11 ms·

If you look at what has happened in China after Google left, how they were able to quickly grow massive web companies, protectionism seems like a no-brainer for

by guelo 11y ago

If you look at what has happened in China after Google left, how they were able to quickly grow massive web companies, protectionism seems like a no-brainer for every slightly advanced country. Silicon Valley sees the huge first-mover advantages and is moving as fast as possible to move into every liberalized market. But it makes no sense for a country to allow Silicon Valley to take these industries for themselves. This is the fastest growing industry for the next several decades with the best paying jobs. It only makes sense to nurture the local companies and local talent instead of giving it all away to the Americans. Europe is always fretting about how they need to create their own Silicon Valley but it's easy to do, kick out the Americans! You'll have your own Baidu, Tencent and Alibabas in no time.

dylanjermiah 11y ago
At the expense of the citizens. Why not let companies compete?
- guelo 11y ago
  There is no competition, it's just monopolies. It's been shown over and over that the first-mover advantage on the web is almost insurmountable because of the network effects.
  - JoshTriplett 11y ago
    Which is why Google was the first search engine ever, and before that people just banged rocks together in the general vicinity of phone lines, because any prior search engine would have had an insurmountable first-mover advantage that Google could not possibly have overcome?
    - abritinthebay 11y ago
      While I agree with the general point you are making - the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search. I think we, as technologically included people, tend to overestimate how old the internet is to most people outside of maybe early email usage. Also the implosion of companies (like Yahoo) is a factor here. If Yahoo hadn't been really stupid they would still be dominant - and it would have been hard to stop them. Of course people can overtake when the leader throws the lead... but it's luck and also hard.
      - eru 11y ago
        > [...] the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search. MySpace vs Facebook happened after Google rose to dominance. Also, Google Video vs YouTube.
        abritinthebay 11y ago
        MySpace was at it's largest in 2005 - at that point Google was nearly 40% of online search traffic. It had been a major player for a while - hell it had already had a huge IPO by that point. I think you forget just how FAST Google blew up. In 1999 they were basically nothing - by 2004 they were the largest search company on the internet. Facebook wasn't even a thing until 2004 - after the Google IPO. So no, Myspace vs Facebook didn't happen after that. Also Google Video was just plain crap. It's like comparing Google+ to Facebook, it was never going to last.
      - marrs 11y ago
        I think you forget just how much better at search Google was. Google's replacement will probably be much better at privacy.
        abritinthebay 11y ago
        No, I don't. It really was amazing and a no-brainer to switch. That said Yahoo could have still stayed ahead - they nearly bought Google after all. Remember though that accurate results is a clear market winning feature - we've seen that the average user quite simply doesn't care about privacy that much.
  - icebraining 11y ago
    Yeap. We're all still using Altavista, MySpace, Hotmail and Livejournal.
    - NeutronBoy 11y ago
      While I agree with the sentiment, I would argue that the network effects now are significantly stronger than they were 10-15 years ago. Back then, the internet was still a novelty for many (those who had the internet, anyway). This was before broadband was commonplace, before smartphones, before Facebook and the iPhone were a thing.
      - oblio 11y ago
        The network effect becomes even stronger now, as the Internet crosses the chasm. Grandma won't switch from Facebook soon, unlike her teen techie granddaughter.
- JoshTriplett 11y ago
  Some countries have no problem banning the best technology so that the best local technology can win, even if it's worse, and even if the best technology did nothing wrong. It's easy enough to make up excuses for that after the fact. It would be nice if at least one such country could just blatantly state their motives up front to be judged on their merits: "We're choosing to prohibit a non-local company to encourage local replacements."
  - levosmetalo 11y ago
    And what exactly is wrong with that? As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood. There are local monopolies everywhere, even in the USA. And they are protected by the local (city, county, state, federal) legislation that favors local business. Just try coming out of nowhere and starting new water supply business somewhere in Texas (constructed example, but point stays).
    - icebraining 11y ago
      As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood. Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?
      - chappi42 11y ago
        This leads to nowhere. I could reply: And you pay for the locally laid off people and support the community which now fails necessary means?
        deleted 11y ago
- biokoda 11y ago
  Short term expense of the citizens. Nurturing local business is a long term benefit strategy. Protectionism is how every nation on the planet developed. Why are Americans driving South Korean/Japanese cars and not the other way around? Because the south koreans and the japanese imposed large tariffs on car imports and the US did not. Their car companies had free range on their own turf. Which gave them time and money to develop. Silicon valley is not giving the outside world any chance of competing.
  - rtpg 11y ago
    The US practices a huge amount of protectionism as well. The reason that the Americans are driving Japanese cars is that they were built in the US (which happens because of the protectionism). Ford doesn't build cars in Japan. The end result is good for most people (consumers get more choice, jobs are still in the country).
    - biokoda 11y ago
