One of my personal projects that I never pushed forward is a blog "a monopoly a day" (under-titled "keeps the EU away"). The idea is that everyday, I want to show small-ish negative impact of a big tech monopoly, and explaining it. The goal is that the sheer recurrence is enough to convince people of the negative impact on innovation and societal growth big companies have.
(That's with a pretty broad definition of "monopoly", including "user-specific monopoly" like you get with android / ios, notions that I would also try to explain in said blog)
> I believe this one shows how a monopoly can prevent innovation. Blackberry with the Passport had a new form-factor. To make this phone worthwhile, it had to use a mainline OS. At the time, only Android with Google apps was available. However, Google rules back then couldn't allow this.
Would HNers be interested in such content? And in contributing to it? (my knowledge wrt monopolies is in my area of expertise, and let's just say I like being employable, so it's better if it doesn't look completely targetted)
This project would be interesting only to the extent it accurately showed the negative impact of monopolies.
Unfortunately, this subject area is full of strong emotions and opinions that make it hard for people to be objective.
For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work (edit to clarify: running BlackBerry’s own OS and software), and so did all my coworkers. Blackberry was the dominant mobile platform once. Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
> Unfortunately, this subject area is full of strong emotions and opinions that make it hard for people to be objective.
I actually think it's not possible to be objective on that matter, hence it needs to be properly explained, to understand the limitations of one post (but the goal is to have many posts, so hopefully readers can reject the ones they feel is wrong)
> For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
Let's just say that I've seen a bit of first-hand, and a lot of second-hand of "Google working jointly with XXX", and in the vast majority, Google-side doesn't spend much engineering time on those issues. I completely agree this is not an objective point of view. This can hardly be proved, shown or explained, so I have no issue with you not taking my word for it. Hopefully if other people join this project, there might turn out /some/ people that you do trust?
> And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work, and so did all my coworkers. Blackberry was the dominant mobile platform once.
I wouldn't exactly call the replacement of BBOS by Android a "healthy competition", when the main reason Android won was that it was an OS completely free of charge, paid for by another recurring stream for the company. (I'm not saying Android was worse than BBOS, that I have no idea, )
> Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
Yes, I would like that. It's nice to have a place to record negative experiences in a way that might contribute to a positive outcome eventually. Some of the best (and most verboten) content will come, of course, from insiders.
One issue I foresee, similar to how local business groups inevitably get overwhelmed with real-estate agents, is that this venture will get overwhelmed with complaints against ISPs and other utilities.
If you haven't already looked at it, Canada is a great case study and cautionary tale in monopolies and their ills. Look at both our consumer ecosystem (pricing, variety, and service) a well as innovation and industry, and at every turn you will find an economy optimized for monopolies to accumulate money at the expense of regular people.
I’d like to encourage you to advance the project, but with perhaps less of an ideological “this will prove X” slant.
I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
For instance, trademarks are a monopoly, but I don’t think many of us want any company to be able to co-opt brand names. That seems pretty clear.
Getting less obvious, IP-protected interfaces like GoPro mounts or those dumb Kureig coffee pods. Nobody likes those proprietary interfaces, and they do give monopoly control, but are they economically bad?
And how about console games, where all of the makers subsidize low Hw margins (therefore higher sales) with monopoly control and a cut of game publishing. Would the market be better if that was prohibited?
It’s going to be pretty easy to dunk on obviously harmful monopolies. It might be more interesting to explore more nuanced cases.
> I’d like to encourage you to advance the project, but with perhaps less of an ideological “this will prove X” slant.
Well, my current conclusion with my post is that wording is very very hard :-). What I said is "I want to show small-ish negative impact of a big tech monopoly". It will not prove it's all bad, even though it'll only give examples of where this is bad
> I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
Let's just say that the current tendency is to think that monopolies are fine, and I'd like to help reverting that. Yes your examples are worst discussing, and I have some of my own.
For instance, I definitely acknowledge that Android's monopoly helped whole unrelated sectors. But I also believe that innovation would be much better served if Android was opensource-in-spirit and maintained by something like the Linux Foundation.
> It’s going to be pretty easy to dunk on obviously harmful monopolies.
If it was, they would already have been ruled illegal? In Europe, I can't really name any "obviously harmful monopolies"
Isn't the whole idea that you would build something new to escape the competition of the current monopolies and succeed? "competition for losers" might be running the show, but it's also the pump in the cycles of disruption. It should always be running the show.
I agree with much of this, I would like to highlight one thing in particular:
> The bigger a tech company gets the worse it becomes at providing consumer and customer surplus, because it needs to eat that margin (of a sort) to keep growing. Growth demands that tech companies eventually consume that which first engendered them good will.
When that comes to Google, I think they are talking about "eating the margin (of a sort)" of the good experience for end users, people searching. But the reality is they are actually eating the very real margin of the advertisers, their "actual customers".
In the last ten years, through the excessive ingestion of data about the advertisers businesses, Google has sought to expand their bottom line by extracting as much revenue from advertisers as possible. The advertisers margin has become Google's target revenue. If (nearly) all advertising is via Google, their only way to grow that revenue is by extracting more of the advertisers margin.
