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Should We Break Up the Tech Giants? Not if You Ask the Economists Who Take Money From Them (fastcompany.com)
This week's FTC hearings on the growing power of companies like Amazon, Facebook, and Google only included economists who have taken money, directly and indirectly, from giant corporations that have a stake in the debate. From a report: Amid growing concern over the power of such behemoths as Amazon, Google, Facebook, and other tech giants, in recent months there's been a bipartisan push for better enforcement of antitrust rules -- with even President Trump saying in August that their size and influence could constitute a "very antitrust situation." The Federal Trade Commission (FTC) has launched its most wide-ranging study of corporate concentration in America in more than 20 years with a series of hearings being held around the country. Chairman Joseph Simons, a practical enforcement-minded leader, launched the hearings by expressing concern over the growing problem of monopoly, which is now found in nearly every sector of the economy. "I approach all of these issues with a very open mind," said Simons, "very much willing to be influenced by what I see and hear."
But there's a problem. The FTC organized these hearings so that Simons and the public would be hearing from many economists who have taken money, directly or indirectly, from giant corporations. For example, on Monday, the FTC convened a panel titled "The Current Economic Understanding of Multi-Sided Platforms" to look specifically at the most dynamic and dangerous set of concentrated economic actors, the big tech platforms. Every single one of the economists who testified had financial ties to giant corporations. One example is David Evans, the chairman of the Global Economics Group. Evans scoffed at the danger of platform monopolies. He indicated that the question of "whether Facebook and Google and Amazon are monopolies, it's all interesting, it's great to read in the New York Times," but it's "not all that relevant" to the practice of antitrust. His firm has taken money directly from Microsoft, Visa, the large investment bank SIFMA, and the Chinese giant tech giant Tencent. Another example is Howard Shelanski, a partner at Davis Polk. Shelanski is more enforcement-minded, but he expressed caution, testifying that we don't know enough for antitrust enforcers to understand whether powerful technology companies hold unassailable market positions. Shelanski pointed to his own children, saying that they've stopped using Facebook because it's uncool. As it turns out, his law firm's clients include Facebook, as well as Comcast, and Chinese search giant Baidu.
But there's a problem. The FTC organized these hearings so that Simons and the public would be hearing from many economists who have taken money, directly or indirectly, from giant corporations. For example, on Monday, the FTC convened a panel titled "The Current Economic Understanding of Multi-Sided Platforms" to look specifically at the most dynamic and dangerous set of concentrated economic actors, the big tech platforms. Every single one of the economists who testified had financial ties to giant corporations. One example is David Evans, the chairman of the Global Economics Group. Evans scoffed at the danger of platform monopolies. He indicated that the question of "whether Facebook and Google and Amazon are monopolies, it's all interesting, it's great to read in the New York Times," but it's "not all that relevant" to the practice of antitrust. His firm has taken money directly from Microsoft, Visa, the large investment bank SIFMA, and the Chinese giant tech giant Tencent. Another example is Howard Shelanski, a partner at Davis Polk. Shelanski is more enforcement-minded, but he expressed caution, testifying that we don't know enough for antitrust enforcers to understand whether powerful technology companies hold unassailable market positions. Shelanski pointed to his own children, saying that they've stopped using Facebook because it's uncool. As it turns out, his law firm's clients include Facebook, as well as Comcast, and Chinese search giant Baidu.
>ask the industry
Seems like wasted steps. Just write BUT INNOVATION on a sign and hold it up when necessary.
The tech giants have a monopoly. Facebook, Microsoft, Apple, Google
You listed 4 companies. That doesn't sound like a monopoly to me. I consider the tech companies and their size and prominence to be something to watch and be concerned about to watch out for their worst anti-competitive behaviours, but I wouldn't go so far as to break them up. Nothing any of them is really a monopoly at this point.
Facebook probably comes the closest; but there is still twitter and linkedin that are independent.
"That's the way to do it" - Punch
Break 'em up,specially google and facebook!
Under what context? Just because you don't like them? Because they're too big and successful? They're not really monopolies- and yes, they do abuse their power with anti-competitive behaviours at time, but the courts slap them when they do. I don't see any legal justification to break them up.
"I don't like them" isn't a good reason.
"That's the way to do it" - Punch
Doesn't sound like it?
It takes only ONE company for a monopoly.
You're right, we've got a oligopoly. Far worse.
Get Nationalized.
If they cannot be broken up under tge current laws then I am of the opinion thye must then be changed,for Google has a monopoly of search engines and FB on the social network scene. They have done more harm than good and are already far too embedded into the life of ther average individual. This isnt about laws,but public health.
Anybody taking money from the tech giants are in a conflict of interest and so need discounted.
The tech giants have a monopoly. Facebook, Microsoft, Apple, Google, If they aren't going to be broken up, then Bell telephone and GM both need to sue the government because they were broken up and they were smaller and less controlling than the tech giants of today.
Ever look at the the market capitalization of the companies that were formed from the breakup of AT&T?
Going even further back, when John D. Rockefeller was asked for advice about Standard Oil being broken up, his reply was, "Buy Standard Oil stock."
When you look at the market capitalization for the multitude of companies Standard Oil was broken into, you're not going to get many shareholders wanting to go back.
Same with AT&T.
The only reason breakups are opposed is control - AKA egomania for guys like Fuckerburg.
Facebook doesn't have a monopoly on search. Microsoft doesn't have a monopoly on social networking. Google doesn't have a monopoly on operating systems. All three however do have monopolies.
I'm actually not sure why the GP mentioned Apple, they don't appear to me to have a monopoly in anything major, maybe control over applications for their own devices? Even that's suspect.