      Yes and those japanese companies developed in their home turf and became strong enough to compete in the world market. The japanese government nurtured their industry. When it comes to internet based businesses this is not done. The end result is silicon valley dominating everyone else because that's where it all started and where the most money right now is.
    - bduerst 11y ago
      You're forgetting the bailouts for the American auto industry and the ghost town known as Detroit. Protectionism stagnates technological development because of the artificially stymied competition. Once the major players from hyper-competitive markets inevitably enter the protected market, then they outperform the resident industry there. Protectionism props up non-competitive markets, which is disruptive for citizens when they fall down.
      - rtpg 11y ago
        That's a good point. The auto industry might not be the best place for where you want to apply protectionism. But one pretty good usage is when the local industry is in its infancy. It's pretty well accepted that the IMF forcing so many African countries to drop agriculture-related tariffs has been among the biggest failures of modern economics.
- bootload 11y ago
  "Why not let companies compete?" foreign company tax avoidance? "Technology giant Google last year paid $11.7 million in corporate tax to Australian government coffers, on revenue of $438.7m and profits of $58m." ~ http://www.theaustralian.com.au/business/media/google-admits-to-paying-a-20pc-tax-rate-in-australia/story-fna03wxu-1227329188267 http://www.theaustralian.com.au/business/media/google-admits...
  - weddpros 11y ago
    "All" the research and development was done abroad, not in Australia. The products were created abroad, so you can't expect the full added value to reside in Australia...
    - kuschku 11y ago
      The thing with taxes like VAT is that they are supposed to apply fully to the end product, no matter where it was made. This is made to prevent tax evasion schemes.
  - ojbyrne 11y ago
    20% corporate tax rate. What's the problem?
- lumberjack 11y ago
  It think you'll find the "customers over workers" mentality doesn't fly so well in most European countries as it does in the US.
- cousin_it 11y ago
  You got your priorities backwards. Good jobs are more scarce than iphones, and more important for the well-being of people.
viraptor 11y ago
> kick out the Americans How? Great firewall of Europe? Or what exactly are you proposing?
- _pmf_ 11y ago
  > How? Great firewall of Europe? Or what exactly are you proposing? Forcing them to follow basic rules of fairness is usually enough to keep them out.
  - hueving 11y ago
    "Basic rules of fairness" is meaningless crap that roughly translates to, "we aren't as good so we will keep passing regulations in favor of locals until it's insane for anyone else to try." Frankly, it wouldn't be that surprising if net neutrality started getting violated in Europe by protectionism laws.
    - harryf 11y ago
      I have family in Germany who get their internet through Deutsche Telekom. When visiting I've found its faster to watch YouTube via a VPN through Switzerland than directly through Deutsche Telekom. While this doesn't prove anything it sure does feel like they already violate net neutrality when it comes to YouTube
      - _xzu 11y ago
        More probably this is routing issue. Connection between Deutsche Telekom and Youtube servers is more busy than connections between DT -> Swiss server -> Youtube.
        kuschku 11y ago
        DTAG (Deutsche Telekom AG) essentially does the exact same with YouTube that Verizon did with Netflix: They refuse to peer with them at all. ALL traffic from DTAG users first runs to a Level3 datacenter in New York, and from there goes to other users. While all other German ISPs have a peering node at DECIX
tellthetruth1 11y ago
This is exactly what any economy with self respect should do. China is so happy now. The last thing you need is an NSA arm operating a monopoly in your country.
- pavlov 11y ago
  China is so happy now. That's an awesome troll factory slogan.
  - chappi42 11y ago
    Without knowing details I strongly suppose that China is much happier now than e.g. 25 years ago. Many peoples lives improved. - And regarding not needing a hidden NSA arm, 100 % agreed. Keep them out.
pavlov 11y ago
I think language and writing system also plays a significant role in the emergence of Chinese native web giants. It's not just about Google getting kicked out; they probably would have had a very hard time adjusting their Western product for the local market. (Google tends to think of their products as "universal", and that doesn't quite work in China.) Look at Russia. They don't have Chinese-style technical or political protections to keep Google out, yet the market is dominated by local players like Yandex and Mail.ru.
- feider 11y ago
  Russia does not have political protections? http://www.reuters.com/video/2015/08/06/russia-destroys-seven-7-tons-of-banned-w?videoId=365212455 http://www.reuters.com/video/2015/08/06/russia-destroys-seve...
  - pavlov 11y ago
    Yes, of course they do, but the mode of operation is very different. Obviously the Russian government exerts control over Google's Russian operation, but it's not explicit like in China. This has meant Google can continue to operate in Russia without losing face ("do no evil" and all that), whereas it wasn't possible in China. Your link is about the Russian trade embargo, which is not directly relevant... But it does illustrate the huge difference between Chinese and Russian trade politics. China keeps tight reins internally on content and communications, but wants to ensure the free flow of material imports and exports. China wouldn't allow an external political disagreement to disturb relations to the extent that Western imports would be banned. At least I can't imagine French cheese being burned by the tonnes in Shanghai...
- adventured 11y ago
  Of the major economies, Russia is the most directly controlled, more so than China. Putin is a dictator when it comes to most of the economy, he determines everything by fiat. The Russian government seized control, through direct violence or the threat of violence, of nearly every major industry across the whole country. There isn't a single major industry they don't control. You can't do anything of economic consequence without first making a deal with Putin's government.
