5 ms·

How is it not problematic when American tech form an oligopoly on internet services? Especially when these services need to bend to the whims of American govern

by verroq 10y ago

How is it not problematic when American tech form an oligopoly on internet services? Especially when these services need to bend to the whims of American government.

DominikR 10y ago
> How is it not problematic when American tech form an oligopoly on internet services? They are the best so they won. I have no problem with that and I don't think anyone should have as long as there's no abuse of power. > Especially when these services need to bend to the whims of American government. This is what I have a problem with.
- marxidad 10y ago
  They didn't win because they are the best, unless you mean they are the best at winning for arbitrary reasons, like random market forces.
  - DominikR 10y ago
    It doesn't look random to me when the biggest IT companies all originate from a small area in or near San Francisco. The US government spent a massive amount of money over decades in infrastructure and in government contracts which in combination with the right legal framework (and capitalism) created this dominance.
    - scholia 10y ago
      Right, because it's not a level playing field. I could start a company in a small European country for €X but tackling the US market would cost me 10 times that, which I haven't got and can't raise. However, the comparable US company can invade my market not by raising 10x more money but by raising 10% more. Even if you're successful, like Spotify, a big American company can start up years later with an inferior product, like Apple, and probably put you out of business. Spotify money is, by Apple's standards, chump change. And if the American company can't knock you out, then it can just buy you. America's home market size and the availability of capital make it very hard to compete, even if you have the talent. And the fact that SV imports almost all the best overseas talent as well as having its own tremendous talents makes things even harder. It's easier with virtual goods than with physical goods, but look at social networking websites for an illustration of the same problem. Sure, you can be the biggest in France or Germany or Italy or whatever, but Facebook just knocked out all the local successes except Russia and China. The only way to play it is to open a small US office and pretend to be American, so you can get US capital and US media promotion. But if you succeeded that way, just how French (or German, or Italian) would you be in the end?
      - DominikR 10y ago
        > However, the comparable US company can invade my market Again talk about "invasion", I'd suggest you don't be so emotional so we can have a fruitful discussion. Aside from that nobody owns the market. You may feel it is an invasion because the barriers are low to do business as a foreigner, but this goes both ways. I successfully sold products in the US as an EU citizen without having an office there, so it is possible. And there are many tech companies from the EU that do the same on a much larger scale. Our problem is really the legal framework, getting loans for starting businesses, getting investments from private investors (this is getting better though) and bureaucracy. In the US you can fail and rebound from it, in most EU countries your life is destroyed because you'll be burdened with debts till the day you leave this earth. (or you lose all wealth you have accumulated to this point) If we in the tech sector weren't so lucky to be able to start businesses with low capital investment I would have never started one because I don't have the rich parents/family that could help me if things go bad. This is the problem from my perspective that we face here and no amount of protectionism will change that. On the other hand I'm truly amazed what risks people take to start businesses in more capital intensive sectors in the EU. I wouldn't have the stomach to do this, to me these people seem almost insane.
        scholia 10y ago
        All of which may be true but misses the point. The size of the US market, and the availability of venture capital, means that there is no level playing field, and it's therefore almost impossible for most non-US tech companies to compete. For various reasons, this may not wholly apply to Russian and Chinese companies, for example, but it certainly applies in Europe. There are no European tech companies with the size and power of Google , Facebook, Microsoft, Intel, Apple etc. Indeed, there are no European tech companies with the size and power of BMW, VW, and Fiat etc. Nokia, briefly, was a notable exception. If a non-US company is successful, it frequently gets taken over. Nokia, PayPal, Skype, and Minecraft are examples. > no amount of protectionism will change that. I wasn't suggesting protectionism. I was merely pointing out the facts of life in the tech market. Incidentally, none of this is new: it's been happening for decades. US companies also wiped out the European mainframe, minicomputer and PC companies before we got to the point where they are wiping out the internet companies. From the array that included companies such as Siemens, Nixdorf, ICL, Bull, Olivetti, Norsk Data, Acorn, Sinclair and dozens more, really only Siemens has survived, and that's because of its broad industrial base.
- Aelinsaar 10y ago
  Do you think that Comcast and Verizon have won because they're the best? The best service providers, or the best at killing competition and bribing politicians?
  - DominikR 10y ago
    This happens in every sector in every country and should be persecuted. But I just can't believe that the Silicon Valley tech sector dominates the West just because they are somehow the best at bribing politicians. I just take a look at Google or Apple products and then compare it to the competition. Sorry to say it, but the US counterparts are far better in almost every way. That's why we in the EU mostly copy stuff we see in the US and not the other way around. Of course everyone copies ideas, there's nothing bad about that, but to win you also have to be innovative. I miss that here in the EU tech sector.
    - Aelinsaar 10y ago
      Google and Apple are impressive both as companies, and in terms of many of their products, absolutely. They are not the norm, just the biggest.
strictnein 10y ago
> "Especially when these services need to bend to the whims of American government." In what way are they doing that today? How is Netflix bending to the whim of the US government?
- wolfgke 10y ago
  > How is Netflix bending to the whim of the US government? National security letters.
  - strictnein 10y ago
    Netflix has received those? Nope, they haven't.
    - wolfgke 10y ago
      It isn't allowed to talk about for a company when they received an NSL. So does Netflix at least have a warrant canary online?
JoshTriplett 10y ago
I'd certainly agree with the second half of the problem; jurisdiction is a growing concern. No matter what service you use, you need to be concerned about what legal systems have (or claim) jurisdiction over them. Regarding the first half, though: if you want to stop people from using a particular service, build a better service that everyone wants to use instead. If no such service exists, people will use what exists.
JustSomeNobody 10y ago
If the current crop of tech companies can supersede MS, AOL, Yahoo, MySpace, etc. Why can't companies from other parts of the globe do it as well? It just takes one company to do something different and build inertia. That's all. What is keeping European companies from toppling Google or FB or Twitter? Edit: Keyboard fail.
- tensor 10y ago
  There are definitely companies from other countries that do well. For example, Skype, Spotify, Shazam, and Soundcloud are all European.
  - sievebrain 10y ago
    Don't forget SAP. Clearly, the key to succeeding as a tech firm in Europe is to start your company's name with an S.
    - orbifold 10y ago
      Software AG too :).
- Daishiman 10y ago
  Here's a brief list: difficulty for funding or capitalization, an existing concentration of tech talent on a few hubs, smaller market sizes that are less attractive as first launch sites, costs of translation into said markets (not just textual translation, but brand, intention, marketing, etc). The examples of the companies you mention have been superseded for the most part, but that's also been due to the fact that new players managed to get huge amounts of cash through funding. Believe it or not cash is not just that liquid globally that you can fundraise like it's SV anywhere else.
- apozem 10y ago
  Because competing in internet services gives a tremendous advantage to the first mover who can amass the largest network. Metcalfe's Law states that the value of a network (and, implicitly, how hard it is to topple) is proportional to the square of the number of connected users. https://stratechery.com/2014/uber-fights/ https://stratechery.com/2014/uber-fights/

