Elizabeth Warren Wants To Break Up Amazon, Google And Facebook; But Does Her Plan Make Any Sense?
from the tell-us-how-you-really-feel dept
This isn’t necessarily a big surprise, given that she’s suggested this many times over the past few years, but 2020 Presidential candidate Elizabeth Warren has just laid out her plan for breaking up Amazon, Google and Facebook. It’s certainly worth reading to understand where she’s coming from, and some of the arguments are worth thinking about — but much of it does feel like just grandstanding populism in front of the general “anti-big tech” stance, without enough substance behind it.
Twenty-five years ago, Facebook, Google, and Amazon didn?t exist. Now they are among the most valuable and well-known companies in the world. It?s a great story???but also one that highlights why the government must break up monopolies and promote competitive markets.
I find this a very odd way to open this proposal. I don’t see how the first sentence supports the second. Indeed, the first sentence would seem to contradict the second. Twenty-five years ago those companies didn’t exist, and if you asked people what tech companies would take over the world, you’d get very different answers. Technology is an incredibly dynamic and rapidly changing world, in which big incumbents are regularly and frequently disrupted and disappear. One of my favorite articles to point people to was a 2007 article warning of the power of a giant monopolistic social network that would never be taken down by competition. That social network? MySpace. The article briefly mentions Facebook, but only to note that it “will always be on MySpace’s periphery.”
Let me make my position clear on all this too: I am always supportive of greater competition, and have always been a huge supporter of disrupting incumbents, because I believe that’s how we get to better innovations. But I also believe that this is rarely done by government intervention, and usually comes from new technologies and new innovations in the marketplace. For years now I’ve been talking about why the real way to “break up” big tech platforms is to push for a world of protocols, rather than platforms, which would push the power out to the ends of the network, rather than keeping them centralized under a single silo with a giant owner.
But I fear that nearly all of these plans to “break up” big tech actually make that harder. It doesn’t open up new opportunities for a protocol-based approach, and simply assumes that the world will always be managed by giant platform companies — just slightly smaller, and highly regulated, ones. And that might actually lead us to a much worse future, one that is still controlled by more centralized systems, rather than more decentralized, distributed protocols where the users have power.
The internet is a constant challenge with lots of new upstarts hoping to disrupt the big guys. And sometimes it works, and sometimes it doesn’t. We should be wary of companies with too much power abusing that position to block competition. And I’m certainly open to looking at specific situations where it’s alleged that these companies are blocking competitors, but a general position that says breaking up the internet giants seems more opportunistic and headline-grabbing than realistic.
In the 1990s, Microsoft???the tech giant of its time???was trying to parlay its dominance in computer operating systems into dominance in the new area of web browsing. The federal government sued Microsoft for violating anti-monopoly laws and eventually reached a settlement. The government?s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge.
Two things on this. First, Microsoft was clearly engaged in anti-competitive practices that were designed to restrict competition and harm consumers. There was clear evidence of the company proactively seeking to undermine competitors. There is (to date!) little such evidence of the same thing with the big internet companies. It is entirely possible that such evidence will eventually be found, and if that’s the case, then it’s reasonable to punish the companies for such practices. But, to date, all of the examples people cite as “evidence” of anti-competitive practices by the big internet companies really looks like reasonable steps to improve consumer welfare with their products (i.e., the opposite of what Microsoft was doing in the 90s.)
Second, I know some may disagree, but I find it difficult to believe that the government’s antitrust case against Microsoft truly “helped clear a path” for Google and Facebook. After all, that antitrust case fizzled with the DOJ, despite “winning” the case, eventually getting basically no real concessions from Microsoft at all. The argument that some will make was that merely being involved in the antitrust case helped clear the path by (a) distracting Microsoft and forcing it to spend a bunch of resources on fighting the DOJ and (b) by making the company more hesitant to continue its historical practices, but I’m not sure there’s much evidence to support either of those claims. Microsoft fell behind Google and Facebook because the company was structurally oblivious to the power of the internet, and when it finally realized the internet was important, really couldn’t make the necessary shifts to be a truly internet native company. Yes, it took over the browser market, temporarily, but was easily beaten back when better browsers came on the market.
The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive???which pushes everyone in the marketplace to offer better products and services. Aren?t we all glad that now we have the option of using Google instead of being stuck with Bing?
Again, this seems to contradict the larger message here. If Microsoft were a stronger company, then, uh, wouldn’t that mean Google had less dominance?
Today?s big tech companies have too much power???too much power over our economy, our society, and our democracy. They?ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.
It may be true that they have too much power. But the way to deal with that is by encouraging more innovation. A heavily regulated market… tends not to do that.
As for Warren’s actual plan, it has two steps:
First, by passing legislation that requires large tech platforms to be designated as ?Platform Utilities? and broken apart from any participant on that platform.
Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as ?platform utilities.?
These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
So, first thing on that: passing legislation is the job of Congress, not the President. And Warren is already in Congress. So if this is part of her Presidential platform, it seems like, maybe she should start by introducing such legislation now, while she’s actually in the legislative body.
Second, while “fair, reasonable, and nondiscriminatory dealing with users” sounds nice — and is used in other things such as FRAND patent licensing — it’s not entirely clear what it truly means in these situations. Everyone likes the words “fair,” “reasonable” and “nondiscriminatory,” but in the context of users on a platform, does it mean that internet platforms can no longer ban trolls for harassment? Because right now there are a lot of trollish people who are insisting that being banned from Facebook, Twitter or YouTube is unfair, unreasonable and discriminatory. Indeed, this seems like a huge gift to the trolls and grifters who pretend to be “conservative” and then whine when platforms cut them off. Certainly, at the very least this would lead to a huge burst of such lawsuits, as Warren’s plan allows basically anyone to sue over this:
To enforce these new requirements, federal regulators, State Attorneys General, or injured private parties would have the right to sue a platform utility to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.
This is a recipe for insane amounts of litigation — often vexatious litigation, just seeking to ding a company for being “unfair” in its choices.
Incredibly, this includes “search results.” Warren specifically calls out Google search as a “platform utility,” and says that under her plan:
Google couldn?t smother competitors by demoting their products on Google Search.