fraserharris 11y ago
This would appear to be an argument in favor of trans-national trade deals that stop nationalist protectionism.
adventured 11y ago
You can't kick out the Americans without assuming dictatorship-like command powers over the entire EU economic zone. That only functions at all in China - to whatever mediocre extent it is functioning today - because that's a unified market, one country, under one leadership. Any attempt by Europe to try that, would destroy the European economy. Germany is hyper dependent on exports. The US eats most of its own dog food when it comes to manufacturing, Germany does not. Nearly all of Europe, other than Russia and perhaps Norway, lacks the ability to be truly energy independent today. It's obvious who would win the import / export restriction war. There's one country capable of being fully self-sustaining across science, innovation, manufacturing, natural resources, technology - that's the US. Europe has barely shown an ability to cooperate even in a poorly functioning manner when it comes to integration, much less of the extreme integration such a command economy system would require. Even the Eurozone experiment has been a disaster for the majority of countries involved. There's no possibility of the kind of extreme integration the kick-the-Americans-out plan would require, ever happening. Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China).
- levosmetalo 11y ago
  > Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China). As someone living in a German city which is a world leading car manufacturing center, I would actually like to see the end of German auto industry. The whole German economic system is geared towards those big car manufacturers, and it's very hard for small businesses and enterpreneurs to navigate through all of that bureaucratic mess created by big German corporations. Letting them fail would actually help making German economy much healthier in the long run.
  - allendoerfer 11y ago
    I think you greatly underestimate how many jobs are dependent on our auto industry. It is not only the cars, big companies like Bosch and a plethora of hidden champions, that dominate their segment but nobody recognizes, would not be possible if it were not for the close connection at home to a world-wide leading industry. I am not even sure, that Silicon Valley is ahead when it comes to "digital stuff" inside cars. It is my perception at least, that companies like Mercedes or BMW had many of the digital helpers first. I therefor think Germany would be a great place to start a tech-startup apart from the next social network.
kennethh 11y ago
There were many search companies in the start and for a long time all of them did the same, google came and delivered a better product and kept innovation. People came and saw the google homesite with a logo, textfield and a button. This is simple we can make this also without knowing all the stuff behind it. Search is now a mature industry, it is always better to go for the new places where there are no dominant players. Google biggest competitor is not another search engine but Facebook. This is the ways it is supposed to work. If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses by protectionism. I think everyone forgets the innovation in Ad Words which made it possible for small businesses to thrive. One can now get started with 100$ marketing budget while one before needed 10000$.
- JakeColtman 11y ago
  I agree that protectionism is normally bad, but the reason that it is bad is that it suppresses competition most of the time. If guelo's argument that Google not being in China fostered more tech companies in China is correct, then removing an initially dominant foreign company with big first mover advantage and economies of scale can actually increase competition in the market. That said, once the home grown companies are sufficiently mature to compete on a level playing field with already established companies I agree the protectionism should be withdrawn again
  - CPLX 11y ago
    For reference, an economist would call this the "infant industries" rationale for protectionism and it is generally considered a reasonable policy tool when done purposefully.
- rjaco31 11y ago
  > it is always better to go for the new places where there are no dominant players It's funny, I've heard several times the total opposite from startup founders ("It's easier to go for a big market and to chunk some % in order to get viable, rather than going on a totally new market in which you'll have to both be better than the competition and convince the clients that's it's actually a promising market") > If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses(sic) by protectionism. Uh? Protectionism has historically worked exceptionally well to develop your own industry, as a matter of fact, all the big players heavily used protectionism in their time to nurture their industry before being big (England, USA, China, South Korea). You just cannot compete with an on-going industry while starting from scratch, so your industry will never take off. Protectionism is only good if you're already the best in town & want to be sure that you keep the upper hand, but it helps in no way the under-developed country.
donkeyd 11y ago
> Europe is always fretting about how they need to create their own Silicon Valley but it's easy to do, kick out the Americans! You'll have your own Baidu, Tencent and Alibabas in no time. People seem to forget that Europe is not a country. Europe does not have a single uniting language. What happens, is that every country starts their own smaller versions and they stay mostly within that country. If they want to move to another country, there's often already a major player there, and they might not have the means to kick them out. I think the reason that silicon valley is so powerful, is that the initial market is 325 million people who all speak the same language. Once you get the US market, you have the size, name and means to easily start conquering European countries. It's always about scale...
- richmarr 11y ago
