not interested in it, but it exists and has rules you may prefer if this hypothetical situation were to occur.
I like diverse viewpoints being allowed. It is unacceptable, however, to be so entitled as to try to force companies not to censor whatever they feel like.
We're talking about protected classes here, and I don't think it's equally unacceptable. On a fundamental level, inherent characteristics (race) are very different from ideas (speech). So I think you can be in favor of anti-discrimination on basis of who you are, while also being against beliefs becoming a protected class.
Though, just so you know where I'm coming from, in my ideal world it would be strong social and business pressures that enforced the idea of protected classes, not regulation. I'd support any competitor which was more ethical, but complex issue.
Would you be similarly comfortable with your cell provider censoring your calls and/or texts? After all, it's unacceptable to force them not to censor whatever they feel like.
I used to think like you do, but what changed my mind was that I tried to consider whether a hands-off approach will maximize total freedom.
If, by regulating the way people do business, we can increase total freedom in the world, I think that it's a worthwhile exchange. The way we do business is already regulated, and is one of the powers that we explicitly grant the government in the constitution.
The way I see it, forcing social platforms to accept free speech is really just a commercial regulation, and not a speech regulation. After all, we all understand that this post doesn't reflect the opinions of YC, and thus forcing YC to accept this post doesn't restrict anyone's freedom of speech.
Presumably if they blocked speech that most people actually wanted to see, they'd leave to one of the billion other messaging tools. You can still say anything you want over email.
The flaw in this logic is that in today's online world if you want to participate in the relevant discourse, where everyone else is participating, it's Facebook/Twitter/Reddit/etc...
This is like saying if you don't like the debate happening in your city hall or town square, go to the small gathering in the woods to have your conversations.. where no one will hear you, and what you say will have no impact.
I know this the analogy is flawed because there is no "public space" on the Internet.. The places we have chosen to hold our public discourse online are all privately owned..
It's a challenging problem and "go somewhere else" is not a viable solution because it marginalizes and suppresses unpopular opinions or minority groups..
Google isn’t only search and ads. Their adverse is worse in smaller markets like Maps and Cloud, where they use revenue from another market to commoditize and build a moat in another — thereby unfairly competing.
Elizabeth Warren specifically mentions separating Search from Ads as something she'd do to Google. Most likely because that's as deeply as her target audience is going to think about it.
Defining by dollar amount is never a good idea due to inflation/market appreciation. There are so many laws and regulations that are pinned to a dollar amount that get more and more out of date each year.
It should always be something that's a better true absolute measure, for example market penetration.
Isn't data collection by the ISPs/phone companies a bigger issue? Consumers truly have no choice there. Whereas you could get by without FAANG, though it'd be inconvenient.
She is inferring that Google/Amazon/Facebook are committing anti-trust crimes? What proof does she have?
>Companies would be barred from transferring or sharing users’ data with third parties.
That can be done without breaking them up. I don't think she realizes that splitting up amazon and amazon basics will do little to nothing.
There are other things that can be done. You could require freedom of speech apply to industry leaders for example. However I suspect the democrats would never propose that because it would be bad for them.
> You could require freedom of speech apply to industry leaders for example.
What does this mean? Mark Zuckerberg, Jack Dorsey, Jeff Bezos, et al already have their constitutionally protected speech, except for where their roles as executives at public companies restrict them. If they find those restrictions onerous they can leave their roles.
I think they meant requiring industry-leading companies to apply freedom of speech on their platforms. That is, no censoring of comments, videos, reviews, etc. as long as they don't violate the law.
So the idea is to "require freedom of speech to apply" by prohibiting corporations from setting their own terms of service, spam policies, etc? That sounds like a very serious restraint of speech.
The government cannot compel speech. I don't think that using the power of the government to require some types of speech against the wishes of private entities solves the problem you think it's solving...
If Twitter decides tomorrow to ban the right-wing from their platform. They absolutely legally can. If you watch the recent Joe Rogan video with Tim Pool and Jack Dorsey. They didn't realize they were slowly banning the right-wing and allowing left-wing terrorists to stay on Twitter. They absolutely didn't realize they were doing this and they are going to look at fixing this.
The government however could come in and simply make it that you have freedom of speech on social media. So if Twitter bans someone for saying "a man cannot be a woman" that person can sue them.
The democrats will NOT do this however, the current censorship on social media is benefiting the left-wing.
The company twitter has set its terms of service. That is speech. What you're suggesting is eliminating the corporation's ability to do speak in that manner.
Do you believe the US government has the ability to simply prohibit speech by corporate entities? Is it in accordance with free speech principles for a federal government to prohibit certain types of speech?
By forcing freedom of speech onto twitter for example. I don't see how that would be restricting their speech.
Personally I see this as something that will come eventually. However, I don't think that's what Twitter should do.
My idea is that twitter should act more like the united nations. You create a 'diplomatic immunity' type of account that people can request. It can be something like:
Minimum 50,000 followers.
Account history of 1 year.
If approved you can no longer edit or delete your posts; but you also cant be kicked off twitter or other be harmed by rules of twitter.
this by itself will solve the problem that twitter has.
I don't think terms of service, basically a contract, fall under free speech. If you and I make a verbal contract that you will assassinate someone we are still breaking the law because assassinations are illegal. Our free speech isn't being violated when we are arrested for doing something illegal.
She has no proof, she does not need any. this is typical politician using FUD to scare the populace into letting them take actions which in the end only go to bolster their own campaign coffers and personal riches. With the upcoming Presidential campaign you can expect politicians tripping over each other using jealously and fear to get people to plea for action.
Amazon is not a Standard Oil by any measure as they have ample competition when it comes to online sales. Facebook is still an opt in environment. If you don't want to join facebook you don't have to and no retailer is dumb enough (well that might not be true but I haven't found one) to require you to be a facebook member to purchase products or services. Google is, well google. I don't have to use their search engine if I don't want to.
if you rephrase that as "Amazon has competition, but what competitor can afford to intentionally give consumers millions or billions of value a year in order to dominate a market segment?" it seems sort of generous?
they're taking all this money from venture capitalists funding startups running on AWS, and pumping it into their retail operation so that the working class can have cheaper goods.
and everyone involved in the process consents to it, even!
>Google is, well google. I don't have to use their search engine if I don't want to.
When threads like this come up I always wonder how the engineers who worked on Bing must feel. I'd feel pretty disheartened if people had such a low opinion of my product that my competitor was considered a monopoly.
I read an article a while back about the team behind Bing. I think they had some of the best people working there and they must feel pretty proud. I think after the project picket up and they started managing them from top up most of them left. I tried looking for the article but can’t find it anymore
No, the reason OP made that comment is because duckduckgo uses Bing by default to power its search. So duckduckgo is literally just Bing with a duck taped over it basically.
Bing is as good as Google in many cases and is better than Google in some cases. IMO, thats no small feat. Bing is profitable too, unlike many other silicon valley companies so I don't think they feel disheartened.
> Google is, well google. I don't have to use their search engine if I don't want to
I don't have a problem with the dominance of their search engine. I have problems with them using their search engine and other platforms to prompt you to use Chrome, or how they use their quasi-monopoly on Android app marketplaces to force manufacturers to preload just about every Google App in existance on Android phones. Then there's various Google services (some of them near monopolies) performing much worse on anything but Chrome.
If Google would be just search I wouldn't have anything against them, but they are notorious for using the market position of one of their products to push another.
> If Google would be just search I wouldn't have anything against them, but they are notorious for using the market position of one of their products to push another.
So does every department and grocery store in the US, and they have for decades, but nobody seems terribly bothered by Great Value at Walmart, or the the notorious contract negotiations with Walmart that put suppliers at a huge disadvantage, because if you want to be a national brand you need to be in Walmart.
But it's much better to talk about fantasy monopolies because they make nice sound bites.
>I don't think she realizes that splitting up amazon and amazon basics will do little to nothing.
I think amazon : amazon basics is a great example of antitrust/unfair monopoly the same as google search : almost all consumer facing google products.
Both amazon and google search are the dominate online market leaders in their respective categories. In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI. In the case of google they too unfairly use their position as a market leader against their own customers (advertisers), so say you are a hotel booking platform and spend $x with google, google knows the market (searches, clicks, etc...) so google launches their own hotel booking, gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved. It’s unfairly using your market position, not to compete, but to be anti competitive to the detriment of consumers.
I’d like to see the tech giants prevented from unfairly using their market dominance to stifle competition. As we saw with the break up of standard oil...competition is good for consumers.
I agree. But if we are going to split up the store platform and the store brands, now youre going to have to split up Target, Walmart etc. Anyone besides Ikea who sells their own store brand and runs as a platform for others to sell their products.
Any grocery store can do the same thing amazon is doing, use data about sales to push clones and store brands of popular products. What percent of products at Target are store brand now? Target is like an Ikea with 3rd party products sprinkled in it, which is what Amazon wants to become.
The difference is that none of those examples dominate their market. The problem isn't "Amazon uses their platform to promote their own products" it's "Amazon uses their market dominance to promote their own products which might not otherwise be competitive"
I agree, I just think its Wal-marts playbook, and to single Amazon out is more political than do-goodery. In Wal-marts case its floorspace, in Amazon's its eshelf and datacenter storage.
dominating the market and holding a monopoly are not the same thing. Amazon has a dominant position in many markets, but are not a monopoly on any market unless you re-define the market to be amazon's portion of it.
Does amazon have a retail monopoly? absolutely not. An online retail monopoly? still no. An online book selling monopoly? okay, now we're getting closer but still not a monopoly. A kindle books monopoly? yeah, by definition.
> In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI.
1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
> How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
It's 100% the exact same thing. Go to Walmart and see thousands of "Great Value" products and you'll get the exact same thing. Warren is off her rocker on this one. We have real tech monopolies in the Cable/ISP industry but we're talking about Amazon and Facebook.
The issue comes with the monopoly status. If a company controls a certain % of marketshare, that behavior crosses into anti-competitive.
If 90% of retail stores were Walmart because they owned a significant percentage of real-estate in key markets (thus, preventing other retailers from moving in), then their Great Value offerings would also be anti-competitive.
Amazon's behavior is a textbook anti-competition. They literally build copies of products offered by other merchants on their site, then rank them higher in search results, often times, driving the merchants out of business.
> If a company controls a certain % of marketshare, that behavior crosses into anti-competitive.
That's just incorrect. There's nothing wrong with controlling 100% of the market share, as long as you don't use your position to illegally prevent competition.
> Amazon's behavior is a textbook anti-competition.
That completely counters the point you just made. Amazon accounts for maybe 5% of retail sales, and Walmart is closer to 15%. Even in the eCommerce market their share is around 50%. Vastly lower than the 90% you threw out there.
> They literally build copies of products offered by other merchants on their site
Every retail company does this through suppliers. It's called "white label" and it's an industry standard. And Amazon does not build them, they license another companies product.
> then rank them higher in search results,
Citation needed.
> often times, driving the merchants out of business.
Again, citation needed. Particularly the "often times".
> as long as you don't use your position to illegally prevent competition.
Which is why I said, literally, "their behavior crosses into anti-competitive." You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
> Even in the eCommerce market their share is around 50%.
50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
> And Amazon does not build them, they license another companies product.
Those companies are accusing amazon of literally copying their unique products. We're not talking about buying batteries or something from a supplier. Amazon is literally copying existing products that do well.
Here's an ex-employee discussing the topic:
> Amazon sees your product is doing very well, they have the retained performance data, and Amazon copies to their best of their ability as a “generic version.” Through subtle advertising, and imitations of the successful attributes of your product, their product cuts straight to the top ranked in your categories.
> Which is why I said, literally, "their behavior crosses into anti-competitive."
Yes, and I'm saying that it isn't true. Merely owning majority market share doesn't make a company anti-competitive. Anti-competitive behavior does. And while it takes the latter following the former to work, it certainly isn't guaranteed.
> You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
They absolutely can drive competition out of business as long as they aren't using their position to do so illegally. Gmail shut down a lot of email providers, not through anti-competitive behavior but through providing a more compelling product. Amazon has yet to successfully drive any supplier out of business. There's an argument that they broke Toys R Us, but that wasn't anti-competitive, that was through introducing toys that weren't severely overpriced. Walmart assisted with that.
> 50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
Toyota is in a nearly 100 year old industry which has multiple multi-national companies competing. iRobot has a 62% market share but nobody is looking to take down big vacuum.
50% market share of a sub-market within a major market is a weak argument. While they have 50% of online market share, they have something like 9% of actual retail sales, which is considerably less than Walmart.
Your argument was that Amazon ranks them higher in search results. Both of these articles are discussing Amazon using white-label suppliers to build competing products. That's not the same thing. Every major retailer has been building white-label and private-label products for decades.
