Trust busting can seem like it’s anti free market, but when a company has a monopoly on a network it stops functioning as a company and basically becomes a government. The problem with Facebook/Amazon/Google is that they have a monopoly on a specific information network, for Facebook the social graph, internet discoverability for Google, and online shopping for Amazon. It’s similar to if a single company owned the road systems or the internet, since the structure of these networks means that competitors can’t exist, there can only be one network for it to have value, so the first company to build it will have a monopoly and be able to indefinitely milk it for a profit.
The same thing happened with railroad barons in the 1800s and also in other areas of the economy, and the trust busting response the government took seems to have worked well to bring back a fair market. Government should keep the information networks predictable and accessible.
I know this is the inevitable and cliche pushback, but it never seems to be grappled with so it remains worth pointing out: none of the three things you mentioned are anywhere close to monopolies. There are lots of social networks (Twitter and TikTok are extremely successful, among others), lots of ways to search the internet, and lots of ways to shop online. The analogy with the railroads simply is not apt, their monopoly was so powerful because there was often no other way to get from point A to point B, so they had complete leverage. This is not the case for any of these companies you listed, there is a lot of competition in all these markets.
But I also think there are major issues with the current configuration of the tech industry! They just aren't because of monopolies. It is not helpful to misdiagnose a real problem. It is not helpful to have only a hammer and call every problem a nail.
I think we need to be clearer by what "product" means when it comes to monopolies in the Information Age.
In the Industrial Age, you had a monopoly on paperclips if the only way to buy a paperclips was through your company. But paperclips themselves are commodity-like: there are billions of them out there and each is more or less interchangeable with the others.
Information products are not like paperclips. Each piece of information is by definition unique, and its value to the consumer is predicated on that uniqueness. When you buy a picture frame from a store, the first thing you do is throw out the little paper photo that's in it and replace it with yours. Why? The previous image was a picture of a smiling family. Isn't your goal with the product to have a framed photo of a smiling family? Why not just save yourself the trouble and keep the paper?
Well, it turns out that the fact that you want a smiling photo of your family is highly salient.
Sure, there are lots of social networks. If I want to find an app that has humans on it that I can connect with, there is definitely no monopoly. But if I want to find an app that lets me connect with my actual friends, then my choices are limited to exactly the social networks they actually use. If I want an app that doesn't just let me receive event invitations, but let's me receive the actual invitations my real friends send, I sure as hell better be on that one particular app. That app has an iron-clad complete monopoly on those events.
Almost every media or information company has thousands of micro-monopolies on various unique pieces of data. Our simple notion of trusts does not accommodate that concept. We need to update our thinking to the 21st century.
The question posed by the monopolies is not "are these the only options". But do these wield too much market power to be controlled by the market. That is, sure, Bing and DDG make up 5% of the global search, but is that enough. Yes, people use Twitter and TikTok, but does that replace the social graph of FB? Yes, I can buy directly online from many places, but if people are going to Amazon instead of Google to search for prices does it matter?
So, my question to you, if every non-Google search engine published their formula for rankings, and SEO for going up all their rankings was mutually exclusive with going up in Google's rankings, do you believe any site would implement them?
I doubt anyone would trade higher status on every other engine for lower status on Google. And in that case, they may as well be a monopoly.
You're right on the technicals, but the GP is right in spirit.
It seems like society needs a term for the concept of a company accumulating far too much power, and that we need laws similar to anti-trust laws, that apply to these companies. This is an incredibly difficult problem to address specifically because FB is not a classic monopoly. I'm not even sure what it would mean to "break them up".
Amazon, MS, Apple, and Google are all far easier to split up. Each company has logical seams to split at (i.e., aws/retail, gcp/search/android, itunes/devices, etc). You could split FB and insta, but that doesn't really curb FB's power and influence at all.
The monopoly is not on the consumer side, it is on the advertising side. Google and Facebook are the only companies that have access to data on basically every sale on the internet (almost every site that uses their ad tools reports back their sales). This data gives them a defensible duopoly on digital advertising.
This right here. I own an e-commerce business, and I sell on Amazon, but I do about 10x the revenue on my own site that I do on Amazon.
I'm in no way unique in this regard - for all of the talk of how much Amazon dominates e-commerce, the reality is that it's never been easier to successfully run your own e-commerce site (just look at Shopify's market cap).
Sure, if you're selling totally commoditized goods that's a different story, but even there you've got substantial enough web presences from retailers like Walmart and Target that Amazon still can't reasonably be called a monopoly.
> The analogy with the railroads simply is not apt, their monopoly was so powerful because there was often no other way to get from point A to point B, so they had complete leverage.
I still believe the analogy holds, just substitute geographical points A and B with person A and person B (or business A to potential client B), and the similarities are obviously clear. There is often no other way to get from person A to person B than to use Facebook, or from person C to D without Twitter, ... . Yes, there are various social networks, but there was also various railway barons. Just like the railway was not a single nationwide monopoly, but instead a series of smaller regional monopolies, a single social network is not an all encompassing internet-wide monopoly, but instead a monopoly lording over a subgroup.
The obvious problem with considering social network platforms as interchangeable competitors is that they... aren't interchangeable at all. A user can't pack up and go to a different platform because their actual social network (i.e., relationships between humans) is only accessible on one platform.
For example, my colleagues are on Twitter but not Mastodon. I can't leave Twitter without leaving my social network. Why does Twitter own access to my colleagues? Why should we allow that to be a competitive advantage? It's certainly at-odds with the principle of innovation--you're not on a platform because it's more innovative than another platform, you're on it because they have a monopoly on your social network.
Contrary to your claim, there's very little competition in these markets because corporate ownership of user social networks is an enormous moat. Not only can users not easily move to another platform, but advertisers can't easily spend their money on some new platform because the new platform is much smaller in all likelihood.
But I also think there are major issues with the current configuration of the tech industry! They just aren't because of monopolies. It is not helpful to misdiagnose a real problem. It is not helpful to have only a hammer and call every problem a nail.
Yeah, the situation involves a contradictory litany of complaints. Google/Facebook/etc are terrible because they suppress free speech and terrible because they allow it. They're terrible because monopolize online advertising and terrible because they facilitate it.
The purpose of breaking up a monopoly is to allow competition to facilitate the provisioning of whatever good a monopoly provides. Lots of people imagine breaking up or regulating Facebook will prevent the variety of abuses that we see. But if you look at the "competitive Internet", you can observe a sea of garbage in the form of endless popups, malware and eCommerce fraud. Things seem little more thought-out than "I want this to stop", which is hardly a recipe for constructive change.
> none of the three things you mentioned are anywhere close to monopolies.
I think it depends on what you consider "the market" to be.
If I want to compare Amazon to the "Global Retail Market" (Amazon's preferred framing), then maybe they aren't in a monopolistic position.
But I—as ab individual—don't participate in the Global Retail Market. I participate in the "online US retail" and "Pacific Northwest retail" market. So I don't get much benefit out of there being more competition to Amazon in France, so the "Global Retail Market" doesn't seem like it's always the right framing. For me, it's still the case that Amazon doesn't feel like a monopoly, but I could imagine areas where Amazon is much closer to being one of just a small number of options for many products.
Similarly, I'm sure Facebook wants to be evaluated against _all_ communication media, but again I want to communicate with people in my immediate network. If 100% of my social network and business contacts used exclusively Facebook for communication, then from _my_ perspective Facebook might have a monopoly on my communication options (even if they have real competition in China from competitors).
I'm not so convinced that we should just accept the broadest possible interpretation of "the market" that we should evaluate as the correct framing. From the perspective of some individuals, if there is only a single dominant option, then that person still needs to deal with anti-trust issues.
It's similar to the way some of the major internet players will carve up the country into regions of fairly exclusive offerings. Across US broadband, the market may be divided amongst a number of different players such that it doesn't appear to be a monopoly. But when you zoom in to an individual municipality, it might be that there _is_ a monopoly at that level, and the competition that appears to exist in the "national market" is actual a union of separate monopolies (and other regions where there is actual competition).
So, while I totally agree with you that under the legal definitions of monopolies, many of these entities are not there, under individuals _practical_ definition of monopolies, many of these entities _are_ monopolistic.
Antitrust is much broader than "monopolies". It's all about concentrated power. Saying "monopoly" is just shorthand for market power, it's not a binary definition.
> none of the three things you mentioned are anywhere close to monopolies.
Yes they are. Imagine that I imported alligators to Washington[0] and set up a gumbo resturant in Seattle. I would have a (local) monopoly on alligator meat. The fact that you can easily buy beef or chicken from any number of other places doesn't change this, it just means that my monopoly isn't particularly relevant.
Similarly, Facebook has a monopoly on communication with people and groups that communicate exclusively via Facebook. You could go communicate with someone else, just like you could go buy some other kind of meat in the above example, but there is no competitor for communicating with the people you actually (for some reason) want to communicate with.
The relevant question is whether Facebook's monopoly is broad enough to be relevant. Reasonable people might disagree about that. But there is no question that they have a monopoly.