  I think this view is one-sided Despite having many different languages, in some ways Europe is a more homogenous market than the US. For example, an insurance business can operate freely across Europe with only one small piece of additional paperwork. I think it's actually an A4 piece of paper. In the US they'd have to be regulated separately by nearly every state.
  - Kurtz79 11y ago
    You are unsing a very specific example do draw a very far-reaching conclusion. The only fact that the there are some 20 different languages makes the EU a much less omogeneous market than the US. This withouth considering that each country has its own employment policies, social security services, healthcare system, education system, revenue service... I'm strongly pro-union, but it's far from perfect, or even efficient, in the current state.
    - richmarr 11y ago
      > You are unsing a very specific example do draw a very far-reaching conclusion. No, I don't think "in some ways Europe is a more homogenous market" is far-reaching at all, especially when accompanied by a concrete example.
  - 11y ago
realusername 11y ago
You are maybe half-joking but the only reason it has not happened yet is that the EU is actively promoting free trade. I don't know for other countries but on my case in France, people would happily block or put massive taxes on large American websites to create local equivalents, they only reason it's not done yet is because they can't with the EU. And it's not the United States either, you can't argue that keeping free trade is good for the economy since the general consensus is that free trade is bad and hurting the country.
- lumberjack 11y ago
  >promoting free trade Yes but not because some EU bureaucrats have been born with some innate fetish for free trade. It's because the EU is easily influenced by deep pockets.
forloop 11y ago
I would hate for Google to leave the UK. The aggregated lost productivity would, presumably, be massive! And I'm part of that aggregate. If the EU, or UK want to improve their tech chops, they should allocate more resources to the brightest of their respective populations. If the UK scrapped the war on drugs and gave the billions which are saved/earned through taxation to people who tested as high IQ (say > 139) to invest in STEM activities, what would happen? I'm not in the set of high-IQ individuals which I propose giving additional resources to; but it's clear in a positive sum game I would benefit greatly from their invention (creation of new products/services) and innovation (improvements of current products/services). Unfortunately, there's a recent fetish for equal outcome for all (vs. even equal opportunity). As soon as there's equal output from all: that'll makes sense!
wil421 11y ago
No Americans are forcing you to use our services. If you have a problem then don't use them it's that simple. You're able to boycott anything on the Internet. I'm tired of Anti-American sentiment when your governments are in bed with ours. American companies weren't the only ones sharing data. German and Belgium telecoms were in bed with spy agencies and not just with the Five Eyes. In public Merkle was outraged but her spy agency was just as much to blame. This is a global problem not just a U.S. and EU one.
- stdbrouw 11y ago
  I don't see any anti-American sentiment in the OP's message. He's just making an economic argument that may or may not be correct.
  - wil421 11y ago
    >kick out the Americans! Anytime someone wants to kick me out I take offense. He's talking about kicking out all American companies and making their own tools as a replacement. How is that not Anti-American?
    - stdbrouw 11y ago
      Protectionism and xenophobia are different things.
      - wil421 11y ago
        Can you explain any of your answers? If it was protectionism why was the US the only country listed?
        stdbrouw 11y ago
        Because the US is the only country that is relevant in this context. None of the major software or web services in use in Europe come from Russia or Nigeria or Australia so there is nothing for trade protections to protect against.
9872 11y ago
That did not happen because Google left. Google was never even close to beating baidu.
est 11y ago
> what has happened in China after Google left, how they were able to quickly grow massive web companies My two cents: 1. Baidu has more market share than Google before Google left. 2. Google's chinese processing was bad before Kaifulee, but now Google's Chinese NLP is way better than rest of the world.
bduerst 11y ago
China already had massive web companies before Google entered the market - including Baidu. China's move wasn't so much protectionism as it was censorship.
doomsells 11y ago
Europe is not equipped to go toe to toe with the Americans. Europe has found a great niche in glomming on to US power and will have a precipitous fall if their actions try to match their rhetoric.
BenoitEssiambre 11y ago
That's a double edge sword. I live in Canada and I've been in a position where rules which I suspect were meant to slow down american companies moving in too fast into Canada actually prevented me from having access to markets to sell into. For example, during the mobile apps gold rush. I had a finished Android app ready to go for almost a year waiting for the "Android Market" (Now the "Play Store") to allow Canadian sellers. I could not sell even in my own country (at least not with any visibility) while my American competitors could accumulate a huge head start. I had to wait for Google to jump through the Canadian regulatory hoops to allow Canadian sellers into their store. It was frustrating as hell. The other problem is that new technologies often evolve from an ecosystem of other new technologies. If we only have late access to Netflix or Uber or self driving cars, it becomes difficult to be competitive in the technologies surrounding these technological shifts. If you're last to experience newer technologies on a daily basis, you're also last in a position to evaluate and predict where they are going which gives you a significant business disadvantage. In order to build on top of the leading edge you have to have good access to the leading edge wherever it may originate from.