> Those companies are accusing amazon of literally copying their unique products.
You'll notice what they aren't doing is suing Amazon for patent-infringement. The very article you posted shows that while Amazon makes competing products, they don't violate patents.
> Amazon is literally copying existing products that do well.
No they are making competing products. That's not copying, that's called "competition".
> their product cuts straight to the top ranked in your categories.
That should have been a very clear indicator for you, but you kind of missed the point. Amazon doesn't rank their products higher. The ranking algorithm is generic, and largely tied to top selling items in a category. When you see two products that are very similar, and one is half the cost of the other, you buy the cheaper market.
It seems, to me at least, your issue isn't Amazon. Your issue is the consumer market doing exactly what it's always done.
You seem to be breaking up my arguments into segments so that you can ignore the big picture.
A. Amazon controls almost 50% of market-share.
B. Amazon uses their platform data to determine which products vendors sell are high-margin, then replicates those products and sells them at a lower cost.
C. Amazon-branded products appear higher in search results, which eventually drive the original vendors out of business. Whether this is explicit, or happens by virtue of intimate understanding of Amazon's algorithms is irrelevant.
Individually, A, B, and C are not anti-competitive, but Amazon is doing A and B and C at the same time, which crosses into anti-competitive behavior. Technically, B & C together are enough to warrant anti-trust investigations.
> 1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
The difference would be Amazon's [alleged] monopoly power.
> 2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
That seems like a very charitable way of describing the situation, and even if accurate may only remain true in the short term. Whether undercutting branded sellers is the goal or not, that's exactly what's happening--even as you charitably describe it. What happens ten years down the road when those brands are gone due to Amazon's allegedly benevolent undercutting?
I'm not sure about the ultimate merits here (in fact, I'm a bit skeptical of the claim that Amazon has all of the market power that some say it does). But I think you may be dismissing this all a bit too quickly.
Again, there's a lot more to think about. What about prices? Even if manufacturing costs remain the same, costs for consumers are likely to rise per unit quality in the absence of meaningful competition. There will also be additional downward pressure on prices paid to those factories if there are fewer (or one one) buyer.
As I said before, I'm not convinced that all of these things will actually happen. But the answer can't be as simple as "who cares...Amazon is just cutting out the middle man."
> The difference would be Amazon's [alleged] monopoly power.
I don't see Amazon as being particularly more of a monopoly than Walmart. If Amazon was a traditional brick and mortar business, would we even be having this conversation?
I think the difference is that they are better at pissing people off essentially by transgressing status quo norms. Most tech companies are too right for the left and too left for the right in addition to their "upsetting their perceptions of the natural order" aspects.
A big chain consumes the market and puts others our of businesses and it is just how things are. A new internet company goes from niche to cannot be ignored and it is scary change despite the impact being essentially the same.
Combine that with openly envious old media and their selective condemnation. I honestly suspect the real reason is that tech companies don't buy enough TV ads for their liking given the softball treatment of ones that do frequently like cable.
Regarding your second point, that is only good for the consumer in the short term. In the long term it harms consumer choice by making it untenable for smaller companies to sell on Amazon when they know a cheaper AmazonBasics version will be released as soon as they see any success.
On #1 I too had the same question, but I think the difference there is that department/grocery stores are re-sellers. They've already bought the goods from the third-party and are choosing to re-sell it at a markup. Amazon on the otherhand is a platform which only enables the initial sale.
They call it the back margin. Brands buy shelf space, position, pay for offers and promotions, extra payments (effectively a fine) if volume targets are not reached, etc.
Tesco infamously had 24 ways of extracting extra money from suppliers via back margin. The front margin is the traditional agreed buying price.
I think it is different. When a department store buys a third-party product, it pays for it and the Store bears the risk of the item not selling. If Macy's decides to make their own brand, they did so by transferring risk from manufacturer to themselves in the beginning; if a product didn't sell enough, they had stake in it. There are some successes (store-brands) and some failures (brands they bought, never worked)
In the Amazon Basics case, AMZN doesn't own inventory for the product at all. All the risk is to be borne by the 3rd party manufacturer. When Amazon looks at its data and sees a product succeeding, it creates a Basics product with no risk - it knows this thing sells. There is no way Amazon can 'fail' per se.
This essentially is the difference. Any manufacturer is likely scared of success on the Amazon Marketplace. If too successful, it can be Amazon-Basic'ed.
> The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup.
I think in the short-term for that product - yes, the consumer finds a cheaper product, but Amazon will always have an economies-of-scale advantage.
However, long-term, I think innovators will not know if making a highly successful product (which is always difficult to sell cheap because scale isn't achieved) is worth it.
If Macy's sells a third party product (say, a piece of cookware) and sees it doing well, then makes and sells a copy of it they don't seem to have taken more risk than Amazon.
It also feels pretty similar to what fashion designers have accused department stores of doing for decades: letting them take the risk, then "following fast" (or stealing designs, depending on your perspective) when something turns out to be popular.
>It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved.
kind of, but not really at all. Google and Amazon aren't preventing anybody else from using their services - getting other people to use their services is kind of their whole business model. If you want to compare Google or Amazon to transporting oil on railroads, it'd be like if the company that owned nearly all the railroads owned a couple of oil wells (but not all of them) and still transported everybody else's oil for a fair price.
> I think amazon : amazon basics is a great example of antitrust/unfair monopoly
Store brands have been around *forever."
> They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI.
If you own a grocery store, you have every right to place the store brand products wherever you think they will sell best. You could (gasp) not sell any name brands at all! And if your grocery store becomes successful, you're allowed to sell advertising inside it however you want.
> It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved.
Railroads are to some extent natural monopolies, and they have a massive barrier to entry. E-commerce websites do not. Many businesses of all sizes still sell products directly from their website and do fine. Now if Amazon bought UPS and FedEx and refused to ship any other packages, that would be different. But all they're doing is running their "department store" the way they want to. If consumers want a competitor, they're free to start one with next to no initial cost.
> gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It would help if the competition in hotel booking, Expedia, Orbitz, ETC weren't all literally owned by a single fucking company now. The sites are entirely rigged against the user.
The point of anti-trust laws is to break up monopolies because they represent a massive and dangerous concentration of market and political power in the hands of the few. You don't need evidence of any specific crime to do it.
You can say you'd prefer it not be that way. But it's a provision of existing law, with precedents. To really argue for your preference you'd need to show how those applications didn't turn out well.
Facebook should be treated the same way and spit up vertically then, not horizontally. Datacenter and infrastructure and all their low level services should be split from client apps, NOT messenger split from whatsapp.
Not sure why this would carry over to Facebook. Amazon sells metered compute or hosting infrastructure used by half the internet, Facebook doesn't sell infrastructure to anyone. Going by their actual levers of market power, you absolutely would split WhatsApp and Instagram off.
I still dont think you can justify any of those as monopolies yet.
Snapchat, twitter, pinterest, reddit, youtube, hangouts/gmessenger, linkedin, skype/groupme, imessage, discord, kik, line, telegram, signal. Especially justifying Instagram, because facebook really made it what it is. WhatsApp MAYBE, but in reality what facebook is doing is owning both the US and INTL messengers, I dont think they overlap in a way that justifies splitting it up, because FB's US marketshare doesnt drastically increase from WA. Is it the justice departments job from to allow the most popular domestic product from merging with the most popular international product? Uber being able to swallow up or own shares in all these regional services should be questioned then. FB/WA still have viable competition from imessage, snapchat, and skype.
> The point of anti-trust laws is to break up monopolies because they represent a massive and dangerous concentration of market and political power in the hands of the few. You don't need evidence of any specific crime to do it.
Not actually true. To break up an existing company, you need to be taken to court by the United States under the one of the anti-trust acts, and prove a violation of the law.
To be clear the FTC can prevent mergers with no evidence of wrongdoing, based solely on market share, but breaking up an existing company is a rarely used remedy in antitrust cases.
George W Bush tried this against Microsoft. They were unsuccessful. You cannot just decide it's a crime to be large. The fundamental rights like unreasonable seizure and freedom of speech. Which means the government cant just steal the corporation from you or prevent your companies from working together.
There's no fundamental right for a corporation (which, to remind, is a separate legal entity) to be of a certain size. This doesn't have anything to do with freedom of speech. And if you trim them down to size by splitting them, the original owners would still own the fragments, so it's not a seizure, either.
In America and in many other countries, the mere fact of monopolizing a market is in fact a crime. The constitution offers no protection against this whatsoever. Go google antitrust law, and read up on some history. The Sherman Act, Standard Oil and AT&T are some good places to start.
It doesn't have to be illegal to undermine competition. Luxottica owns a vertical of 80% of the brands, the factories, the retail stores, AND the largest insurance company concerning eyeglasses in America. It isn't illegal, but the rents they are extracting from our society by keeping prices artificially high sure as hell SHOULD be.
They've admitted that they work together on censorship issues. They're colluding together to harm potential competitors: Gab is banned from the Google app store, and Google was running a competing social media network Google+. This is exactly what ATT was doing that got them broken up.
What is the alleged anti-competitive behavior? The article doesn't mention it. It sounds like she is calling for their breakup merely for being big and powerful, and if that were cause enough to break up an entity we would logically start with the government.
The Medium article[1] mentions a couple - Google prioritizing their reviews above Yelp in search results, Amazon copying third party products that were successful on its marketplace.
RE Amazon... how is this much different than say, store branded items from a grocery or WalMart, or quasi store brands(ie brands mainly only sold in WalMart, like Brahma boots or Ozark Trail)?
The difference comes down to market share. It's fine to sell store brands if you have 10% of the market because there's plenty of competition. Vendors who refuse to deal with you can do just fine by working with your competitors.
Amazon is approaching 50% market share. They are close to becoming the place for online commerce. So when they compete with vendors by offering similar products, the vendors are effectively put out of business.
Just like with MS and IE. The issue wasn't so much that MS offered IE with Windows so much as the fact that 95% of computers came with Windows, so bundling IE was putting other software providers out of business.
A quick search for a local restaurant shows yelp as the top hit. Google shows a info box to the side with their own reviews. I don't see a problem with this, and I can't imagine it being illegal. Companies are allowed to cross-promote between their services. Changing this would go far beyond tech companies.
> Google prioritizing their reviews above Yelp in search results
This is one reason I use Google. I can view all Google review w/out downloading an app. I'd classify Yelp reviews in browser search as nothing more than an ad.
For starters, Amazon provided a marketplace platform for third parties to sell goods. They then gathered data on which items sold the best, created their own line of products based off this data, and crushed their customers-turned-competitors using their massive advantage in economies of scale.
FWIW, while I agree this a problem, large box retailers (Whole Foods before the Amazon acquisition, Walmart, etc) are well known for doing this as well.
So if that's the line you draw, it extends further than just tech giants.
It's a little bit different though, because Amazon has 2 streams of how they get products: Amazon can buy branded from vendor and control price and selection, or those same vendors could list directly on Amazon (as FBA) and the vendor controls price and selection.
Pop sockets got in a fight recently with Amazon, because they wanted to stay FBA in order to have better control of selection and pricing, but Amazon was trying to force them into a more traditional vendor role.
Right, and Walmart only allows products in its store under their terms which is far more restrictive, so I'm failing to understand how this model is worse for competition than Walmart's.
And what happened with PopSockets didn't quite work that way. They were already a vendor on Amazon, and they wanted to remove themselves as a direct vendor and designate a single reseller as their "approved" FBA on Amazon.
So they wanted to change the terms of the agreement, Amazon said no, and that was that.
Perhaps grocery stores have done well to keep their brands on lower shelves and not end cap their own stuff. Amazon brands will often appear first in the list of results, which would be akin to putting Great Value products front and centre on all Walmart shelves.
Don’t brick and mortar stores collect inventory and trend data too? Amazon isn’t the first one to do this, they just put the data closer to the center of their business so it’s more public that they collect data.
Until recently, brick and mortar really just knew what people tend to buy together. They can't tell, like Amazon, than a single customer buys XYZ over their lifetime. Brick and mortar now employee ways to aggregate using credit card numbers across stores.
Yes and collecting data is a lot more expensive and less detailed for brick and mortar stores
Also Amazon is less likely to have an issue with respect to stock since they do not buy most of the stock they just store it, where as brick and mortar stores invest in their inventory which gives them an higher incentive to promote them. And this also gives them an incentive to have disfounted sales on slow moving products that are either of slightly lower quality to a comparable product or it is a new Unknown brand resulting in a win for the customer. In case of Amazon if a new Unknown product is not selling it is all up to the seller to manipulate the algorithm to move up the seller ranking( we already see all the way sellers manipulate reviews and change products to have a high number of reviews) this is a big loss for the customer. And if the seller puts in all the effort and succeeds Amazon can just copy the product and say MY PRODUCT NOW, and show an Amazon basics product for the exact same price as the buyer and bump him Lower than its own product.