> their monopoly was so powerful because there was often no other way to get from point A to point B
In such a case, the fact that you could instead choose to go to point C by way of some other railroad, does not mean they don't have a monopoly on travel to point B. (Nor does your theoretical ability to walk to point B, or track down a Facebook user in real life and visit their house.)
0: I'm going to assume noone has already done this.
Every interaction with them is blindfolded deep cavity strip search with average 30 agents(30 cookies) without our permission. Even the EU data compliance pop ups don’t show participants of this heinous data molestation.
Forget antitrust, they ought to be tried under racketeering laws or RICCO statues which was used against mafia. Bork and Lina khan doctrine while relevant can’t help us restore the old internet from the current toxic ad littered pages.
The railroads weren't total monopolies, they were just local monopolies. If you didn't like them you could just move somewhere else, to another place with a local monopoly. Which is not the same as competition.
My contention summarized is that using market share as it has historically been used is not good, because these software-based companies can scale to much greater power than ever before whereas in the past, one had to gain significant market share to wield the same or even less power.
> none of the three things you mentioned are anywhere close to monopolies
Let me propose a different way to think about it.
Can I do task <X> and prevent company <Y> from capturing any value from it?
Can I post my own video online and prevent YouTube from capturing any value? The answer is "No." Some jerk will post it to YouTube and a whole bunch of views will go over there and Google will capture ad revenue on it.
They most certainly are monopolies and we can see it in their behavior.
What America is figuring out that, if the US Markets are going to remain uncompetitive, than Chinese companies that don't play by the same rules are going to outcompete these lethargic companies that don't want to get better but instead vacuum up all their competitors. This hurts American's technology advantage and competitiveness in the global marketplace.
>Again, according to the complaint, Facebook chose to buy an emerging threat rather than compete, and announced an agreement in February 2014 to acquire WhatsApp for $19 billion.
>The complaint also alleges that Facebook, over many years, has imposed anticompetitive conditions on third-party software developers’ access to valuable interconnections to its platform, such as the application programming interfaces (“APIs”) that allow the developers’ apps to interface with Facebook. In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.
> none of the three things you mentioned are anywhere close to monopolies
Imagine thinking that google doesn’t have a monopoly on search. That Amazon doesn’t have a monopoly on selling goods online, etc.
Now these companies do lots of other things that they don’t monopolize, but they ARE monopolies in specific high value spaces and they leverage those monopolies in their other endeavours.
Remember that you are the product and not the customer for these companies.
Google’s customers are the advertisers who pay and (I’d argue) those who want to show up in search results. You have to either pay for ads or play their algorithm game to be relevant because of their monopoly position on search. It’s basically the same story for Facebook, Twitter, TikTok, etc.
Your analysis is correct, but the quality of antitrust commentary on this site is not that high! Neither Google nor Facebook is plausibly a monopoly.
This does not mean that they don't occasionally do things which violate antitrust laws! They do. And they should be punished for such violations. But they aren't monopolies.
When a system has two billion users, then it is the world's largest government. It really doesn't matter if it meets one nation's definition of monopoly.
Facebook literally rivals the Catholic Church for participation. Zuck is literally the Pope of his own empire.
Well, duh. "Free market" does not mean "unregulated market". It requires that the market be free from monopolies and that all agents have complete information. Regulation and trust-busting are, in practice, required to bring about a free market.
Co-opting the term "free market" was a fantastically successful bit of propaganda.
It could be that idea of a free market if everyone did what was right and not cheat, screw over, sabotage the competition to get ahead. You beat the competition by being better.
We don't have that though, people are assholes, so we have a regulated market.
An associated component to trust-busting should be foreign trust blocking.
Given the way the world works, if the US breaks Facebook up, (insert here) government-supported competitor takes its place.
Part of creating a fair, diverse playing field is ensuring international competition is playing by the same rules in the internal market (because you have no jurisdiction to prosecute them as a monopoly in their home country).
Which isn't an argument for not breaking Facebook up. But is an argument that if you break Facebook up, you should probably impose substantial limitations on ByteDance and Tencent as they operate in the US.
What I want addressed is how we can bust these companies without making the experience worse for consumers or making things less efficient.
A railroad that'd require a toll every mile because you split one company into hundreds wouldn't be viable. If I had to visit multiple web pages to get the same result as a google search, that'd also be bad.
Amazon online shopping has a "monopoly" almost purely because the monopoliness makes it much easier and lower friction than trying to find an online store that is 1) somewhat trustworthy 2) consistent UI 3) ships in a reasonable time 4) isn't going to disappear (and importantly, already has my shipping and payment information). I regularly buy stuff online from elsewhere, but I use Amazon more often because it reduces the cognitive load by centralizing/standardizing everything.
The railroad example would be solved by forming a single-purpose clearing house business to distribute the tolls, collected by the origin or destination carrier, among all the rail providers on the route. It's the same process in banking --- you can deposit a check drawn on any bank, and a clearing house process routes the funds. It's the same in public stock trading, you can use any brokerage, but almost all shares are owned by Cede & Co on the corporate books.
You can split out payment and address retention easily: paypal and amazon both offer 3rd party checkout systems. If we're trustbusting Amazon, force that to be an independent company, offered on FRAND terms to all.
I think you could probably seperate into three business the fulfilment included marketplace consignment store from the merchant fulfilled marketplace consignment store from the sold by amazon store. Although, since two of those share facilities, it might be a little tough. Perhaps, splitting off the store from the inventory makes more sense --- if Amazon is just one of the marketplace vendors and the marketplace is a separate entity, that eliminates some of the unfair practices (require marketplace vendors to share sources, contract sources directly to undercut marketplace vendors).
You could also split off warehouses off into individual or regional baby-bell style corporations; vendors could send to whichever warehouses they like, the marketplace could choose which warehouse to use to fulfill orders, each warehouse could be reasonably independent.
Shipping/delivery could clearly be made independent. AWS, too.
I think the point of trustbusting is not necessarily to eliminate monopoly or dominant businesses, it's to reduce the scope of the monopoly such that dominance in one area doesn't become dominance in more areas. If there's a single purpose marketplace corporation, it may be dominant, but if it's prevented from controlling warehousing, shipping, and inventory, there's more room in those areas. After the breakup, you can still come back and do more to address the smaller areas, if they prove to be problematic under the new system.
I have come to a conclusion lately that there is no free lunch. You either optimize and increase risks (of system becoming monopoly like rail roads in the past, or busting like mortgage companies in 2007-8, government becoming tyranny, something like that) or you pay for inefficiencies. I think the free market is really about finding a balance between optimizations and risks. If the company is too optimized and carries significant risk - eventually, it will bust. If the marker is not efficient because of transactions volume - a larger company will inevitably emerge (and if it continues to grow - eventually bust)
EDIT: what really worries people about monopolies is that it takes more than a generation to see these companies bust. And to, again, optimize it, we come up with antitrust laws... But any optimization, in my opinion, costs risks and never is free (as in lunch).
>> Amazon online shopping has a "monopoly" almost purely because the monopoliness makes it much easier and lower friction than trying to find an online store that is 1) somewhat trustworthy 2) consistent UI 3) ships in a reasonable time 4) isn't going to disappear (and importantly, already has my shipping and payment information). I regularly buy stuff online from elsewhere, but I use Amazon more often because it reduces the cognitive load by centralizing/standardizing everything.
This is a firm being successful, not a monopolist. This is exactly what antitrust law shouldn't (and does not) punish!
I'd press your claim of efficiency. As we are learning now, efficiency (in the JIT sense of the word) and robustness are a single sliding scale. Our global supply chain was a wonder of human achievement until it hit a snag, and now it's a complete mess.
Using Amazon as an example - the larger they've grown, they've actually become less trustworthy and a worse experience for consumers. Amazon has been stricken with all the negative traits that American culture associates with "big" government - bad user experience, bloat, fraud, and arbitrary bureaucracy. I've naturally found myself wanting to use them less and less, the larger they've gotten.
The general idea would be breaking things into viable businesses and imposing compatibility with competitors. So, for Amazon, spin off the delivery and allow others to do the driving around, provided they can meet the same requirements around picking up from the warehouse and so on. For Google, spin off the DC operations. And so on.
It becomes harder conceptually if you try to break things in the software layer. Working in Google, I just cannot fathom what would it take to actually allow competing ads platforms in search.
Not just shopping, but also AWS. It is functionally impossible to use the internet and not patron Amazon because of the ubiquity of AWS. It's not a monopoly because there are technically competitors, but the sheer scope of AWS reach makes consumer choice a practical impossibility.
I do nearly all of my internet shopping away from Amazon, only resorting to it when there's no other choice. But nearly every website I visit is powered by AWS at some level, either directly (the site itself) or indirectly (one of the site's service providers). To my mind, this is something new(ish) that is monopoly-adjacent and needs to be taken a bit more seriously. Telling people not to use the internet, or to deeply audit every service they patron, is not a practical solution at all, even for technical users, nevermind the average non-technical user.
> But nearly every website I visit is powered by AWS at some level, either directly (the site itself) or indirectly (one of the site's service providers). To my mind, this is something new(ish) that is monopoly-adjacent and needs to be taken a bit more seriously. Telling people not to use the internet, or to deeply audit every service they patron, is not a practical solution at all, even for technical users, nevermind the average non-technical user.