by guelo 11y ago

dylanjermiah 11y ago

At the expense of the citizens. Why not let companies compete?

guelo 11y ago
There is no competition, it's just monopolies. It's been shown over and over that the first-mover advantage on the web is almost insurmountable because of the network effects.
- JoshTriplett 11y ago
  Which is why Google was the first search engine ever, and before that people just banged rocks together in the general vicinity of phone lines, because any prior search engine would have had an insurmountable first-mover advantage that Google could not possibly have overcome?
  - abritinthebay 11y ago
    While I agree with the general point you are making - the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search. I think we, as technologically included people, tend to overestimate how old the internet is to most people outside of maybe early email usage. Also the implosion of companies (like Yahoo) is a factor here. If Yahoo hadn't been really stupid they would still be dominant - and it would have been hard to stop them. Of course people can overtake when the leader throws the lead... but it's luck and also hard.
    - eru 11y ago
      > [...] the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search. MySpace vs Facebook happened after Google rose to dominance. Also, Google Video vs YouTube.
      - abritinthebay 11y ago
        MySpace was at it's largest in 2005 - at that point Google was nearly 40% of online search traffic. It had been a major player for a while - hell it had already had a huge IPO by that point. I think you forget just how FAST Google blew up. In 1999 they were basically nothing - by 2004 they were the largest search company on the internet. Facebook wasn't even a thing until 2004 - after the Google IPO. So no, Myspace vs Facebook didn't happen after that. Also Google Video was just plain crap. It's like comparing Google+ to Facebook, it was never going to last.
    - marrs 11y ago
      I think you forget just how much better at search Google was. Google's replacement will probably be much better at privacy.
      - abritinthebay 11y ago
        No, I don't. It really was amazing and a no-brainer to switch. That said Yahoo could have still stayed ahead - they nearly bought Google after all. Remember though that accurate results is a clear market winning feature - we've seen that the average user quite simply doesn't care about privacy that much.
- icebraining 11y ago
  Yeap. We're all still using Altavista, MySpace, Hotmail and Livejournal.
  - NeutronBoy 11y ago
    While I agree with the sentiment, I would argue that the network effects now are significantly stronger than they were 10-15 years ago. Back then, the internet was still a novelty for many (those who had the internet, anyway). This was before broadband was commonplace, before smartphones, before Facebook and the iPhone were a thing.
    - oblio 11y ago
      The network effect becomes even stronger now, as the Internet crosses the chasm. Grandma won't switch from Facebook soon, unlike her teen techie granddaughter.
JoshTriplett 11y ago
Some countries have no problem banning the best technology so that the best local technology can win, even if it's worse, and even if the best technology did nothing wrong. It's easy enough to make up excuses for that after the fact. It would be nice if at least one such country could just blatantly state their motives up front to be judged on their merits: "We're choosing to prohibit a non-local company to encourage local replacements."
- levosmetalo 11y ago
  And what exactly is wrong with that? As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood. There are local monopolies everywhere, even in the USA. And they are protected by the local (city, county, state, federal) legislation that favors local business. Just try coming out of nowhere and starting new water supply business somewhere in Texas (constructed example, but point stays).
  - icebraining 11y ago
    As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood. Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?
    - chappi42 11y ago
      This leads to nowhere. I could reply: And you pay for the locally laid off people and support the community which now fails necessary means?
      - deleted 11y ago
biokoda 11y ago
Short term expense of the citizens. Nurturing local business is a long term benefit strategy. Protectionism is how every nation on the planet developed. Why are Americans driving South Korean/Japanese cars and not the other way around? Because the south koreans and the japanese imposed large tariffs on car imports and the US did not. Their car companies had free range on their own turf. Which gave them time and money to develop. Silicon valley is not giving the outside world any chance of competing.
- rtpg 11y ago
  The US practices a huge amount of protectionism as well. The reason that the Americans are driving Japanese cars is that they were built in the US (which happens because of the protectionism). Ford doesn't build cars in Japan. The end result is good for most people (consumers get more choice, jobs are still in the country).
  - biokoda 11y ago
    Yes and those japanese companies developed in their home turf and became strong enough to compete in the world market. The japanese government nurtured their industry. When it comes to internet based businesses this is not done. The end result is silicon valley dominating everyone else because that's where it all started and where the most money right now is.
  - bduerst 11y ago
    You're forgetting the bailouts for the American auto industry and the ghost town known as Detroit. Protectionism stagnates technological development because of the artificially stymied competition. Once the major players from hyper-competitive markets inevitably enter the protected market, then they outperform the resident industry there. Protectionism props up non-competitive markets, which is disruptive for citizens when they fall down.
    - rtpg 11y ago
      That's a good point. The auto industry might not be the best place for where you want to apply protectionism. But one pretty good usage is when the local industry is in its infancy. It's pretty well accepted that the IMF forcing so many African countries to drop agriculture-related tariffs has been among the biggest failures of modern economics.
bootload 11y ago
"Why not let companies compete?" foreign company tax avoidance? "Technology giant Google last year paid $11.7 million in corporate tax to Australian government coffers, on revenue of $438.7m and profits of $58m." ~ http://www.theaustralian.com.au/business/media/google-admits-to-paying-a-20pc-tax-rate-in-australia/story-fna03wxu-1227329188267 http://www.theaustralian.com.au/business/media/google-admits...
- weddpros 11y ago
  "All" the research and development was done abroad, not in Australia. The products were created abroad, so you can't expect the full added value to reside in Australia...
  - kuschku 11y ago
    The thing with taxes like VAT is that they are supposed to apply fully to the end product, no matter where it was made. This is made to prevent tax evasion schemes.
- ojbyrne 11y ago
  20% corporate tax rate. What's the problem?
lumberjack 11y ago
It think you'll find the "customers over workers" mentality doesn't fly so well in most European countries as it does in the US.
cousin_it 11y ago
You got your priorities backwards. Good jobs are more scarce than iphones, and more important for the well-being of people.

