You Have To Distort The Facts Pretty Badly To Argue That Google & Facebook Are Worse For Consumers Than AT&T

from the just-sayin' dept

We’ve had our run-ins with Jonathan Taplin before. The quintessential OMYAC of the legacy entertainment industry, who is so obsessed with the nefarious things he insists Google and Facebook are doing (even though he’s often flat out wrong), is back in the pages of the NY Times, arguing that regulators shouldn’t be so concerned about AT&T, when they should be attacking Google and Facebook instead.

Taplin kicks it off by jumping on Mark Cuban’s ridiculous comments from last week saying that AT&T should be able to buy Time Warner so that it can “compete” against Google and Facebook, and then takes it to an even more ridiculous level. The crux of Taplin’s argument: Google and Facebook are big, and thus bad, and need antitrust treatment.

Look at the numbers. Alphabet (the parent company of Google) and Facebook are among the 10 largest companies in the world. Alphabet alone has a market capitalization of around $550 billion. AT&T and Time Warner combined would be about $300 billion.

Yup. They’re big companies — and certainly, like with all big companies, we should be wary about how they might abuse their powers. But big, by itself, isn’t automatically bad. And the nature of antitrust is not that big is bad, but that abusing monopoly power is bad. And Taplin has no way to show either (1) monopoly power or (2) abusive behavior, so he just starts throwing numbers.

Alphabet has an 83 percent share of the mobile search market in the United States and just under 63 percent of the US mobile phone operating systems market. AT&T has a 32 percent market share in mobile phones and 26 percent in pay TV. The combined AT&T-Time Warner will have $8 billion in cash but $171 billion of net debt, according to the research company MoffettNathanson. Compare that to Alphabet?s balance sheet, with total cash of $76 billion and total debt of about $3.94 billion.

Nice cherry picking, Jonathan! The real scam in fake antitrust complaints is trying to define the markets in a way that looks much worse than it really is. Notice that Taplin focuses on “mobile search” (random?) as the market for Google and “mobile phones” for the market for AT&T. But he leaves out the simple facts: if you need an internet connection, in many cases AT&T is either your only option or one of two options. And if you do that, AT&T gets to see everything you do. And switching broadband providers or mobile phone providers is a complicated and often expensive process. Switching a search engine… is not.

Then, to get to the question of “bad behavior,” Taplin falls back on the silly line that because Google and Facebook have made a lot of money, and his buddies in legacy entertainment companies have been making a lot less money, that somehow Google and Facebook have unfairly taken money from his industry. That’s just silly.

In the past decade, an enormous reallocation of revenue of perhaps $50 billion a year has taken place, with economic value moving from creators of content to owners of monopoly platforms.

I reached this conclusion from the following statistics: Since 2000, recorded music revenues in the United States have fallen to $7.2 billion per year from $19.8 billion. Home entertainment video revenue fell to $18 billion in 2014 from $24.2 billion in 2006. United States newspaper ad revenue fell to $23.6 billion in 2013 from $65.8 billion in 2000.

And yet, by every available metric, people are consuming more music, video, news and books. During that same period, Google?s revenue grew to $74.5 billion from $400 million.

Sing it with me, folks: correlation is not causation. After all, the number of works of visual art copyrighted in the US similarly has an inverse correlation to the number of females in NY who slipped or tripped to their death (really!). It doesn’t mean it’s a causal relationship where more of one means less of the other.

The reason that Google and Facebook are making lots of money is because they’re offering a product that people want and they’re doing it for free and have come up with business models that work. The reason legacy entertainment companies are flailing (and, realistically, only some of them are), is because they tried to stick with their old business model that focused on basically ignoring or mocking and attacking competition from new sources.

The problem, in short: Taplin’s whole world revolved around elitism and gatekeepers. The business models he celebrates are gatekeeper business models — the ones that keep out the riff raff and the people that Taplin likes to insult because he thinks their “art” isn’t good enough to be seen by the world. The world of the internet is the opposite. It’s about enabling anyone to be a creator, and to open up new avenues to create, to share, to promote, to distribute, to build a fan base and to monetize. Those were all functions that Taplin and his friends used to control, with a strict lock on the gate, allowing them to artificially inflate the prices. When the new platforms came on the market and democratized every bit of the process of creating/distributing content, suddenly the “deal” offered by the gatekeepers didn’t look so good. And that’s why those busineses have struggled.