And that sounds good if Google was legitimately “smothering competitors” by “demoting their products on Google search” but there’s no evidence that it does. The very nature of search is that Google is expressing its opinion by ranking the search results in the order it thinks best serves you. If it believes that your particular site is not relevant, it’s going to demote it. But, under Warren’s plan, if you’re not showing up at the top of Google results, you can sue for massive damages. In other words, SEO-by-litigation and anyone who isn’t happy with where they show up is going to sue.
Indeed, in her plan, she links to the big NY Times article about the site Foundem that has been at the center of various antitrust challenges against Google over the past decade. And, as we wrote all the way back in 2010, Foundem’s argument makes no sense. The company made a shopping search engine, and insists that it was anticompetitive that Google’s search engine kept dropping Foundem’s site in Google’s search results further and further. But the reason for that was that when people were searching on Google for products, they wanted links to actual products and not to another search engine. Foundem’s search results dropped not because Google suddenly feared competition from Foundem, but because pointing users to another search engine was a bad experience for users. Back in 2009 there was a great analysis that explained why Google downranked Foundem and it had nothing to do with competition, but because Foundem was a crappy link directory (with affiliate codes attached) that was basically just a spam site hoping to live off of Google traffic.
Now imagine if every such spam company could now sue Google for not ranking high enough? Is that really the world we want?
The second part of Warren’s plan is to break up already consummated tech merger deals:
Second, my administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers.
Current antitrust laws empower federal regulators to break up mergers that reduce competition. I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers, including:
Amazon: Whole Foods; Zappos
Facebook: WhatsApp; Instagram
Google: Waze; Nest; DoubleClickUnwinding these mergers will promote healthy competition in the market???which will put pressure on big tech companies to be more responsive to user concerns, including about privacy.
First of all, I should note that just recently lots of people were totally up in arms over Donald Trump supposedly trying to interfere with the DOJ’s analysis of the AT&T / Time Warner merger. And I’m curious if those people feel the same way about a potential President Warren announcing ahead of time — without any actual investigation by a supposedly independent DOJ — that it’s okay to declare that they should be broken up? It certainly seems like the same form of bogus interference, even if for different reasons. The DOJ is supposed to be an independent agency for a reason. We shouldn’t cheer when Donald Trump ignores that and we shouldn’t cheer when any other President or Presidential candidate does it either.
Second, while I might find myself much more supportive of a more aggressive DOJ that blocks future acquisitions by these companies, I’m not sure I see how the specifically listed divestiture plans would… do much of anything (with the one possible exception of Google/Doubleclick, which I’ll get to). While I’m sure that Amazon, Facebook and Google would grumble about breaking off all of the others, for the most part, all of the listed divestitures involve companies that were mostly left alone and run as separate subsidiaries, which don’t necessarily have much to do with any of those companies’ core business. Sure, there might be some revenue or growth hits in spinning those off, but it doesn’t really change their fundamental ways of doing business. Amazon loses Zappos? Meh. It’ll still sell lots of shoes and maybe ramp up its efforts there in a way that ends up making Zappos tough to sustain by itself. Google loses Waze? Well, it already has Google Maps which probably has more users anyway.
Facebook might be a little different, since Instagram and Whatsapp clearly seem to be a key part of Facebook’s future strategy, but at least for now they’re pretty separate.
The Google Doubleclick one could be a bigger deal, since that is a core part of Google’s business. Warren’s “plan” talks about Google buying up DoubleClick as if that were done for anticompetitive reasons, and pretending that the DOJ “waved through” the deal while ignoring the monopoly issues, leaving out the fact that it happened way back in 2007 when the marketplace was very, very different, and Google’s current position was far from certain. And while Doubleclick, as part of Google, may end up handling a lot of the ad serving market, there are tons of alternatives. The online ad market is crammed with tons and tons of companies. It’s not difficult to find confusing maps laying out the state of the market — and many companies are looking to take down Google Doubleclick, which is often seen as the provider of last resort (it works, but the quality is shit and the payouts are worse).
In other words, this entire plan gets headlines (duh) because so many people are (perhaps reasonably!) angry at the power of big tech companies. But, very little in the actual plan makes much sense. The “platform utility” idea will lead to massive, wasteful, stupid lawsuits. The unwinding of old mergers will involve interfering with an independent agency, and seem unlikely to do much to change the main “concerns” that Warren raises in the first place.
And, again, none of this is to say we shouldn’t be concerned about big internet companies with too much power. It’s a perfectly reasonable concern, but just because you want to “do something” and “this is something,” doesn’t mean that it’s the something we should do. The way to attack the positions of these big internet companies is to enable more competition — and you do that by encouraging alternatives in the marketplace. This is why I’m actually hopeful that some of these companies will actually start to explore an idea of moving to protocols, rather than owning the whole platform themselves, or that we’ll see new protocols springing up.
Meanwhile, if Warren were truly concerned about “monopolies” and a lack of competition, why isn’t her plan looking at the lack of competition in the broadband and mobile markets — cases where we have legitimate competition problems due to bad regulatory policies going back decades?
Filed Under: antitrust, big tech, breaking up, doj, elizabeth warren, fairness, internet, platform utilities
Companies: amazon, facebook, google
Comments on “Elizabeth Warren Wants To Break Up Amazon, Google And Facebook; But Does Her Plan Make Any Sense?”
You had a guest on your podcast a while back who made this exact argument, and explained it pretty well. The experience of having been through the antitrust trial caused a chilling effect, so to speak, on Microsoft’s predatory behavior going forward. (Proof that they are not always a bad thing.) He mentioned how they had the opportunity at one point to try to either buy out a little Internet startup by the name of Google, or use their usual tactics to destroy them before they grew big enough to be a real threat, but they chose not to for fear of drawing regulatory attention.
Google: See above.
Facebook: Not sure why they’re being mentioned here, as they didn’t appear until well after
So this line of reasoning comes across as a bit incoherent, to be honest.
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Just this morning over coffee, I said to myself, "Thank god there are useful idiots around to defend these multi-billion dollar mega corporations."
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Warren is not very bright. I do not like her and would be terrified if she got to ru for president. I do agree google, Facebook and other big tech need to be broke up
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How did you reach that conclusion?