When you advertise on Google (and FB for that matter) you now have to transmit to Google's algorithm all data about all transactions on your site. This is sold as training the algorithm to enable the targeting of customers. But what you are in fact doing is telling Google everything about your revenue, they know exactly how much you are receiving from all sales. The algorithm is designed to maximise the extraction of the advertisers margin, to squeeze it as much as possible.
This is going to come back and bite them. I believe advertisers are going to fall out of love with Google, if they haven't done so already.
Something I would like to add to my original point, and why I think this is "anti trust". During the last 10 years there has been a proactive move to remove controls and visibility from advertisers, moving towards a black box algorithm. At the same time Google have a (near) monopoly on search advertising. The supposed "auction" between advertisers is closed book and controlled by secret algorithms.
Google are the ultimate beneficiary of the auction, but don't show how it operates, what the other bids were, and how they reached a value for the placement.
On top of that as the advertiser you have been forced to give Google your full revenue numbers in order to play this game.
In my opinion Google needs breaking up, they should not be able to operate as both the marketplace/exchange and the vendor when they have a monopolistic position. The advertising marketplace/exchange should also be regulated in the same way as financial exchanges.
> they should not be able to operate as both the marketplace/exchange and the vendor
This should just be codified into law, regardless of monopolistic intent. Any vendor that uses their position of power to limit the freedom of their customers should be hit with the full extent of the law - starting with FAANG, and then working our way down from there.
I think you are absolutely right. Even on our small ecommerce presence we are seeing it is harder to get a return from Google shopping. A decade ago it was a no brainer, and now it is a money pit. We are seeking instead to expand our influencer involvement.
As a side-note, increasing margins is not the only way to gain revenue, you can increase the market as well. This is what they have been trying all along with all their parallel products. It was very successful with Android, less so with their self-driving car (that could have increased the market by letting drivers consume internet content and ads during the drive instead of driving).
And it's same on the other side of the pipe, content creators on YT are getting worse and worse deal every year, that's why everyone nowadays runs sponsorships and patreon on it
Y’all worried about Google. But ads + search/recommendations is a lost battle, that’s just the status quo – the devil we already know.
I’m worried more about Apple. Why? Because Apple has been a counterweight to ad-tech. They’ve been able to champion privacy and UX for actual end users, they have literally been forced to care. But now they’re expanding into ad-tech as well, that’s terrifying; there is literally only Google left, and they’re full-on ad-tech already. So that means mobile (by far the biggest and most universal computing platform worldwide) will have NO customer champions. (Caveat Apple treats customers bad already yadda yadda, but this point still holds). This will be a truly “advertiser first” world.
I’m no antitrust expert, but I can understand a company maximizing its core business (or “do one thing really well”), and I can even respect pure ad-tech. What truly sucks though, is these “expand into every crack of the market” faceless mega-behemoths that these companies all become. (In McKinsey speak, I believe this horror is known as vertical integration.) This always sucks for the consumer.
In principle, the advertisers could buy Google shares and influence the company's policy towards an equilibrium that is more favourable to advertisers. If a natural monopoly is a public company, the entities that depend on this company could buy shares and bend the company's actions towards their interests. Is this happening? If not, why not?
Google is a trillion dollar company. You'd need to have billions of dollars in Google stock before you opinion even mattered around the board room. The majority of the companies advertising on Google couldn't even dream of that and for those that could it's not exactly clear that this would be a wise investment.
Advertisers have no choice but to go where the eyeballs are. So I don't see how they could possibly drop Google unless Google loses those eyeballs. If they could, then Google wouldn't be so exploitative.
I've always found it pretty weird how common the idea is that companies _need_ to keep growing indefinitely, regardless of the size they've reach. If a company is sustainably making a profit (i.e. makes more money than it needs to spend to keep running) and will continue to for the foreseeable future, why do they need to grow their revenue even higher? It seems like the expectation is they need to do this so that the stock price can go up, but if people only buy the stock to sell it when it's worth more due to being larger, what's the actual connection between the stock price and the amount of money the company makes other than everyone just agreeing to pretend there's one? Ostensibly the reason stock is worth anything at all is that it could eventually yield dividends, but there's no reason that a company already making a profit can't just start paying dividends regularly without needing to ever grow any larger.
I suspect in reality the increasing compensation of the executive suite in stock, while intended to alleviate the principal agent problem, means that it's substantially more remunerative for leadership to try to goose their stock price by whatever means possible within their tenure than to steer the ship in a growth-agnostic fashion. Doubly so with modern big tech companies where RSU growth can fuel a big chunk of your salary costs for your tech department when your company is on the rise, but scare everyone off when the reverse is true.
Due to inflation, basically. There is an effect like inflation which as far as I know is unnamed, where the credit growth & money creation in the economy hits asset prices and drives them up at a fast rate (eg, gold has been pretending to make real annual returns for the last few decades when we all know it isn't changing in value). A company that is treading water will still be growing in percentage terms year-on-year due to this, so a company that isn't growing is actually failing to position correctly vs the credit in an economy.
If that inflation wasn't part of the picture, companies holding steady would be more acceptable.
Although you wouldn't hear about it in the press; the hot companies are always the ones that are growing. There isn't much to say about companies that just sit there.
>If a company is sustainably making a profit (i.e. makes more money than it needs to spend to keep running) and will continue to for the foreseeable future, why do they need to grow their revenue even higher? [...], but there's no reason that a company already making a profit can't just start paying dividends regularly without needing to ever grow any larger.