You are allowed to crush your competitors with economy of scale provided that you don't do it by selling at a loss. That's actually the entire point of economy of scale. The reference in the article is to passing a law against this so clearly what Amazon did is legal now. Furthermore, we don't need a law for this as this type of thing is well handled by a non-compete clause, which I am surprised wasn't in the seller's agreements with Amazon.
The larger issue is that Amazon does not treat each product equally. When you search for an item, they don’t necessarily even show you the “best item” — most bought or highest reviews. Products which buy advertisements or Amazon’s own brands are bubbled up: its not an even playing field in this sense.
If they were the largest retail seller, that would be anti-competitive. Amazon does less than half the revenue of Walmart. Amazon and Costco are the same size.
Looking at the vast majority of Amazon Basics goods, I just don't see how they would have needed to use marketplace data to come up with what products to sell.
Batteries, clothes (lots of clothes), backpacks, these are all products that are cheap to produce and where brand loyalty plays a large role. People generally trust the name Amazon. It's not rocket science to realize people want cheap clothes and batteries.
well, the element that corrupts government should be removed and a govt for the people restored.
Just breaking it up is as anti productive as just breaking up a company, if the company isnt breaking any laws.
Govt is a different type of entity than a corporation and as enlightening as the comparison might be, a thought exercise is all that comparison should really be.
There's a difference, at least on paper, between the government and corporations: the government is big and powerful, but (in a republican society) is accountable in some way to the people and society as a whole. Corporations are also big and powerful, and (in a capitalist society) accountable only to a majority of their shareholders.
So there's a reason to believe that you cannot have corporations serve the public interest without either breaking them up to limit their power or fundamentally redefining what it means to be a corporation, but you can have government serve the public interest while remaining big and powerful. If the federal government followed the views of the American public to the detriment of career politicians, we'd say, "Great, you're actually doing your job." If Amazon followed the views of the American public to the detriment of career managers, we'd be very confused.
(That said, breaking up the government sounds like a fine plan too, I just don't think it needs to be first)
In theory. But in fact it is the opposite. Companies are accountable to their customers above all else, and the government to its voters. If the IRS makes a mistake with your taxes and Amazon makes a mistake with your order, which of these would scare you more?
I'm talking about accountability to society. I'm only a customer of Amazon in very limited ways (I own a Kindle that I received as a gift, which I buy a book for once every few months, and I spend about $30/month on AWS of which $29/month is a VM I should really decommission), but that doesn't change the ways they impact my life - their influence on the book market, the literally-everything-else market, the cloud computing market, their purchase of Whole Foods, their presence as an employer in my city, etc. None of those worries are a worry about Amazon making a mistake with my order.
So I'm a lot more worried about Amazon than the IRS - I feel the IRS is in fact accountable to me in a way which Amazon isn't.
Perhaps not the government itself which exists within strict constitutional boundaries, but the same logic should apply to the major political parties with hard caps on the amount of incoming donations over which they have to "structurally separate" from the electoral process.
She's a politician. She doesn't need logic behind her statements. Rather, she's tapping into progressive sentiments and trying to ignite her base during primary season.
The government is already being dis-intermediated. You could look at this as the government eliminating their competition.
These companies have more revenue and cash on hand than many countries. Looking at the Bay Area, Google and Facebook are taking the lead on repairing and improving infrastructure because the government can't do it alone anymore.
You shouldn't be resolving such issues after the fact. If the FTC or the DOJ AD weren't diminished into such seemingly titular existences, we wouldn't have this problem in the first place.
Enforcing the use of open, federated, interoperable standards when they're technically feasible would be a lot more productive than the crude approach of simply breaking up the companies. To the extent that there is a competition concern it's due to network effects, and open, interoperable standards would go a long way towards resolving these. Even for Amazon, it's only the "UX"-related company that needs to be broken away from the rest. That company would then face an incentive to interoperate will all sorts of suppliers on an equitable basis.
This would require a level of vision & planning we're not likely to see from political leaders, but I agree this is the best take here.
If the goal of antitrust action is to keep the free market competitive, I think a better way to achieve this than enforcing a breakup of big companies is by legally requiring standards for open protocols that allow for competitors to interface with each other and compete on their service quality rather than their network size.
How this would be done is a hard question without an easy answer. But breaking apart Facebook from Whatsapp isn't going to make it any easier for a new social network or a new messaging app to break into the space. Typically new social products can only enter a saturated market by targeting a niche and then expanding (e.g. Signal on a privacy/security focus or Discord on a gaming focus). Enforcing some level of open protocol makes it possible to try a new product without customers giving up because "oh but my friends aren't on here"
I like Warren. Also, I believe something needs to be done about these tech companies enormous influence over information flow. I don't think the solution is breaking them up.
These complaints are absurd and antibusiness. Every serious retailer sells their own brand of products. For instance, Walmart sells their own products under the "Great Value" label. Every FAANG caliber employee would have to look at relocating to work for a Chinese internet giant to make actual money or move to a proprietary trading firm.
edit: To the people down voting me, I am sorry that you cannot LeetCode.
Walmart sell their own products, but they don't restrain their dealings with other suppliers in order to promote their own product lines. This is a key difference wrt. what Amazon is doing. In a world of fair competition, "Amazon Marketplace" would be the main Amazon Website, and you would additionally be able to restrict your view to products from the suppliers you trust, be they Amazon-the-supplier, Walmart or whoever.
The only news here is that Elizabeth Warren voiced support for such policies. There have been very reasonable arguments for breaking up Amazon and Google on anticompetitive grounds for years now. Breaking up Facebook from WhatsApp is less about anticompetitive behavior is more about privacy.
Google/Facebook/Amazon have the power to push any startup competition out of the market in ways that are hard to even enumerate. Think about all of the services, devices, and standards that they control.
Watching the fanboys defend their favorite tech giant is incredible. These companies are not behaving in the markets or people's best interest and they are way too big, at a scale that dwarfs most of the worlds organizations.
As long as those services are profitable and they can outcompete startups then there’s nothing illegal or wrong about that. There’s no right that startups need to survive or have bias to succeed.
There's no right that tech giants need to be allowed to exist in their current form, either.
If a person doesn't break any pre-existing laws, then they must not suffer any legal consequences, sure. And nobody is suggesting that Page and Brin should spend a minute in court or pay a cent in fines.
But a corporation isn't a person, it's a business instrument, and if the United States were to judge that the existence of that instrument is detrimental to the greater security / stability / welfare of the nation as a whole, they would have every right to write a new law to ban usage of that instrument, i.e. ban the existence of Google in its current form, as they once wrote a new law to ban the existence of the United Aircraft and Transport Corporation.
Breaking up a company certainly harms people, by diminishing the value of the company's stock, which is private property. Not only people like Page and Brin, but more sympathetic characters like workers whose retirement funds contain Google stock.
This may be worth it for society, but it's a little too convenient to say no people will be harmed.
> Watching the fanboys defend their favorite tech giant is incredible. These companies are not behaving in the markets or people's best interest and they are way too big, at a scale that dwarfs most of the worlds organizations.
It's not illegal to be big, it's illegal to use your influence to prevent competition in a way that's illegal. There's zero evidence of that, which is why she's talking about a new law.
And please refrain from calling those that disagree with you "fanboys". It diminishes every single point you're attempting to make, because you sound like a jaded teenager rather than an adult that wants to have a conversation.
> Here's how to explain to people the distinction between fighting poverty and fighting economic inequality. If you're fighting poverty, you might say "Let's have universal health care." If you're fighting economic inequality, you have to say "Let's have universal health care. And Larry, please don't start Google." Otherwise Larry's going to mess up your numbers big time.
Since reading that, I've realized that a major part of my political beliefs is that future Larrys should be unable to start future Googles in their current form, and in particular that I don't believe it's a just use of the powers of government to enable the creation of future Googles.
This view misunderstands the nature of modern science and R&D. Interesting R&D is shockingly expensive, and you need mega-corps to do it. The cost of a new fab is $10 billion now, and it's been increasing exponentially. The 747 cost $7.5 billion in inflation-adjusted dollars to develop. The 787 cost almost $30 billion. The future of science and technology is not Edison inventing the lightbulb in his private lab. It's mega-corps doing mega-R&D.
This used to be less true in CS, but that's changing due to machine learning. Google has a huge leg-up in self-driving-car R&D because of the enormous amount of data it has from Google services. In "hard" R&D, even "startups" are spending the kind of capital that previously used to only be in the province of established conglomerates.
I agree you need significant amounts of resources / capital to do it. I disagree you need megacorps to do it. It's inefficient for the means of production to be held by a private company looking out for its own interests and wealth and not the good of society: even if you want the military to be more capable, the military-industrial complex is a bad way to do it. And the argument that startups need to spend money on their own fabs is an argument these shouldn't be in private, competitive hands.
At least the U.S. government does an absolutely terrible job with the capital-intensive infrastructure it touches. Having it be in charge of something like a nuclear reactor or a chip fab would end technological progress.
I think the first remedy should be prevent acquisitions after companies grow past certain size.
Google, Amazon, Facebook and Apple innovated at their own in the beginning, but once the cash from network externalities started to pour in, they stared to buy market share and buy into the markets. Google did not invent Gmail (Postini), Android Inc, YouTube, AdSense (Adscape), Google Analytics (Trendalyzer), Google Maps (Endoxon).
So if a very capable, a hard working, effective person is able to increase their wealth by 20x, and in so doing increases my wealth by 2x without my doing anything, you'd be in favor of using the power of the state to prevent this from happening because it would increase inequality?
Not OP, but my take on that is this: if that industrious 20x / 2x value creator could exist in a vacuum there's no reason to stop them. Im fine even with a 1000x / 1.1x split, ceteris paribus. My problem with aggregation of wealth and power is not with numerical inequality, but with the "evil" that can follow--rent seeking, externalization of costs, monopolization. If the externalities end up 0.5x-ing everyone else's wealth, this is a problem.
You should think in the terms of opportunity cost.
The alternative to what you suggest is not zero growth of wealth. It can be even larger growth of wealth when the markets work better.
The type of anti-markets and pro business approach where big corporations are shielded from the markets and monopoly powers are allowed as long as antitrust felony crimes don't happen is perversion of capitalism. The ideological foundation for this tinking was laid out in Robert Bork's book 'The Antitrust Paradox' (1978) that Reagan administration used as their bible.
I'm good at what I do and I work for a hedge fund because they'll compensate me well for it. I increase the productivity of other people at my company, without them doing anything, by giving them better platforms for their work. Chasing salary is the obvious locally rational action for me, but it's inefficient for the world. I could be making life better for the world if I could be funded to work on, say, Debian instead of our in-house build system. And I probably could be funded at about 1/20 of my current salary to do it, and provide 2x productivity benefits for you personally, but the incentives of a capitalist society mean that isn't the right decision for me.
However - you say "using the power of the state to prevent." I am not in favor of that. I am in favor of ceasing using the power of the state to enable. The government could stop recognizing the right of corporations to property and to the labor of individuals at any time.
If you think the debate is purely about relative wealth, you are misunderstanding most of it.
But even still: relative wealth distribution getting too extremely unequal has negative ramifications for any society, regardless of the absolute wealth. But again: that is NOT the issue in this case.
>>> relative wealth distribution getting too extremely unequal has negative ramifications for any society, regardless of the absolute wealth
Like what exactly?
I do not understand why people are upset over extreme wealth. I think Jeff Bezos deserves to be a billionaire and I would not want to live in a society that does not allow people like him succeed and accumulate this sort of money. The quetion is what happens with his wealth in the second and third generation. Historically in fedualism this was passed down to the next generation and the family would keep it until end of the feudalism era. In a capitalistic society it deisappears within 2-3 egenerations, especially with people like Bill Gates. Not sure what is the problem here.
There's this weird notion that you can improve your lot in life by worrying more about the contents of other peoples' bank accounts than you do your own. I don't get it either.
I don't have time to answer your specific claim about why relative wealth inequality is a problem even if the poor aren't miserably poor. It's a complex and deep subject. There's resources out there if you are curious. And yes, there's a good share of BAD arguments against wealth inequity (lots of people who are just resentful and superficial and believe even factually wrong things) — so you could spend your time convincing yourself that everyone you disagree with is an idiot. There's no shortage of idiocy. But you can also find the real stuff from smart and expressive people discussing these things better, and that's what you should try to find. Sorry for not picking out citations, I'm already procrastinating too much by writing this.