viraptor 11y ago

> kick out the Americans How? Great firewall of Europe? Or what exactly are you proposing?

_pmf_ 11y ago
> How? Great firewall of Europe? Or what exactly are you proposing? Forcing them to follow basic rules of fairness is usually enough to keep them out.
- hueving 11y ago
  "Basic rules of fairness" is meaningless crap that roughly translates to, "we aren't as good so we will keep passing regulations in favor of locals until it's insane for anyone else to try." Frankly, it wouldn't be that surprising if net neutrality started getting violated in Europe by protectionism laws.
  - harryf 11y ago
    I have family in Germany who get their internet through Deutsche Telekom. When visiting I've found its faster to watch YouTube via a VPN through Switzerland than directly through Deutsche Telekom. While this doesn't prove anything it sure does feel like they already violate net neutrality when it comes to YouTube
    - _xzu 11y ago
      More probably this is routing issue. Connection between Deutsche Telekom and Youtube servers is more busy than connections between DT -> Swiss server -> Youtube.
      - kuschku 11y ago
        DTAG (Deutsche Telekom AG) essentially does the exact same with YouTube that Verizon did with Netflix: They refuse to peer with them at all. ALL traffic from DTAG users first runs to a Level3 datacenter in New York, and from there goes to other users. While all other German ISPs have a peering node at DECIX

tellthetruth1 11y ago

This is exactly what any economy with self respect should do. China is so happy now. The last thing you need is an NSA arm operating a monopoly in your country.

pavlov 11y ago
China is so happy now. That's an awesome troll factory slogan.
- chappi42 11y ago
  Without knowing details I strongly suppose that China is much happier now than e.g. 25 years ago. Many peoples lives improved. - And regarding not needing a hidden NSA arm, 100 % agreed. Keep them out.

pavlov 11y ago

I think language and writing system also plays a significant role in the emergence of Chinese native web giants. It's not just about Google getting kicked out; they probably would have had a very hard time adjusting their Western product for the local market. (Google tends to think of their products as "universal", and that doesn't quite work in China.) Look at Russia. They don't have Chinese-style technical or political protections to keep Google out, yet the market is dominated by local players like Yandex and Mail.ru.

feider 11y ago
Russia does not have political protections? http://www.reuters.com/video/2015/08/06/russia-destroys-seven-7-tons-of-banned-w?videoId=365212455 http://www.reuters.com/video/2015/08/06/russia-destroys-seve...
- pavlov 11y ago
  Yes, of course they do, but the mode of operation is very different. Obviously the Russian government exerts control over Google's Russian operation, but it's not explicit like in China. This has meant Google can continue to operate in Russia without losing face ("do no evil" and all that), whereas it wasn't possible in China. Your link is about the Russian trade embargo, which is not directly relevant... But it does illustrate the huge difference between Chinese and Russian trade politics. China keeps tight reins internally on content and communications, but wants to ensure the free flow of material imports and exports. China wouldn't allow an external political disagreement to disturb relations to the extent that Western imports would be banned. At least I can't imagine French cheese being burned by the tonnes in Shanghai...
adventured 11y ago
Of the major economies, Russia is the most directly controlled, more so than China. Putin is a dictator when it comes to most of the economy, he determines everything by fiat. The Russian government seized control, through direct violence or the threat of violence, of nearly every major industry across the whole country. There isn't a single major industry they don't control. You can't do anything of economic consequence without first making a deal with Putin's government.