Your comment is common but it implicitly assumes a stable steady-state in the business landscape. (E.g. phrases such as "profit _will_ continue to for the foreseeable future,")
That type of thinking can work for local businesses (isolated from global competition) such as a small family restaurant. The owner opens a new restaurant with 10 tables and then maybe the business modestly grows to 15 tables a few years later and then stops growing. The owner is able to maintain a steady-state business of repeat patrons at the restaurant for decades with predictable profits. Another example of somewhat predictable profits on a larger scale are legacy oligopoly/monopoly businesses such as railroad companies.
But unlike local restaurants, many businesses have to aggressively compete in national and global markets and if it stops growing, it starts dying. Predictable profits are not guaranteed for the foreseeable future. That's why giants like Motorola and Nokia got their mobile phone business killed by a (growing) hobbyist computer company named Apple. (Motorola and Nokia are still big but not as big as they once were.) The businesses in hyper-competitive spaces like technology etc are a basically in a Red Queen race: https://en.wikipedia.org/wiki/Red_Queen_hypothesis
E.g. Why can't Blockbluster Video stop worrying about growth and just pay dividends from profits? Because an upstart like Netflix competed away Blockbuster's rental profits. Using hindsight, we can see that assuming Blockbuster could just pay "dividends regularly and for the foreseeable future" is flawed. The same broken assumption is happening to Netflix today: Why can't Netflix stop worrying about growth and just pay dividends? Because Disney+ and HBO MAX are competing away Netflix's profits.
Growing revenue and profits allows adaption to new competitive threats.
It isn't just the investors who want growing businesses. The prospective employees find them desirable too. Many talented graduates of engineering would rather get a job with a growing Apple than a declining Motorola/Nokia.
If you leave profit (growth, resources) on the table, someone else will pick them up and beat you with it.
The supposed analogy is biological. You may choose to check out of the always-do-more-with-less rat race, or even out of existence completely. But that choice will help populate the world with "not your successors". Similar with companies: your "sustainably making profit" premise is incompatible with "willingly foregoes growth / change" – at least in the long term, due to competition.
Some people will say that companies need to grow to increase the bottom line, but my experience is that growth is actually a byproduct that indicates the health of your business rather than the actual goal. Growth is a result of competition, when new markets emerge, when competitors come up with better products, there is an opportunity to increase your market share and take in more revenue. Assuming you don't leave money on the table, it's understandable that you will compete and if you're doing well you will grow.
Yo be clear not all companies are expected to grow. But growth is the main characteristic of a certain kind of companies, and the reason why their stock can have very high PE ratio, because shareholders expect to get return in the stock going up instead of dividends. You have plenty of vale companies that pay dividends and do not grow very much, sustaining a healthy business on their market.
But the transition between growth and value is a bit tough. You need to stop hiring like crazy, intern promotions suddenly go more stale as a result, stock compensation is hurt a lot so your employees might not be super happy with it, the story is also appealing to a completely different kind of people, and your stock goes down a lot at first, all your financing suddenly gets a lot more expensive etc.
It is possible that we are witnessing that transition in some of the tech companies right now, as the symptoms match, but it really is too early to tell.
It seems to me that they need to keep growing because they are in reality pyramid schemes with the people (and investment institutions) at the top wanting ever larger profits. The company gets bigger but the number of people at the apex of the pyramid does not.
Population is growing. Your company's target market is a subset of population. Unless your target is a niche that nobody new is joining, then your company must grow just to maintain status quo. If you sell phones and you're not growing, it means you are actually contracting. That's why everyone is crazy behind growth. It means your business is not dying.
growth means constant investment. The day you stop growing, your investment is capped or much more constrained, and it's only a matter of time until your company is over.
More legal effort should be put into big companies coming in and crushing start ups.
They usually build something and price it at a loss, because big companies can afford that till start ups go under.
Or unfairly using their services to hinder competiton.
Amazon is a big prepetrator of this. There was a smart oven, sold on Amazon. Amazon was also an investor, who made their own into a basics product at a loss.
Many startups do the same thing to established industries. They burn VC money to "disrupt" a field, then when it's time to make money, they hike prices. But by then, there's no competition left.
I started to use the term "fracking" for this[0], because that's more-less what the likes of Uber, AirBnB, Doordash, etc. do to their respective markets: they pump billions of VC money like it was a fracking fluid, in order to crack the market, pump out all the value, and leave behind a toxic mess for the locals to deal with.
While I agree that startups can disrupt the big monopolies, past Uber, I now find them just as dangerous as big companies to the customers and the societies they live in. Perhaps more so, because big companies don't have to disrupt anything to extract their rents.
I feel startups are not like they used to be. Or maybe they always were what they were, and I became disillusioned only recently. Either way, today, this is a well-developed process of wealth transfer. In a sense, startups aren't something opposite to big companies - they're the means big companies use to frack an existing market and pump out all value. Startups are an integral part of the market ecosystem now, and from the POV of those at the top, it's arguably a symbiotic, not parasitic relationship.
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[0] - I used to call it "strip-mining a market for all its worth", pointing at fast extraction of value with no concerns about sustainability, but I think "fracking" is better, as it also evokes the image of first cracking the market by a sudden, focused infusion of seemingly infinite free money.