Now, Jeff Bezos is absolutely a remarkable and unique person who worked very hard and intelligently to get to where he is. But on just the pure matter of "deserve" it's so much more complex than the way you are looking at it. We don't live in a fair world. Look up "just world fallacy". In a world that is quite out of alignment from what we'd have if everyone got what they "deserve", it's simplistic to look at select cases like Bezos and judge from there.
But that's not what this is about AT ALL.
The concept of anti-trust and of managing this stuff is about power. The question is whether it's okay for Bezos and the whole company really to not only be wealthy but have monopoly-like power in the market. I have no reason to believe you checked out the link I posted earlier because you went on and repeated arguments about wealth — and this is NOT about that, not philosophically or legally. It's not even about taking away Bezos' wealth! Anti-trust is not about wealth redistribution, it's only about stopping anti-competitive threats to market competition.
> In a capitalistic society it deisappears within 2-3 generations
Well, that's just factually wrong. Capitalism doesn't just automatically do that, and the evidence doesn't support that claim either. And we don't have any sort of "pure" capitalism in existence to even study anyway. You need to get beyond these superficial specious ideas if you want to understand the reality. Start by treating your presumptions as hypotheses and figure out what evidence would be scientifically strong enough to validate or invalidate them and see how they hold up.
Not sure what to make of that first link. The first one is a bunch of quotes about wealthy people worrying that their kids are irresponsible and this one uncited sentence aligned with the headline:
> Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.
What is that? Sounds like a marketing claim by a company catering services to the wealthy about how to keep their family wealth. I can't just accept it blindly.
I agree that in the (unusual) case of Gates, he's obviously not just hoarding and passing on his wealth directly, but the upbringing and advantages his kids are getting plus $10 million leaves them still really wealthy compared to nearly anyone else on the planet regardless of the fact that it's a miniscule fraction of Gates' current wealth.
> If you're fighting economic inequality, you have to say "Let's have universal health care. And Larry, please don't start Google." Otherwise Larry's going to mess up your numbers big time.
That's fucking idiocy. Or more accurately, propaganda from a billionaire with extreme vested interest in this topic.
It's pretty straightforward to say "Go ahead and start Google, and if it succeeds we're going to have some basic rules about worker's rights and compensation you'll have to follow, and we're going to tax a much larger percentage of your personal gains, but you'll still be very, very rich". At which point you're also fighting economic inequality.
Agreed. This avoids the common argument against socialism removing incentives to success, while still providing social safety nets. Allow people to succeed, but when they do, tax them and regulate them to benefit the less fortunate members of society. The rich got rich in part because of the protections and services afforded them by our modern society. In having reaped a greater share of benefit, why should they not contribute a greater share of taxes?
There is a stark difference between socialism rooted in the above idea and socialism rooted in jealousy and vindictiveness toward the wealthy just because they're wealthy. We're not trying to punish the wealthy and we can still allow them to be very wealthy. But as the US currently stands, the wealthy could contribute much more while still having far greater quality of life than almost everyone else.
The argument that there won't be incentives for success is and has always been ludicrous. It's not based in any kind of empirical reality, just on an emotional theory that people won't work if you tax them more, and an Ayn Rand novel or two.
The reality is that people compete for status, success, money, and power, within the framework they are given.
I mean we've actually tried this. If you take a group of incredibly skilled business people and tax them heavily you don't get some dystopia, you get Switzerland.
True, but also the Swiss have a direct tax on corporate capital, a VAT, a policy of taxing capital gains as regular old income for professional investors, plus many other subtleties and differences that don't fit on a bumper sticker. I think my point stands.
I mean we've actually tried this. If you take a group of incredibly skilled business people and tax them heavily you don't get some dystopia, you get Switzerland.
And what important/useful companies, tech or otherwise, got their start in Switzerland?
That reads like Graham is poking fun at Google/Larry opposers, am I missing something? He's saying fighting poverty by bringing up the bottom is noble, but fighting inequality by capping the top end is foolish.
BTW I agree with him in the sense that indices like Gini coefficients etc. are not comprehensive enough, and optimizing for simple numbers leads to distorted outcomes. I also agree with you in the sense that top heavy players in the economy are harmful to the extent that they seek rent and prevent competition.
Yes, he's being sarcastic, but I think his words have a point if taken straight, so I'm being counter-sarcastic. PG says "You believe this thing I think is nonsense, right?" so I say "I absolutely believe this thing which you were serious about, right?"
Depends what you mean by "founders." You can certainly enable people who have interesting ideas for worthwhile projects without enabling them turning into owners of megacorps, and I think he's playing on the confusion. Google the search engine started as a Stanford research project, and we should, as a society (I'm intentionally not saying as government) provide additional support for grad students who want to develop cool projects and make them real who aren't interested in turning into business owners. Saying "Don't start Alphabet Inc." and "Don't start Google the search engine" are very different things.
Awesome, upvoted for more visibility. Who needs advancements in medicine, tech, science? Not us! Everyone’s the same, everyone’s equal, everyone’s the lowest common denominator!!
Was it necessary to make $100B on it? Remember that Google started as a grad school project. Could it have continued and still been the same gift to the world? (Could it have been better?)
While I agree that we should break apart giant companies (and not just Amazon, telecoms too), the first large entity that we should break apart, is the government.
The only way to stop monopolies from forming is by getting rid of legislation that heavily benefits large businesses.
> ... the first large entity that we should break apart, is the government.
If you're talking about the United States of America, it is already broken apart. By design we have three distinct branches, due process, and free speech/press.
I'd argue that the government is already broken apart and is in fact a cautionary tale of how doing so can lead to waste and paralyzed decision making. With the House having a Democratic majority, and the Senate and Presidency being Republican, no-one realistically expects anything is going to get done. Add to that mix the layers of state and local government before it gets to the road outside your house that's in need of paving... I think that government is broken up more than enough already.
To my knowledge, American monopoly laws focus more on the welfare of the consumer and whether customers are being negatively affected rather than the companies themselves. There’s nothing wrong with having a monopoly, but where issues arise is when consumers start to be hurt.
In this context, how do Elizabeth Warren’s comments mesh out?
Monopolies are inherently harmful to consumers, as reduced competition means less parties can compete for the best offering, or push to create a better product. The myth that a monopoly "isn't hurting anyone" is nonsense. It's existence is enough, and yes, impacting other competitors negatively directly harms consumers. There has been an outdated focus on price specifically, which is why many free services have evaded the law for so long.
That being said, Warren directly states something tech companies should be competing on: Privacy. An issue with direct consumer impact, that due to monopoly status, these companies have largely not set as a priority.
I recommend listening to Planet money's series on antitrust. You'll see why your statement was indeed the rationale behind not enforcing the monopoly regulations. Spoiler: it wasn't the care for the welfare of the consumer.
You might be able to divide Amazon into two distinct pieces (retail and cloud services), but I don't know how you'd even start with a company like Google or Facebook. Most of the services offered by those two are only justified by the amount of data they provide for ad targeting. You can't take away those services without ruining their ad-revenue model.
There's precedent to this in the USA. The US Government once passed regulations that caused one of the largest companies in America to break up into three smaller companies. Today those, three companies are entirely independent, employ over 400,000 people combined, and have a combined net work of over $400B.
Those companies are Boeing Aircraft (153k employees, $244B market value), United Technologies (202k employees, $148B market value), and United Airlines (88k employees, $33B market value).[0]
What most people perceive as a threat to the market is when one company takes over an entire single market. And that is a problem, no doubt. But in the case of Boeing, the problem was that one company had such an advantage vertically- lose money on planes in order to make money on shipping, or vice versa, as needed. It meant it could win in whichever market it wanted to and slowly come to dominate all of those markets. The synergies of doing it all internally meant it could win at everything.
If one uses that situation as a precedent, one can start to see the parallels in many of the FAANG companies today.
[0] "The Air Mail Act of 1934 prohibited airlines and manufacturers from being under the same corporate umbrella, so the company split into three smaller companies – Boeing Airplane Company, United Airlines, and United Aircraft Corporation, the precursor to United Technologies." https://en.wikipedia.org/wiki/Boeing
I don’t know about “help”, but it will still change something - over time the different management teams will diverge (in some sense), even if the shareholders stay mostly the same.
Per Das Wiki [1]: "The government had little choice but to return service to the commercial airlines, but did so with several new conditions. The Air Mail Act of June 12, 1934, drafted at the height of the crisis by Black (and known as the "Black-McKellar bill"), restored competitive bidding, closely regulated airmail labor operations,[n 28] dissolved the holding companies that brought together airlines and aircraft manufacturers, and prevented companies that held the old contracts from obtaining new ones."
It's a legitimate concern. After Standard Oil was split up, Rockefeller still arranged meetings of the heads of the now-separated companies.
However as long as the companies are well regulated and publicly traded, I think the concern diminishes over time. Each manager has an incentive to look out for their own shareholders, their own bonuses. And if activist shareholders suspect one company is subsidizing another, they can happily buy the undervalued company, raise a ruckus (and maybe some lawsuits), and profit when the subsidies end.
Anti-competition law and it's interpretation has changed drastically in the US after Robert Bork's book 'The Antitrust Paradox' (1978). Reagan administration used it as their bible.
Yes. Broadly speaking, the law went from looking at concentration as a bad thing on its own to only looking at whether consumer prices would be impacted. The prevalent idea now is that mega-mergers will reduce prices because of economies of scale.
The law was not changed. The interpretation of the law was changed, as you describe, initially by Republicans but Clinton and Obama maintained the Republican interpretation.
Probably why a company like amazon has achieved elusive scrutiny is that they give consumers cheapest prices but squeeze suppliers. Suppliers most definitely hate amazons dominant position.
This is classic example of short term optimization. Sure, prices can be lower now but it might stagnate there for long time because there is no competition allowed. If it is technologically feasible, competition would find the global optimal point eventually in longer term but monopolies will settle in local minima.
Ma Bell wasn't created naturally at all. It's monopoly status was granted by the federal government. This is fundamentally different from Facebook, Amazon, etc. If anything, the large ISPs like ATT, Verizon, and Spectrum should be looked at, but solving the problems of ISP monopolization will take a lot more than just breaking up territorial monopolies into smaller territorial monopolies.
Why does it matter whether a monopoly is "natural" or not, let alone that the definition of "naturally" is sort of laughable given the legal framework put in place for our government is the economy in the first place? Just as you get a lot of government run monopolies with pure socialism, you get a lot of "market-driven" monopolies with pure capitalism. Both should be broken up.
The point is that they're caused by different processes, and the steps to ensure that it doesn't happen again after you break them up are also very different because of that.
The US also broke up Ma Bell in 1956, forcing the spinoff of Bell Canada and Caribbean operations, and before that in 1925, breaking off other international operations into ITT.
How would this work in practice though? Eg Amazon. Bezos is a major shareholder. Imagine splitting AWS from the retail arm, which I guess would be a sensible split point. If Bezos controls both, then what would really change?
I'm not critical to the idea nor supportive - I'm just curious to learn more.
That was the case when Standard Oil was broken up and it's not a problem. The retail arm becomes free to get their cloud computing needs from others -- say Azure or Google. Bezos can't force them to get a worse deal at AWS simply because he owns the AWS. A lot of the arguments for breaking up companies come from this. It can make the components more efficient once they're freed from the shackles of being locked in. Likewise, the crappy parts of the big conglomerate can't coast on having a guaranteed customer. This is the whole point of capitalism. Monopolies are the anti-thesis of capitalism.
I don't think it's fair to say the break-up was a failure even if in the near term they still coordinated. In the long term, the oil companies competed with each other. Even if Rockefeller became wealthier, it only adds to the original point: breaking up monopolies unlock value for shareholders and increases efficiency. I highly doubt anyone in the main stream schools of economics would call the Standard Oil breakup a failure. That Rockefeller wasn't punished is immaterial to the breakup itself. The point here isn't to punish Bezos or anyone else. It's about efficiency and fairness. In that sense, that goal was accomplished. No single oil company today wields the power that SO once did.
Also, those guys meeting up together at Rockefeller's house to coordinate would likely be illegal today and probably was back then too.
Did you read her proposal? There would be a structural separation from distribution and first party goods. Just like railroads couldn't own interests in the commodities they were transporting, Amazon couldn't operate a market place and also own private label brands.
So what about Walmart who does double Amazon in revenue AND has their own private label brands? They have so much retail power they are known to get manufacturers by the balls and make manufacturers accept the cost they want instead.
or Costco? $130B in revenue and I dont hear clamor for Costco to be split from Kirkland.
By this logic Apple shouldnt be allowed to have Apps in its App store, right? Or are they banned from selling first and third party phone cases in store?
CVS shouldnt be allowed its own generic drugs.
At what point does this become "companies arent allowed to make/sell their own products if they also resell other companies products."
