The best remedy for these tech giants is to force the use of open standards or to allow integration with other products on their platforms and products without profit sharing (e.g. 30% take) or any other share-cropper tactics.
Their big unfair advantage comes from the network effect of consumers using their products and the closed access to those customers.
Open integration benefits everyone except those with the monopolies.
> The best remedy for these tech giants is to force the use of open standards
The best remedy for these tech giants would be to kill the ad-supported business model. The reason users get treated like second-class citizens by the tech giants is that they are second-class citizens; they aren't the customers.
Unfortunately, you can't kill ad-supported businesses with regulation. Only users can kill them, by refusing to let their eyeballs be used as a free resource.
Huh, I've always wondered why someone doesn't start a company with these open integrations. If it benefits everyone, then people will migrate to this new company, right? Instant success?
If proprietary implementations have a strong business benefit, a company with only open standards (esp if there is some promise to customers) would be unilaterally disarming.
The only way we move forward is if a) open standards have a business advantage or b) all players are forced through regulation to use open standards.
I wonder if US officials will be concerned by the prospect that breaking up these companies may potentially cede market share to tech companies in other countries, such as China. Especially if other countries don't bother breaking up their tech companies if they get too large.
I think fear of China is a common bogeyman to throw out to try to avoid tech regulation. And I don't feel it's a very compelling argument: Tech monopolies squash newer, more innovative competitors. The monopolies are holding us back. For all of the innovation you may believe tech monopolies have accomplished, it pales in comparison to what we'd accomplish without them in a competitive environment where the best technology wins, instead of the biggest monopoly.
The ability to foster rapid, zealous competition is the strength of capitalism and it's what we have over China. We need to get the established corporate entities using their market power to harm competition out of the way.
Wouldn't opening up competition to other companies be exactly the reason why such non-US competitors may be able to acquire more market share?
The only way I could see the US being able to regulate non-US competitors who grow too large is to fine them, such as what the EU does. Although that may not be enough to stop them from acquiring market dominance and may cause retaliation (such as the current trade war).
To be clear, I'm not a shill for these big tech companies. I don't currently work in any of them nor have stock in any. I'm concerned about their dominance, stifling of competition and their use of market position to render consumers powerless just as much as you may be.
This is only true in a world where the barrier to entry is low, and innovation is "cheap". There is a possibility that true innovation on the internet is becoming expensive e.g. how much does it cost to gain a 1% relevance improvement in search results? how much does it cost to take photos of every street corner twice as often as google?
If we wanted to actually compete with China we'd do what they did - grant immunity to copyright law to a Chosen Company for a given product line (chat, search, video, whatever) and leverage the legal system to block foreign competitors to Chosen Companies from functioning within China (i.e. google search, facebook).
I'm not interested in what it'll take to compete with China because we'll have to act like assholes to do it.
US companies don't have citizenship. The big Chinese companies are mostly owned by high ranking party members, but if the US government does ill against Google it'll be shipping off to <insert tax haven here> before you can blink.
Google isn't even in the top 25 of employers in the US - it's theoretically a large revenue source[1] but losing it would be nothing to the US economy when compared to losing a company like Walmart.
1. US employees at Google probably do pay some substantial income taxes - Google evades corporate taxes much like other corporations, but seems to be a bit less ridiculous in its effort than, say, Amazon.
Focusing just on the companies with the most employees would mean the U.S. would become a retail nation, since that's the industry with the most head count. It isn't the best metric to measure by, since companies can also redistribute their revenue locally through capex, investments, services, and other costs.
There's no reason for US goverment to enforce how countries behave in other countries. US goverment can protect US against Chinese threats, and other governemtns can protect their countries against US or Chinese threats.
My question is what comes after? Look at AT&T, which was once part of the aftermath of Bell. It now owns so much of the telecom market, that it's only challengers own pretty much all major network stations and entertainment companies. And Verizon is no slouch either.
They can split these companies up but eventually some piece/s will gobble up the rest through dark mergers and aggressive business dealings and become bigger than their predecessor.