Perhaps this happens on a diversity of time frames and in a diversity of contexts? The French historian Fernand Braudel says that during the 1600s the European merchants in India deliberately bought more than they sold, so that Europe was running a trade deficit with India for all of the 1600s. But offering so much money to India meant that India opened up to European merchants, who were then able to turn the situation around during the 1700s. Once they had been invited into every city and every kingdom in the sub-continent, the European merchants were then able to use their international networks gain an advantage over the local merchants. And then they added even more pressure by hiring local mercenaries to enforce their will with military power, thus beginning the conquest of India.
But the pattern seems to repeat on so many levels, and at so many different time frames: pump in money in a manner that seems generous, so as to gain control of a market. Then use that control to maximize one's own profits.
A trade deficit is not the same as a loss. It means that the UK ended up with more goods and the Indians ended up with more currency. If the goods are more valuable than the currency, it's still an economic gain for the UK. The US runs a trade deficit every year, and is far from going broke.
Anti-establishment startups becoming their parents are instances of a very common pattern.
Gods murder their primordial parents. Republicans overthrow kings and crown a Napoleon. The liberator-opressor complex litters history.
The first step is to notice the cliche and expect it. The phenomenon exists. Next step, tread lightly. Any reason you think up is too specific. Your reason why Microsoft became IBM under Ballmer does not explain why Cronus castrated Uranus or why he wanted to eat baby Zeus.
That said... I think "you are what you eat" is inescapable long term. Wikipedia would not have been wikipedia if it had been a startup, IPOed, etc. If you are a giant software company deeply embedded into locked in customers across all industries... you will have IBM-ish tendencies. Ballmer is Thanos, inevitable.
And yet, most people love the stability of existing systems. Trying something new is betting with your time: if the startup goes defunct in x years, you've created work for yourself to migrate to a competitor, and that's a big risk to take if you're a medium or large business evaluating a B2B product that maybe only has Series B funding (and is dependent on massive growth to survive without being sold off to some investment firm due to pressure from their existing investors).
With decent anti-trust, we would have many many more stable mid-size companies. I.e. startups that FAANG snapped up on their ascendence to stability, that would now be successful in their own right.
Some examples to rattle off a few household names: instagram, whatsapp, youtube, tumblr, android, beats, audible.
Instagram became big because of Facebook’s cross promotion and adTech.
YouTube had huge storage and bandwidth costs and was about to be sued out of existence.
Tumblr wasn’t exactly doing great before being bought by Yahoo and Yahoo wasn’t exactly a monopoly when it acquired Tumblr and its current owner is definitely not that big.
How do you think Android would have succeeded when better funded companies like Microsoft, RIM and Palm failed to make a dent?
Beats was already profitable before being acquired by Apple. No one can credible claim that Apple has a “monopoly” on headphones or in streaming music.
People are complicated! I like being healthy, but I also like eating pizza with mountains of cheese.
Wearing my “enterprise architect” hat, I love stability. I don’t want to choose a technology that just might be the silver bullet but probably isn’t, and will in fact be abandoned and need replacing in 2 years.
But with my “Hacker News reader” hat on, stability is boring. Constantly inventing and testing new ways of doing things is how we progress as a species. Anti-trust speeds that up and so I love it.
I guess I want a constant churn of innovation with other people bearing the risk. Perhaps if anti-trust were more aggressive it would at least level the playing field - at the moment, most innovation is from companies who can afford to drop $10B as an experiment. (And they get a tax refund either way.)
From being on both sides of the fence (providing B2B software as a startup, and dealing with small businesses as a client), smaller entities will be expected to adapt to the bigger fish.
Startups will bring translation layers to fit inside an existing system, and as a big client you can often send them the exact interface they need to adhere to and they’ll deal with it.
In that sense, the switching cost can be minimal (and you might keep your existing system running in parrallel), and if you’re big enough you’ll have the option to outright buy the smaller business if it were to flail.
It’s more complicated I think on the B2C side, where you have to buy more trust and establish a brand for people to give your their data and/or money.
When I lived in China and talked to VCs about the volatile regulatory environment and relatively frequent busting of companies one sentence I heard often was always something along the lines of, "sure it's annoying but you know what? For the occassional billionaire that gets toppled there's a hundred millionaires waiting to take their spot, it's just opportunity".
This changed my attitude quite a bit. In particular in the US the debate is often framed from the perspective of the very few individuals adverserly impacted by anti-trust. "If you break X apart, who will want to be the next Y? The answer is quite literally: hundreds of people gleefully waiting to take even a fraction of that market.
If there is a void to fill, someone will always do it. I think of all the measures one can take, anti-trust is one of the least disruptive things to the ecosystem overall, because it not only doesn't diminish, but strengthens market dynamics.
All companies strive/want/expect/hope/conspire for one thing for cost: When purchasing for the input it would like to operate with terms of a market economy but when selling their goods/services they would like to be monopolistic. It's very a fundamental and natural desire. Desire to kill competition is just a manifestation of this fundamental rule.
That's a bit of a weird article: the author seems to argue that monopolies etc are bad, but then makes the mental leap and assumes that just because there's something called 'anti-trust legislation' that it'll help.. The author himself almost grasps the problem:
> [...] Oracle became a company more famous for its legal department than new innovation.
Just like most other regulation 'anti-trust' is just another weapon that those with a big enough legal department can wield against the competition.