Well be terrified because she’s running for president (I assume "ru" was meant to be "run").
Need...
We need to do Something! This plan doesn’t make any sense, but it is something.
Warren knows it isn’t a good plan. And she probably recognizes that she couldn’t push it thru. But it makes a nice headline, and it worked for the lying Cheeto. "A big, beautiful wall, and Mexico will pay for it!" It didn’t make any sense, but it got the racists worked up.
Re: Need...
Wanting to protect the border does make anyone racist. Every country protects its borders. If there were no borders, there wouldn’t be a country.
Mexico will end up paying for it in the form of Tariffs.
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… Did that sound like logic in your head?
Need to work on those priorities
Meanwhile, if Warren were truly concerned about "monopolies" and a lack of competition, why isn’t her plan looking at the lack of competition in the broadband and mobile markets — cases where we have legitimate competition problems due to bad regulatory policies going back decades?
I was thinking this very thing the entire article. She wants to bust up monopolies that are harmful to the public? Then maybe put Google, Amazon and Facebook on the backburner and start with companies where in large numbers of cases people aren’t signed up with them because they’re popular, but because it’s either them or nothing.
If someone really doesn’t want to use Facebook the fact that it’s popular doesn’t mean they have to, as there are plenty of alternatives, but if the only choice of actual broadband in your area comes from one company whether you like them or not doesn’t matter, it’s either them or no internet, which is dramatically more severe than simply ‘no using this platform for social media’.
She wants to crack down on monopolies that are harmful to the public? Great, there are much better targets to start with, and I’d love for someone to point that out to her, if only to see her reaction and whether or not she’d be willing to go on the record as supporting the idea of going after Comcast and company for their respective monopoly positions.
Re: Need to work on those priorities
That depends. I think there’s a pretty strong argument to be made that if you’re trying to advertise a business, avoiding Facebook and Twitter is going to hobble your ability to do so.
(This is without getting into the point that even if you don’t have a Facebook account, there’s really no way of stopping Facebook from collecting data on you.)
This is a false dichotomy. It is entirely possible to be concerned about tech platform dominance and natural-monopoly ISPs.
You…realize that Warren is largely responsible for starting the Consumer Financial Protection Bureau, right? She’s been advocating against companies like Comcast since before she ever ran for office. She’s consistently supported net neutrality and customer privacy protections.
I can’t find any "break up Comcast" suggestions from her with a quick search, but given her description of separating platforms from content providers, I would expect her to be amenable to my preferred solution of separating the infrastructure owner from the service provider.
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Yeah, those 14 likes a business gets for its page really matters!
There are plenty of ways to promote a business online.
Re: Re: Re: Need to work on those priorities
I don’t respond to strawmen.
Re: Re: Need to work on those priorities
That depends. I think there’s a pretty strong argument to be made that if you’re trying to advertise a business, avoiding Facebook and Twitter is going to hobble your ability to do so.
True, but not as much of an impact as avoiding the internet, should the only choices for that be either lacking or all equally bad.
This is a false dichotomy. It is entirely possible to be concerned about tech platform dominance and natural-monopoly ISPs.
I’m not saying it isn’t, or implying that being concerned about both isn’t perfectly valid, my point was that if she’s going to go so far as to assert that if she get’s elected president she’s going to crack down on companies for being monopolies and harming the public for it her statement would have been better aimed at different companies, who’s market positions and power are almost certainly more harmful to the public than the ones she chose to list.
You…realize that Warren is largely responsible for starting the Consumer Financial Protection Bureau, right? She’s been advocating against companies like Comcast since before she ever ran for office. She’s consistently supported net neutrality and customer privacy protections.
I can’t find any "break up Comcast" suggestions from her with a quick search, but given her description of separating platforms from content providers, I would expect her to be amenable to my preferred solution of separating the infrastructure owner from the service provider.
I think I responded to this well enough above, in that my objection is her priorities based upon what she said. If she equally thinks that the likes of Comcast should get the hammer as well, great, but as it stands the examples she used and the justification for going after them strike me as misplaced and could have been better aimed.
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I would argue that, while most Americans do have a monopoly ISP, it’s not the same monopoly ISP for everyone.
Everybody deals with the Big Five tech companies — and let’s dispense with the usual bullshit about how you don’t have to use Google, Microsoft, Apple, Facebook, or Amazon if you don’t want to; we’re on a page that calls scripts from Google and AWS right now — but not everybody deals with Comcast. (At least, not Comcast’s Internet service. Most people do deal with Comcast subsidiaries like NBC — and Warren vocally opposed the Comcast/NBC merger.) For example, my local Internet monopoly is Cox.
Cory Doctorow describes Warren’s proposal this way:
$25B would include larger ISPs like Comcast and AT&T; the $99M amount would include Cox and other large-but-not-that-large ISPs, and ISPs with revenues under $99M would be unaffected, which I imagine probably makes Ehud happy.
If your complaint is that she chose to namedrop companies that everyone in America has to deal with but not specifically namedrop other companies that only some people in America have to deal with, but that her proposal affects both groups of companies, I don’t think that’s a substantive criticism. What matters more: the rhetoric in a press release, or the actual details of the policy proposal behind it?
Re: Re: Re:2 Need to work on those priorities
Everybody deals with the Big Five tech companies — and let’s dispense with the usual bullshit about how you don’t have to use Google, Microsoft, Apple, Facebook, or Amazon if you don’t want to; we’re on a page that calls scripts from Google and AWS right now — but not everybody deals with Comcast.
As far as Facebook and Apple at least I’m not aware of similar circumstances so I’m not sure it would be fair to lump them in with Google or Amazon, but your point is fair.
$25B would include larger ISPs like Comcast and AT&T; the $99M amount would include Cox and other large-but-not-that-large ISPs, and ISPs with revenues under $99M would be unaffected, which I imagine probably makes Ehud happy.
So long as those companies were classified as ‘tech companies’ and thereby considered to be under the bill, rather than telecommunications, unless the proposed bill is a lot broader than would seem to be implied. Because if they’re not then all this bill would do is what they’ve been trying to do, burden those companies with more regulations as all the while they skate by with fewer and fewer.
