I don't have a problem with this. But I wonder why there isn't similar willpower to pursue, say, telecoms, banks, Monsanto, Luxxotica, Disney, and the like. Why is it just big tech?
What, you mean go after their friends? Are you crazy?
It’s complete nonsense. Telecoms have been fucking people over for decades and yet we still see mergers resulting in 3 providers going to 2 despite it being downright impossible to start a new one (see: Google Fiber), that is if you’re even lucky enough to have more than one in your region.
This is the biggest fear I have about antitrust. The reason Google is likely being targeted is because they have not stuffed enough pockets for most politicians to turn a blind eye.
Sure, some well meaning officials may enact useful policy to carve out a competitive space for smaller players. What everyone else, however, will learn is to stuff congress with more and more lobbyists.
Google fiber was fine. Google just stopped caring once they realized how little ROI is in the field. Turns out being a last mile ISP is a pretty low margin business.
Google Fiber was never about ROI. Fiber stopped expanding after encountering legal resistance in market after market from the preexisting telecom (take note the singular, because there’s usually just one). Every market they successfully pushed through, the existing telecom dropped prices and improved service to stay competitive. These competition-stifling monopolies are costing taxpayers tons of money when the taxpayers were the ones that funded the infrastructure the incumbents are holding out on now.
Big Tech has a corporate sophistication problem. The other industries are far more savvy when it comes to optics and fixing image problems. Remember Monsanto's reverse merge into Bayer that cleverly sidestepped the bad PR trail it received? That never caught up with them. It likely never will.
Sadly, I imagine that big tech will catch on. It has the resources. It's just still in the process of developing the playbook.
Telecoms usually pay for their monopoly privileges.
This is just a shakedown.
The same way Microsoft was deemed a "monopoly" and what? Unbundled explorer? Is anyone seriously worried about their monopoly now? There's always a new kid on the block.
The DOJ is too slow to be effective at targeting tech monopolies. They should just quit before they look like a bunch of johnny-come-lately blowhards.
Microsoft was specifically deemed a monopoly in desktop operating systems. That was OK. The problem was that they were trying to use that to "leverage" their way into dominance on the internet, by pushing (really quite aggressively) users to use Internet Explorer, and by pushing (even bribing) websites to include "IE-only" elements. "Try to make using Netscape a jarring experience" was the way they put it.
It's that "leveraging" bit that was the problem - trying to use a monopoly in one area to destroy competition in another area.
> The problem was that they were trying to use that to "leverage" their way into dominance on the internet, by pushing (really quite aggressively) users to use Internet Explorer
Absolutely correct. By the way, have you visited Google with a non-Chrome browser? They’ll encourage you to use Chrome for “the best experience.” Seems very much like leveraging, never understood why people don’t make a bigger deal about this.
Most people use Chrome already so they don't see how aggressive Google popup spams anyone not using it. Meanwhile, Microsoft tries a subtle reminder about Edge, and there's a media ruckus about it for days.
Telecom is a horse of a slightly different color though because they are intentionally granted regional monopolies over utilities. There should be better regulatory enforcement of these utility deals, but between regulatory capture and nearly trust-like brokered deals to swap regions among each other to best minimize any particular region's regulatory control and collusion opportunities between neighboring regions, almost all of the regulatory enforcement that should prevent certain types of monopolist behaviors has nearly no teeth left in the US.
The distinction is on which meaning of "monopoly" and "monopoly with respect to what". Yes, no telecom should be the only telecom in a region, but each telecom is granted an exclusivity (monopoly) on a particular utility line: cable companies are given (in most regions) exclusive rights to a region's originally TV focused fiber and coax cables and phone companies are given (in most regions) exclusive rights to a region's originally phone-focused fiber and coax cables. The convergence of all such lines towards data/internet-utility lines has let things like the Cable Act of 1992 declare a telecom not a monopoly with respect to a region so long as there is, for instance, a duopoly with a cable and a phone company. But there is still just one cable company with a (should be) regulated monopoly on cable lines and installations, and there is still just one phone company with a (should be) regulated monopoly on phone lines and installations. Those exclusive utility licenses themselves are still called and managed as intentionally granted monopolies for the public benefit (which is why they are regulated as such, and should be enforced better).