We need more competition, not less. Eg we need to allow Wal-Mart to open bank accounts.
> makes the mental leap and assumes that just because there's something called 'anti-trust legislation' that it'll help
I'm not trying to defend the author.
But there's no "mental leap" here; that's exactly the real-world, observable effect of anti-trust legislation when it is enforced. And what we're seeing now with the FTC is precisely the enforcement, for the first time in decades, of existing anti-trust legislation.
If your point is "legislation isn't enough", you're right, but trivially and uselessly right. Of course the real effect comes from enforcement, just as making murder illegal but then not charging and arresting murderers would, obviously and trivially, not decrease the rate of murder.
> But there's no "mental leap" here; that's exactly the real-world, observable effect of anti-trust legislation when it is enforced.
The problem is that it's selectively enforced, which makes the legislation dubious at best. There are hundreds of monopolies or quasi-monopolies out there that will never be challenged.
From what I gather from reading Matt Stoller's newsletter on monopolies, there has been little meaningful enforcement of antitrust for a very long time.
Did you know there's a huge cheerleading monopoly [0]? There is essentially one company that runs the competitions, sells the uniforms, and sells the equipment. A quote from the article:
> The most interesting aspect of this case are not the legal arrangements, but the fear that I found in interviewing people in the cheer world. Virtually every interview I did was under the condition that the person remain anonymous for fear of retribution. Often people would email me saying that I had no idea the depths of the scandals in the sport.
How about monopolies in port-a-potties and MMA? [1]
The alternative seems to be that you do...nothing? And just let them keep consolidating a market? That can't be good.
Antitrust needs enforcement so that we can have competition.
Top down pressure on monopolies keeps competition healthy and active. A neverending arms race, which is good for innovation. It prevents lethargy, malinvestment, stagnation, and mere taxation.
Do you have any sources to back up your claim that anti-trust is something that’s most often wielded by big companies against smaller ones?
Because it sounds highly unlikely to me.
The whole point of anti-trust is to provide a check on only the most massive companies that over rent-seek their market and cannibalize competitors, before the startups are able to get off the ground, literally crushing competition.
One of the most worrisome statistics in antitrust is that for every case brought by government, private plaintiffs bring ten. The majority of cases are filed to hinder, not help, competition. According to Steven Salop, formerly an antitrust official in the Carter administration, and Lawrence J. White, an economist at New York University, most private antitrust actions are filed by members of one of two groups. The most numerous private actions are brought by parties who are in a vertical arrangement with the defendant (e.g., dealers or franchisees) and who therefore are unlikely to have suffered from any truly anticompetitive offense. Usually, such cases are attempts to convert simple contract disputes (compensable by ordinary damages) into triple-damage payoffs under the Clayton Act.
> The second most frequent private case is that brought by competitors. Because competitors are hurt only when a rival is acting procompetitively by increasing its sales and decreasing its price, the desire to hobble the defendant’s efficient practices must motivate at least some antitrust suits by competitors. Thus, case statistics suggest that the anticompetitive costs from “abuse of antitrust,” as New York University economists William Baumol and Janusz Ordover (1985) referred to it, may actually exceed any procompetitive benefits of antitrust laws.
The purpose of antitrust law and merger review and the FTC in general is to preserve and promote competition. It’s the government’s legal department against FB, Google, Amazon, Microsoft’s legal and lobbying departments
Readit News
(That's with a pretty broad definition of "monopoly", including "user-specific monopoly" like you get with android / ios, notions that I would also try to explain in said blog)
One example:
> https://mobilesyrup.com/2016/09/27/why-blackberry-never-rele...
> I believe this one shows how a monopoly can prevent innovation. Blackberry with the Passport had a new form-factor. To make this phone worthwhile, it had to use a mainline OS. At the time, only Android with Google apps was available. However, Google rules back then couldn't allow this.
Would HNers be interested in such content? And in contributing to it? (my knowledge wrt monopolies is in my area of expertise, and let's just say I like being employable, so it's better if it doesn't look completely targetted)
Unfortunately, this subject area is full of strong emotions and opinions that make it hard for people to be objective.
For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work (edit to clarify: running BlackBerry’s own OS and software), and so did all my coworkers. Blackberry was the dominant mobile platform once. Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
I actually think it's not possible to be objective on that matter, hence it needs to be properly explained, to understand the limitations of one post (but the goal is to have many posts, so hopefully readers can reject the ones they feel is wrong)
> For example the article you link says that Google and Blackberry worked jointly on the 1:1 format phone, and jointly decided to stop working on it. That hardly sounds like an abusive monopolist.
Let's just say that I've seen a bit of first-hand, and a lot of second-hand of "Google working jointly with XXX", and in the vast majority, Google-side doesn't spend much engineering time on those issues. I completely agree this is not an objective point of view. This can hardly be proved, shown or explained, so I have no issue with you not taking my word for it. Hopefully if other people join this project, there might turn out /some/ people that you do trust?
> And sure, at that point Android was more popular than the BlackBerry OS. But this actually demonstrates healthy competition. I had a Blackberry for work, and so did all my coworkers. Blackberry was the dominant mobile platform once.
I wouldn't exactly call the replacement of BBOS by Android a "healthy competition", when the main reason Android won was that it was an OS completely free of charge, paid for by another recurring stream for the company. (I'm not saying Android was worse than BBOS, that I have no idea, )
> Through complacency and poor decision-making, they stopped innovating and competing. And thus, allowed new products with zero installed base on day one to come in and take their market.