And lets be serious: you want to take away Google's ability to choose the ranking of results? Thats their entire company's purpose. People go to google because they like the order the results come in. If google starts delivering bad results, that opens opportunity for other companies.
> Warren's team said that the proposal would also apply to Apple. "They would have to structurally separate -- choosing between, for example, running the App Store or offering their own apps,
Walmart isn't a platform (excluding Jet.com). They purchase goods (take on risk) prior to selling them.
Amazon is a marketplace meaning the seller takes on all of the risk and pays Amazon for the privilege. Amazon then uses the data that marketplace generates to undercut the sellers with their private labels.
> ... legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.
Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.”
These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
Where is the demonstrated consumer harm that warrants monopoly treatment? Adding private labels increases the amount of selection consumers have.
You’d think we would hear more about it since basically every physical retailer owns their own brands that they sell in their own marketplaces already.
As Elizabeth Warren makes clear in her post, "demonstrated consumer harm" isn't the only justification for antitrust action. We can't demonstrate the innovation that would occur in a competitive marketplace, but we break up monopolies with the faith that it will. This was the prevailing view until the late 20th century. Hopefully we'll get back to it.
How would this be applied? I feel like nearly every grocery store chain in the USA has it's own brand competing with same 3rd party brands they carry. Whole Foods had "360", Walgreens has "Nice". It's been too long since I've been to a Safeway, a Lucky's, a Ralph's, etc but it became pretty clear that each one had it's own brand. And let's not forget Trader Joe's which is almost 90% all it's own brand.
Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as "platform utilities." … These companies would be prohibited from owning both the platform utility and any participants on that platform.
Thus Safeway would be exempt from the regulation because (a) they do not offer an online marketplace and (b) they do not connect third parties (but instead act as an intermediary).
Similarly, it appears that only Amazon Marketplace, not the retail arm of Amazon, would be affected by this regulation.
That sucks because every company that actually cares enough about its customer experience eventually vertically integrates, and it results in a better experience.
For instance, Apple makes hardware, software, services and they all fit together perfectly. Tesla distributes cars in addition to making them, leading to a better buying experience.
Everything Amazon does is in-line with this principle as well.
Is the end game laws similar to what we have for alcoholic beverages and cars? Where distribution and manufacturing are artificially separated?
One of the perceived risks of breaking up the tech giants is that they will be at a competitive disadvantage to their foreign peers. The degree of competitive risk at the time of Boeing's split was perceived as lower. As long as Americans are ok with losing some areas of advantages, they should move forward.
Dems/libs are fools when it comes to this. They never have the backbone to take on foreign Govts. I'm totally against this because we are in a globalized world and these companies need to be large and strong to out-compete with others across the world.
Saying "we are in a globalized world" makes it seem like that is just the nature of things and not the outcome of specific policies taken by primarily the US in the post-WW2 era. Corporate concentration is against capitalism, and dealing with global competitors can be dealt with with the tools we already have, like the current administration is with trade policy.
It is not as simple as it looks. Some degree of globalization already existed for tens of thousands of years, whether through colonialism, Asia-MiddleEast-Europe trade and many more. Even though there are ups and downs in the cycle of regional/global trade, it has continued to move towards more integration, especially due to technological innovations seen in the past 500 years.
Nations that decide to close down in certain areas, may find themselves in a competitive disadvantage to peers making use of data, economies of scale, technology, labour, etc. This is something we have seen happen in history.
The problem is this type of vertical splitting doesn't solve the problem of large tech companies. It's like treating a burst appendix with a kidney transplant.
The problem of Amazon is that it is effectively the only online shopping place, and thus can act as a Monopsony in hiring it's workers for warehouses, splitting AWS out of that doesn't fix that problem. Maybe you could require that distribution centers be owned by separate companies. This might work but locally each Center would still be a Monopsony and thus cause the same problem. Maybe if you capped the size of distribution center you could force lots of smaller ones to be built, but at this point I worry that you are going to end up making shipping slower and more expensive.
The problem of Google is they are very dominate in the Ads space splitting out the Ads portion into another company would not solve that. Facebook's problems is everyone has put their data in Facebook has friends in Facebook and feel compelled to keep using it. I don't see how splitting up the company into, Instagram, What's App, and Facebook solves the network effects of those apps.
Splitting up tech companies is not a punishment to make the CEO feel bad or change their ways. It is a technique to change how we need the market works to benefit the large population. As such we need to think about how to split them, the effects, and most importantly if the effect achieves the intended result.
If we had a progressive corporate tax, I think all the problems would sort themselves out.
You want to build a trillion dollar company? Fine. Corporate tax rate of 50%. You're a small business with less than $1M in revenue. Cool. Corporate tax rate of 0%.
Big companies will break up to take advantage of the tax code. Problem solved.
Instead, the bigger you are, the harder you can lobby for tax breaks. Currently, if you're a $1M company, that sucks. You pay 20%+. If you're Amazon, you pay $0.
I feel like all that will create is "partnership contracts" where a large company will be split into the "ideal" size tax-wise while still being run by an "advisory board". Compensation gets interesting at that point though, so many its an interesting idea.
a constellation of partnerships happening through more tangible corporate boundaries sounds much better. right now it seems to happen in unclear ways, and I assume is much less observable from outside forces (e.g. Sidewalk Labs & Google & Intersection, etc.)
The IRS is pretty awesome and incredibly underfunded, yes.
But we could simplify the tax code... The bigger the surface area, the easier it is to find a vulnerability / loophole. And anymore, the tax code is basically being written by BigCos to protect their interests and provide breaks for themselves.
Enforcing a tax code that's 20-feet tall when printed out when companies are as complicated as they are -- it's a wonder anyone pays taxes. It would take years in court to figure out what a company honestly owes.
If it's simple -- you make x profit or y revenue -- then you pay z dollars -- for any public company, good luck grossly cheating that.
People always ask this as if it's impossible to change laws or have agencies that actually want to follow through on their missions. As if corporations are so devious and brilliant they are unfindable. It's just not true. If you vote for people who actually want taxes, the enforcement takes care of itself. It works the exact same the other way, because these people gut agencies and replace them.
I agree it should be harder the bigger you are, but it's not the tax rate. Right now, FAANGs either run a 0% profit margin, or book their profits to Ireland.
I think this is an absolutely incredible idea if it could actually be made in a way such that the taxation and other factors could not be easily avoided. But there's one unspoken problem with taxes and particularly corporate taxes.
Large companies are perceived as being proportionally beneficial to the US economy. If you made the US a place that was meaningfully undesirable for corporations, they can leave. And even if these companies did not leave, you would strongly deter new companies. For instance imagine you were able to create your system such that it could not be simply avoided through various typical methods. So big companies really did risk losing up to 50% of their net. How long would it take before e.g. YCombinator started requiring new companies to incorporate in e.g. Hong Kong (or wherever) instead of the US? Perhaps even moving the entire operation abroad.
So even though I think this would be an absolutely incredible idea, I do not think it would work or be meaningfully considered in practice.
generally, large corporations (and wealthy people) do not, and will not, leave the US because of taxes. people want to live here and companies want to do business here. badly. but they also want an unfair advantage and will say anything (like "we'll just take our toys and leave!") to try to get it.
It was actually common, they still do business here, before the tax law change they would do an inversion so they'd no longer be taxed by the US on their foreign profits (US had worldwide taxation while most every other country did not).
yes, our tilted tax system let them do that without any repercussion. not only can they keep doing business as they always have, they get extra incentive on top. let's just equalize the tax treatment of individuals and corporations already.
Only profits are taxed, and they're only vaguely related to revenue, and both profit and revenue are vaguely related to whether a company is a monopoly or not. Profit is an okay-ish measure of how much a monopoly a company is, but not great. Comcast and Amazon turn profits of ~10 billion. Apple is 60 billion, microsoft is 16 billion. Amazon is much more of a monopoly than either of those, and Comcast enjoys a much stronger natural monopoly as well. The industries are just different sizes and the supply/demand curves are different, and for some reason people are just super willing to pay an absurd premium for Apple products.
A progressive corporate tax still makes some sense, and there's basically no excuse for their taxes being less simple than a citizen's. However active management is still required. Markets are fast and efficient but they are often dumb.
> Amazon is much more of a monopoly than either of those
In what market are they a monopoly? Seriously. Amazon retail competes with walmart and target both of which offer online sales and AWS competes heavily with Azure and Google cloud. In what way is Amazon a monopoly?
I don't think the relationship between monopoly behavior is directly correlated with size. Your solution is a "one size fits all" approach will would probably cause problems for big markets with non-monopoly players.
Taxes don't solve these problems. In your setup, companies would "break up" but only on paper to take advantage of tax code. Outside of papers filed in Delaware no one would even know these were separate companies. Many billionaires often have few 100s LLCs filed in such a complex graph of ownerships that would take days to decipher.
> Taxes don't solve these problems. In your setup, companies would "break up" but only on paper to take advantage of tax code. Outside of papers filed in Delaware no one would even know these were separate companies. Many billionaires often have few 100s LLCs filed in such a complex graph of ownerships that would take days to decipher.
An essential point any plan like the GP's would be to make conduct like you describe illegal, and make sure those laws are adequately enforced and have enough teeth to be a deterrent.
Taking morality out of it for the time-being, taxes serve as an additional barrier to entry for smaller companies; these tech giants have hordes of lawyers and accountants to make sure they pay very minimal taxes (if any). These companies are also multinational, so they can keep money overseas and search for tax havens globally---a choice smaller companies don't have.
The point is: you can give big companies whatever rate you want, but they're in the strongest position to circumvent it, and they will. The better choice is to lower taxes substantially and give the smaller companies a chance to accumulate capital faster, so they can compete.
Splitting AWS out of Amazon isn't the thing that really matters though so much as preventing Amazon from operating a store AND a marketplace on the same site, not to mention having its own product lines. If you want to sell something online and you're not already a household name then you're at a big disadvantage if you're not on Amazon, but if you do sell there then the price is giving Amazon insight into your business. And if Amazon chooses it can basically bury you by promoting your competitors or worse, selling its own copy of your product.
This is very insightful. When one considers how a monolith application could be split into a collection of microservices but STILL serve the same user experience, it becomes evident how trust-busting won't affect meaningful change.
> Splitting up tech companies is not a punishment to make the CEO feel bad or change their ways. It is a technique to change how we need the market works to benefit the large population. As such we need to think about how to split them, the effects, and most importantly if the effect achieves the intended result.
In my opinion, Amazon as a platform has leveraged network effects to be both a monopsony and a monopoly: in essence by aggregating both consumers and suppliers, both sides of the transaction feel compelled to use Amazon as a middle man.
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[ 2.5 ms ] story [ 474 ms ] threadI think the big three are way too powerful and need to be broken up, but doing so intelligently is a tricky problem that I don't have much faith in government tackling.
Zuckerberg integrating all the services yesterday seems to be a transparent attempt to short circuit splitting the company along these service lines, he knows this is coming. I'll bet $100 he'll soon be talking about how it's impossible to split out insta from facebook because of database keys and integrated AI or whatever.
I think that's very unlikely. Maybe in the far future, but unless there is some significant campaign finance reform first, the big tech companies have more than enough cash to prevent the "worst" possible outcome (from their perspective).
Google is really the issue. They are dominant in search, browser, and maps, and they're half the mobile duopoly. It's very difficult to avoid using their products entirely and even if you did, their dominance allows them to dictate how the internet works, to a certain extent.
I couldn't care less about Facebook. Yet, while I certainly could live without Amazon (or Whole Foods), their service is very nice and WF has things I can't buy at other grocery stores around me.
They employ teams of accountants to make sure they are.
Corporations are not the problem.
The tax code is.
Plus, Elizabeth Warren is an idiot to boot, so..yeah, there is that.
Regulation? What type are we talking? Something that makes someone who has a general disdain for successful companies 'feel better'?
Be specific.
China doesn't seem to be having any problems competing, and winning, against Google and Amazon. Baidu and Alibaba are huge.
Interesting platform for a US presidential candidate to promote regulations against US companies to promote world corperate “fairness”.
I'm not just throwing stones here. I'd welcome some clarification from GP.
I'm definitely left-leaning economically. I also am very much in favor of giving developing nations a chance at competing with our economy.
However, I would go more or less the opposite direction of what you're suggesting. I support allowing American companies to produce jobs on foreign shores _provided those companies follow American labor laws_. I'm in favor of pro-labor regulation and I'm also in favor of free international trade, but not where the latter is at the expense of the former. A totally free world market would circumvent our protections at home.
All this to say, I wouldn't really call what you're suggesting a benefit by any view.
It's certainly a benefit from the view of the Chinese government.
I prefer breaking up monopolies if the end result will be a healthier, consumer-focused and competition driven market.