It isn't the job of antitrust law to make sure you don't have to use AWS.
Also: AWS is not plausibly a monopoly at all. It faces competition from a number of other cloud providers AND doesn't have a particularly large market share in cloud services anyway.
A social network is a natural monopoly due to the network effect. It wouldn't make any sense to split it up. Regulating it like any other natural monopoly could make sense.
Amazon is certainly not an online shopping monopoly. It's just a superior service. I can get a similar online shopping experience from Wal Mart and many others. If Amazon can offer us such good service through having its own big network of warehouses, drivers, etc. that's impossible with a bunch of smaller companies then I say let them be as big as they are so long as they don't egregiously abuse it.
> A social network is a natural monopoly due to the network effect. It wouldn't make any sense to split it up.
This isn’t entirely accurate. Federated social networking is entirely feasible, and arguably the only reason it isn’t more widespread is because large non-federated social networks have an active interest in not federating.
Breaking up Facebook would make it possible for social-network “hub operators” to compete on the basis of moderation quality, administrative practices, and site quality.
> A social network is a natural monopoly due to the network effect. It wouldn't make any sense to split it up. Regulating it like any other natural monopoly could make sense.
They definitely need to take Whatsapp away from Facebook, though. Regulators only allowed it under specific conditions and Facebook violated those conditions
> The problem with Facebook/Amazon/Google is that they have a monopoly on a specific information network, for Facebook the social graph, internet discoverability for Google, and online shopping for Amazon.
None of these things are a natural monopoly.
Facebook only stays relevant by buying its competitors. You don't even need to break them up, just disable acquisitions. Then Instagram would be separate, WhatsApp would be separate. You don't even have to break them apart, just wait for the next one and don't let them buy it.
Google is the biggest search engine but search isn't a natural monopoly. Their dominant position comes from all the vertical integration. Google owns YouTube and YouTube is featured prominently in Google Search results. To get Android/Google Play, OEMs have to use Google as their default search engine. To fix this you don't have to regulate the search results, just separate the search engine from the other companies, and stop allowing them to buy competing ad networks.
Amazon doesn't really even have a dominant market position. They're not a railroad, they're Internet Walmart. They're just the biggest player in a highly competitive market. They have no capacity to significantly raise prices or people would immediately switch to any of their hundreds of competitors. Most of the complaints are from competitors butthurt that Amazon is keeping everyone's margins slim -- but that's what they're supposed to be doing.
A railroad is a natural monopoly. You can't really break up a natural monopoly, so you have to regulate it, which is terrible.
None of this tech stuff is like that. The problems here come from consolidation through mergers and vertical integration. They're unnatural monopolies with clear lines across which they can be broken up without long-term regulation. Just stop letting them buy their competitors.
Google isn't primarily a search engine. By revenue they're primarily an ad network.
Ad networks naturally form monopolies. Ad matching algorithms can make better matches (more revenue per click and more desirable product for advertisers) the more ad campaigns they have to select from and the more display properties they have to publish ads to. It's a market extremely prone to winner-takes-all.
I say this as someone who worked internally on an ad system which used to be one of Google's primary competitors. I specifically worked on projects intended to address these runaway network effects. It wasn't possible and the company exited the business (they actually tried to be a customer of google's because it'd be more profitable to just show their ads, but this was blocked on antitrust grounds ...)
The monopolistic aspects of these entities aren't necessarily the customer facing products they market to the masses.
Amazon does leverage their position as market maker to undercut competition with anti-competitive practices though. They run data analytics to figure out what goods are the most profitable, then launch competing products and promote their own over the originals in their listings. Their monopoly gives them the ability to take over nearly any market they want at any time, with no consequences.
And how would you stop them from simply replacing their competitors? From the article "Budding companies that resist being acquired are pruned through flagrant copying." Would you pass a law that said Facebook can't expand their business to do anything a competitor is doing? I can't see how that would fly.
I'm found of "a democratically elected government is the least bad monopoly". If you must have a monopoly, it should be a government. But if you can avoid a monopoly, do that instead.
That's the crux of the friction here. The old monopoly (gov) is being overrun by the new "monopoly" (tech). While it might not be a battle for the known universe, controlling the spice (i.e., attention, information, nudges, etc.) is definitely in play.
The problem I have with "The Free Market" is that it is a platonic ideal. Going a step further, the whole concept of a Free Market was developed before the advent of the Network Effect and the kind of economy we have today. As such, I think defenders of the Free Market do not have adequate tools to address the kind of "monopoly" that Facebook/Apple/Google enjoy today because of their business models. Free Market competition works great on a small to medium scale. The idea that you have some competitive advantage and can capitalize on that works wonderfully, but not for things like social media and companies with a market cap of over a trillion dollars.
18th century England had strict anti monopoly laws. For example canal owners could not operate their own boats. This type of centralization and monopoly acceptance came with railroads.
We really need a funded and functioning SEC and FTC. They have failed us in the 21st century. However, breaking things up won't be a panacea. It worked in the past but even spinning out Instagram won't open up much space for an Instagram competitor given the existing network effects. To fix some of these issues, I think we need a tax on digital advertising revenue. Right now it is way too profitable to just create click-bait and rake in the money.
The idea of taxing digital advertising revenue because it is too profitable as an antidote makes no sense on at least three different levels.
1. It being profitable is good for getting more people to get into the market. Taxing it by activity if anything discourages competition!
2. What does degree of profitability have to do with clickbait? Spamming isn't very profitable but it does generate some revenue so we are stuck with the crap.
3. The advertiser network's profit is entirely seperate from how much the individual end-point earns by showing them.
Building another Facebook isn’t hard, but the network effect makes it almost impossible. Then they have their acquisition team to ensure that anything that does make it through doesn’t last long. The idea that they’re out there competing on their own merits is silly.
I think that’s one of the big differences - they have a monopoly on the means of production (the userbase), which is less ephemeral than say owning all the steel plants and mines.
One of the issues that I have with your analogy is that the monopolies you mentioned (roads, internet, rail) all have substantial physical assets that are tied to their monopoly power. For example, even without factoring in the cost of land, it can cost up to $700k per mile of rail track. These kinds of upfront costs are one of the major moats they have to keeping outside competitors from emerging. I'm not sure the digital-era monopolies discussed have this same type of barrier to entry.
The internet example is a more interesting analogy to me because it seems to align more with a utility, which we're okay with having monopolies existing, albeit regulated, because of the greater efficiencies.
So are social networks, online shopping, or search public goods? If so, should they be regulated because we think there is an advantage to having a monopoly in this space? If not, what are their barriers of entry that stifle competition?
I don't necessarily don't think they shouldn't be broken up, but I'm trying to understand whether/how they fit into previous paradigms or if the monopoly paradigm is fundamentally different in this digital era.
The only way these companies can generate sufficient revenues is through advertising. It really does not matter what moonshot projects they are working on. There is not enough willingness to pay for that "work" to sustain a business.
The internet has value besides being a vector for advertising. This is more or less what the parent comment is suggesting.
Who pays the cost of supporting the internet. Internet subscribers. We finance (a) the delivery of advertising, (b) creation metadata about our usage (e.g., empty POST requests, beacons, various forms of telemtry, etc.) and (c) uploading our data to their computers.
That road analogy fails pretty quickly. If we wanted to follow that direction then it would like owning a home where there are 20 roads directly in front of your house and you can choose any one of them but you keep choosing Apple/Amazon/Facebook/Google
For example I just moved and had to buy lots of stuff. I ordered from Macy's, Walmart, Target, Wayfair, and Amazon.
It's trivial to use Bing or Ducduckgo over Google. When a search engine starts doing better for me I'll switch.
As for Facebook, plenty of people using other services to stay connected
Another problem is that Facebook, Amazon, and Google get special treatment. There are explicit filters in WebKit (and probably mozilla) which allow special features for certain big-name companies. Also the App Store gives exemptions (e.g. VoIP notifications) to certain social apps. And most websites block crawlers but allow Google and Internet Archive.
This IMO is a better argument towards anti-competitiveness. I absolutely get that there needs to be filters for certain privileges, but hard-coding them for big-name apps is not the answer.
Devil's advocate question: I don't really remember my railroad history in the US, but I do know that railroads are so mediocre as to be barely usable these days.
Does that have anything to do with weakening the railroad industry at a critical moment just before the automobile industry popped up and ate their lunch?
Could we be risking a similar problem here with the successors to Facebook's social media, Google's internet search algos, and Amazon's shopping experience?
This book sounded interesting to me, but it appears the author is controversial because he doesn't believe in evolution amongst other things which dampens my enthusiasm:
> when a company has a monopoly on a network it stops functioning as a company and basically becomes a government.
That is very aptly put. To go on a bit of a tangent, I would go even further and say that companies are always a form of government, even without a monopoly, but the addition of a monopoly just extends the power and reach of such individual government.
In the modern capitalist systems, the collective of all companies together are the branch of govern that decide what will be produced and where-and-how people are going to work, all that under the checks and balances of the free-market and the official branches government. That is, an individual company is a form of tiny local government (not local in geography, but in scope) with the mandate to govern some aspects of the life of their employees (what they will be doing for 40h a weak), and the production of their particular products, being that mandate can be removed and transferred to other company by the free market.