Agreed. We can't just break apart Google and call it a day.
There are plenty of gigantic corporations who are probably looking forward to eventually acquiring parts of Google. I wouldn't put it past Verizon, who has not only partnered with Google but also fought for telecom control against them. Don't we also need to break these companies up as well? Or do they have too much influence in the government? Ajit Pai, for example, famously worked for Verizon before government.
I'm not trying to protect Google. But I just think that the government needs to find a way to enforce these breakups more evenly or else it just leads to further consolidation, as you pointed out.
>Ajit Pai, for example, famously worked for Verizon before government.
Pai worked at Verizon for two years between 2001 and 2003. He was appointed as FCC member in 2012. How much loyalty do you have to a job you held for two years, nine years ago?
The regulators need to do a better job preventing M&A of large companies. These companies all just wait for favorable climate before merging again.
I think we need a better solution than breaking up monopolies. Perhaps something like caps on profit margins and/or asset taxes that apply to companies which carry too much market share.
The better solution is to break off the specifically non-contestable part of the firm (where the non-contestability is often due to network effects or barriers to entry) and regulate it so it has to be run as a fair and open platform. Sometimes this can be done as simply as requiring the firm to use applicable open standards to enable third parties to cleanly federate with its offerings - but the case of a leading search engine and general portal is not nearly as simple, unfortunately.
They will probably make cuts along market segments, along horizontal integrations, along prior M&A; they will probably also, as in the Bell case, cut geographically.
The main obvious cuts for Google and Amazon are to fully split up the technical infrastructure and Web hosting technologies from the consumer marketplaces. For Google, they would force Alphabet to spin off Google Cloud along with Google's own datacenters into a new datacenter host, and force Google/Alphabet to purchase hosting services at arms' length. Similarly, Amazon would be forced to be fully at arms' length with AWS.
As an aside, Facebook could not be directly split up in this direction, but instead regulators would probably choose to unwind their M&A spree of the past decade, in particular spinning off Instagram and WhatsApp.
Your question now can be reframed: What stops Alphabet from becoming big anyway? Nothing, really, aside from the same regulators that have the responsibility of splitting them up right now. Nothing short of legislative action will work, after a certain point.
They probably won't make cuts at all. Assuming they can even get a conviction, what's more likely is a consent degree like what they did in the Microsoft settlement. Either way, it'll be a decade or two before we find out.
Is there research into what systemic mechanisms we can employ that would prevent formation of monopolies in the first place? Relying on corruptible human judgment and the laughable political process to apply fixes ex post facto seems like the worst possible way to address these problems. Surely there’s something more fundamental going on here?
Monopolies are a primary goal of corporate capitalism. When you combine that with the reality of regulatory capture, the answer to your first question becomes "no."
> you may want to argue why AT&T is any different than Amtrak, The Postal Service, and the TSA
It isn't. But that's not an argument for nationalizing AT&T; it's an argument for privatizing the others. In fact, two out of three of them already have private competitors in the US; the only one that doesn't is Amtrak.
I don't think you made it clear in your unedited comment that you were talking about AT&T and not Google. I certainly wouldn't want Google to be nationalized.
Very savage to “leak” this when Alphabet’s earnings are released. Probably a predictor of a bad outcome for Google. Or, everyone in this administration is an inside trader.
Outside of Chrome being the default browser on Android, I don't see what antitrust Google could be hit with. Their market dominance in almost all of their sectors seems to only exist due to either it easily integrating into other Google products or their product being better than the rest, and nearly every time there are other comparable players you can easily migrate to.
There are other ways Google "leverages" its market share that are questionable. Look at the recent controversy about making all search results look like ads. They are also making it harder for ad blockers to exist in Chrome with every release. Favoring sites that implement AMP, removing urls...
I think our industry as a whole would benefit from Google being broken up.
If AMP favoritism isn't an Antitrust violation I don't know what is.
It'd be like if Microsoft rigged Windows to run .NET applications twice as fast as anything else, and made it very difficult to open any other type of application... where second-class applications are unavailable from being found in desktop search, can't have custom icons or be in Program Files.