And it’s why, comparatively speaking, most of the public likes companies like Google and Facebook, while they hate AT&T. Find me a list of consumer satisfaction or most admired companies where AT&T outranks either of the other ones. Antitrust should be about protecting consumers — and the public is pretty happy with the services it gets from Google and Facebook… but not so much with AT&T.

But, of course, to Taplin, it all comes back to piracy, because he’s absolutely sure that’s why everyone uses Google and Facebook, even though he’s wrong.

Every pirated music video or song posted on YouTube or Facebook robs the creators of income, and YouTube in particular is dominated by unlicensed content. Google?s YouTube has an over 55 percent market share in the streaming audio business and yet provides less than 11 percent of the streaming audio revenues to the content owners and creators. But Facebook, which refuses to enter into any licensing agreement on music or video, is challenging YouTube in the free online video and music world.

As we discussed a few months ago, when you look at the actual data, only 2% of music video views on YouTube are unauthorized. 2%. So, no, YouTube is not “dominated by unlicensed content.” That’s simply and utterly false. And, no, even those unauthorized videos are not “robbing creators of income.” Many smart creators these days are using YouTube as a platform to get more fans and build a bigger support base, which they can take to platforms like Patreon or Kickstarter, rather than having to give up everything to sign with a major label run by one of Taplin’s friends.

I recognize that Taplin’s friends have struggled to understand and adapt to this new world. And I understand that they want to lash out at the big companies like Google and Facebook that have helped make this world a reality. But why does the NY Times keep letting him publish blatantly factually false information? Oh, and the kicker? After a long rant that is full of misleading buillshit… he asks for “an honest national conversation.”

Perhaps in January we can have an honest national conversation on monopoly and our future.

If we were to have an honest conversation, it would have to leave out Taplin’s lies.

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Companies: at&t, facebook, google

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Comments on “You Have To Distort The Facts Pretty Badly To Argue That Google & Facebook Are Worse For Consumers Than AT&T”

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That One Guy (profile) says:

'Conversation', you know, when one person does all the talking and the other person shuts up and listens

Perhaps in January we can have an honest national conversation on monopoly and our future.

From the sound of it he wants an ‘honest conversation’ in the same way that those aiming to undermine encryption do, which is to say ‘I speak, you accept anything I say at face value and agree’.

Anonymous Coward says:

AT&T should be able to buy Time Warner so that it can "compete" against Google and Facebook

They have a funny way of competing, buy up a legacy content creating and owning company to compete against companies that are services whereby anybody can publish content. If AT&T really wanted to compete against those companies they would eliminate data caps, and invest in server farms, for content distribution and provide people with better publishing platforms than Google does, when they could reclaim the advertising revenue that they are losing. The part of competing that they would find difficult is letting content creators keep their copyrights, and the ability to move their content to a different platform if they wanted to.

Trying to buy up what is rapidly becoming a minor player in content creation is not the way tp compete with companies that only provide services to content creators. Also, giving up on the data delivery business is to hand control over content delivery to others, who have decided that they will charge the content providers to deliver streaming data.

Mason Wheeler (profile) says:

Sing it with me, folks: correlation is not causation. After all, the number of works of visual art copyrighted in the US similarly has an inverse correlation to the number of females in NY who slipped or tripped to their death (really!). It doesn’t mean it’s a causal relationship where more of one means less of the other.

In this particular case, though, there absolutely is a causal relationship. Technology companies are out-competing them by having a better product, and are ending up eating their lunch.

Thing is, that’s exactly how the system is supposed to work. Sucks to be the guys who failed to compete, but that’s their problem. They have no right to make it Google’s problem.

Espryon (profile) says:

AT&T hasn’t caused an election to be shifted because of the availability and volume of fake news on facebook and google search results. I hate AT&T as much as the next nerd here but, I also realize Donald Trump is most likely the president because of how little Google and Facebook care about the quality of their products vs the ability to profit off of those products.

David (profile) says:

Re: Facebook, Google changed the election == BS

The issues are clear and yet you jump into tinfoil hat land without addressing the point in question (ATT/TWC merger should be allowed because Google/Facebook are bigger and take revenue from his friends).