Given that this is an Elizabeth Warren idea, I'm suspicious that the motives are anything having to do with creating a vibrant market... :)
ii.AWS
Nice neat separation. Make Amazon pay retail rates for AWS, too.
> By definition, non-horizontal mergers involve firms that do not operate in the same market. It necessarily follows that such mergers produce no immediate change in the level of concentration in any relevant market as defined in Section 2 of these Guidelines.
The Merger Enforcement Division's assumption may have been true in 1997 but it's difficult to argue that simply because Google and Amazon don't operate in the "same market" as their primary businesses that their combination would "produce no immediate change in the level of concentration" of the market for both online advertising and computing services. Yet, under these guidelines, if a Google + Amazon merger were proposed it wouldn't present any immediate issue for the Antitrust Division to oppose it.
[1]https://www.justice.gov/atr/non-horizontal-merger-guidelines
The way to look at the 1996 boondoggle is ask ourselves if FCC could have ever been expected to provide even a token enforcement of its terms. The answer is of course not, because FCC was created to protect Bell Telephone and that's most of what it has ever done. Given that, of course all the investments in competing telcos would fail and be gobbled by the incumbents, enriching execs and bankers in the process. Given that, what we've seen was only ever exactly what was planned. The 1996 Act has allowed Bell to shed money-losing rural exchanges, do away entirely with common carriage, pay for wireless infrastructure with money stolen from wireline investors, rearrange assets in ways that would have violated previous consent decrees, pretend that we ever tried competition in telecom, and burrow in even more tightly to its vampire-bite on the neck of USA residents. That was a pretty good con, that Bell execs ran on us, with the assistance of the corrupt in government and the credulous in media.
And that dependence was both created artificially and then abused.
Why can't YouTube switch to, say, Azure? Or Oracle Cloud? or whatever other magic exists?
Infrastructure exists outside of Google - as did the ability to decouple Internet Explorer from Windows.
People often misrepresent the MS trial.
I mean it was and still is dependent on MSHTML for rendering things like the help system as well as rich text in many pre-XAML apps. You don’t want the icon on your desktop, fine, but it certainly is a core part of the OSs rendering system.
YT is integrated at every level from infrastructure on up. It depends on Google-internal libraries which are in turn integrated with other parts of the infrastructure... It would pretty much amount to a full from-scratch rewrite of almost the entire product.
Moreover, I'd question whether other providers even have the available public resource capacity to support YT.
And that's really a shame, because you're also dead on about the logistics/product point. I almost mentioned that, but it's complicated by competition from Walmart, Target, et al. Upvoted you on that basis. That similar to my point of "ad distribution / ad sourcing" split on FB and Google.
That makes me think that Amazon might have to give up Twitch too
Facebook, Google and Amazon really do have an unprecedented amount of data on us. And keep vacuuming up more and more of it. Facebook should never have been allowed to buy WhatsApp (and maybe not Instagram though I'm less concerned about that one). Google should never have been allowed to buy DoubleClick.
Question is how you'd effectively roll that back now. I'm concerned that the government doesn't have enough people with the technical knowledge to really tackle the data question, but I'm still glad Warren is starting the conversation. And she's got some interesting ideas:
> Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.”
> These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
https://medium.com/@teamwarren/heres-how-we-can-break-up-big...
I actually think Android is a really bad example precisely because all the useful google apps ARE separate from the OS. Its just that what people think of as android is actually mostly Play Services now.
1. Raise prices for customers since now someone has to pay for Android development/upkeep/progress, or
2. Starve and kill Android and leave customers with just one major app store (Apple)?
Hiding revenue is something multi-national corporations do really well.
If I ran a company that had a platform as described, and we were approaching the 25bn mark, I'd find ways to make sure we never crossed that line.
Losing IP to what would become a 'public utility' would discourage me from ever trying to develop beyond the 24.9bn mark.
(it wouldn't be a public utility but) I feel like that's kind of the point? Encourage dozens of smaller (if multi-billion counts as "small") businesses to thrive rather than one 25bn+ business. And if you do want to go big, you have to do it in a way that lifts up significantly smaller businesses.
I feel like shareholders wouldn't be very happy with this
Sure, some of your IP moves to a new company that is more restricted in how it can operate. But at least your marketplace doesn't hold back everything else your company is doing.
I thought it was profits that were easily hidden. Hiding revenue seems like it would be very difficult.
Perhaps the platform utility designation will let us enforce a kind of "content neutrality" instead.
I don't see how this could be implemented to the best interest of the USA without "censorship" being involved at some point.
Right now, it feels like companies like Google are mostly silencing hate speech, violent extremists, and pornography, but there is no guarantee that their censorship will remain that way in the future. In a not-so-hypothetical future where a single private company has taken almost whole control over online media and starts imposing heavy censorship over non-offensive speech, are we going to continue saying "it's a private company, and if you don't like it, you can just share your opinions on this platform that nobody reads"?
I like diverse viewpoints being allowed. It is unacceptable, however, to be so entitled as to try to force companies not to censor whatever they feel like.
What about forcing companies to offer housing to people they do or don't like?
And what about offering loans? Should companies be forced to offer loans to people, even if they don't want to?
Though, just so you know where I'm coming from, in my ideal world it would be strong social and business pressures that enforced the idea of protected classes, not regulation. I'd support any competitor which was more ethical, but complex issue.
If, by regulating the way people do business, we can increase total freedom in the world, I think that it's a worthwhile exchange. The way we do business is already regulated, and is one of the powers that we explicitly grant the government in the constitution.
The way I see it, forcing social platforms to accept free speech is really just a commercial regulation, and not a speech regulation. After all, we all understand that this post doesn't reflect the opinions of YC, and thus forcing YC to accept this post doesn't restrict anyone's freedom of speech.
This is like saying if you don't like the debate happening in your city hall or town square, go to the small gathering in the woods to have your conversations.. where no one will hear you, and what you say will have no impact.
I know this the analogy is flawed because there is no "public space" on the Internet.. The places we have chosen to hold our public discourse online are all privately owned..
It's a challenging problem and "go somewhere else" is not a viable solution because it marginalizes and suppresses unpopular opinions or minority groups..
It should always be something that's a better true absolute measure, for example market penetration.
She is inferring that Google/Amazon/Facebook are committing anti-trust crimes? What proof does she have?
>Companies would be barred from transferring or sharing users’ data with third parties.
That can be done without breaking them up. I don't think she realizes that splitting up amazon and amazon basics will do little to nothing.
There are other things that can be done. You could require freedom of speech apply to industry leaders for example. However I suspect the democrats would never propose that because it would be bad for them.
What does this mean? Mark Zuckerberg, Jack Dorsey, Jeff Bezos, et al already have their constitutionally protected speech, except for where their roles as executives at public companies restrict them. If they find those restrictions onerous they can leave their roles.
The government however could come in and simply make it that you have freedom of speech on social media. So if Twitter bans someone for saying "a man cannot be a woman" that person can sue them.
The democrats will NOT do this however, the current censorship on social media is benefiting the left-wing.
Do you believe the US government has the ability to simply prohibit speech by corporate entities? Is it in accordance with free speech principles for a federal government to prohibit certain types of speech?
Personally I see this as something that will come eventually. However, I don't think that's what Twitter should do.
My idea is that twitter should act more like the united nations. You create a 'diplomatic immunity' type of account that people can request. It can be something like:
Minimum 50,000 followers.
Account history of 1 year.
If approved you can no longer edit or delete your posts; but you also cant be kicked off twitter or other be harmed by rules of twitter.
this by itself will solve the problem that twitter has.
Amazon is not a Standard Oil by any measure as they have ample competition when it comes to online sales. Facebook is still an opt in environment. If you don't want to join facebook you don't have to and no retailer is dumb enough (well that might not be true but I haven't found one) to require you to be a facebook member to purchase products or services. Google is, well google. I don't have to use their search engine if I don't want to.
they're taking all this money from venture capitalists funding startups running on AWS, and pumping it into their retail operation so that the working class can have cheaper goods.
and everyone involved in the process consents to it, even!
When threads like this come up I always wonder how the engineers who worked on Bing must feel. I'd feel pretty disheartened if people had such a low opinion of my product that my competitor was considered a monopoly.
I don't have a problem with the dominance of their search engine. I have problems with them using their search engine and other platforms to prompt you to use Chrome, or how they use their quasi-monopoly on Android app marketplaces to force manufacturers to preload just about every Google App in existance on Android phones. Then there's various Google services (some of them near monopolies) performing much worse on anything but Chrome.
If Google would be just search I wouldn't have anything against them, but they are notorious for using the market position of one of their products to push another.
So does every department and grocery store in the US, and they have for decades, but nobody seems terribly bothered by Great Value at Walmart, or the the notorious contract negotiations with Walmart that put suppliers at a huge disadvantage, because if you want to be a national brand you need to be in Walmart.
But it's much better to talk about fantasy monopolies because they make nice sound bites.
I think amazon : amazon basics is a great example of antitrust/unfair monopoly the same as google search : almost all consumer facing google products.
Both amazon and google search are the dominate online market leaders in their respective categories. In amazons case they unfairly use their market position to begin offering amazon private label products on their platform. They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI. In the case of google they too unfairly use their position as a market leader against their own customers (advertisers), so say you are a hotel booking platform and spend $x with google, google knows the market (searches, clicks, etc...) so google launches their own hotel booking, gives their in-house service priority in search results over existing market incumbents and self bids on google search advertising for key industry terms to drive up costs of advertisers to keep in business.
It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved. It’s unfairly using your market position, not to compete, but to be anti competitive to the detriment of consumers.
I’d like to see the tech giants prevented from unfairly using their market dominance to stifle competition. As we saw with the break up of standard oil...competition is good for consumers.
Any grocery store can do the same thing amazon is doing, use data about sales to push clones and store brands of popular products. What percent of products at Target are store brand now? Target is like an Ikea with 3rd party products sprinkled in it, which is what Amazon wants to become.
Does amazon have a retail monopoly? absolutely not. An online retail monopoly? still no. An online book selling monopoly? okay, now we're getting closer but still not a monopoly. A kindle books monopoly? yeah, by definition.
1) How is that different than a department store? If you go into housewares at Macy's you'll see their own branded stuff along with other brands. So at issue is not the practice itself, but rather that the digital marketplace makes it easier and more efficient.
2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
It's 100% the exact same thing. Go to Walmart and see thousands of "Great Value" products and you'll get the exact same thing. Warren is off her rocker on this one. We have real tech monopolies in the Cable/ISP industry but we're talking about Amazon and Facebook.
If 90% of retail stores were Walmart because they owned a significant percentage of real-estate in key markets (thus, preventing other retailers from moving in), then their Great Value offerings would also be anti-competitive.
Amazon's behavior is a textbook anti-competition. They literally build copies of products offered by other merchants on their site, then rank them higher in search results, often times, driving the merchants out of business.
That's just incorrect. There's nothing wrong with controlling 100% of the market share, as long as you don't use your position to illegally prevent competition.
> Amazon's behavior is a textbook anti-competition.
That completely counters the point you just made. Amazon accounts for maybe 5% of retail sales, and Walmart is closer to 15%. Even in the eCommerce market their share is around 50%. Vastly lower than the 90% you threw out there.
> They literally build copies of products offered by other merchants on their site
Every retail company does this through suppliers. It's called "white label" and it's an industry standard. And Amazon does not build them, they license another companies product.
> then rank them higher in search results,
Citation needed.
> often times, driving the merchants out of business.
Again, citation needed. Particularly the "often times".
Which is why I said, literally, "their behavior crosses into anti-competitive." You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
> Even in the eCommerce market their share is around 50%.
50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
> Citation needed.
https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot...
http://fortune.com/2016/04/20/amazon-copies-merchants/
> And Amazon does not build them, they license another companies product.
Those companies are accusing amazon of literally copying their unique products. We're not talking about buying batteries or something from a supplier. Amazon is literally copying existing products that do well.
Here's an ex-employee discussing the topic:
> Amazon sees your product is doing very well, they have the retained performance data, and Amazon copies to their best of their ability as a “generic version.” Through subtle advertising, and imitations of the successful attributes of your product, their product cuts straight to the top ranked in your categories.
https://www.skubana.com/the-best-kept-secrets-of-amazons-ama...
Yes, and I'm saying that it isn't true. Merely owning majority market share doesn't make a company anti-competitive. Anti-competitive behavior does. And while it takes the latter following the former to work, it certainly isn't guaranteed.
> You can compete with vendors, or you can control most of the market. But you can't do both: control the market, then use that advantage to drive competition out of business.