I don't hate Google (I don't love them either) but they clearly have too much power in Online Advertising.
If you are a publisher and a big one, you have to use Google Ads Manager (formerly known as DFP) because it's the only way to have full access to Google AdExchange which allows you to have access to demand coming from Google Ads (ex Adwords).
And because they had dominant market share in all these markets, they could get to be the first in line whenever there's was a request for ad on the exchanges. This has changed recently but put simply, you can't escape the Borg if you are in this industry.
I've harbored a counterargument for a while against breaking up Google or Facebook:
Both of these are effectively surveillance capitalist companies. Their primary business is spying on people and using that data to target them for ads and other forms of manipulation.
When big bloated "Soviet bureau" corporations are broken apart the result is generally an explosion of innovation and growth in a sector.
Do we really want an explosion of innovation and growth in that sector? Maybe it would be a good thing if the surveillance capitalist behemoths are allowed to continue to get stagnant and bloated. If and when an alternative paradigm for sustainable business on the Internet emerges it would make them easier to displace.
Breaking up these companies would also vastly increase the surface area exposed via surveillance. Instead of two or three companies spying on us we'd suddenly have dozens of former divisions of these companies.
Edit: lastly I must echo others in their lack of trust for this justice department. I think this is likely to be a political cudgel deployed to force these companies to stop filtering out or de-prioritizing extreme far right propaganda.
The best divide is actually far less aggressive: Platforms should be split from services. Android and Chrome are IMHO the primary things Google should be forced to divest.
I am not sure you could (or even should) split Search and Ads, but there may need to be some significant rules laid down on Google's ability to tie their other products and services to search. Strict rules should be laid down on allowing ads to sell placement above trademark holders for their own trademark, as that kind of shakedown is insane.
The best move would be to revert the Doubleclick acquisition and spin out the AdTech part as its own separate entity.
But also make Google Search an open auction system (like it sort of is on Display) where other players can integrate with and Google (search) takes a fixed % for each click.
Pipe dream I suppose but best way to avoid Google from being able to be truly dominant.
Bidding on trademarks has nothing to do with antitrust. If I can place a billboard for BMW next to a Lexus dealership, there is no reason I should not be able to show a BMW ad to somebody searching for Lexus or visiting a Lexus blog.
Many of these products already carry ads or would be a convenient place to put ads, even if they'd have to be bought for each product individually. Also the Pixel stuff is very pricy for hardware that isn't top of the line.
Readit News
Their big unfair advantage comes from the network effect of consumers using their products and the closed access to those customers.
Open integration benefits everyone except those with the monopolies.
The best remedy for these tech giants would be to kill the ad-supported business model. The reason users get treated like second-class citizens by the tech giants is that they are second-class citizens; they aren't the customers.
Unfortunately, you can't kill ad-supported businesses with regulation. Only users can kill them, by refusing to let their eyeballs be used as a free resource.
The only way we move forward is if a) open standards have a business advantage or b) all players are forced through regulation to use open standards.
https://en.wikipedia.org/wiki/Reasonable_and_non-discriminat...
(My initial thought was "more ads?")
The ability to foster rapid, zealous competition is the strength of capitalism and it's what we have over China. We need to get the established corporate entities using their market power to harm competition out of the way.
The only way I could see the US being able to regulate non-US competitors who grow too large is to fine them, such as what the EU does. Although that may not be enough to stop them from acquiring market dominance and may cause retaliation (such as the current trade war).
To be clear, I'm not a shill for these big tech companies. I don't currently work in any of them nor have stock in any. I'm concerned about their dominance, stifling of competition and their use of market position to render consumers powerless just as much as you may be.
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I'm not interested in what it'll take to compete with China because we'll have to act like assholes to do it.
Dead Comment
Google isn't even in the top 25 of employers in the US - it's theoretically a large revenue source[1] but losing it would be nothing to the US economy when compared to losing a company like Walmart.
1. US employees at Google probably do pay some substantial income taxes - Google evades corporate taxes much like other corporations, but seems to be a bit less ridiculous in its effort than, say, Amazon.