Now, I know that this metaphor I described is not a 100% perfect fit, if stretched to the extremes it will arrive at absurd corners where companies are nothing like governments. But then, no metaphor is perfect, not even the metaphor officially supported by the USA Judiciary branch, that "companies are people". They are only useful, and only fit in small contexts, and as such I believe "companies are government" is a very useful one and should be part of the discourse.
Of course. Trust-busting has always been part of liberalism.
The idea of liberalism has always been to avoid monopolies, which government is just one form of. The government’s role should be reduced to the minimum, police-army-justice-currency, and even the last one is up for a debate. So the government’s role is to stay small, and make companies stay small enough.
Unfortunately this flew away in 2001 wehn Microsoft had been condemned, but not sentenced, because after 9/11, USA needed their companies to reign upon the rest of the world. Maybe time has come to admit that US reigning on the rest of the world hurt the domestic market with too-large-monopolies, and maybe it is time to come back to a competition market.
Sigh, another day, another blame of Facebook for destroying Snap.
Fundamentally, products are always gonna get copied. Google tried to do it to Facebook, back when FB was the size that Snap was at the time, how well did that work?
Fundamentally, while competing with a megacorp sucks monkey balls, Snap shot themselves in the foot with their boneheaded product strategy.
They literally didn't invest in their Android app because they wanted to be exclusive. Given that the vast majority of countries are majority Android, this gave FB the space to clone their product and put it in front of hundreds of millions of users who'd never seen the concept before.
Ultimately, while I do agree with most of the articles points (breaking up the internet behemoths would probably be a good idea), I really dislike the Snap analogy, as they could easily have beaten FB to the punch if they'd had an effective growth strategy.
>They literally didn't invest in their Android app because they wanted to be exclusive
Mind blown, I had no idea Snapchat was iOS exclusive. I was thinking just yesterday about how Clubhouse's strategy may (who knows really) have backfired, it seems to me by betting on FOMO-manufacturing they just gave time for others (like Twitter Spaces) to catch up before they filled a niche.
I remember their Android app being shitty. Especially the camera, which is literally their primary feature. It took pictures by taking screenshots instead of going through the proper process of capturing the full-resolution image.
> I was thinking just yesterday about how Clubhouse's strategy may (who knows really) have backfired, it seems to me by betting on FOMO-manufacturing
I was so fed up by the lack of the Clubhouse app on Android that I made one myself using reverse-engineered API docs. And, I managed to do it right when it was on top of its popularity. The amount of attention (and not very smart questions from journalists) I got was absolutely mind-blowing. Who would've known that a for-fun 2-day project could do that?..
By the time they did finally release an official Android app several months later, Clubhouse was largely forgotten.
I'll never understand this thing with an excellent iOS app but the Android app being an afterthought. No, there's not THAT much fragmentation any more. This excuse is no longer valid. You really only run into device-specific bugs when you use low-level stuff like video codecs, but even then, these are rare.
As Wu and others have rightly pointed out, the straightforward Chicago School standard overlooks, among other things, the stifling effect monopolies can have on innovation. As a case in point: when AT&T was broken up in 1984, a torrent of new products came on the market, everything from the first answering machines to early ISPs.
This is a oversimplification and wrong.
AT&T was controlled by the government until 1984 and only because of this we were able to got technical innovations like UNIX, The C Programming Language and reusable open-source software. This formed not only the foundation of Linux and C but also later the Internet. And all of this happened because AT&T was actually controlled instead of split up. They were not allowed to enter new markets and therefore we benefit all. What happened next? UNIX-Wars, Lawsuits and disastrous situation which enabled especially Microsoft.
The lesson learned here is that - just mere splitting up - doesn't fix anything. The government subsequently did actually nothing against Microsoft and it's contracts with PC-Manufacturers. What I cannot say is whether the government still doesn't understand what software is and it's influence?Especially mass gravitation through user. Or if just no market regulation happens since the 1980ies.
I wonder how Personal-Computers and the handling of source-code would've been evolved if BSD and SysV were have been better friends? The appreciation of source code availability? And maybe an simple option at the store which sold that IBM-PCs with the 386 processors. If you got that "UNIX" thing on our PC with the source - you would probably wondered a lot that the spreadsheet application doesn't came with the source...especially when you pay for it.
I think it's even more wrong than that, and suffers badly from post hoc ergo propter hoc.
How could the growth of answering machines be connected to the break-up of AT&T, which was about separating local from long-distance service? According to https://americanhistory.si.edu/collections/search/object/nma..., there were commercial answering machines being sold in the U.S. in 1960. The increase in the use of answering machines in the 1980s likely had a lot more to do with the emergence of cheap microchips and cassette tapes, which greatly reduced their cost.
And what did the breakup of AT&T have to do with the creation of the first ISPs? Even before the breakup, anyone could create their own separate communications networks if they wanted. There were already commercial computer networks like TymNet and consumer proto-ISPs like CompuServe before the breakup and the breakup had no effect on them.
> How could the growth of answering machines be connected to the break-up of AT&T, which was about separating local from long-distance service?
I believe they are talking about AT&T's ability to impose rules over what devices could be connected to the telephone network, and how. That's one of the reasons that both early answering machines (like the one you linked to) and modems used acoustic couplers. It's true, though, that court cases had eroded how tightly AT&T could control what devices could be connected to phone jacks well before the breakup of the Bell System. Still, 1200 baud modems were only possible with a direct connection, and didn't become commercially available until the year after the Bell System breakup.
Yes. Regarding technology, the US is not the only country in the world. Answer machines and wireless phones where introduced worldwide be many companies around that time. Technology evolved at that time quickly, transistor usage in consumer devices.
For example at that time phone lines where controlled in Germany by the state owned "Deutsche Bundespost" (similiar to USPS) and there were a lot of heated debates between Chaos-Computer-Club (CCC) and them about what to connect to the lines or not.
Finally CCC won through the privatization of Deutsche Post. Did they? A mere pyrrhic victory. The new private owner of the cable lines restrict what to connect so thightly by there marketpower that the same problem from late 80ies emerged again in 2010ies. We have now extra laws which requires free usage of modems and routers. The private companies still try to make it as hard as possible. The only company which makes it easy for the average customer to get a contract without a modem at all is "Deutsche Telekom" (a smaller successor company of Deutsche Bundespost).
In other terms, it seems that well minded regulation is required in terms of peoples need. It may is a surprise but the same problem with "what can I connect" emerged with state owned companies, one big monopoly or multiple private companies.
The problem was even lets say AT&T was willing to put BSD on pc style hardware they were wildly overpricing it. If you were dead set at that time having a PC you could kit one out for ~2k which was respectable for the time. Yet then AT&T would come along and say 'oh you want BSD? 20,000 please, oh and that PC you got well it does not work correctly with it you need to buy a different set of kit that is 8x the cost, plus a 40k per year support cost'. AT&T is and was a phone company through and through. I have worked at the leftovers of another one. They only care about one thing, number of lines hooked up. Their sales staff and training is all about that. How can software sell me more lines. It is one of the metrics that they look at. A few thousand PC sales? A blip on the balance sheet and probably not really worth investing in because it does not sell more lines. Phone companies are laser focused on that.
The problem with these types of articles is that it doesn't contain a single actionable step on how one would go about breaking up these monopolies. It's a lot of "well, we did it with the electrical providers and telephone providers so we should do it with google."
Well, you can take a national utility and split it across geographic regions so local calls or electricity bills go into the pockets of the region you are in, and calls between two regions go into the pockets of both according to whatever long distance agreement is in place. That's at least workable. Or you break up an Oil Company that has 500 wells/concessions, into 5 groups of 100 wells/concessions. Or a railroad with a nationwide network, split up into 5 regional networks. That could work, too. That's what we did in the past to break up monopolies.
Now how would that work with google search? Prevent people in region A from loading a website in region B? Is that what we want? crickets
Sure there is low hanging fruit in terms of divesting -- e.g. no reason to keep a video monopoly like youtube with a search monopoly. I'm all for it. But now you just have two monopolies, and have not solved the problem of lack of competition in either video or search, which is ostensibly what you use to justfy these actions.
In fact the consumer pains with long distance in the wake of the ATT breakup is the reason why the law has changed on anti-trust. Now you must show consumer harm to pass constitutional muster and your proposal has to show consumer benefit. A proposal to break off youtube from google is going to have a hard time passing this test.
So yes, we, get it, we solved the problem of anti-trusts in the past, we don't like google, so We Must Do Something. Except those old anti-trust strategies just wont work against monopolies that have no geographic dimension. That no one is willing to touch that explains why we have a deluge of pleas, none of which contain a single workable proposal.
> But now you just have two monopolies, and have not solved the problem of lack of competition in either video or search, which is ostensibly what you use to justfy these actions.
The problem is not really a monopoly (or at least market dominant position) in one business, it's using that dominant position to gain dominance in other businesses.