That's irrelevant, and belongs to opinions.
It seems what you’re envisioning has a ton of overlap with his work covering monopolies.
I’m sure you two could work some magic together.
https://mattstoller.substack.com/
One issue I foresee, similar to how local business groups inevitably get overwhelmed with real-estate agents, is that this venture will get overwhelmed with complaints against ISPs and other utilities.
I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
For instance, trademarks are a monopoly, but I don’t think many of us want any company to be able to co-opt brand names. That seems pretty clear.
Getting less obvious, IP-protected interfaces like GoPro mounts or those dumb Kureig coffee pods. Nobody likes those proprietary interfaces, and they do give monopoly control, but are they economically bad?
And how about console games, where all of the makers subsidize low Hw margins (therefore higher sales) with monopoly control and a cut of game publishing. Would the market be better if that was prohibited?
It’s going to be pretty easy to dunk on obviously harmful monopolies. It might be more interesting to explore more nuanced cases.
Well, my current conclusion with my post is that wording is very very hard :-). What I said is "I want to show small-ish negative impact of a big tech monopoly". It will not prove it's all bad, even though it'll only give examples of where this is bad
> I think it would be very interesting to explore the boundaries of monopoly, and to look at cases where monopolies are probably a good thing.
Let's just say that the current tendency is to think that monopolies are fine, and I'd like to help reverting that. Yes your examples are worst discussing, and I have some of my own.
For instance, I definitely acknowledge that Android's monopoly helped whole unrelated sectors. But I also believe that innovation would be much better served if Android was opensource-in-spirit and maintained by something like the Linux Foundation.
> It’s going to be pretty easy to dunk on obviously harmful monopolies.
If it was, they would already have been ruled illegal? In Europe, I can't really name any "obviously harmful monopolies"
This is basically what he is doing except uncovering a monopoly in depth takes months, not a day. Amazing work.
E.g. here for cheerleading monopoly article he wrote
https://mattstoller.substack.com/p/how-a-cheerleading-monopo...
I don't think anyone disagrees that monopolies are cancer.
The hard part is coming up with a targeted cure that attacks monopolies without hurting innovation.
So far that seems impossible. Almost like monopolies are a natural result of innovation.
Do it and post it on here. Just be prepared to be flagged a lot.
> The bigger a tech company gets the worse it becomes at providing consumer and customer surplus, because it needs to eat that margin (of a sort) to keep growing. Growth demands that tech companies eventually consume that which first engendered them good will.
When that comes to Google, I think they are talking about "eating the margin (of a sort)" of the good experience for end users, people searching. But the reality is they are actually eating the very real margin of the advertisers, their "actual customers".
In the last ten years, through the excessive ingestion of data about the advertisers businesses, Google has sought to expand their bottom line by extracting as much revenue from advertisers as possible. The advertisers margin has become Google's target revenue. If (nearly) all advertising is via Google, their only way to grow that revenue is by extracting more of the advertisers margin.
When you advertise on Google (and FB for that matter) you now have to transmit to Google's algorithm all data about all transactions on your site. This is sold as training the algorithm to enable the targeting of customers. But what you are in fact doing is telling Google everything about your revenue, they know exactly how much you are receiving from all sales. The algorithm is designed to maximise the extraction of the advertisers margin, to squeeze it as much as possible.
This is going to come back and bite them. I believe advertisers are going to fall out of love with Google, if they haven't done so already.
Google are the ultimate beneficiary of the auction, but don't show how it operates, what the other bids were, and how they reached a value for the placement.
On top of that as the advertiser you have been forced to give Google your full revenue numbers in order to play this game.
In my opinion Google needs breaking up, they should not be able to operate as both the marketplace/exchange and the vendor when they have a monopolistic position. The advertising marketplace/exchange should also be regulated in the same way as financial exchanges.
This should just be codified into law, regardless of monopolistic intent. Any vendor that uses their position of power to limit the freedom of their customers should be hit with the full extent of the law - starting with FAANG, and then working our way down from there.
I’m worried more about Apple. Why? Because Apple has been a counterweight to ad-tech. They’ve been able to champion privacy and UX for actual end users, they have literally been forced to care. But now they’re expanding into ad-tech as well, that’s terrifying; there is literally only Google left, and they’re full-on ad-tech already. So that means mobile (by far the biggest and most universal computing platform worldwide) will have NO customer champions. (Caveat Apple treats customers bad already yadda yadda, but this point still holds). This will be a truly “advertiser first” world.
I’m no antitrust expert, but I can understand a company maximizing its core business (or “do one thing really well”), and I can even respect pure ad-tech. What truly sucks though, is these “expand into every crack of the market” faceless mega-behemoths that these companies all become. (In McKinsey speak, I believe this horror is known as vertical integration.) This always sucks for the consumer.
That doesn't make for a great democratic rule.
If that inflation wasn't part of the picture, companies holding steady would be more acceptable.
Although you wouldn't hear about it in the press; the hot companies are always the ones that are growing. There isn't much to say about companies that just sit there.