They absolutely can drive competition out of business as long as they aren't using their position to do so illegally. Gmail shut down a lot of email providers, not through anti-competitive behavior but through providing a more compelling product. Amazon has yet to successfully drive any supplier out of business. There's an argument that they broke Toys R Us, but that wasn't anti-competitive, that was through introducing toys that weren't severely overpriced. Walmart assisted with that.
> 50% is a staggeringly high market share. For reference, Toyota has less than 10% market share.
Toyota is in a nearly 100 year old industry which has multiple multi-national companies competing. iRobot has a 62% market share but nobody is looking to take down big vacuum.
50% market share of a sub-market within a major market is a weak argument. While they have 50% of online market share, they have something like 9% of actual retail sales, which is considerably less than Walmart.
> https://www.bloomberg.com/news/articles/2016-04-20/got-a-hot....
> http://fortune.com/2016/04/20/amazon-copies-merchants/
Your argument was that Amazon ranks them higher in search results. Both of these articles are discussing Amazon using white-label suppliers to build competing products. That's not the same thing. Every major retailer has been building white-label and private-label products for decades.
> Those companies are accusing amazon of literally copying their unique products.
You'll notice what they aren't doing is suing Amazon for patent-infringement. The very article you posted shows that while Amazon makes competing products, they don't violate patents.
> Amazon is literally copying existing products that do well.
No they are making competing products. That's not copying, that's called "competition".
> their product cuts straight to the top ranked in your categories.
That should have been a very clear indicator for you, but you kind of missed the point. Amazon doesn't rank their products higher. The ranking algorithm is generic, and largely tied to top selling items in a category. When you see two products that are very similar, and one is half the cost of the other, you buy the cheaper market.
It seems, to me at least, your issue isn't Amazon. Your issue is the consumer market doing exactly what it's always done.
A. Amazon controls almost 50% of market-share.
B. Amazon uses their platform data to determine which products vendors sell are high-margin, then replicates those products and sells them at a lower cost.
C. Amazon-branded products appear higher in search results, which eventually drive the original vendors out of business. Whether this is explicit, or happens by virtue of intimate understanding of Amazon's algorithms is irrelevant.
Individually, A, B, and C are not anti-competitive, but Amazon is doing A and B and C at the same time, which crosses into anti-competitive behavior. Technically, B & C together are enough to warrant anti-trust investigations.
The difference would be Amazon's [alleged] monopoly power.
> 2) The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup. The play is not to undercut all the power strip sellers (to take an example) and once they are out of business, jack up the price. The play is to take the margin due to marketing and brand equity from the sellers and split it between the consumer and Jeff Bezos, so rather than being harmed, the consumer benefits from this.
That seems like a very charitable way of describing the situation, and even if accurate may only remain true in the short term. Whether undercutting branded sellers is the goal or not, that's exactly what's happening--even as you charitably describe it. What happens ten years down the road when those brands are gone due to Amazon's allegedly benevolent undercutting?
I'm not sure about the ultimate merits here (in fact, I'm a bit skeptical of the claim that Amazon has all of the market power that some say it does). But I think you may be dismissing this all a bit too quickly.
It doesn't matter. The power strips are still being manufactured at the same factory in China.
As I said before, I'm not convinced that all of these things will actually happen. But the answer can't be as simple as "who cares...Amazon is just cutting out the middle man."
I don't see Amazon as being particularly more of a monopoly than Walmart. If Amazon was a traditional brick and mortar business, would we even be having this conversation?
A big chain consumes the market and puts others our of businesses and it is just how things are. A new internet company goes from niche to cannot be ignored and it is scary change despite the impact being essentially the same.
Combine that with openly envious old media and their selective condemnation. I honestly suspect the real reason is that tech companies don't buy enough TV ads for their liking given the softball treatment of ones that do frequently like cable.
Tesco infamously had 24 ways of extracting extra money from suppliers via back margin. The front margin is the traditional agreed buying price.
I think it is different. When a department store buys a third-party product, it pays for it and the Store bears the risk of the item not selling. If Macy's decides to make their own brand, they did so by transferring risk from manufacturer to themselves in the beginning; if a product didn't sell enough, they had stake in it. There are some successes (store-brands) and some failures (brands they bought, never worked)
In the Amazon Basics case, AMZN doesn't own inventory for the product at all. All the risk is to be borne by the 3rd party manufacturer. When Amazon looks at its data and sees a product succeeding, it creates a Basics product with no risk - it knows this thing sells. There is no way Amazon can 'fail' per se.
This essentially is the difference. Any manufacturer is likely scared of success on the Amazon Marketplace. If too successful, it can be Amazon-Basic'ed.
> The consumer (along with Amazon) is a beneficiary here. The losers are brands trying to sell commodity items at a markup.
I think in the short-term for that product - yes, the consumer finds a cheaper product, but Amazon will always have an economies-of-scale advantage.
However, long-term, I think innovators will not know if making a highly successful product (which is always difficult to sell cheap because scale isn't achieved) is worth it.
I found this episode from Planet Money pretty informative: https://www.npr.org/sections/money/2019/02/22/697170790/anti...
If Macy's sells a third party product (say, a piece of cookware) and sees it doing well, then makes and sells a copy of it they don't seem to have taken more risk than Amazon.
It also feels pretty similar to what fashion designers have accused department stores of doing for decades: letting them take the risk, then "following fast" (or stealing designs, depending on your perspective) when something turns out to be popular.
kind of, but not really at all. Google and Amazon aren't preventing anybody else from using their services - getting other people to use their services is kind of their whole business model. If you want to compare Google or Amazon to transporting oil on railroads, it'd be like if the company that owned nearly all the railroads owned a couple of oil wells (but not all of them) and still transported everybody else's oil for a fair price.
Store brands have been around *forever."
> They know what users are looking for, spend the most on, and they can give their own products dominate positions in the UI.
If you own a grocery store, you have every right to place the store brand products wherever you think they will sell best. You could (gasp) not sell any name brands at all! And if your grocery store becomes successful, you're allowed to sell advertising inside it however you want.
> It’s kind of like standard oil buying up the railroads so they owned the supply chain and no other oil could be moved.
Railroads are to some extent natural monopolies, and they have a massive barrier to entry. E-commerce websites do not. Many businesses of all sizes still sell products directly from their website and do fine. Now if Amazon bought UPS and FedEx and refused to ship any other packages, that would be different. But all they're doing is running their "department store" the way they want to. If consumers want a competitor, they're free to start one with next to no initial cost.
It would help if the competition in hotel booking, Expedia, Orbitz, ETC weren't all literally owned by a single fucking company now. The sites are entirely rigged against the user.
The point of anti-trust laws is to break up monopolies because they represent a massive and dangerous concentration of market and political power in the hands of the few. You don't need evidence of any specific crime to do it.
You can say you'd prefer it not be that way. But it's a provision of existing law, with precedents. To really argue for your preference you'd need to show how those applications didn't turn out well.
Snapchat, twitter, pinterest, reddit, youtube, hangouts/gmessenger, linkedin, skype/groupme, imessage, discord, kik, line, telegram, signal. Especially justifying Instagram, because facebook really made it what it is. WhatsApp MAYBE, but in reality what facebook is doing is owning both the US and INTL messengers, I dont think they overlap in a way that justifies splitting it up, because FB's US marketshare doesnt drastically increase from WA. Is it the justice departments job from to allow the most popular domestic product from merging with the most popular international product? Uber being able to swallow up or own shares in all these regional services should be questioned then. FB/WA still have viable competition from imessage, snapchat, and skype.
Not actually true. To break up an existing company, you need to be taken to court by the United States under the one of the anti-trust acts, and prove a violation of the law.
To be clear the FTC can prevent mergers with no evidence of wrongdoing, based solely on market share, but breaking up an existing company is a rarely used remedy in antitrust cases.
It doesn't have to be illegal to undermine competition. Luxottica owns a vertical of 80% of the brands, the factories, the retail stores, AND the largest insurance company concerning eyeglasses in America. It isn't illegal, but the rents they are extracting from our society by keeping prices artificially high sure as hell SHOULD be.
[1] https://medium.com/@teamwarren/heres-how-we-can-break-up-big...
Amazon is approaching 50% market share. They are close to becoming the place for online commerce. So when they compete with vendors by offering similar products, the vendors are effectively put out of business.
Just like with MS and IE. The issue wasn't so much that MS offered IE with Windows so much as the fact that 95% of computers came with Windows, so bundling IE was putting other software providers out of business.
This is one reason I use Google. I can view all Google review w/out downloading an app. I'd classify Yelp reviews in browser search as nothing more than an ad.
So if that's the line you draw, it extends further than just tech giants.
Pop sockets got in a fight recently with Amazon, because they wanted to stay FBA in order to have better control of selection and pricing, but Amazon was trying to force them into a more traditional vendor role.
And what happened with PopSockets didn't quite work that way. They were already a vendor on Amazon, and they wanted to remove themselves as a direct vendor and designate a single reseller as their "approved" FBA on Amazon.
So they wanted to change the terms of the agreement, Amazon said no, and that was that.
Batteries, clothes (lots of clothes), backpacks, these are all products that are cheap to produce and where brand loyalty plays a large role. People generally trust the name Amazon. It's not rocket science to realize people want cheap clothes and batteries.
https://www.amazon.com/b?ie=UTF8&node=17602470011
https://www.recode.net/2018/4/7/17208804/amazon-private-labe...
Though many of them choose brand that are not as obviously connected with the house. Like half the stuff at Walmart is actually a house brand.
So there's a reason to believe that you cannot have corporations serve the public interest without either breaking them up to limit their power or fundamentally redefining what it means to be a corporation, but you can have government serve the public interest while remaining big and powerful. If the federal government followed the views of the American public to the detriment of career politicians, we'd say, "Great, you're actually doing your job." If Amazon followed the views of the American public to the detriment of career managers, we'd be very confused.
(That said, breaking up the government sounds like a fine plan too, I just don't think it needs to be first)
So I'm a lot more worried about Amazon than the IRS - I feel the IRS is in fact accountable to me in a way which Amazon isn't.
Whatever that means.
These companies have more revenue and cash on hand than many countries. Looking at the Bay Area, Google and Facebook are taking the lead on repairing and improving infrastructure because the government can't do it alone anymore.
If the goal of antitrust action is to keep the free market competitive, I think a better way to achieve this than enforcing a breakup of big companies is by legally requiring standards for open protocols that allow for competitors to interface with each other and compete on their service quality rather than their network size.
How this would be done is a hard question without an easy answer. But breaking apart Facebook from Whatsapp isn't going to make it any easier for a new social network or a new messaging app to break into the space. Typically new social products can only enter a saturated market by targeting a niche and then expanding (e.g. Signal on a privacy/security focus or Discord on a gaming focus). Enforcing some level of open protocol makes it possible to try a new product without customers giving up because "oh but my friends aren't on here"
edit: To the people down voting me, I am sorry that you cannot LeetCode.
Watching the fanboys defend their favorite tech giant is incredible. These companies are not behaving in the markets or people's best interest and they are way too big, at a scale that dwarfs most of the worlds organizations.
In the past we've taken a harder stance on giants like this and as a matter of precedence we can do it again.
If a person doesn't break any pre-existing laws, then they must not suffer any legal consequences, sure. And nobody is suggesting that Page and Brin should spend a minute in court or pay a cent in fines.
But a corporation isn't a person, it's a business instrument, and if the United States were to judge that the existence of that instrument is detrimental to the greater security / stability / welfare of the nation as a whole, they would have every right to write a new law to ban usage of that instrument, i.e. ban the existence of Google in its current form, as they once wrote a new law to ban the existence of the United Aircraft and Transport Corporation.
This may be worth it for society, but it's a little too convenient to say no people will be harmed.
It's not illegal to be big, it's illegal to use your influence to prevent competition in a way that's illegal. There's zero evidence of that, which is why she's talking about a new law.
And please refrain from calling those that disagree with you "fanboys". It diminishes every single point you're attempting to make, because you sound like a jaded teenager rather than an adult that wants to have a conversation.
I never said that it was.
> Here's how to explain to people the distinction between fighting poverty and fighting economic inequality. If you're fighting poverty, you might say "Let's have universal health care." If you're fighting economic inequality, you have to say "Let's have universal health care. And Larry, please don't start Google." Otherwise Larry's going to mess up your numbers big time.
Since reading that, I've realized that a major part of my political beliefs is that future Larrys should be unable to start future Googles in their current form, and in particular that I don't believe it's a just use of the powers of government to enable the creation of future Googles.
There is a place in the world for massive technologically focused organizations.
This used to be less true in CS, but that's changing due to machine learning. Google has a huge leg-up in self-driving-car R&D because of the enormous amount of data it has from Google services. In "hard" R&D, even "startups" are spending the kind of capital that previously used to only be in the province of established conglomerates.