So, you split out the obvious things: youtube, search, adwords, media ads, g suite stuff, android + chrome OS, payment/wallet, cloud, some sort of bucket for the rest.
Require FRAND terms when baby Gs work with othet baby Gs and restrict the baby Gs from expanding into other lines of business. There's your actionable plan. It leaves you with a handful of mostly viable businesses that are still pretty dominant, but...
If YouTube has the same relationship with its ad network as any other video site could get, other video sites can have a better chance to compete.
Setting up an Android for people new to the internet won't require creating a gmail account and steer your choice of email providers, etc.
Geographic splits don't really make sense for Google. And really, I'm not sure it did for AT&T, except that local vs long distance was a useful split, and I don't know that a nationwide local phone company that can't connect long distance calls would make sense. We certainly didn't get competitive local residential phone service by breaking up AT&T. The telecom act of 1996 came closer to giving us that, until the FCC decided it didn't care.
Yeah, I'm fine splitting youtube and google and even adwords. I don't think any of the rest are viable businesses, TBH.
However I don't think this will solve the issues raised in the original article or the general issues with monopoly.
People used to think that Microsoft had an unfair monopoly with its browser because of bundling. Well, Chrome took over market share pretty easily when it released something better. It turns out it wasn't bundling, but investing more dev resources than the competitor that made the difference. And you can do that if you have surplus profits from a monopoly. It is those profits that allow for more resources that make the difference, not any consumer-facing bundling problems.
So even if you completely eliminate the bundling, you'll still have a situation where off-shoot products by monopolies outcompete other self-funded products. Now, you have to complain not about bundling, but about subsidies -- basically making it illegal for the monopoly to branch out into another business, because all tech investment starts out as subsidies. But now you are really hurting innovation, because a large part -- I would say a large majority -- of innovation happens as subsidized R&D performed by monopolies. From the invention of C at Bell Labs to Android at Google. These are all side projects afforded to monopolies but not to private investors, who would never invest in such things. Thus no standard of consumer harm will result in making this illegal.
So you say, OK, we wont ban a firm from creating other products but we will ban it from purchasing companies. So that takes care of Youtube and Adwords, but not android, office, etc. But now if the monopoly has surplus profits, it has an edge at making competing products and outcompeting smaller incumbents. Yes, it's harder than just buying them, but you have not fundamentally changed the landscape. It's an improvement, yes, but only a marginal improvement.
It's really a tough call, and not at all the same thing as the previous US push on anti-trust, which was conceptually much simpler until you had the ill-advised ATT breakup, which showed the limits of the old approach. Merely longing for the old days of anti-trust in which we were busting up Standard Oil doesn't address any of the reasons why we have moved past that period.
I wrote this [1] four years ago. It shows how to break up FAANG by making their biggest asset, their data, transparent and regulated. And you would get a check from it.
Imagine your consuming history on Amazon in a company by itself, you own dividend-paying shares, and if you don't like their policies, you can take the data elsewhere, or keep it private.
Anyone who wants to use it, including "Amazon" itself, has to pay Amazon Data for it, and they can only use it for approved purposes, all public.
The history of the Internet in FAANG becomes a regulated asset, like a power plant. The "free market" would make much better use of all this data than FAANG itself does now. They are bloated bureaucracies who don't even realize what they have.
Would FAANG scream? Sure, but they would own massive (but not controlling) shares of the FAANG Data companies, so as Larry Page says in my "interview" it works out well for them, too.
I love the idea of data portability and data dividends. I love it dearly. It gets at what are by far the most critical principles here - data sovereignty and data value.
So it is with a heavy heart that I similarly always find myself deeply concerned by the security implications of such a world. As soon as you create data import and export functions, we will collectively realize that most people both have absolutely no idea how to handle it and are incredibly resistant to education on the subject. A lot of well-meaning ordinary people are going to get hurt when they get tricked into mishandling their data. There's already a sizable black market for personal data, and increasing transparency and access is going to grow that by both providing more ways to access data and more ways to use it.
I don't know a good way to reconcile these two. The tension hurts my heart.
We should work on making user privacy more private, not more portable.
If it does not exist it does not need to be ported.
A piece of data which has been put somewhere is there forever. It cannot be moved, only copied.
And we should disincentivize data collection by making it worthless or costly, so only the strict minimum to make something work is collected.
edit: and having a central place where companies can request personal data is to be avoided: it should be hard to know where to find someone's data.
Instauring data dividends would risk encouraging people to share personal data because it could benefit them financially, and that we probably want to avoid as well.
I should add here that Sec. of Energy Jennifer Granholm wrote & asked me something about it. No other major impact that I'm aware of.
If your argument is "this would be complicated!" I'd say "compared to what? the 14-year case against AT&T? the case against Microsoft, which ended in no breakup?" Do you really think a breakup of FAANG would be any simpler?
I spent several years at Google working with ads data. By far most of my work was with anonymous & aggregated data. In my proposal, that work, too, would require a license from the Data company, and the owners of that data would share in the profits from it.
I accept this as a compromise to my preferred solution of "make collecting & hoarding any personal data you don't strictly need to operate very, very illegal, and make using the data you do collect for anything but directly delivering a service to the customer—no 3rd parties, no ads, no using it to train ML models without paying the customer for the data separately with no ties to or requirement-of-consent for other services, et c.—also very illegal."
I don't like this as well, but it's pretty alright.
Yup, one's data needs to become a first class citizen. I should be able to grant/rescind access of it at a moment's notice. Unfortunately I don't think we'll get there any time soon...if ever.
Being anti-facebook & anti-google is popular in media circles because they are direct competitors in the advertising space that are eating their lunch. The fact the author does not include amazon, apple or microsoft is telling on it's own. "Cui bono" is something you should always apply to whatever you read.
I'd really prefer lawyers and congress to focus on breaking up monopolies in the health care system, where the government requires certificate of need and through licensing allows cartels to control the supply of labor to ensure high salaries. You know, actually abusing their monopoly position.
But that doesn't get them editorial influnce over an estate of power! Seriously it has been obvious from the start that the pissiness over "big tech" is really about them not doing the impossible and providing the exact influnce they want. So monopoly is their legal thug pretext because the judge would break their hand slapping them across the face for their blatantly First Ammendment violations if they said what they really wanted.
Readit News
The same thing happened with railroad barons in the 1800s and also in other areas of the economy, and the trust busting response the government took seems to have worked well to bring back a fair market. Government should keep the information networks predictable and accessible.
This is a core theme in George Gilder’s controversial but imho extremely insightful book Knowledge and Power: The Information Theory of Capitalism and How it is Revolutionizing our World: https://www.amazon.com/Knowledge-Power-Information-Capitalis...
But I also think there are major issues with the current configuration of the tech industry! They just aren't because of monopolies. It is not helpful to misdiagnose a real problem. It is not helpful to have only a hammer and call every problem a nail.
In the Industrial Age, you had a monopoly on paperclips if the only way to buy a paperclips was through your company. But paperclips themselves are commodity-like: there are billions of them out there and each is more or less interchangeable with the others.
Information products are not like paperclips. Each piece of information is by definition unique, and its value to the consumer is predicated on that uniqueness. When you buy a picture frame from a store, the first thing you do is throw out the little paper photo that's in it and replace it with yours. Why? The previous image was a picture of a smiling family. Isn't your goal with the product to have a framed photo of a smiling family? Why not just save yourself the trouble and keep the paper?
Well, it turns out that the fact that you want a smiling photo of your family is highly salient.
Sure, there are lots of social networks. If I want to find an app that has humans on it that I can connect with, there is definitely no monopoly. But if I want to find an app that lets me connect with my actual friends, then my choices are limited to exactly the social networks they actually use. If I want an app that doesn't just let me receive event invitations, but let's me receive the actual invitations my real friends send, I sure as hell better be on that one particular app. That app has an iron-clad complete monopoly on those events.
Almost every media or information company has thousands of micro-monopolies on various unique pieces of data. Our simple notion of trusts does not accommodate that concept. We need to update our thinking to the 21st century.
So, my question to you, if every non-Google search engine published their formula for rankings, and SEO for going up all their rankings was mutually exclusive with going up in Google's rankings, do you believe any site would implement them?
I doubt anyone would trade higher status on every other engine for lower status on Google. And in that case, they may as well be a monopoly.
It seems like society needs a term for the concept of a company accumulating far too much power, and that we need laws similar to anti-trust laws, that apply to these companies. This is an incredibly difficult problem to address specifically because FB is not a classic monopoly. I'm not even sure what it would mean to "break them up".
Amazon, MS, Apple, and Google are all far easier to split up. Each company has logical seams to split at (i.e., aws/retail, gcp/search/android, itunes/devices, etc). You could split FB and insta, but that doesn't really curb FB's power and influence at all.
I'm in no way unique in this regard - for all of the talk of how much Amazon dominates e-commerce, the reality is that it's never been easier to successfully run your own e-commerce site (just look at Shopify's market cap).
Sure, if you're selling totally commoditized goods that's a different story, but even there you've got substantial enough web presences from retailers like Walmart and Target that Amazon still can't reasonably be called a monopoly.