Your comment is common but it implicitly assumes a stable steady-state in the business landscape. (E.g. phrases such as "profit _will_ continue to for the foreseeable future,")
That type of thinking can work for local businesses (isolated from global competition) such as a small family restaurant. The owner opens a new restaurant with 10 tables and then maybe the business modestly grows to 15 tables a few years later and then stops growing. The owner is able to maintain a steady-state business of repeat patrons at the restaurant for decades with predictable profits. Another example of somewhat predictable profits on a larger scale are legacy oligopoly/monopoly businesses such as railroad companies.
But unlike local restaurants, many businesses have to aggressively compete in national and global markets and if it stops growing, it starts dying. Predictable profits are not guaranteed for the foreseeable future. That's why giants like Motorola and Nokia got their mobile phone business killed by a (growing) hobbyist computer company named Apple. (Motorola and Nokia are still big but not as big as they once were.) The businesses in hyper-competitive spaces like technology etc are a basically in a Red Queen race: https://en.wikipedia.org/wiki/Red_Queen_hypothesis
E.g. Why can't Blockbluster Video stop worrying about growth and just pay dividends from profits? Because an upstart like Netflix competed away Blockbuster's rental profits. Using hindsight, we can see that assuming Blockbuster could just pay "dividends regularly and for the foreseeable future" is flawed. The same broken assumption is happening to Netflix today: Why can't Netflix stop worrying about growth and just pay dividends? Because Disney+ and HBO MAX are competing away Netflix's profits.
Growing revenue and profits allows adaption to new competitive threats.
It isn't just the investors who want growing businesses. The prospective employees find them desirable too. Many talented graduates of engineering would rather get a job with a growing Apple than a declining Motorola/Nokia.
If you leave profit (growth, resources) on the table, someone else will pick them up and beat you with it.
The supposed analogy is biological. You may choose to check out of the always-do-more-with-less rat race, or even out of existence completely. But that choice will help populate the world with "not your successors". Similar with companies: your "sustainably making profit" premise is incompatible with "willingly foregoes growth / change" – at least in the long term, due to competition.
But the transition between growth and value is a bit tough. You need to stop hiring like crazy, intern promotions suddenly go more stale as a result, stock compensation is hurt a lot so your employees might not be super happy with it, the story is also appealing to a completely different kind of people, and your stock goes down a lot at first, all your financing suddenly gets a lot more expensive etc.
It is possible that we are witnessing that transition in some of the tech companies right now, as the symptoms match, but it really is too early to tell.
The car industry is a great example. If you're not growing (in the most basic sense - new products, new markets), you're dying.
That's even more true in tech.
The US in particular greatly disincentive dividends, putting larger taxes over them than over any other form of profit accumulation.
Sort of like a malign tumor, which in the end kills the host and itself.
It's just propaganda. Nothing grows endlessly, apart maybe from human greed and idiocy.
Also some growth is "mandatory" because of inflation. If you don't grow your profits but there is inflation, your profits in reality shrink.
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They usually build something and price it at a loss, because big companies can afford that till start ups go under.
Or unfairly using their services to hinder competiton.
Amazon is a big prepetrator of this. There was a smart oven, sold on Amazon. Amazon was also an investor, who made their own into a basics product at a loss.
While I agree that startups can disrupt the big monopolies, past Uber, I now find them just as dangerous as big companies to the customers and the societies they live in. Perhaps more so, because big companies don't have to disrupt anything to extract their rents.
I feel startups are not like they used to be. Or maybe they always were what they were, and I became disillusioned only recently. Either way, today, this is a well-developed process of wealth transfer. In a sense, startups aren't something opposite to big companies - they're the means big companies use to frack an existing market and pump out all value. Startups are an integral part of the market ecosystem now, and from the POV of those at the top, it's arguably a symbiotic, not parasitic relationship.
--
[0] - I used to call it "strip-mining a market for all its worth", pointing at fast extraction of value with no concerns about sustainability, but I think "fracking" is better, as it also evokes the image of first cracking the market by a sudden, focused infusion of seemingly infinite free money.
Not all markets are winner takes all or even close to it
- the actual innovators are rewarded
- innovators have more skin in the game
- innovators live or die by their execution
Not so with the monopolies.
But the pattern seems to repeat on so many levels, and at so many different time frames: pump in money in a manner that seems generous, so as to gain control of a market. Then use that control to maximize one's own profits.
history from Perspective Of The World:
https://www.amazon.com/Perspective-World-Civilization-Capita...
Gods murder their primordial parents. Republicans overthrow kings and crown a Napoleon. The liberator-opressor complex litters history.
The first step is to notice the cliche and expect it. The phenomenon exists. Next step, tread lightly. Any reason you think up is too specific. Your reason why Microsoft became IBM under Ballmer does not explain why Cronus castrated Uranus or why he wanted to eat baby Zeus.
That said... I think "you are what you eat" is inescapable long term. Wikipedia would not have been wikipedia if it had been a startup, IPOed, etc. If you are a giant software company deeply embedded into locked in customers across all industries... you will have IBM-ish tendencies. Ballmer is Thanos, inevitable.
Some examples to rattle off a few household names: instagram, whatsapp, youtube, tumblr, android, beats, audible.
YouTube had huge storage and bandwidth costs and was about to be sued out of existence.
Tumblr wasn’t exactly doing great before being bought by Yahoo and Yahoo wasn’t exactly a monopoly when it acquired Tumblr and its current owner is definitely not that big.