What matters more: the rhetoric in a press release, or the actual details of the policy proposal behind it?
As always, the details, but the press release is still worth examining as it displays the priorities on display, and I’m still not convinced that the companies listed are a bigger problem. Yes they have significant power online, but to get there you still have to go through the likes of Comcast.
Reading the link you provided does not inspire confidence that this is more than a PR stunt, or at least I dearly hope it is, because I have some real problems with several parts, and at least one paragraph seems to be straight out of a an EU Article 13 press release/fluff piece.
"We must help America’s content creators — from local newspapers and national magazines to comedians and musicians — keep more of the value their content generates, rather than seeing it scooped up by companies like Google and Facebook" (this rhetoric is scarily similar to the notional basis for Europe’s terrible Article 13 proposal, but there are some ways to imagine it going well, if we keep in mind that enriching media companies has little relationship to enriching creators).
The proposed fine also looks almost tailor made for abuse, given how insanely large it stands to be.
Enforcement would come through a right for state Attorneys General and private parties to sue platforms for violating the deal, "to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages." Violators will face statutory damages of 5% of global revenues.
Handing state AG’s(who have a history of grandstanding via threatening companies to score PR) the ability to threaten 5% global revenue-sized fines strikes me as handing a kid with a history of hitting people with sticks a truck-sized branch with nothing more than a pinky-promise to behave.
Then there’s a bunch more squishy stuff, like "we must ensure that Russia — or any other foreign power — can’t use Facebook or any other form of social media to influence our elections"
Great idea, now, how does she propose they do that at the same time they are faced with massive potential fines for ‘discriminatory actions’, which you can be damn sure would be argued if they tried to get rid of groups/users they believed were foreign powers trying to use social media for their own ends? ‘Damned if you do, damned if you don’t’ comes to mind.
I can see the problems she’s aiming at(a handful of companies having significant power over wide swaths of daily life), and agree that it is a problem, but as it stands her proposals seem to open up some serious potential for abuse, such that it seems like an overreaction with the potential to just replace one problem with another.
Who can we break up...Monopolies 101.
Movie industry
Music industry
Cellphone industry
Cable industry
TV industry(7 corps own most of it, around the world, if she didnt know)
NEWS industry..
ISP’s?? (this list has gotten real short in major metro)
And there are 2 more in 1 more group…as I have never seen a democracy with only 2 option, worse and worser..
Both political parties.. they control to much and give us little choice of WHO we would like to elect..
We get more info about our baby sitters then anything we get on these folks..
Re: Monopolies 101.
… add "government" as the biggest monopoly of all.
if monopolies are so bad — why does everybody luv gargantuan government monopoly?
LIz Warren makes Trump look like a freakin’ genius.
We can very safely ignore Liz and everything she says.
Democrats are really digging themselves into a deep hole for 2020.
Re: Re: Monopolies 101.
Because…
the gov. is supposed to represent the citizens, and be a buffer between Us and the corps..
The funny part is that they are the biggest employer..
and getting rid of excess gov. tends to DO the same as the corps..
Get rid of low paid employees…
Also we get made when the roads dont get fixed, but if we DEMAND the gov get smaller, they Dont do it, they HIRE someone at very high prices to do it, or even pay the states…Who dont always do a good job.
Whats Nice about gov. jobs, WAS that they got very good benefits and good retirement…WHICH made allot of others abit jealous. And gave the Corps something to pick on, and demand other things and point AT the gov.
Blame the gov. is an interesting idea. But has it done anything bad to you?? NOT COUNTING THE STATE..
They kept people working. corps dont. and employees alwasy asked Why the gov. gave better benefits, and they didnt get any.. corps hate that.
Re: Re: Monopolies 101.
What do you suggest, a competitive market of for-profit national governments? Of course the government is monopoly; anything else couldn’t properly be called a government.
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"if monopolies are so bad — why does everybody luv gargantuan government monopoly?’
What’s your alternative? Competing governments for the same population? How does that work?
It’s hard to take someone seriously when they don’t realize Google broke themselves up a few years ago. She’s clearly a moron.
Monopolies
Warren’s phrasing seems to be geared toward vertical integration issues, For example, Alphabet owns Google the search/advertising clearinghouse and also YouTube, the advertising/consumer data platform, which basically creates a conflict of interest for Google in terms of favoring YouTube over platforms, and a conflict for youTube in terms of how much consumer data it shares with Google. Amazon has a conflict because of the way it acts as a platform for other sellers while being in direct competition with many of them, even without considering the impact of AWS on those same competitors. Then there’s the Comcast/NBC Universal, AT&T/Warner mergers create incentives for the ISPs to discriminate between customers and platforms based on ownership.
On the other hand, separating the power generators from the power carriers back in the day didn’t go so well and ended up with Enron’s fraud/collapse. So breaking up vertical monopolies isn’t a panacea.
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Agree with this take aka "vertical integration issues".
Listening to local radio in Seattle today they walked through this focusing on Amazon. e.g. Amazon owns hundreds of brands that don’t say Amazon but are sold on Amazon. Now think about that for a minute and realize the impact this has on ALL products sold.
Now look at the wholesellers which Amazon just cut off today. Those wholesellers (which used to fill Amazon warehouses) will now need to become resellers within the Amazon marketplace, that’s not the wholesellers function.
Anti-trust isn’t just about Consumers, look back at the origination’s and you’ll note it refers to treatment of other businesses as well. That’s where Ms. Warren is focused – on how big tech is messing with businesses across the board.
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That’s certainly a concern, but it doesn’t make this an anti-trust or a monopoly issue.
The fact that they can affect a lot of businesses is not enough to trigger anti-trust. It needs to show that they are actively doing something to block/harass/prevent competitors from coming in or these companies from going to competition. So far no such evidence exists.
The fact that Amazon/Facebook/Google are big is not a problem. Yes it affects a lot of people but that doesn’t make it a problem. As long as competition is free to come in and try to compete then the market is free and open to disruption. If those companies are still doing things better enough than their competitors that consumers don’t want to go anywhere else then they deserve to stay as large as they are.
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Market share can be sufficient to trigger an antitrust action, with or without intent.