I still believe the analogy holds, just substitute geographical points A and B with person A and person B (or business A to potential client B), and the similarities are obviously clear. There is often no other way to get from person A to person B than to use Facebook, or from person C to D without Twitter, ... . Yes, there are various social networks, but there was also various railway barons. Just like the railway was not a single nationwide monopoly, but instead a series of smaller regional monopolies, a single social network is not an all encompassing internet-wide monopoly, but instead a monopoly lording over a subgroup.
For example, my colleagues are on Twitter but not Mastodon. I can't leave Twitter without leaving my social network. Why does Twitter own access to my colleagues? Why should we allow that to be a competitive advantage? It's certainly at-odds with the principle of innovation--you're not on a platform because it's more innovative than another platform, you're on it because they have a monopoly on your social network.
Contrary to your claim, there's very little competition in these markets because corporate ownership of user social networks is an enormous moat. Not only can users not easily move to another platform, but advertisers can't easily spend their money on some new platform because the new platform is much smaller in all likelihood.
Yeah, the situation involves a contradictory litany of complaints. Google/Facebook/etc are terrible because they suppress free speech and terrible because they allow it. They're terrible because monopolize online advertising and terrible because they facilitate it.
The purpose of breaking up a monopoly is to allow competition to facilitate the provisioning of whatever good a monopoly provides. Lots of people imagine breaking up or regulating Facebook will prevent the variety of abuses that we see. But if you look at the "competitive Internet", you can observe a sea of garbage in the form of endless popups, malware and eCommerce fraud. Things seem little more thought-out than "I want this to stop", which is hardly a recipe for constructive change.
I think it depends on what you consider "the market" to be.
If I want to compare Amazon to the "Global Retail Market" (Amazon's preferred framing), then maybe they aren't in a monopolistic position.
But I—as ab individual—don't participate in the Global Retail Market. I participate in the "online US retail" and "Pacific Northwest retail" market. So I don't get much benefit out of there being more competition to Amazon in France, so the "Global Retail Market" doesn't seem like it's always the right framing. For me, it's still the case that Amazon doesn't feel like a monopoly, but I could imagine areas where Amazon is much closer to being one of just a small number of options for many products.
Similarly, I'm sure Facebook wants to be evaluated against _all_ communication media, but again I want to communicate with people in my immediate network. If 100% of my social network and business contacts used exclusively Facebook for communication, then from _my_ perspective Facebook might have a monopoly on my communication options (even if they have real competition in China from competitors).
I'm not so convinced that we should just accept the broadest possible interpretation of "the market" that we should evaluate as the correct framing. From the perspective of some individuals, if there is only a single dominant option, then that person still needs to deal with anti-trust issues.
It's similar to the way some of the major internet players will carve up the country into regions of fairly exclusive offerings. Across US broadband, the market may be divided amongst a number of different players such that it doesn't appear to be a monopoly. But when you zoom in to an individual municipality, it might be that there _is_ a monopoly at that level, and the competition that appears to exist in the "national market" is actual a union of separate monopolies (and other regions where there is actual competition).
So, while I totally agree with you that under the legal definitions of monopolies, many of these entities are not there, under individuals _practical_ definition of monopolies, many of these entities _are_ monopolistic.
Yes they are. Imagine that I imported alligators to Washington[0] and set up a gumbo resturant in Seattle. I would have a (local) monopoly on alligator meat. The fact that you can easily buy beef or chicken from any number of other places doesn't change this, it just means that my monopoly isn't particularly relevant.
Similarly, Facebook has a monopoly on communication with people and groups that communicate exclusively via Facebook. You could go communicate with someone else, just like you could go buy some other kind of meat in the above example, but there is no competitor for communicating with the people you actually (for some reason) want to communicate with.
The relevant question is whether Facebook's monopoly is broad enough to be relevant. Reasonable people might disagree about that. But there is no question that they have a monopoly.
> their monopoly was so powerful because there was often no other way to get from point A to point B
In such a case, the fact that you could instead choose to go to point C by way of some other railroad, does not mean they don't have a monopoly on travel to point B. (Nor does your theoretical ability to walk to point B, or track down a Facebook user in real life and visit their house.)
0: I'm going to assume noone has already done this.
https://www.reuters.com/legal/litigation/amazon-copied-produ...
Every interaction with them is blindfolded deep cavity strip search with average 30 agents(30 cookies) without our permission. Even the EU data compliance pop ups don’t show participants of this heinous data molestation.
Forget antitrust, they ought to be tried under racketeering laws or RICCO statues which was used against mafia. Bork and Lina khan doctrine while relevant can’t help us restore the old internet from the current toxic ad littered pages.
Deleted Comment
https://news.ycombinator.com/item?id=28851867
My contention summarized is that using market share as it has historically been used is not good, because these software-based companies can scale to much greater power than ever before whereas in the past, one had to gain significant market share to wield the same or even less power.
Let me propose a different way to think about it.
Can I do task <X> and prevent company <Y> from capturing any value from it?
Can I post my own video online and prevent YouTube from capturing any value? The answer is "No." Some jerk will post it to YouTube and a whole bunch of views will go over there and Google will capture ad revenue on it.
That's definitely a monopoly.
What America is figuring out that, if the US Markets are going to remain uncompetitive, than Chinese companies that don't play by the same rules are going to outcompete these lethargic companies that don't want to get better but instead vacuum up all their competitors. This hurts American's technology advantage and competitiveness in the global marketplace.
>Again, according to the complaint, Facebook chose to buy an emerging threat rather than compete, and announced an agreement in February 2014 to acquire WhatsApp for $19 billion.
>The complaint also alleges that Facebook, over many years, has imposed anticompetitive conditions on third-party software developers’ access to valuable interconnections to its platform, such as the application programming interfaces (“APIs”) that allow the developers’ apps to interface with Facebook. In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.
https://www.ftc.gov/news-events/press-releases/2020/12/ftc-s...
Imagine thinking that google doesn’t have a monopoly on search. That Amazon doesn’t have a monopoly on selling goods online, etc.
Now these companies do lots of other things that they don’t monopolize, but they ARE monopolies in specific high value spaces and they leverage those monopolies in their other endeavours.
Google’s customers are the advertisers who pay and (I’d argue) those who want to show up in search results. You have to either pay for ads or play their algorithm game to be relevant because of their monopoly position on search. It’s basically the same story for Facebook, Twitter, TikTok, etc.
This does not mean that they don't occasionally do things which violate antitrust laws! They do. And they should be punished for such violations. But they aren't monopolies.
~Antitrust economist.
Facebook literally rivals the Catholic Church for participation. Zuck is literally the Pope of his own empire.
Co-opting the term "free market" was a fantastically successful bit of propaganda.
https://gutenberg.edu/2013/03/adam-smith-was-no-laissez-fair...
We don't have that though, people are assholes, so we have a regulated market.
Noah Smith had a good article on this with links to economics papers and brief summaries:
https://noahpinion.substack.com/p/the-economists-revolt
Given the way the world works, if the US breaks Facebook up, (insert here) government-supported competitor takes its place.
Part of creating a fair, diverse playing field is ensuring international competition is playing by the same rules in the internal market (because you have no jurisdiction to prosecute them as a monopoly in their home country).
Which isn't an argument for not breaking Facebook up. But is an argument that if you break Facebook up, you should probably impose substantial limitations on ByteDance and Tencent as they operate in the US.
Dead Comment
A railroad that'd require a toll every mile because you split one company into hundreds wouldn't be viable. If I had to visit multiple web pages to get the same result as a google search, that'd also be bad.
Amazon online shopping has a "monopoly" almost purely because the monopoliness makes it much easier and lower friction than trying to find an online store that is 1) somewhat trustworthy 2) consistent UI 3) ships in a reasonable time 4) isn't going to disappear (and importantly, already has my shipping and payment information). I regularly buy stuff online from elsewhere, but I use Amazon more often because it reduces the cognitive load by centralizing/standardizing everything.
You can split out payment and address retention easily: paypal and amazon both offer 3rd party checkout systems. If we're trustbusting Amazon, force that to be an independent company, offered on FRAND terms to all.
I think you could probably seperate into three business the fulfilment included marketplace consignment store from the merchant fulfilled marketplace consignment store from the sold by amazon store. Although, since two of those share facilities, it might be a little tough. Perhaps, splitting off the store from the inventory makes more sense --- if Amazon is just one of the marketplace vendors and the marketplace is a separate entity, that eliminates some of the unfair practices (require marketplace vendors to share sources, contract sources directly to undercut marketplace vendors).
You could also split off warehouses off into individual or regional baby-bell style corporations; vendors could send to whichever warehouses they like, the marketplace could choose which warehouse to use to fulfill orders, each warehouse could be reasonably independent.
Shipping/delivery could clearly be made independent. AWS, too.
I think the point of trustbusting is not necessarily to eliminate monopoly or dominant businesses, it's to reduce the scope of the monopoly such that dominance in one area doesn't become dominance in more areas. If there's a single purpose marketplace corporation, it may be dominant, but if it's prevented from controlling warehousing, shipping, and inventory, there's more room in those areas. After the breakup, you can still come back and do more to address the smaller areas, if they prove to be problematic under the new system.