Yet even under this situation of "competition" between say a cable company and a phone company in most regions you have a duopoly and in very rare cases you find tripolies in the US. I did accuse these companies of swapping agreements in a friendly matter like if not exactly as a Trust to evenly distribute such duopolies and make it tough to enforce the places where the laissez faire regulatory environment around the duopolies have led to de facto monopolies by benchmarks such as which provide modern internet speeds at the neighborhood and/or building level. (It's been too long since the US was last interested in trust busting. It's also maybe been too long with the hand off the regulatory rudder for those cable and phone monopoly licenses.)
> Yes, no telecom should be the only telecom in a region, but each telecom is granted an exclusivity (monopoly) on a particular utility line: cable companies are given (in most regions) exclusive rights to a region's originally TV focused fiber and coax cables and phone companies are given (in most regions) exclusive rights to a region's originally phone-focused fiber and coax cables.
That's a weird way of phrasing it. Cable companies own their lines because they paid to build them. But they haven't been "intentionally granted monopolies" as you claimed above, because another provider could come in and build lines and provide service. (Power companies, by contrast, generally do have a monopoly in that sense.)
Most regions are aware that cable and/or phone lines form a natural monopoly, and thus intentionally granted that monopoly, placing regulatory bodies just as they did power, water, etc.
Just look at how badly Google Fiber is failing some cities to see how hard it is for "another provider could come in and build lines and provide service". It may be "slightly" easier to have competing cable providers than competing power companies (though keep in mind early America did have more competing power companies in some regions), but it's not that much easier, it's still a natural monopoly.
WorldMaker's answer to this comment is great. I would TL;DR it by saying that while there are always multiple phone companies to choose from, there is usually only one cable or fiber internet company, which is what matters.
In every state I've ever lived, for example, Comcast is the only company that provides acceptable internet speeds. DSL and satellite providers don't even come close enough to count as competition. So Comcast has the localized monopoly on the infrastructure necessary to actually provide a good product.
They are? Recent history suggests it's way easier for a random person to build a successful search engine (e.g. DuckDuckGo) than a successful telecom, and I have way more choice of search engine than telecom.
I definitely won't argue that telecoms play fair, but there are high barriers to entry for starting a telecom. If you start a new telecom only to compete for customers with an existing telecom in a certain area, you have to pay a huge expense to build out your network and your upside will be limited by the ensuing price war.
Not arguing that starting a telecom is easier than a search engine, but I think a large part of that difficulty is inherent to the industry.
You’re describing point by point exactly why they’re dangerous monopolies. It’s hard, incumbents have advantage, and even if you do it, incumbents will undercut you because they are already well situated. Consumers have no choice; incumbents frequently at the receiving end of the worst consumer satisfaction. Oh, and taxpayers also paid $400B to lay that infrastructure that apparently newcomers aren’t allowed to have. And yet here we are, going after a search engine that has a dozen alternatives that are just as capable of suiting your needs and new ones able to spring up overnight. It just makes no sense. This is pure manipulation by the government.
I definitely agree with you that they are dangerous monopolies, I hope I didn't come across as defending them.
I think the overall point though is that both the telecom and search engine market experience the network effect. In a telecom's case, the effect is more literal. For search engines, they increase in value as they can collect data on more and more users (which increases the value of the search engine to the users and the cycle continues). Saying that there are dozens of alternatives to me is like saying there are dozens of alternatives to Facebook. There are, but my Grandma isn't on them so do I really care?
I think that the network effect is really hard to regulate around effectively. Just look at Bell. the resulting companies from the Bell antitrust case are the same companies we are discussing as having monopolies on internet access. I absolutely agree that we have an issue, but I just don't know of a solution.
I disagree that the network effect in Google is anywhere near as substantial as Facebook. You don’t have a social network without your friends on it. You can definitely crawl the internet and make an index out of the cross references and build a search engine out of it. It may be worse at first but that’s because of the data you mine from users, right? So either this whole privacy thing is overblown and it’s really necessary to collect data to make a really great product or no one should be able to in which case Google holds little monopoly power over a newcomer that doesn’t have any of this data.
Not sure about the others, but by law no bank can have more than 10% of the national deposit asset, which makes it very difficult to be a monopoly. That's why the recent rumor of the merge of Wells Fargo and Goldman is just nonsense.