fraserharris 11y ago

This would appear to be an argument in favor of trans-national trade deals that stop nationalist protectionism.

adventured 11y ago

You can't kick out the Americans without assuming dictatorship-like command powers over the entire EU economic zone. That only functions at all in China - to whatever mediocre extent it is functioning today - because that's a unified market, one country, under one leadership. Any attempt by Europe to try that, would destroy the European economy. Germany is hyper dependent on exports. The US eats most of its own dog food when it comes to manufacturing, Germany does not. Nearly all of Europe, other than Russia and perhaps Norway, lacks the ability to be truly energy independent today. It's obvious who would win the import / export restriction war. There's one country capable of being fully self-sustaining across science, innovation, manufacturing, natural resources, technology - that's the US. Europe has barely shown an ability to cooperate even in a poorly functioning manner when it comes to integration, much less of the extreme integration such a command economy system would require. Even the Eurozone experiment has been a disaster for the majority of countries involved. There's no possibility of the kind of extreme integration the kick-the-Americans-out plan would require, ever happening. Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China).

levosmetalo 11y ago
> Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China). As someone living in a German city which is a world leading car manufacturing center, I would actually like to see the end of German auto industry. The whole German economic system is geared towards those big car manufacturers, and it's very hard for small businesses and enterpreneurs to navigate through all of that bureaucratic mess created by big German corporations. Letting them fail would actually help making German economy much healthier in the long run.
- allendoerfer 11y ago
  I think you greatly underestimate how many jobs are dependent on our auto industry. It is not only the cars, big companies like Bosch and a plethora of hidden champions, that dominate their segment but nobody recognizes, would not be possible if it were not for the close connection at home to a world-wide leading industry. I am not even sure, that Silicon Valley is ahead when it comes to "digital stuff" inside cars. It is my perception at least, that companies like Mercedes or BMW had many of the digital helpers first. I therefor think Germany would be a great place to start a tech-startup apart from the next social network.

kennethh 11y ago

There were many search companies in the start and for a long time all of them did the same, google came and delivered a better product and kept innovation. People came and saw the google homesite with a logo, textfield and a button. This is simple we can make this also without knowing all the stuff behind it. Search is now a mature industry, it is always better to go for the new places where there are no dominant players. Google biggest competitor is not another search engine but Facebook. This is the ways it is supposed to work. If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses by protectionism. I think everyone forgets the innovation in Ad Words which made it possible for small businesses to thrive. One can now get started with 100$ marketing budget while one before needed 10000$.

JakeColtman 11y ago
I agree that protectionism is normally bad, but the reason that it is bad is that it suppresses competition most of the time. If guelo's argument that Google not being in China fostered more tech companies in China is correct, then removing an initially dominant foreign company with big first mover advantage and economies of scale can actually increase competition in the market. That said, once the home grown companies are sufficiently mature to compete on a level playing field with already established companies I agree the protectionism should be withdrawn again
- CPLX 11y ago
  For reference, an economist would call this the "infant industries" rationale for protectionism and it is generally considered a reasonable policy tool when done purposefully.
rjaco31 11y ago
> it is always better to go for the new places where there are no dominant players It's funny, I've heard several times the total opposite from startup founders ("It's easier to go for a big market and to chunk some % in order to get viable, rather than going on a totally new market in which you'll have to both be better than the competition and convince the clients that's it's actually a promising market") > If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses(sic) by protectionism. Uh? Protectionism has historically worked exceptionally well to develop your own industry, as a matter of fact, all the big players heavily used protectionism in their time to nurture their industry before being big (England, USA, China, South Korea). You just cannot compete with an on-going industry while starting from scratch, so your industry will never take off. Protectionism is only good if you're already the best in town & want to be sure that you keep the upper hand, but it helps in no way the under-developed country.

donkeyd 11y ago

> Europe is always fretting about how they need to create their own Silicon Valley but it's easy to do, kick out the Americans! You'll have your own Baidu, Tencent and Alibabas in no time. People seem to forget that Europe is not a country. Europe does not have a single uniting language. What happens, is that every country starts their own smaller versions and they stay mostly within that country. If they want to move to another country, there's often already a major player there, and they might not have the means to kick them out. I think the reason that silicon valley is so powerful, is that the initial market is 325 million people who all speak the same language. Once you get the US market, you have the size, name and means to easily start conquering European countries. It's always about scale...