It appears to be true that Facebook had some dubious solution in their attempt to replicate the AOL experience. Google however does searches and ad services. Yet you blame them for the idiots that voted for Trump?

Show me the data that Trump voters would have voted Democratic without fake news. You cannot, because they will believe anything that aligns with their twisted world view. They routinely don’t believe the truth.

Espryon (profile) says:

Re: Re: Facebook, Google changed the election == BS

Theres no conspiracy here. TIME Magazine and 60 Minutes interviewed the people in X-Soviet Countries (US along the border with Russia) and some media companies in the US and how they created fake news because it would generate increased traffic to their website and enable profiteering off of advertisements and traffic. There’s no conspiracy that people were misinformed by these fake news sites and it enabled Trump to get elected because of the massive mistrust in the establishment media in the US. People found a way to fill that void, along with it being profitable to fake news organizations. Google and Facebook noticed this and did nothing because it was profitable, its their fault as much as it is people who’re responsible for informing themselves with news that is accurately sourced.

Wendy Cockcroft (user link) says:

Re: Re: Re: Facebook, Google changed the election == BS

Assume you’re right: what are they supposed to do about it? Mike wrote an excellent post earlier about how FB plans to call out BS news without blocking it. I predict that’ll run into trouble as people argue over what constitutes real and fake news based on their partisan preferences.

So, then, who gets to be the Decider, the curator who proclaims that “this news” is good and the source trustworthy, and that “that news” is bad and the source very dodgy? There’s your problem.

Anonymous Coward says:

A little history:

Google (Alpha-whatever), and Facebook both rose to their current market position by out-competing an existing “monopoly” player. (Yahoo for Google, MySpace for Facebook.)

at&t came about because Alexander Graham Bell happened to get his patent approved first. His Bell Telephone then grew by force of monopoly, imposed by bribes, lawsuits, and outright violence.

(*Oh, and “Market Cap” has little to do with a company’s size. It’s just a consensus opinion of a company’s total worth at one slice of time, and is subject to extreme and rapid change, see: dot-com bubble)

orbitalinsertion (profile) says:

Re: Give it the fuck up Mike.

How does this even have anything to do with some unstated purported wrongdoing on Google’s part? How is allowing yet another monopoly-boosting merger (far worse than what the original AT&T was dismembered for) address some putative wrongdoing of Google? Or is this just another boilerplate Mike-is-a-shill-for-X comment pasted wherever you see Google or whatever favorite target mentioned on techdirt?

As to that, I am hardly a Google fan, and have never seem Mike doing anything to shill or defend bad actions by Google, and i would be predisposed, i think, to see such things.

You want to kill these companies? Start infiltrating the advertising world and corporate marketing with people who think sensibly. Of course, the same companies who want Google or Facebook dead so bad are large corporations who must spend hefty amounts advertising on… Facebook and Google. Their ad revenue is not coming from the little guys.

Anonymous Coward says:

Re: Re: Give it the fuck up Mike.

I think we have a shill for big content here, and big contents beef with Google and Facebook et al. is that they allow the publication of content without acting as gate keepers. This is creating intense competition, and they are not willing to turn themselves into service providers, rather that content buyers, and so are losing their audience to ore content providers than they can count.

There are now many more hours of video and music, along with many more words that the legacy industry can keep track of being published per minute on the Internet, and I think they fear being drowned under that flood.

Google and the other search engines, along with social media sites, are the key to stopping that flood, as they are the means by which people find what interests them. They are forced to use these services themselves to keep themselves in front of their target audience, but they also see their audience drifting away.

Anonymous Coward says:

Re: Give it the fuck up Mike.

The long established history is that of bullshit stories being publishing as “news”.

What “red handed” activity were either accused of?
What “red handed” activity were either convicted of?
What “red handed” activity was actually complete made up bullshit?

Few things are simple and easy, complex and convoluted is the norm. Simple minds are easily lost in the maze they create.

crade (profile) says:

The nice thing about both Google and Facebook is that the barrier to entry for competition is almost non-existent. If I wanted to, I could start up my own search engine or social media site and throw it online myself. The reason people use these isn’t because they have a monopoly, they choose to use them over the competition because they continue to do such a damn good job.

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