Anti-trust needs to come back in a big way to a Teddy Roosevelt / FDR level. Monopoly/oligopoly that causes too much concentration should be subject to regular anti-trust.
The biggest needing breakups are:
- ISPs / telecoms
- Banks
- Food supply
ISPs / telecom should be first, the 2017 push to remove net neutrality even with clear violations [1], privacy protections and focus on ad networks [2], data caps, throttling, prioritization and more are unforgivable. The network is a utility, it needs strong liability behind that. I'd rather the lines be run by power companies and in many places like Phoenix SRP runs all the fiber anyways [3]. Cox only ran lines when Google Fiber was here. All Cox does is overload nodes and upload is severely limited as well as prioritization is going overboard and ending up with dropped packets and a horrible QoE. While these systems have a decent QoS, the QoE is going down immensely. There are lots more things they are doing like trying to get their modems in while having access to remotely install firmware on approved but not rented modems and limiting/throttling by device when you get their shared modem/router that they can see every device.
"too big to fail banks" next which are a national security issue almost at this point. Mind blowing after the Great Recession that we let the banks handle this stimulus as a gatekeeper. The GR bubble was caused by mortgage backed securities that went into cause a credit crunch. Now we got whistleblowers coming out about commercial mortgage backed securities [4]. It is going to get bad.
With the pandemic, now the food supply has been exposed as too consolidated. Even hedge funds are saying it, when hedge funds are worried you should be worried as these are the wealth extractors [5].
Harvard Business Review recently raised the alarm about too much consolidation called "The High Price of Efficiency" and how there should be a 'rethinking efficiency' to reduce concentration [6].
> "Superefficient businesses create the potential for social disorder."
You can have too much "efficiency", it leads to stagnation and monopolies/oligopolies which stop innovating and turn to rent-seeking. Ultimately it leads to less innovation, less products, less jobs, monoculture, higher prices and missed opportunities when there is efficient competition but not super efficient markets. We need companies doing the same things and finding new ways to do things otherwise product development and research and development stop. The sales/marketing/finance takes over then from the product/engineering/creative people and we all lose.
Here's a great quick point by Steve Jobs about product stagnation and the managers/business side [7] and how they can run amok if not controlled to allow value creation to continue, and how monopolies or problems that arise when only the business/managers are in charge.
> It turns out the same thing can happen in technology companies that get monopolies, like IBM or Xerox. If you were a product person at IBM or Xerox, so you make a better copier or computer. So what? When you have monopoly market share, the company's not any more successful.
> So the people that can make the company more successful are sales and marketing people, and they end up running the companies. And the product people get driven out of the decision making forums, and the companies forget what it means to make great products. The product sensibility and the product genius that brought them to that monopolistic position gets rotted out by people running these companies that have no conception of a good product versus a bad product.
> They have no conception of the craftsmanship that's required to take a good idea and turn it into a good product. And they really have no feeling in their hearts, usually, about wanting to really help the customers.
The market is like a garden. The seeds and smaller plants need help, the overgrown and large plants should be harvested and culled back so it doesn't take over the garden and then the midsize plants flourish. Our market garden is in a state of overgrowth and the rest of the crops can't survive.
What happens when the overgrowth is taken over and efficiently worked out competition and created stagnation? How will there be competition in an oligopoly that is no longer US owned? It is a national security issue as well as a fair market matter.
It is in there under the "With the pandemic, now the food supply has been exposed as too consolidated. Even hedge funds are saying it, when hedge funds are worried you should be worried as these are the wealth extractors." [1]
Too much consolidation and waste due to super efficiency that is inflexible like code that is too coupled and specialized for a certain cpu over being flexible.
Right now pork is being wasted as slaughterhouses and meat packing has been reduced dramatically in the US since the 90s, larger facilities, less of them. Too efficient that it created a security issue and potential national security attack vector. Everything is not as localized, so there are choke points in our food supply that become massive backlogs.
>In 1977, the four largest meat processing firms constituted just 25% of the market, claims Bond. Today, they control 85% of the slaughter market, as well as some 35% of cattle ranches and around 65% of the entire chicken industry, he said.
> Since 1990, the number of slaughter houses, excluding poultry, has declined by 46%, from 2,709 establishments to just 1,461 establishments.
The antitrust lawsuit is focused on Google’s dominance of search. The specific question is whether Google has a monopoly on search. I think the case is pretty strong that it does.