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Federal AntiTrust law is so vague and ill-defined that almost anything could "trigger" a formal prosecution.
Federao Law does not define in advance what behavior is a "monopolistic" crime and what is not.
Normal rule-of-law requires clear definitions of crime, known in advance, and discoverable by a jury after due legal process.
U.S. antitrust laws thrive on deliberate vagueness and ex post facto rulings.
No businessman knows when he has committed a crime and when he has not, and he will never know until the government, perhaps after another shift in its own arbitrary criteria of antitrust crime, swoops down upon him and prosecutes.
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They know it when they see it.
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How about supermarket brands which are no longer inferior to the other brands that rent shelf space from the supermarkets?
The most famous vertical issue was when film studios also owned movie theaters.
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"The most famous vertical issue was when film studios also owned movie theaters."
That is one of several well known examples, not sure why it would be considered the most famous, was it in a movie?
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Internet 101: projecting long-term revenue from a brief period of thriving in a changing internet environment is a surefire way to go bankrupt.
Re: Monopolies
Supermarkets do the same thing with their shelf space. Once upon a time, supermarket brands were of much lower quality but that has disappeared.
Well done
Mike, this is the best article I have read re: Senator Warren’s plan. Good job!
"government must break up monopolies and promote competitive markets"
A judge ruled that 1 provider represented competition in the telco monopolies.
Perhaps we could take you seriously if you stopped handing out corporate welfare to those giving you bigger ‘donations’ than the internet guys you might understand.
Before you fsck up everything else, how about you clean up the huge messes you already made in the name of benefiting us with higher prices, worse service, & no options.
Today I’m all for the sledgehammer.
I fall under the center left sector of the political spectrum. Absolutely disgusted by identarian ideologues with tribal harassment extremes shouting and labeling everyone and everything in sight. I want modifications to the platform and increasingly tired of being yelled out for daring to have a thought outside what digital media is demanding on that given day. I’m politically homeless today for that reason, not seeing candidates that represent my biggest issues.
The tech giants are shoving that brand of identarian ideologue viewpoint on users of their platform. That crosses my line. Censorship to the lowest common denominator of the easiest offended. Completely jumps the shark and good people are excommunicated for complete out of context or slanderous claims, the more often repeated the harsher the penalty. This road has completely abandoned Western social and legal norms toward a world of restricted speech without any path to redemption once mis-labeled.
These platforms have played dumb while activists employed within turned their platform into an arm of their activism to silence their scapegoat of the week.
I’m beyond annoyed by it. Use the sledgehammer. It’s time to break them up.
Re: ?
your point is very unclear
and center-left is the dominant ideology across the mainstream media, Hollywood, the education system, big tech companies and Federal government — you should feel that left luv
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His point is very clear: the POLITICAL monopoly of Big Tech needs to be broken up as well.
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How do you break up a deranged extreme-right hallucination, though?
I am suspicious that the companies she is targetting are not contributing enough to her election campaigns, while those she is ignoring, like the Telcos with their content ownership are.
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Open Secrets indicates that Alphabet contributed more to her last campaign than AT&T or Comcast individually, though less than the two of them combined. The Industries page lumps them all together under "Internet" and shows that Internet companies didn’t really contribute much to her campaign compared to other sectors.
"But Comcast!"
Breaking up these tech giants would definitely be a good thing, as would giving competition to the broadband industry.
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Breaking up these tech giants would definitely be a good thing, as would giving competition to the broadband industry.
Simply breaking up Comcast will only mean 4-5 smaller companies, who will carve up territories and continue as always. And They won’t compete with each other.
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I meant creating competition for Comcast and other broadbands, whether or not that involves breaking them up.
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Comcast is a natural monopoly; it’s not as simple as "creating competition".
I mentioned upthread that I could see breaking up Comcast by separating the infrastructure owner and the service provider into separate companies, and regulating the infrastructure provider as a public utility. That way you could have your choice of ISPs and they’d all use the same cable.
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If they are a natural monopoly, their prices should be regulated, with discounts for the poor. Internet access is vital these days. Bell was once a monopoly as well. Even electricity suppliers now compete over the same backbone. Comcast could easily be required to do the same. I’d rather see price regulation myself.
The wealth gap is a much bigger problem. Even if we broke up big tech, we still have way too many people living in poverty given the number of billionaires we have.
AT&T / Time Warner merger
Good article, except for the part about the AT&T / Time Warner merger, which doesn’t fit into Warren’s paradigm at all (or the rest of the article’s argument, for that matter).
It should be a no-brainer to disallow companies who control internet pipes from also be content creators.
Funny (strange, not haha)
Missing from her list despite topping all lists of huge companies: Microsoft and Apple.
Her list of who to target is more telling than anything she says.
Re: Funny (strange, not haha)
A Warren spokesperson has since confirmed that the policy applies to Apple, and even directly states that it would prevent them from both owning the App Store and owning any apps available through it: https://twitter.com/broderick/status/1104053142440869888
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My question is if this applies to kroger grocery stores, with revenue of 25 billion a quarter, who is an effective monopoly in many areas, with a massive company brand.
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Yeah, she’s targeting big tech while ignoring all the other monopolies/oligopolies that exist all across American life. How about eyeglasses? One company owns them all, which is why a new pair of glasses will run you $400 or more.
Re: Re: Re:2 Funny (strange, not haha)
Zenni.com
Re: Re: Re:2 Funny (strange, not haha)
The suggestion that Warren is ignoring other industries besides tech indicates you haven’t actually paid much attention to Warren’s career.
The expression is usually "What about", but close enough.
Re: Funny (strange, not haha)
Not strange at all:
https://www.digitalmusicnews.com/2019/03/07/spotify-pandora-amazon-google-songwriter/
‘why the government must break up monopolies and promote competitive markets’
Great point! Pity she dont wanna start where dhe should, with the likes of the phone, broadband, mobile and tv companies! These need sorting more urgently yhan the likes of Google etc!
Let's break up Westinghouse and GE.
They never mention the old-industries when saying Google is too big. Nope, they must have been listening to ‘screw google’ podcasts from MSFT and the EU copyright dictator.
Better yet, let’s have Federal Privacy laws and an agency that has sufficient funding to put the teeth in them.