EDIT: what really worries people about monopolies is that it takes more than a generation to see these companies bust. And to, again, optimize it, we come up with antitrust laws... But any optimization, in my opinion, costs risks and never is free (as in lunch).
This is a firm being successful, not a monopolist. This is exactly what antitrust law shouldn't (and does not) punish!
~antitrust economist
Using Amazon as an example - the larger they've grown, they've actually become less trustworthy and a worse experience for consumers. Amazon has been stricken with all the negative traits that American culture associates with "big" government - bad user experience, bloat, fraud, and arbitrary bureaucracy. I've naturally found myself wanting to use them less and less, the larger they've gotten.
It becomes harder conceptually if you try to break things in the software layer. Working in Google, I just cannot fathom what would it take to actually allow competing ads platforms in search.
Not just shopping, but also AWS. It is functionally impossible to use the internet and not patron Amazon because of the ubiquity of AWS. It's not a monopoly because there are technically competitors, but the sheer scope of AWS reach makes consumer choice a practical impossibility.
I do nearly all of my internet shopping away from Amazon, only resorting to it when there's no other choice. But nearly every website I visit is powered by AWS at some level, either directly (the site itself) or indirectly (one of the site's service providers). To my mind, this is something new(ish) that is monopoly-adjacent and needs to be taken a bit more seriously. Telling people not to use the internet, or to deeply audit every service they patron, is not a practical solution at all, even for technical users, nevermind the average non-technical user.
It isn't the job of antitrust law to make sure you don't have to use AWS.
Also: AWS is not plausibly a monopoly at all. It faces competition from a number of other cloud providers AND doesn't have a particularly large market share in cloud services anyway.
~ antitrust economist
Amazon is certainly not an online shopping monopoly. It's just a superior service. I can get a similar online shopping experience from Wal Mart and many others. If Amazon can offer us such good service through having its own big network of warehouses, drivers, etc. that's impossible with a bunch of smaller companies then I say let them be as big as they are so long as they don't egregiously abuse it.
This isn’t entirely accurate. Federated social networking is entirely feasible, and arguably the only reason it isn’t more widespread is because large non-federated social networks have an active interest in not federating.
Breaking up Facebook would make it possible for social-network “hub operators” to compete on the basis of moderation quality, administrative practices, and site quality.
Thats exactly why it should be split up and regulated more heavily.
They definitely need to take Whatsapp away from Facebook, though. Regulators only allowed it under specific conditions and Facebook violated those conditions
But hey, since we are in pitch-fork mode, we can simply make up stuff to our fellow-brainwashed posters. How is this different from Q?
None of these things are a natural monopoly.
Facebook only stays relevant by buying its competitors. You don't even need to break them up, just disable acquisitions. Then Instagram would be separate, WhatsApp would be separate. You don't even have to break them apart, just wait for the next one and don't let them buy it.
Google is the biggest search engine but search isn't a natural monopoly. Their dominant position comes from all the vertical integration. Google owns YouTube and YouTube is featured prominently in Google Search results. To get Android/Google Play, OEMs have to use Google as their default search engine. To fix this you don't have to regulate the search results, just separate the search engine from the other companies, and stop allowing them to buy competing ad networks.
Amazon doesn't really even have a dominant market position. They're not a railroad, they're Internet Walmart. They're just the biggest player in a highly competitive market. They have no capacity to significantly raise prices or people would immediately switch to any of their hundreds of competitors. Most of the complaints are from competitors butthurt that Amazon is keeping everyone's margins slim -- but that's what they're supposed to be doing.
A railroad is a natural monopoly. You can't really break up a natural monopoly, so you have to regulate it, which is terrible.
None of this tech stuff is like that. The problems here come from consolidation through mergers and vertical integration. They're unnatural monopolies with clear lines across which they can be broken up without long-term regulation. Just stop letting them buy their competitors.
Ad networks naturally form monopolies. Ad matching algorithms can make better matches (more revenue per click and more desirable product for advertisers) the more ad campaigns they have to select from and the more display properties they have to publish ads to. It's a market extremely prone to winner-takes-all.
I say this as someone who worked internally on an ad system which used to be one of Google's primary competitors. I specifically worked on projects intended to address these runaway network effects. It wasn't possible and the company exited the business (they actually tried to be a customer of google's because it'd be more profitable to just show their ads, but this was blocked on antitrust grounds ...)
The monopolistic aspects of these entities aren't necessarily the customer facing products they market to the masses.
And how would you stop them from simply replacing their competitors? From the article "Budding companies that resist being acquired are pruned through flagrant copying." Would you pass a law that said Facebook can't expand their business to do anything a competitor is doing? I can't see how that would fly.
A monopoly functions like a government.
Or inverted: a government functions like a monopoly.
I find both angles interesting.
Free markets only exist because of regulation.
It's regulation that allows actors to participate in good faith, and not get smoked by the huge whales and owners of exchanges, etc.
1. It being profitable is good for getting more people to get into the market. Taxing it by activity if anything discourages competition! 2. What does degree of profitability have to do with clickbait? Spamming isn't very profitable but it does generate some revenue so we are stuck with the crap. 3. The advertiser network's profit is entirely seperate from how much the individual end-point earns by showing them.
I think that’s one of the big differences - they have a monopoly on the means of production (the userbase), which is less ephemeral than say owning all the steel plants and mines.
The internet example is a more interesting analogy to me because it seems to align more with a utility, which we're okay with having monopolies existing, albeit regulated, because of the greater efficiencies.
So are social networks, online shopping, or search public goods? If so, should they be regulated because we think there is an advantage to having a monopoly in this space? If not, what are their barriers of entry that stifle competition?
I don't necessarily don't think they shouldn't be broken up, but I'm trying to understand whether/how they fit into previous paradigms or if the monopoly paradigm is fundamentally different in this digital era.
The internet has value besides being a vector for advertising. This is more or less what the parent comment is suggesting.
Who pays the cost of supporting the internet. Internet subscribers. We finance (a) the delivery of advertising, (b) creation metadata about our usage (e.g., empty POST requests, beacons, various forms of telemtry, etc.) and (c) uploading our data to their computers.
For example I just moved and had to buy lots of stuff. I ordered from Macy's, Walmart, Target, Wayfair, and Amazon.
It's trivial to use Bing or Ducduckgo over Google. When a search engine starts doing better for me I'll switch.
As for Facebook, plenty of people using other services to stay connected
This IMO is a better argument towards anti-competitiveness. I absolutely get that there needs to be filters for certain privileges, but hard-coding them for big-name apps is not the answer.
Does that have anything to do with weakening the railroad industry at a critical moment just before the automobile industry popped up and ate their lunch?
Could we be risking a similar problem here with the successors to Facebook's social media, Google's internet search algos, and Amazon's shopping experience?
https://en.m.wikiquote.org/wiki/George_Gilder
That is very aptly put. To go on a bit of a tangent, I would go even further and say that companies are always a form of government, even without a monopoly, but the addition of a monopoly just extends the power and reach of such individual government.
In the modern capitalist systems, the collective of all companies together are the branch of govern that decide what will be produced and where-and-how people are going to work, all that under the checks and balances of the free-market and the official branches government. That is, an individual company is a form of tiny local government (not local in geography, but in scope) with the mandate to govern some aspects of the life of their employees (what they will be doing for 40h a weak), and the production of their particular products, being that mandate can be removed and transferred to other company by the free market.
Now, I know that this metaphor I described is not a 100% perfect fit, if stretched to the extremes it will arrive at absurd corners where companies are nothing like governments. But then, no metaphor is perfect, not even the metaphor officially supported by the USA Judiciary branch, that "companies are people". They are only useful, and only fit in small contexts, and as such I believe "companies are government" is a very useful one and should be part of the discourse.
Bing and yahoo contain near equal information networks and Google isn’t dominate in many important Asian regions.
The idea of liberalism has always been to avoid monopolies, which government is just one form of. The government’s role should be reduced to the minimum, police-army-justice-currency, and even the last one is up for a debate. So the government’s role is to stay small, and make companies stay small enough.
Unfortunately this flew away in 2001 wehn Microsoft had been condemned, but not sentenced, because after 9/11, USA needed their companies to reign upon the rest of the world. Maybe time has come to admit that US reigning on the rest of the world hurt the domestic market with too-large-monopolies, and maybe it is time to come back to a competition market.
It's like we're living in some global Orwellian dystopia or some Communist dictatorship.
Fundamentally, products are always gonna get copied. Google tried to do it to Facebook, back when FB was the size that Snap was at the time, how well did that work?
Fundamentally, while competing with a megacorp sucks monkey balls, Snap shot themselves in the foot with their boneheaded product strategy.
They literally didn't invest in their Android app because they wanted to be exclusive. Given that the vast majority of countries are majority Android, this gave FB the space to clone their product and put it in front of hundreds of millions of users who'd never seen the concept before.
Ultimately, while I do agree with most of the articles points (breaking up the internet behemoths would probably be a good idea), I really dislike the Snap analogy, as they could easily have beaten FB to the punch if they'd had an effective growth strategy.