How though? It's trivially simple to change the default search engine. Just because a product is dominant doesn't mean it got that way nefariously. I'm sure if you added up all the R&D over the years in search, especially considering the lead time in market, Google's numbers dwarf others (I don't have a citation on that, but it stands to reason).
Parallels could be drawn with Amazon and AWS's dominance.
Why is nefarious intent necessary? The rules for monopoly and abuse of market power don’t presuppose such negative motivations, just negative market outcomes.
>The rules for monopoly and abuse of market power don’t presuppose such negative motivations, just negative market outcomes.
Yes they do. The reason MS got put on the chopping block was because they began telling vendors that they would charge them more if they bundled Netscape or Java. Intel got slapped with a similar suite when they began telling vendors that they would charge more for their chips if they sold any configuration with AMD chips. Similarly Standard Oil did the same thing - once they began telling suppliers they would squeeze them out if they worked with any competitors they got broken up.
It's simply not enough to have a dominant position - you have to abuse it to get slapped with an anti trust suite.
I agree that negative intent from a monopoly power is actionable. I merely point out that negative intent is not necessary prior to regulatory action against or upon a monopoly power. I refer to another comment on this post for further info.
‘Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power — that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power.’
These rules have changed before, and they can change again. Look up the history of anti-trust and the major shift that happened after judge Bork authored his paper. There's a popular argument that things went downhill from there, and we should reverse that decision. Since it was all about how the courts interpret legislation, this change can be reverted in the same way it was originally carried out.
AWS is not that dominant. Azure is half its size and GCP is a serious competitor. Not only that, there are plenty of companies you can go to if you don’t want managed services and just want VPSs.
Besides that, Amazon itself admits that only 5% of Enterprise workloads are on any cloud platform.
Any company - or heck most tech nerds - can build our infrastructure to suit their needs without going to managed services. Whether they should is based on their business model.
Before anyone tries to “educate me” about what AWS offers, I know the ins and outs of AWS.
Why is it dominant? Is Google is preventing competition from entering the market or is it because Google offers the superior product? Good luck with that in court.
Just because they don't stop their competition from entering the market would not change whether or not something is a monopoly. They have 88% of the US search market share which is often consider to be in the monopoly territory.
Of course it may not be prudent to go after a company that isn't doing any malicious against its competitors.
How would a government even go after a monopoly that isn't doing anything malicious against its competitors?
What would the punishment even be? Forcing adoption of other platforms to artificially inflate usage rates? Breaking Google Search into two competing Google Mini-Search products that aren't expected to cooperate and push search #3 and onward out of the market?
Yelp is a parasite that participates in extortion of small businesses. They need to be investigated themselves long before their word has any weight in this matter.
The antitrust lawsuit is focused on Google’s dominance of search...
Not principally:
Much of the states’ investigation has focused on Google’s online advertising business. The company owns the dominant tool at every link in the complex chain between online publishers and advertisers. The Justice Department likewise is making Google’s ad technology one of its points of emphasis. But it is also focusing more broadly on concerns that Google uses its dominant search business to stifle competition, people familiar with the matter said.
Google has an estimate 88% of the search market share in the US. (Its higher world wide if it matters.) Many people consider that to be getting into monopoly territory.
The big tech co's have become politically active by infringing on people's freedom of speech, etc. You can argue they're private, but that doesn't really matter. The telcos are private, but they can't drop your connection if they don't like what you are talking about. They can't drop the account of an organization that agitates for things they disagree with.
The big tech co's have made their bed, now they get to sleep in it.
Is it wrong if I'm kicked out a private club for saying something that offended the other members? Is the club's management obligated to allow me to continue expressing myself on their property, to their members?
Social media platforms and telcos operate at different layers of the stack. Even if something's acceptable at one layer, doesn't mean it's OK at another, because the consequences are different.
If an ISP allows someone to express something offensive (i.e. legal, but strongly disagreeable to the majority) on their network, it doesn't affect their other customers directly - they won't know or care which ISP this person was using. If a social media platform allows posting something that most other users would find offensive, those other users will leave. And yet people are arguing for deregulating the first (anti-net-neutrality) and regulating the second. It seems backward to me.
What you call "censoring" someone else might call "curation and removal of BS". The free market can decide whether it's too much or too little.