You are not alone. This is not normal. None of this is normal.
"I don't like them" isn't a good reason.
What? Have you been living under a rock?
"I don't like them" is now considered a great reason for just about anything! Evidence be damned!
I hate Google and Facebook with a burning passion, and would love to see them fail, but even for those stinkers: what right would the government have to break them up? The whole discussion makes no sense to me.
If they were engaged in specific abuses of monopoly power, hold them accountable for that (as the EU has been doing with Google), but this seems like a straight-up desire to punish success. Heck, as much as I hate the lack of an alternative to e.g., YouTube and it's bizarre and arbitrary censorship, it's not like Google has been unfairly stomping competing products - people just like YouTube.
Regulate them as carriers? Sure, that's an interesting discussion, and the conclusion isn't obvious. But break them up? On what basis other than envy?
Socialism: a lie told by totalitarians and believed by fools.
Natural monopolies do not need to exist. We just got jinxed into believing they need to. Power companies are a great example. In Texas you can purchase power from any producer you choose, and the rates are pretty good.
I hope you realize that the only reason you can buy power from the producer of your choice is because the state of Texas mandates that distributors must deliver power from any supplier - and that is done by regulation. Without regulation, you would buy electricity from whoever your last mile provider said you would buy it from. Texas did go through "deregulation" in 2002, but that only refers to suppliers - the entire market only exists because of the regulation placed on the distributors and those in charge of the large-scale transmission lines.
If there is a monopoly that forms, it won't stay a monopoly for long. At some point, it's profits will reflect its monopoly, and new entrants will raise the necessary capital to compete with it, based on a stronger value proposition (sacrificing those profits in the industry for market share).
The big tech companies often benefit from "network effects". Facebook's value comes from the people you can connect to on Facebook. Social platforms have an inherent tendency to reward technologies with more users. Add to that the fact that software development is expensive, but is only done once and the cost is divided across all participants, and you get a market where large companies earn more dollars per new head and software improvements cost fewer dollars per head. That's a huge advantage to incumbents.
MySpace will never be defeated?
Yes, I totally said that. Thank you for translating to the world that "That's a huge advantage to incumbents" is exactly the same thing as "Incumbents can never be defeated".
where a virtual company with a free product is going to use their powers as a monopoly to affect my life? If you think that facebook, which is a voluntary, needs to be broken up because it's too big than you've got some screws loose. No one is forced to use it (hopefully), other social media exists and is allowed to be created whenever by whomever, and it actually increases in value the larger it gets. A town owned facebook is useless.
You need to read up on the history of standard oil and ATT.
The government has a vested interest in not allowing businesses to become 500lbs gorillas.
If they cannot be broken up under tge current laws then I am of the opinion thye must then be changed,for Google has a monopoly of search engines and FB on the social network scene. They have done more harm than good and are already far too embedded into the life of ther average individual. This isnt about laws,but public health.
If we're redefining "monopoly" to mean >60% of a market, then the anti-trust lawyers are going to be busy for the next century.
By that definition:
Raytheon is too big.
Lockheed Martin is too big.
Boeing is too big.
Kraft Heinz is too big.
General Mills is too big.
Procter & Gamble is too big.
Dow Du Pont is too big.
GlaxoSmithKline is too big.
Walmart is too big.
News Corp is too big.
Walt Disney is too big.
NBC Universal is too big.
Comcast is too big.
General Electric is too big.
Bank of America is too big.
Adobe is too big.
NVIDIA is too big.
BNSF is too big.
Visa is too big.
AT&T is too big.
Each and every one of those companies has a >60% marketshare in something, and has leveraged that marketshare to gain something else, somewhere, the criteria for violating the Sherman Anti-Trust Act.
You know what? I agree. Let's break them up. Let's break them all up.
Oh wait. You only wanted to break up the ones with politics you don't like. Right.
Selective enforcement is indistinguishable from fascism.
They thought like you do.
Dunno. I think they did have a huge advantage, but that was overcome by several factors. First, the market was growing, so a competitor could gain fewer users, but still gain a measurable amount. Second, Facebook focused on higher education only, so they were able to become the dominant social network for a specific market segment, then counted on those users to want to continue to communicate with the people they knew back in college.
In summary, you can have a "huge advantage" and still lose. The evidence that Myspace lost is not evidence that incumbents don't have a huge advantage where network effects are significant. Your logic is flawed. You saying it again and telling me the story of Myspace doesn't fix your logic error. A single contrary event is not evidence of the non-existence of a trend.
If you could produce some sort of evidence that shows that competing against Facebook is no harder than competing against the TV repair shop down the street, then you would be on the right track from a logic perspective.
The government has a vested interest in not allowing businesses to become 500lbs gorillas.
The government has a vested interest in preventing abuse of monopoly power. But that's not what we're talking about here. There's nothing implicitly wrong with a company being very successful.
I think the real topic is "how do we regulate social media to prevent corporate abuse of communication platforms for political ends?" This is something we've figured out for other carriers and broadcast companies: you're either just a pipe, or you're a publisher responsible for what's published.
Socialism: a lie told by totalitarians and believed by fools.
Your prognostication is no more logical than mine. You just believe 'past performance is predictive'.
I said no such thing. All I said was that incumbents have a huge advantage. I never said they couldn't lose, or that they wouldn't lose, or made any other prediction for the future of any of the tech giants. You equated my statement that they had a "huge advantage" to a prediction... and I've been trying all day to inform you that it was the little man in your head that said that, not me.
What I did say (huge advantage) is simply the network effect and is believed by pretty much anyone that has given this more than ten seconds of thought. There's no way you can spin this as "you're wrong too".