Mind blown, I had no idea Snapchat was iOS exclusive. I was thinking just yesterday about how Clubhouse's strategy may (who knows really) have backfired, it seems to me by betting on FOMO-manufacturing they just gave time for others (like Twitter Spaces) to catch up before they filled a niche.
> I was thinking just yesterday about how Clubhouse's strategy may (who knows really) have backfired, it seems to me by betting on FOMO-manufacturing
I was so fed up by the lack of the Clubhouse app on Android that I made one myself using reverse-engineered API docs. And, I managed to do it right when it was on top of its popularity. The amount of attention (and not very smart questions from journalists) I got was absolutely mind-blowing. Who would've known that a for-fun 2-day project could do that?..
By the time they did finally release an official Android app several months later, Clubhouse was largely forgotten.
I'll never understand this thing with an excellent iOS app but the Android app being an afterthought. No, there's not THAT much fragmentation any more. This excuse is no longer valid. You really only run into device-specific bugs when you use low-level stuff like video codecs, but even then, these are rare.
This is a oversimplification and wrong. AT&T was controlled by the government until 1984 and only because of this we were able to got technical innovations like UNIX, The C Programming Language and reusable open-source software. This formed not only the foundation of Linux and C but also later the Internet. And all of this happened because AT&T was actually controlled instead of split up. They were not allowed to enter new markets and therefore we benefit all. What happened next? UNIX-Wars, Lawsuits and disastrous situation which enabled especially Microsoft.
The lesson learned here is that - just mere splitting up - doesn't fix anything. The government subsequently did actually nothing against Microsoft and it's contracts with PC-Manufacturers. What I cannot say is whether the government still doesn't understand what software is and it's influence?Especially mass gravitation through user. Or if just no market regulation happens since the 1980ies.
I wonder how Personal-Computers and the handling of source-code would've been evolved if BSD and SysV were have been better friends? The appreciation of source code availability? And maybe an simple option at the store which sold that IBM-PCs with the 386 processors. If you got that "UNIX" thing on our PC with the source - you would probably wondered a lot that the spreadsheet application doesn't came with the source...especially when you pay for it.
How could the growth of answering machines be connected to the break-up of AT&T, which was about separating local from long-distance service? According to https://americanhistory.si.edu/collections/search/object/nma..., there were commercial answering machines being sold in the U.S. in 1960. The increase in the use of answering machines in the 1980s likely had a lot more to do with the emergence of cheap microchips and cassette tapes, which greatly reduced their cost.
And what did the breakup of AT&T have to do with the creation of the first ISPs? Even before the breakup, anyone could create their own separate communications networks if they wanted. There were already commercial computer networks like TymNet and consumer proto-ISPs like CompuServe before the breakup and the breakup had no effect on them.
I believe they are talking about AT&T's ability to impose rules over what devices could be connected to the telephone network, and how. That's one of the reasons that both early answering machines (like the one you linked to) and modems used acoustic couplers. It's true, though, that court cases had eroded how tightly AT&T could control what devices could be connected to phone jacks well before the breakup of the Bell System. Still, 1200 baud modems were only possible with a direct connection, and didn't become commercially available until the year after the Bell System breakup.
AT&T enforced a rule that you could not connect "foreign attachments" to the phone network, which included answering machines not made by them.
https://dcchs.org/the-era-of-ma-bell/
Well, you can take a national utility and split it across geographic regions so local calls or electricity bills go into the pockets of the region you are in, and calls between two regions go into the pockets of both according to whatever long distance agreement is in place. That's at least workable. Or you break up an Oil Company that has 500 wells/concessions, into 5 groups of 100 wells/concessions. Or a railroad with a nationwide network, split up into 5 regional networks. That could work, too. That's what we did in the past to break up monopolies.
Now how would that work with google search? Prevent people in region A from loading a website in region B? Is that what we want? crickets
Sure there is low hanging fruit in terms of divesting -- e.g. no reason to keep a video monopoly like youtube with a search monopoly. I'm all for it. But now you just have two monopolies, and have not solved the problem of lack of competition in either video or search, which is ostensibly what you use to justfy these actions.
In fact the consumer pains with long distance in the wake of the ATT breakup is the reason why the law has changed on anti-trust. Now you must show consumer harm to pass constitutional muster and your proposal has to show consumer benefit. A proposal to break off youtube from google is going to have a hard time passing this test.
So yes, we, get it, we solved the problem of anti-trusts in the past, we don't like google, so We Must Do Something. Except those old anti-trust strategies just wont work against monopolies that have no geographic dimension. That no one is willing to touch that explains why we have a deluge of pleas, none of which contain a single workable proposal.
The problem is not really a monopoly (or at least market dominant position) in one business, it's using that dominant position to gain dominance in other businesses.
So, you split out the obvious things: youtube, search, adwords, media ads, g suite stuff, android + chrome OS, payment/wallet, cloud, some sort of bucket for the rest.
Require FRAND terms when baby Gs work with othet baby Gs and restrict the baby Gs from expanding into other lines of business. There's your actionable plan. It leaves you with a handful of mostly viable businesses that are still pretty dominant, but...
If YouTube has the same relationship with its ad network as any other video site could get, other video sites can have a better chance to compete.
Setting up an Android for people new to the internet won't require creating a gmail account and steer your choice of email providers, etc.
Geographic splits don't really make sense for Google. And really, I'm not sure it did for AT&T, except that local vs long distance was a useful split, and I don't know that a nationwide local phone company that can't connect long distance calls would make sense. We certainly didn't get competitive local residential phone service by breaking up AT&T. The telecom act of 1996 came closer to giving us that, until the FCC decided it didn't care.
However I don't think this will solve the issues raised in the original article or the general issues with monopoly.
People used to think that Microsoft had an unfair monopoly with its browser because of bundling. Well, Chrome took over market share pretty easily when it released something better. It turns out it wasn't bundling, but investing more dev resources than the competitor that made the difference. And you can do that if you have surplus profits from a monopoly. It is those profits that allow for more resources that make the difference, not any consumer-facing bundling problems.
So even if you completely eliminate the bundling, you'll still have a situation where off-shoot products by monopolies outcompete other self-funded products. Now, you have to complain not about bundling, but about subsidies -- basically making it illegal for the monopoly to branch out into another business, because all tech investment starts out as subsidies. But now you are really hurting innovation, because a large part -- I would say a large majority -- of innovation happens as subsidized R&D performed by monopolies. From the invention of C at Bell Labs to Android at Google. These are all side projects afforded to monopolies but not to private investors, who would never invest in such things. Thus no standard of consumer harm will result in making this illegal.
So you say, OK, we wont ban a firm from creating other products but we will ban it from purchasing companies. So that takes care of Youtube and Adwords, but not android, office, etc. But now if the monopoly has surplus profits, it has an edge at making competing products and outcompeting smaller incumbents. Yes, it's harder than just buying them, but you have not fundamentally changed the landscape. It's an improvement, yes, but only a marginal improvement.
It's really a tough call, and not at all the same thing as the previous US push on anti-trust, which was conceptually much simpler until you had the ill-advised ATT breakup, which showed the limits of the old approach. Merely longing for the old days of anti-trust in which we were busting up Standard Oil doesn't address any of the reasons why we have moved past that period.
Imagine your consuming history on Amazon in a company by itself, you own dividend-paying shares, and if you don't like their policies, you can take the data elsewhere, or keep it private.
Anyone who wants to use it, including "Amazon" itself, has to pay Amazon Data for it, and they can only use it for approved purposes, all public.
The history of the Internet in FAANG becomes a regulated asset, like a power plant. The "free market" would make much better use of all this data than FAANG itself does now. They are bloated bureaucracies who don't even realize what they have.
Would FAANG scream? Sure, but they would own massive (but not controlling) shares of the FAANG Data companies, so as Larry Page says in my "interview" it works out well for them, too.
[1] https://issuu.com/stanfordchaparral/docs/parody_119_3-4/17
So it is with a heavy heart that I similarly always find myself deeply concerned by the security implications of such a world. As soon as you create data import and export functions, we will collectively realize that most people both have absolutely no idea how to handle it and are incredibly resistant to education on the subject. A lot of well-meaning ordinary people are going to get hurt when they get tricked into mishandling their data. There's already a sizable black market for personal data, and increasing transparency and access is going to grow that by both providing more ways to access data and more ways to use it.
I don't know a good way to reconcile these two. The tension hurts my heart.
If it does not exist it does not need to be ported.
A piece of data which has been put somewhere is there forever. It cannot be moved, only copied.
And we should disincentivize data collection by making it worthless or costly, so only the strict minimum to make something work is collected.
edit: and having a central place where companies can request personal data is to be avoided: it should be hard to know where to find someone's data.
Instauring data dividends would risk encouraging people to share personal data because it could benefit them financially, and that we probably want to avoid as well.
If your argument is "this would be complicated!" I'd say "compared to what? the 14-year case against AT&T? the case against Microsoft, which ended in no breakup?" Do you really think a breakup of FAANG would be any simpler?
I spent several years at Google working with ads data. By far most of my work was with anonymous & aggregated data. In my proposal, that work, too, would require a license from the Data company, and the owners of that data would share in the profits from it.
I don't like this as well, but it's pretty alright.