richmarr 11y ago
I think this view is one-sided Despite having many different languages, in some ways Europe is a more homogenous market than the US. For example, an insurance business can operate freely across Europe with only one small piece of additional paperwork. I think it's actually an A4 piece of paper. In the US they'd have to be regulated separately by nearly every state.
- Kurtz79 11y ago
  You are unsing a very specific example do draw a very far-reaching conclusion. The only fact that the there are some 20 different languages makes the EU a much less omogeneous market than the US. This withouth considering that each country has its own employment policies, social security services, healthcare system, education system, revenue service... I'm strongly pro-union, but it's far from perfect, or even efficient, in the current state.
  - richmarr 11y ago
    > You are unsing a very specific example do draw a very far-reaching conclusion. No, I don't think "in some ways Europe is a more homogenous market" is far-reaching at all, especially when accompanied by a concrete example.
- 11y ago

realusername 11y ago

You are maybe half-joking but the only reason it has not happened yet is that the EU is actively promoting free trade. I don't know for other countries but on my case in France, people would happily block or put massive taxes on large American websites to create local equivalents, they only reason it's not done yet is because they can't with the EU. And it's not the United States either, you can't argue that keeping free trade is good for the economy since the general consensus is that free trade is bad and hurting the country.

lumberjack 11y ago
>promoting free trade Yes but not because some EU bureaucrats have been born with some innate fetish for free trade. It's because the EU is easily influenced by deep pockets.

forloop 11y ago

I would hate for Google to leave the UK. The aggregated lost productivity would, presumably, be massive! And I'm part of that aggregate. If the EU, or UK want to improve their tech chops, they should allocate more resources to the brightest of their respective populations. If the UK scrapped the war on drugs and gave the billions which are saved/earned through taxation to people who tested as high IQ (say > 139) to invest in STEM activities, what would happen? I'm not in the set of high-IQ individuals which I propose giving additional resources to; but it's clear in a positive sum game I would benefit greatly from their invention (creation of new products/services) and innovation (improvements of current products/services). Unfortunately, there's a recent fetish for equal outcome for all (vs. even equal opportunity). As soon as there's equal output from all: that'll makes sense!

wil421 11y ago

No Americans are forcing you to use our services. If you have a problem then don't use them it's that simple. You're able to boycott anything on the Internet. I'm tired of Anti-American sentiment when your governments are in bed with ours. American companies weren't the only ones sharing data. German and Belgium telecoms were in bed with spy agencies and not just with the Five Eyes. In public Merkle was outraged but her spy agency was just as much to blame. This is a global problem not just a U.S. and EU one.

stdbrouw 11y ago
I don't see any anti-American sentiment in the OP's message. He's just making an economic argument that may or may not be correct.
- wil421 11y ago
  >kick out the Americans! Anytime someone wants to kick me out I take offense. He's talking about kicking out all American companies and making their own tools as a replacement. How is that not Anti-American?
  - stdbrouw 11y ago
    Protectionism and xenophobia are different things.
    - wil421 11y ago
      Can you explain any of your answers? If it was protectionism why was the US the only country listed?
      - stdbrouw 11y ago
        Because the US is the only country that is relevant in this context. None of the major software or web services in use in Europe come from Russia or Nigeria or Australia so there is nothing for trade protections to protect against.

9872 11y ago

That did not happen because Google left. Google was never even close to beating baidu.

est 11y ago

> what has happened in China after Google left, how they were able to quickly grow massive web companies My two cents: 1. Baidu has more market share than Google before Google left. 2. Google's chinese processing was bad before Kaifulee, but now Google's Chinese NLP is way better than rest of the world.

bduerst 11y ago

China already had massive web companies before Google entered the market - including Baidu. China's move wasn't so much protectionism as it was censorship.

doomsells 11y ago

Europe is not equipped to go toe to toe with the Americans. Europe has found a great niche in glomming on to US power and will have a precipitous fall if their actions try to match their rhetoric.

BenoitEssiambre 11y ago

That's a double edge sword. I live in Canada and I've been in a position where rules which I suspect were meant to slow down american companies moving in too fast into Canada actually prevented me from having access to markets to sell into. For example, during the mobile apps gold rush. I had a finished Android app ready to go for almost a year waiting for the "Android Market" (Now the "Play Store") to allow Canadian sellers. I could not sell even in my own country (at least not with any visibility) while my American competitors could accumulate a huge head start. I had to wait for Google to jump through the Canadian regulatory hoops to allow Canadian sellers into their store. It was frustrating as hell. The other problem is that new technologies often evolve from an ecosystem of other new technologies. If we only have late access to Netflix or Uber or self driving cars, it becomes difficult to be competitive in the technologies surrounding these technological shifts. If you're last to experience newer technologies on a daily basis, you're also last in a position to evaluate and predict where they are going which gives you a significant business disadvantage. In order to build on top of the leading edge you have to have good access to the leading edge wherever it may originate from.