Privacy laws would do so much more for the betterment of everyone than pissing away a couple of decades of DOJ funding to tip at these particular windmills.
What's anticompetitive about owning Whole Foods?
I don’t know about every merger and acquisition she mentions, but are Amazon really doing anything anticompetitive with Whole Foods? There’s only one in my city, which I understand is typical—and that alone means they have little effect on the market. They’re certainly not undercutting other stores with their prices—some stuff got cheaper after Amazon bought them, but it’s pricey overall.
I hear the working conditions have deteriorated, but that’s not antitrust-related—and probably isn’t worse than Walmart, for which many actual market-harming behaviors are documented. What’s Amazon done with Whole Foods to warrant antitrust scrutiny?
It’s hard to read stuff like this and not hear it in samual jacksons voice- from that character in Django…
The sycophancy is nauseating.
Maybe someday people will come to realize that silicon valley think-tanks and marketing has broken us so badly, that we now equate ‘buying things in a store that we can own’ – with ‘selling ourselves for the privilege of using someone else’s imaginary property.’
There’s far more ethics between consensual prostitutes and pimps, then the user and the eula.
Perhaps to fix things- we need to go back and start over there.
The MySpace analogy is poor. MySpace was dominant for only 3-4 years, and there was other serious competition at the time (facebook, friendster, etc.). Likewise, Lycos was the top search engine for a few years, but was facing tons of competition. Google has been tops for 15 years now and there is no competition in site. Amazon never had any serious competition.
These are no longer markets in flux. They are entrenched monopolies. We need a new Teddy Roosevelt to come in here and bust them up like he did Standard Oil and the railroads. Also, I agree with others that telecom/cable needs to be busted as well, perhaps even more so than google, amazon and facebook.
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Google has been tops for 15 years now and there is no competition in site. Amazon never had any serious competition.
These are no longer markets in flux. They are entrenched monopolies
Assuming for the sake of argument that that’s true, time for the million dollar question: Are they ‘monopolies’ because they’ve used their market power to ensure that there can’t be any competition, or because their popularity with people means more people choose to use them over the alternatives?
‘More popular than the competition’ does not a monopoly make, otherwise you could have a situation where a restaurant in a given town could have a ‘monopoly’ not because they’re the only one there but simply because more people eat there than the alternatives, perhaps becuase of a better line-up.
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"Tops" at what? Search? I use other decent search engines like DuckDuckGo and Bing all the time (due to Google’s Tor-hostility). Phones? Android wasn’t public until 2008 and it was some years before the current duopoly solidified. Google Plus was arguably an anticompetitive attempt to force their way into the social networking space, but it’s dead as dead, with no government help. For email it mostly doesn’t matter which provider one uses.
The EU did have some valid antitrust complaints (whether legal or not, "preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code" is surely anticompetitive) and the US could sue over the same, with existing laws. The idea that a breakup would be better for the public is not obvious to me, and I’d like to understand more of the logic behind that. Into what parts could we break them and what would the effects be?
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Oh never mind guys, there’s someone who uses other search engines, I guess Google isn’t the dominant market leader after all.
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I use DuckDuckGo all the time. No one is forcing you to use Google. There are many other options. Just because you’re too lazy to use them, doesn’t make Google a Monopoly.
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You may have missed the point, but good for you so being so hip and non-mainstream.
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Market leader and monopoly are very different things. Either way, we need to know the market(s) we’re talking about to have a useful discussion.
So, are you claiming they have a harmful monopoly on search? What specifically is harmful, and will splitting up the company help resolve those problems? How much government regulation makes sense for a service that takes literally seconds to switch away from?
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No, I’m just pointing out that "Google isn’t the top search engine because I use DuckDuckGo" is extremely stupid.
Wouldn’t anyone be suspicious of a company that has literally blanketed the upper reaches of earth’s skies mapping the entire world realtime crossing borders of sovereign nations in a world of corporations begging for sovereignty that could undermine the economies and security of whole nations? Maybe there is a growing awareness of the power these corporations do wield and that conspiring forces could be planning the unimagineable.
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Yeah because the government US et al, is so much more trustworthy and has never been playing that game at all.
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"Wouldn’t anyone be suspicious of a company that has literally blanketed the upper reaches of earth’s skies mapping the entire world realtime"
I’m not sure what’s funnier. The fact that you think the data used is real time, the fact that you apparently think that Google launched the satellites themselves or the fact that you don’t believe the US government have been doing the same things since long before Google existed.
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Someone has the realtime data. What is problematic with a private corporation out for profit that has expanded across all borders in the world is "are they selling it to the highest bidder?" And if so, WHO?
Personally, I think she is both brave and clever to suggest it. She is looking for a constituency to support her, and she might just have found one. A lot of people HATE the big tech companies, and for good reason. They have been trying to covertly impose their particular world view on the world, and a LOT of people, including me, don’t like their tactics.
I was going to do a video but I know that will never happen so here I am, not a BOT, but an American who has never sided with a political party and now will vow to never vote Democrat again. I just decided to post after that recent post of the man on here who had a neighbor leave a note to take his American flag down as it was a symbol of hate. Wow.
Born and raised outside of Boston, we never talked politics in our family. My dad, a Marine, was a definite Republican and my mother said you never ask who someone votes for, when they are getting married or when they are having kids. {smart in the 70s, now we have to be vocal to keep our country together}. I never followed politics that much and when it came time to vote, I voted on issues I knew, but turns out, I had just sound bytes on. I voted Bush Sr., Bill Clinton., Bush Jr., Obama {twice} and now Trump {and will vote him again….if you see the pattern, everyone I vote for tends to win {smile}.