How do you think Android would have succeeded when better funded companies like Microsoft, RIM and Palm failed to make a dent?
Beats was already profitable before being acquired by Apple. No one can credible claim that Apple has a “monopoly” on headphones or in streaming music.
Wearing my “enterprise architect” hat, I love stability. I don’t want to choose a technology that just might be the silver bullet but probably isn’t, and will in fact be abandoned and need replacing in 2 years.
But with my “Hacker News reader” hat on, stability is boring. Constantly inventing and testing new ways of doing things is how we progress as a species. Anti-trust speeds that up and so I love it.
I guess I want a constant churn of innovation with other people bearing the risk. Perhaps if anti-trust were more aggressive it would at least level the playing field - at the moment, most innovation is from companies who can afford to drop $10B as an experiment. (And they get a tax refund either way.)
Startups will bring translation layers to fit inside an existing system, and as a big client you can often send them the exact interface they need to adhere to and they’ll deal with it.
In that sense, the switching cost can be minimal (and you might keep your existing system running in parrallel), and if you’re big enough you’ll have the option to outright buy the smaller business if it were to flail.
It’s more complicated I think on the B2C side, where you have to buy more trust and establish a brand for people to give your their data and/or money.
This changed my attitude quite a bit. In particular in the US the debate is often framed from the perspective of the very few individuals adverserly impacted by anti-trust. "If you break X apart, who will want to be the next Y? The answer is quite literally: hundreds of people gleefully waiting to take even a fraction of that market.
If there is a void to fill, someone will always do it. I think of all the measures one can take, anti-trust is one of the least disruptive things to the ecosystem overall, because it not only doesn't diminish, but strengthens market dynamics.
> [...] Oracle became a company more famous for its legal department than new innovation.
Just like most other regulation 'anti-trust' is just another weapon that those with a big enough legal department can wield against the competition.
We need more competition, not less. Eg we need to allow Wal-Mart to open bank accounts.
I'm not trying to defend the author.
But there's no "mental leap" here; that's exactly the real-world, observable effect of anti-trust legislation when it is enforced. And what we're seeing now with the FTC is precisely the enforcement, for the first time in decades, of existing anti-trust legislation.
If your point is "legislation isn't enough", you're right, but trivially and uselessly right. Of course the real effect comes from enforcement, just as making murder illegal but then not charging and arresting murderers would, obviously and trivially, not decrease the rate of murder.
The problem is that it's selectively enforced, which makes the legislation dubious at best. There are hundreds of monopolies or quasi-monopolies out there that will never be challenged.
My point is that 'anti-trust' legislation is at best pointless and at worst counter-productive to actually do anything about 'trusts'.
Did you know there's a huge cheerleading monopoly [0]? There is essentially one company that runs the competitions, sells the uniforms, and sells the equipment. A quote from the article:
> The most interesting aspect of this case are not the legal arrangements, but the fear that I found in interviewing people in the cheer world. Virtually every interview I did was under the condition that the person remain anonymous for fear of retribution. Often people would email me saying that I had no idea the depths of the scandals in the sport.
How about monopolies in port-a-potties and MMA? [1]
The alternative seems to be that you do...nothing? And just let them keep consolidating a market? That can't be good.
Antitrust needs enforcement so that we can have competition.
[0]: https://mattstoller.substack.com/p/this-is-not-a-democracy-i... [1]: https://mattstoller.substack.com/p/a-land-of-monopolists-fro...
To posit a real world example, when the predator overkills, the ecosystem dies.
To cite just a handful of examples:
https://blogs.scientificamerican.com/extinction-countdown/wo...
https://en.wikipedia.org/wiki/Surplus_killing
Top down pressure on monopolies keeps competition healthy and active. A neverending arms race, which is good for innovation. It prevents lethargy, malinvestment, stagnation, and mere taxation.
Huh? What does a biological predator/prey relationship have to do with economic competition?
Because it sounds highly unlikely to me.
The whole point of anti-trust is to provide a check on only the most massive companies that over rent-seek their market and cannibalize competitors, before the startups are able to get off the ground, literally crushing competition.
Anti-trust fosters competition by design.
>
One of the most worrisome statistics in antitrust is that for every case brought by government, private plaintiffs bring ten. The majority of cases are filed to hinder, not help, competition. According to Steven Salop, formerly an antitrust official in the Carter administration, and Lawrence J. White, an economist at New York University, most private antitrust actions are filed by members of one of two groups. The most numerous private actions are brought by parties who are in a vertical arrangement with the defendant (e.g., dealers or franchisees) and who therefore are unlikely to have suffered from any truly anticompetitive offense. Usually, such cases are attempts to convert simple contract disputes (compensable by ordinary damages) into triple-damage payoffs under the Clayton Act.
> The second most frequent private case is that brought by competitors. Because competitors are hurt only when a rival is acting procompetitively by increasing its sales and decreasing its price, the desire to hobble the defendant’s efficient practices must motivate at least some antitrust suits by competitors. Thus, case statistics suggest that the anticompetitive costs from “abuse of antitrust,” as New York University economists William Baumol and Janusz Ordover (1985) referred to it, may actually exceed any procompetitive benefits of antitrust laws.
See the linked article for more details.
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Walmart is allowed to offer bank account in the US. They can even buy an existing small bank and spin it up tomorrow.