Google, Amazon, Facebook and Apple innovated at their own in the beginning, but once the cash from network externalities started to pour in, they stared to buy market share and buy into the markets. Google did not invent Gmail (Postini), Android Inc, YouTube, AdSense (Adscape), Google Analytics (Trendalyzer), Google Maps (Endoxon).
The alternative to what you suggest is not zero growth of wealth. It can be even larger growth of wealth when the markets work better.
The type of anti-markets and pro business approach where big corporations are shielded from the markets and monopoly powers are allowed as long as antitrust felony crimes don't happen is perversion of capitalism. The ideological foundation for this tinking was laid out in Robert Bork's book 'The Antitrust Paradox' (1978) that Reagan administration used as their bible.
I'm good at what I do and I work for a hedge fund because they'll compensate me well for it. I increase the productivity of other people at my company, without them doing anything, by giving them better platforms for their work. Chasing salary is the obvious locally rational action for me, but it's inefficient for the world. I could be making life better for the world if I could be funded to work on, say, Debian instead of our in-house build system. And I probably could be funded at about 1/20 of my current salary to do it, and provide 2x productivity benefits for you personally, but the incentives of a capitalist society mean that isn't the right decision for me.
However - you say "using the power of the state to prevent." I am not in favor of that. I am in favor of ceasing using the power of the state to enable. The government could stop recognizing the right of corporations to property and to the labor of individuals at any time.
But even still: relative wealth distribution getting too extremely unequal has negative ramifications for any society, regardless of the absolute wealth. But again: that is NOT the issue in this case.
https://www.npr.org/sections/money/2019/02/22/697170790/anti... for more perspective, a bunch of discussion about antitrust issues in big tech and NONE, ZERO, NADA of it is about wealth and money in itself.
Like what exactly?
I do not understand why people are upset over extreme wealth. I think Jeff Bezos deserves to be a billionaire and I would not want to live in a society that does not allow people like him succeed and accumulate this sort of money. The quetion is what happens with his wealth in the second and third generation. Historically in fedualism this was passed down to the next generation and the family would keep it until end of the feudalism era. In a capitalistic society it deisappears within 2-3 egenerations, especially with people like Bill Gates. Not sure what is the problem here.
Now, Jeff Bezos is absolutely a remarkable and unique person who worked very hard and intelligently to get to where he is. But on just the pure matter of "deserve" it's so much more complex than the way you are looking at it. We don't live in a fair world. Look up "just world fallacy". In a world that is quite out of alignment from what we'd have if everyone got what they "deserve", it's simplistic to look at select cases like Bezos and judge from there.
But that's not what this is about AT ALL.
The concept of anti-trust and of managing this stuff is about power. The question is whether it's okay for Bezos and the whole company really to not only be wealthy but have monopoly-like power in the market. I have no reason to believe you checked out the link I posted earlier because you went on and repeated arguments about wealth — and this is NOT about that, not philosophically or legally. It's not even about taking away Bezos' wealth! Anti-trust is not about wealth redistribution, it's only about stopping anti-competitive threats to market competition.
> In a capitalistic society it deisappears within 2-3 generations
Well, that's just factually wrong. Capitalism doesn't just automatically do that, and the evidence doesn't support that claim either. And we don't have any sort of "pure" capitalism in existence to even study anyway. You need to get beyond these superficial specious ideas if you want to understand the reality. Start by treating your presumptions as hypotheses and figure out what evidence would be scientifically strong enough to validate or invalidate them and see how they hold up.
>>> Well, that's just factually wrong.
Really?
http://money.com/money/3925308/rich-families-lose-wealth/
https://www.cheatsheet.com/entertainment/the-real-reason-bil...
> Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.
What is that? Sounds like a marketing claim by a company catering services to the wealthy about how to keep their family wealth. I can't just accept it blindly.
I agree that in the (unusual) case of Gates, he's obviously not just hoarding and passing on his wealth directly, but the upbringing and advantages his kids are getting plus $10 million leaves them still really wealthy compared to nearly anyone else on the planet regardless of the fact that it's a miniscule fraction of Gates' current wealth.
That's fucking idiocy. Or more accurately, propaganda from a billionaire with extreme vested interest in this topic.
It's pretty straightforward to say "Go ahead and start Google, and if it succeeds we're going to have some basic rules about worker's rights and compensation you'll have to follow, and we're going to tax a much larger percentage of your personal gains, but you'll still be very, very rich". At which point you're also fighting economic inequality.
There is a stark difference between socialism rooted in the above idea and socialism rooted in jealousy and vindictiveness toward the wealthy just because they're wealthy. We're not trying to punish the wealthy and we can still allow them to be very wealthy. But as the US currently stands, the wealthy could contribute much more while still having far greater quality of life than almost everyone else.
The reality is that people compete for status, success, money, and power, within the framework they are given.
I mean we've actually tried this. If you take a group of incredibly skilled business people and tax them heavily you don't get some dystopia, you get Switzerland.
And what important/useful companies, tech or otherwise, got their start in Switzerland?
BTW I agree with him in the sense that indices like Gini coefficients etc. are not comprehensive enough, and optimizing for simple numbers leads to distorted outcomes. I also agree with you in the sense that top heavy players in the economy are harmful to the extent that they seek rent and prevent competition.
Sounds like Paul Graham was saying that stopping founders is some unstated but believed goal, and is a poor one.
That some people made a few $100B on it is nothing compared to the value it's given humanity.
The only way to stop monopolies from forming is by getting rid of legislation that heavily benefits large businesses.
If you're talking about the United States of America, it is already broken apart. By design we have three distinct branches, due process, and free speech/press.
In this context, how do Elizabeth Warren’s comments mesh out?
That being said, Warren directly states something tech companies should be competing on: Privacy. An issue with direct consumer impact, that due to monopoly status, these companies have largely not set as a priority.
https://www.npr.org/templates/transcript/transcript.php?stor...
Those companies are Boeing Aircraft (153k employees, $244B market value), United Technologies (202k employees, $148B market value), and United Airlines (88k employees, $33B market value).[0]
What most people perceive as a threat to the market is when one company takes over an entire single market. And that is a problem, no doubt. But in the case of Boeing, the problem was that one company had such an advantage vertically- lose money on planes in order to make money on shipping, or vice versa, as needed. It meant it could win in whichever market it wanted to and slowly come to dominate all of those markets. The synergies of doing it all internally meant it could win at everything.
If one uses that situation as a precedent, one can start to see the parallels in many of the FAANG companies today.
[0] "The Air Mail Act of 1934 prohibited airlines and manufacturers from being under the same corporate umbrella, so the company split into three smaller companies – Boeing Airplane Company, United Airlines, and United Aircraft Corporation, the precursor to United Technologies." https://en.wikipedia.org/wiki/Boeing
[1] https://en.wikipedia.org/wiki/Air_Mail_scandal#Effects_on_th...
However as long as the companies are well regulated and publicly traded, I think the concern diminishes over time. Each manager has an incentive to look out for their own shareholders, their own bonuses. And if activist shareholders suspect one company is subsidizing another, they can happily buy the undervalued company, raise a ruckus (and maybe some lawsuits), and profit when the subsidies end.
It also doesn't help that there seems to be academic corruption or at least conflicts of interest driving the new interpretation. https://www.propublica.org/article/these-professors-make-mor...
https://i.imgur.com/rMFqmbt.jpg
https://www.motherjones.com/politics/2019/03/att-time-warner...
I'm not critical to the idea nor supportive - I'm just curious to learn more.
https://www.npr.org/sections/money/2019/02/15/695131832/anti...
Also, those guys meeting up together at Rockefeller's house to coordinate would likely be illegal today and probably was back then too.
https://medium.com/@teamwarren/heres-how-we-can-break-up-big...
By this logic Apple shouldnt be allowed to have Apps in its App store, right? Or are they banned from selling first and third party phone cases in store?
CVS shouldnt be allowed its own generic drugs.
At what point does this become "companies arent allowed to make/sell their own products if they also resell other companies products."
And lets be serious: you want to take away Google's ability to choose the ranking of results? Thats their entire company's purpose. People go to google because they like the order the results come in. If google starts delivering bad results, that opens opportunity for other companies.
This is just the first step in a new conversation about confronting monopoly in America. There hasn't been a bill written yet.
Amazon is a marketplace meaning the seller takes on all of the risk and pays Amazon for the privilege. Amazon then uses the data that marketplace generates to undercut the sellers with their private labels.
> ... legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform. Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.” These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
You’d think we would hear more about it since basically every physical retailer owns their own brands that they sell in their own marketplaces already.
Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as "platform utilities." … These companies would be prohibited from owning both the platform utility and any participants on that platform.
Thus Safeway would be exempt from the regulation because (a) they do not offer an online marketplace and (b) they do not connect third parties (but instead act as an intermediary).
Similarly, it appears that only Amazon Marketplace, not the retail arm of Amazon, would be affected by this regulation.
For instance, Apple makes hardware, software, services and they all fit together perfectly. Tesla distributes cars in addition to making them, leading to a better buying experience.
Everything Amazon does is in-line with this principle as well.
Is the end game laws similar to what we have for alcoholic beverages and cars? Where distribution and manufacturing are artificially separated?
Nations that decide to close down in certain areas, may find themselves in a competitive disadvantage to peers making use of data, economies of scale, technology, labour, etc. This is something we have seen happen in history.
The problem of Amazon is that it is effectively the only online shopping place, and thus can act as a Monopsony in hiring it's workers for warehouses, splitting AWS out of that doesn't fix that problem. Maybe you could require that distribution centers be owned by separate companies. This might work but locally each Center would still be a Monopsony and thus cause the same problem. Maybe if you capped the size of distribution center you could force lots of smaller ones to be built, but at this point I worry that you are going to end up making shipping slower and more expensive.
The problem of Google is they are very dominate in the Ads space splitting out the Ads portion into another company would not solve that. Facebook's problems is everyone has put their data in Facebook has friends in Facebook and feel compelled to keep using it. I don't see how splitting up the company into, Instagram, What's App, and Facebook solves the network effects of those apps.
Splitting up tech companies is not a punishment to make the CEO feel bad or change their ways. It is a technique to change how we need the market works to benefit the large population. As such we need to think about how to split them, the effects, and most importantly if the effect achieves the intended result.
You want to build a trillion dollar company? Fine. Corporate tax rate of 50%. You're a small business with less than $1M in revenue. Cool. Corporate tax rate of 0%.
Big companies will break up to take advantage of the tax code. Problem solved.
Instead, the bigger you are, the harder you can lobby for tax breaks. Currently, if you're a $1M company, that sucks. You pay 20%+. If you're Amazon, you pay $0.
But we could simplify the tax code... The bigger the surface area, the easier it is to find a vulnerability / loophole. And anymore, the tax code is basically being written by BigCos to protect their interests and provide breaks for themselves.
Enforcing a tax code that's 20-feet tall when printed out when companies are as complicated as they are -- it's a wonder anyone pays taxes. It would take years in court to figure out what a company honestly owes.
If it's simple -- you make x profit or y revenue -- then you pay z dollars -- for any public company, good luck grossly cheating that.
Changing tax rates don't fix either of those.
Sales/Use/VAT tax for payments to wholly owned subsidiaries.
Large companies are perceived as being proportionally beneficial to the US economy. If you made the US a place that was meaningfully undesirable for corporations, they can leave. And even if these companies did not leave, you would strongly deter new companies. For instance imagine you were able to create your system such that it could not be simply avoided through various typical methods. So big companies really did risk losing up to 50% of their net. How long would it take before e.g. YCombinator started requiring new companies to incorporate in e.g. Hong Kong (or wherever) instead of the US? Perhaps even moving the entire operation abroad.
So even though I think this would be an absolutely incredible idea, I do not think it would work or be meaningfully considered in practice.
Here's an article about 2016: https://www.bloomberg.com/graphics/tax-inversion-tracker/
US citizens can't avoid worldwide taxation, but they certainly move states to avoid taxes.
A progressive corporate tax still makes some sense, and there's basically no excuse for their taxes being less simple than a citizen's. However active management is still required. Markets are fast and efficient but they are often dumb.
In what market are they a monopoly? Seriously. Amazon retail competes with walmart and target both of which offer online sales and AWS competes heavily with Azure and Google cloud. In what way is Amazon a monopoly?
An essential point any plan like the GP's would be to make conduct like you describe illegal, and make sure those laws are adequately enforced and have enough teeth to be a deterrent.
The point is: you can give big companies whatever rate you want, but they're in the strongest position to circumvent it, and they will. The better choice is to lower taxes substantially and give the smaller companies a chance to accumulate capital faster, so they can compete.
What exactly is that intended result?
https://promarket.org/stigler-monopolies-competition-tough-w...
It was back in 2001 that I remember reading a newspaper article on this