Why Startups Aren't Pushing the Feds To Break Up Big Tech (axios.com)

An anonymous reader shares a report: Today's tech startups have largely stayed out of the debate over whether antitrust law should be used to humble -- and possibly break up -- giants like Facebook, Google and Amazon. Startups are often in position to lead the antitrust charge against major competitors. But entrepreneurs face a dilemma: If they go running to regulators, they have to admit they're in danger and tick off a powerful player in their world. If they do nothing, they risk bleeding out.

[...] Tech giants have immense leverage over startups. "The tech hypercaps have never been more powerful relative to startups, including Microsoft in the '90s," said Sam Altman, the president of startup accelerator Y Combinator. "[T]he resources are so mismatched it's an unfair fight." Startups (or larger competitors) can confidentially press their case before staff members at the Department of Justice or the Federal Trade Commission, or the startups can go public with their concerns. With the exception of Yelp, there are no major startups in the U.S. that have turned to regulators to take on today's biggest companies, like Facebook, Amazon, or Google. [...] Why startups don't lodge antitrust complaints: "Running a startup, running a growth company there's so many things to do, and every hour is precious," said Albert Wenger, a managing partner at Union Square Ventures.

Comments

And there's always the possibility...

[cayenne8]

....that your start up company could get big enough to be bought at a hefty fee by one of the big guys....

What would you rather do? Win the "good" fight, or work a few years, sell for a few billion dollars and be able to retire young and never have to work again?

I know which lines I'd be in....I'd be in the LOOOooooongggg line.

(with apologies to Richard Pryor).

Most of us remember...

[SvnLyrBrto]

We remember the time when MySpace was king and Facebook was a startup and Zuckerberg was a nobody. Or we remember MySpace knocking off Tribe, which knocked out Friendster, which stole away all of the LiveJournal user base.

Or we remember when Google was just a cute misspelling of the word for a 1 followed by 100 zeros, and we did our searching with Lycos, AltaVista, LookSmart, AskJeeves, or just welled on the Yahoo directory to find cool pages.

Or we remember when Microsoft was the unstoppable evil empire. And Apple was "beleaguered" and Mikey Dell was threatening a hostile takeover so he could "shut it all down and refund the money to the shareholders."

Or we remember when there was no Amazon and Barnes & Noble and Borders were the monolithic behemoths putting neighborhood bookstores out of business.

The real oldsters remember the days of IBM being the evil empire that even the US government was incapable of reigning in, and no one would buy a computer named after a fruit, and Gates and co. were rotting in a New Mexico desert writing an OS for a computer that communicated vis das blinkenlights.

Dominance in tech is fleeting, and has been for at least 50 years. I expect most startup founders are as aware of that history as anyone. And they probably all have dreams of. themselves, being that scrappy underdog that punches out an established player to become the king of the mountain. So it shouldn't be too surprising that they're wary of inviting the government in to interfere.

Anti-trust is too unwieldy - KISS

[bradley13]

The problem is: anti-trust just serves to shovel money into the pockets of lawyers, lobbiests and politicians. It takes years, even decades to come to an end. Remember the anti-trust hearings against IBM? By the time they were over, they were irrelevant.

What's needed is a simple, objective solution that avoids eternal hearings and court cases. For example, how about the following two rules:

- Any company with a valuation over $x may no longer merge, or acquire other companies.

- Any company with a valuation over $x * y must divest within z months, with the largest resulting fragment is valued under $x.

Valuation of public companies is easy: stock market capitalization. Privately held companies are somewhat more difficult, but they still file financial documents: if valuation is too difficult, one could substitute total turnover. Penalties for failing to divest must be massive: immediate and permanent closure, plus criminal liability for the corporate officers.

What values are reasonable? The threshold needs to be low enough to avoid large monopolies, and also to avoid companies becoming "too big to fail". Lower is better - I suggest that y = 4, and x = $25 billion, putting the upper limit at $100 billion.