My awakening came when I moved from a busy part of the country in New England to 45 minutes from any town in the southern rockies of Colorado. One fall afternoon, I was followed while out running by three men in a truck and it went on for an hour until I had to run through the woods and behind homes to my house as they frantically drove around looking for me. I was able to get home safe and did something I never thought I would have to do, and that was buy a gun, take a conceal carry class and practice it often. In a place with under 500 people in the fall and winter, no cell service at 8K feet in elevation and 45 minutes from police help, I was not having that happen twice. But when I told family and friends back east, they were shocked {as that isn’t like me to own a gun} and I was told not to tell my nieces and nephews I owned a gun {because they are really not used to being around them and some of our family are not a fan of them}. That is when I saw the cultural difference between the northeast and southern Colorado. The difference between a liberal mentality towards our right to bear arms in the northeast {people not thinking guns should be in the hands of the average person} compared to the need and desire in the southwest and the conservatives views on it. It made me buy more, actually, and practice more and while I don’t hunt, I enjoy it and add to my collection.
A dear friend that I became close with would often ask me why I stood behind Obama. I honestly "thought" I knew, but I didn’t. I was flying all over the country for work, working 12-14 hour days, being brainwashed in the terminals of airports by CNN and MSNBC and then continued that when I got home. I never turned Fox on, even though my niece had been an anchor for Fox outside of Philadelphia. This particular friend challenged me to watch Fox for a week. It was around the time of the Ferguson riots and I got to witness first hand the difference in reporting. As well as the division in our country that our President at the time, Obama, and his side kick Holder, were creating. Not to mention the direct outright attacks on our policemen and women. I was mortified. I thought, who is even going to want to JOIN the force after this? Then what happens to the safety and law and order in this country? It was then that I publicly apologized to everyone on my Facebook page and in person for voting that guy in. I was embarrassed I had not taken an active part in my country and our politics.
At the time, my husband and I were both self employed and I thought, hey, let’s see about this Affordable Care Act. My first quote was $1,500.00 for two adults and the hospital that was 45 minutes away wasn’t on the plan, the one 3 hours away was. My second quote last year was $1,700.00 a month for two adults. No children. No surgeries, never been under anesthesia. Because we make decent salaries, I realized we are now supposed to pay for the people in the county that want to rent houses and ski the mountain and bar-tend when there are no powder days. To the tune of someone telling me they pay $50.00 a month and everything is covered. Me? I had another mortgage payment in the form of the lowest coverage health insurance and oh, if you don’t pay it, you get fined. On top of that I had to pay $3,500 in physical therapy from a dogsledding accident I had – the girl paying $50.00 a month on Obamacare? Her therapy was all covered. Approaching 50 years old, I decided I would give up my business last year and work for a company directly. Both for the team interaction as well as it would provide me and my husband healthcare without the nightmare of the ACA. What a shame this is how the Affordable Care Act worked out.
As a result, I decided to learn everything and anything I could about politics and I witnessed the complete breakdown of the left when Trump won office. I saw the hate, the lunatic fringe mentality and I saw even more division I had ever seen in my life. I paid attention to the corruption in the Clintons, the Obamas and the FBI. I lost friends on Facebook and in real life {LOL} when I started posting my political views and discussing my right to bear arms, own an AR15 and wear a right to bear arms dog tag with a .22 bullet around my neck. I hang the American flag everyday and a Don’t Tread on Me Gadsden flag. I am proud to call this country my home. Proud that my family fought in our wars. I have been to every state in this country and there are good decent people all over. We need to stand up to this hate and get people to unite and to love one another again, regardless of their backgrounds or political stances. This movement is doing just that and I am proud to be a part of it.
Lastly, I am saddened that this country forgets itself. My hometown in Massachusetts had men marching from our center town commons to the North Bridge in Concord {not too far away} to start the Revolutionary War after Gage sent his men to take our munitions in that barn…today, there are kids on those town center lawns protesting guns, with their parents along side them. Old Ironsides, The Old North Bridge – this is where our field trips were as kids. We pledged the flag in school in the mornings. Today? #@$%$ the NRA signs held by 8 year olds and worse signs held by young women alongside their moms in protests to our country. To this day, when I see another #$@%$ the NRA post by someone, I pay for another friends membership for one year. I urge people to do the same when and if they can.
I walked away. I urge people to RUN away from the hate and start spreading love and unity and common sense. Let’s not have our forefathers continue to spin in their collective graves. We are Americans and everyone should be acting like it.
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You realize she kicked Shiva Ayyadurai’s ass in the polls, right Hamilton?
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Beyond the fact that most of your comment is cut and paste nonsense from a Russian troll site (yeah, we know), someone should let you and your comrades know that that if you start out praising how brave and clever Elizabeth Warren (Democratic candidate for President) is and how she might now get you as a voter, you shouldn’t immediately follow that up with your long story about how you’ll never vote for a Democrat, and how awful the left is. Your attempt to connect this story to the text you wanted to cut and paste contradicts itself, but, hey, no one said Russian trolls are smart.
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McCarthyism
noun [ U ] UK /məˈkɑː.θi.ɪ.zəm/ US /məˈkɑːr.θi.ɪ.zəm/
the practice of accusing someone of being a Communist and therefore avoiding or not trusting them:
McCarthyism is named after the American politician Joseph McCarthy, who in the 1950s accused many Americans of being Communists.
She was a victim of McCarthyism.
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Publius argues that government must have force behind its laws. He reminds the reader that punishment for disobedience is necessary because the "passions of men will not conform to the dictates of reason and justice without this constraint." Punishment of individuals, not states, is necessary because "regard for reputation has a less active influence when the infamy of a bad action is to be divided among a number than when it is to fall singly upon one."
Re: 3.4%
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Uh huh.
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No really, they capitalized ‘American’ and everything, that’s means it must be true, that being what Real Americans do all the time.
I’m a very liberal progressive, but stuff like this BS from Warren embarrasses me. She’s just pandering to her base no differently than Trump does to his. All BS.
It’s ridiculous to keep seeing MySpace dragged out as an example that Facebook still has viable competition and can be toppled by pure competitive means. It’s the equivalent of a legislator bringing a snowball into the Capitol building to explain how climate change isn’t real.
Facebook is now in a position that MySpace could’ve only ever dreamed of. It has over two billion users spanning the globe and many places where they’re the only real website that people really visit. Some of them don’t even realize that they’re using the Internet. Facebook’s Free Basics, a mini-Internet that Facebook controls, now has 100 million users. They also still track you even if you don’t use any of their services. Facebook isn’t a lumbering behemoth that nimble innovators can hope to topple. Facebook and its acquisitions Instagram and WhatsApp can now copy any and all features of any app they want in a shockingly fast manner, or Facebook can buy the app outright.