They can split these companies up but eventually some piece/s will gobble up the rest through dark mergers and aggressive business dealings and become bigger than their predecessor.
There are plenty of gigantic corporations who are probably looking forward to eventually acquiring parts of Google. I wouldn't put it past Verizon, who has not only partnered with Google but also fought for telecom control against them. Don't we also need to break these companies up as well? Or do they have too much influence in the government? Ajit Pai, for example, famously worked for Verizon before government.
I'm not trying to protect Google. But I just think that the government needs to find a way to enforce these breakups more evenly or else it just leads to further consolidation, as you pointed out.
Pai worked at Verizon for two years between 2001 and 2003. He was appointed as FCC member in 2012. How much loyalty do you have to a job you held for two years, nine years ago?
I think we need a better solution than breaking up monopolies. Perhaps something like caps on profit margins and/or asset taxes that apply to companies which carry too much market share.
The main obvious cuts for Google and Amazon are to fully split up the technical infrastructure and Web hosting technologies from the consumer marketplaces. For Google, they would force Alphabet to spin off Google Cloud along with Google's own datacenters into a new datacenter host, and force Google/Alphabet to purchase hosting services at arms' length. Similarly, Amazon would be forced to be fully at arms' length with AWS.
As an aside, Facebook could not be directly split up in this direction, but instead regulators would probably choose to unwind their M&A spree of the past decade, in particular spinning off Instagram and WhatsApp.
Your question now can be reframed: What stops Alphabet from becoming big anyway? Nothing, really, aside from the same regulators that have the responsibility of splitting them up right now. Nothing short of legislative action will work, after a certain point.
Edit: instead of downvoting me, you may want to argue why AT&T is any different than Amtrak, The Postal Service, and the TSA.
It isn't. But that's not an argument for nationalizing AT&T; it's an argument for privatizing the others. In fact, two out of three of them already have private competitors in the US; the only one that doesn't is Amtrak.
I think our industry as a whole would benefit from Google being broken up.
It'd be like if Microsoft rigged Windows to run .NET applications twice as fast as anything else, and made it very difficult to open any other type of application... where second-class applications are unavailable from being found in desktop search, can't have custom icons or be in Program Files.
If you are a publisher and a big one, you have to use Google Ads Manager (formerly known as DFP) because it's the only way to have full access to Google AdExchange which allows you to have access to demand coming from Google Ads (ex Adwords).
And because they had dominant market share in all these markets, they could get to be the first in line whenever there's was a request for ad on the exchanges. This has changed recently but put simply, you can't escape the Borg if you are in this industry.
See https://www.wsj.com/articles/how-google-edged-out-rivals-and...
Dead Comment
Both of these are effectively surveillance capitalist companies. Their primary business is spying on people and using that data to target them for ads and other forms of manipulation.
When big bloated "Soviet bureau" corporations are broken apart the result is generally an explosion of innovation and growth in a sector.
Do we really want an explosion of innovation and growth in that sector? Maybe it would be a good thing if the surveillance capitalist behemoths are allowed to continue to get stagnant and bloated. If and when an alternative paradigm for sustainable business on the Internet emerges it would make them easier to displace.
Breaking up these companies would also vastly increase the surface area exposed via surveillance. Instead of two or three companies spying on us we'd suddenly have dozens of former divisions of these companies.
Edit: lastly I must echo others in their lack of trust for this justice department. I think this is likely to be a political cudgel deployed to force these companies to stop filtering out or de-prioritizing extreme far right propaganda.
I am not sure you could (or even should) split Search and Ads, but there may need to be some significant rules laid down on Google's ability to tie their other products and services to search. Strict rules should be laid down on allowing ads to sell placement above trademark holders for their own trademark, as that kind of shakedown is insane.
But also make Google Search an open auction system (like it sort of is on Display) where other players can integrate with and Google (search) takes a fixed % for each click. Pipe dream I suppose but best way to avoid Google from being able to be truly dominant.
Deleted Comment