Regarding the the idea that Facebook has actual real competition: Sorry, it doesn’t. Honestly, if you think that just because there are other platforms that are similar to Facebook out there that you could use instead (if you didn’t actually care about connecting to anyone that’s only on Facebook, that is), and in turn you think that this means that Facebook has competition, then you don’t actually understand why most people who still continue to use Facebook itself do so in the first place, nor do you understand why it has this ludicrous level of power. Facebook has a locked-in userbase in a market where your userbase size determines your value to prospective users. It then bought out Instagram and WhatsApp to cover its bases on major different forms of social media. Everyone else is not competing with Facebook, but rather fighting for the niche scraps in the edges that Facebook doesn’t cater to.
Moving on to Amazon: In Techdirt Podcast 198 you talked about Amazon gathering data on its AWS customers and using that data to decide who to invest in. As I said then, that’s pretty damn creepy. Let’s say that Website/Service A, which uses AWS, is gaining serious traction. Amazon can use the data to either invest in the Website/Service A, strategically invest in a competing Website/Service B, or offer to buy Website/Service A outright. That’s Amazon using its absurdly dominant position in a market to manipulate the market (or even other markets it has no real fingers in) to its own benefit.
Then there’s Amazon Basics. The issue with Amazon basics is not necessarily that it exists. It’s the fact that Amazon uses its dominant retail platform and various analytics (including analytics from AWS too) to put out their own products without having to engender the risk of determining if those products are going to be successful or not. So let’s say I sell Widget X on Amazon, or on my website that uses AWS. It is quite successful. Amazon uses the data it gathers and then says "Hmm, we can spin up manufacturing on Widget X as well…" and starts selling an Amazon Basics Widget X. They can afford to take the expense of undercutting me and not making a profit on Widget X sales until I get squeezed out of the market. Amazon did none of the R&D and took none of the risk, but they reap the majority of the reward in the end. The tactics that Amazon uses are not the tactics of a company that wishes to merely dominate the market, but are rather the tactics of a company that wants to become the market.
I fully support Elizabeth Warren in any action she takes to break these companies up.
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These actions are most likely never going to bear fruit. What will in some minds be the image Elizabeth Warren is planting in susceptable minds for her 2020 election bid, a notion that she is a warrior for the people, and she’s going to push back these powerful corporations and GET STUFF DONE.
LOL
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Watch Trey Gowdy try to get Elizabeth Warren to answer simple yes or no answers to his questions concerning consumer protection from lending institutions! Priceless!
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https://m.youtube.com/watch?v=OjQrRCB6Nfc
sorry!
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Well, if she does make it, maybe she’ll finally be able to get Shiva Ayyadurai to shut the fuck up and go away.
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Given his ego I’m not sure that’s possible, but it is a nice thought to be sure.
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Facebook from what I’ve heard had lost 25% of its users in a short period of time because of the things that they’ve done.
I stopped using Facebook and Twitter some time ago. No one is forced to use them. I don’t use them. They don’t exist in China. There are other options.
MySpace back in the day was HUGE. Then Facebook came along and MySpace went to the wayside for the most part. I don’t want to see any of these company’s broken up just because YOu think they’re too big and some type of Monopoly, which they are not.
You sound like a communist. Why don’t you move to a country where you fit in better. Elizabeth Warren is an IDIOT. One that LIED about being an Indian to get where she is. F her!!!
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Except that they didn’t innovate this practice.
This was and is the standard operating procedure for all the retail giants no matter the sector for a very very long time. IIRC Sears was the innovator with that practice brought to scale.
Modularizing the platforms is the real answer
As you say, "the real way to "break up" big tech platforms is to push for a world of protocols, rather than platforms, which would push the power out to the ends of the network, rather than keeping them centralized under a single silo with a giant owner."
Look at the example of the Bell system — first with Carterfone and the modular jack, then with the modular business breakup into local (subdivided by regional geography), long distance, and manufacturing — which opened up huge competitive innovation.
I expand on this and related issues in my post "Architecting Our Platforms to Better Serve Us — Augmenting and Modularizing the Algorithm" at http://bit.ly/PlatMod.
It takes some sophistication to do this well, but the government once has that sophistication, and could again.
Re: Modularizing the platforms is the real answer
Then they all merged right back together again!!!
I’m shocked to see Masnick parroting ad/surveillance industry talking points on this subject! Shocked!
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I’m shocked to see this Anonymous Coward unable to respond to the many detailed points Mike wrote and instead resorting to glib attacks! Shocked!
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I’d put that shock as not being very current and not making much of a spark in the discussion though it’s frequency is quite high.
Definitely AC in the picoamps running in the millivolts.
Small, annoying and a sign of some serious underlying problems
I think Warren really needs to do a little more research, because she seems to have timelines and cause/effect really screwed up.
"Twenty-five years ago, Facebook, Google, and Amazon didn’t exist."
Just barely – Amazon was founded in 1994 but not until the summer.
"The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge."
This is one hell of a stretch. First off, the antitrust lawsuits were about Microsoft’s dominance in web browsers. It has nothing to do with the sites that those browsers were used to visit. There is no cause and effect.
I’d also love to know how the conclusion of a case that ended in 2001 helped lead to Google emerging. I can buy the argument that it helped them get traction with things like Chrome in the long term, but their initial success had nothing to do with which browser people were using.
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Google makes most of its money from Google Search. That hasn’t ever changed. Google Chrome and Android help make it more money as it helps them track what you do and sell more personal ads directed to you.
this distills you perfectly, Mike.
"The market will fix itself"
It’s not even hard. Right now 49% of all retail sales come to Amazon. For comparison, about 9% of physical retail sales go to Walmart (https://walmartone.onl). Any small business that wants to do online retail pretty much has to be on Amazon. They go to Amazon right now, and they’re on the platform and Amazon sucks up information about every buyer and every seller. When it spots a profitable business, it has the option of moving in on that profitable business’ space, undercutting them — maybe only temporarily — on price, moving where they appear on the platform back to page 9, and killing off the competitor business and sucking up the business for themselves.