by verroq 10y ago

How is it not problematic when American tech form an oligopoly on internet services? Especially when these services need to bend to the whims of American government.

DominikR 10y ago

> How is it not problematic when American tech form an oligopoly on internet services? They are the best so they won. I have no problem with that and I don't think anyone should have as long as there's no abuse of power. > Especially when these services need to bend to the whims of American government. This is what I have a problem with.

marxidad 10y ago
They didn't win because they are the best, unless you mean they are the best at winning for arbitrary reasons, like random market forces.
- DominikR 10y ago
  It doesn't look random to me when the biggest IT companies all originate from a small area in or near San Francisco. The US government spent a massive amount of money over decades in infrastructure and in government contracts which in combination with the right legal framework (and capitalism) created this dominance.
  - scholia 10y ago
    Right, because it's not a level playing field. I could start a company in a small European country for €X but tackling the US market would cost me 10 times that, which I haven't got and can't raise. However, the comparable US company can invade my market not by raising 10x more money but by raising 10% more. Even if you're successful, like Spotify, a big American company can start up years later with an inferior product, like Apple, and probably put you out of business. Spotify money is, by Apple's standards, chump change. And if the American company can't knock you out, then it can just buy you. America's home market size and the availability of capital make it very hard to compete, even if you have the talent. And the fact that SV imports almost all the best overseas talent as well as having its own tremendous talents makes things even harder. It's easier with virtual goods than with physical goods, but look at social networking websites for an illustration of the same problem. Sure, you can be the biggest in France or Germany or Italy or whatever, but Facebook just knocked out all the local successes except Russia and China. The only way to play it is to open a small US office and pretend to be American, so you can get US capital and US media promotion. But if you succeeded that way, just how French (or German, or Italian) would you be in the end?
    - DominikR 10y ago
      > However, the comparable US company can invade my market Again talk about "invasion", I'd suggest you don't be so emotional so we can have a fruitful discussion. Aside from that nobody owns the market. You may feel it is an invasion because the barriers are low to do business as a foreigner, but this goes both ways. I successfully sold products in the US as an EU citizen without having an office there, so it is possible. And there are many tech companies from the EU that do the same on a much larger scale. Our problem is really the legal framework, getting loans for starting businesses, getting investments from private investors (this is getting better though) and bureaucracy. In the US you can fail and rebound from it, in most EU countries your life is destroyed because you'll be burdened with debts till the day you leave this earth. (or you lose all wealth you have accumulated to this point) If we in the tech sector weren't so lucky to be able to start businesses with low capital investment I would have never started one because I don't have the rich parents/family that could help me if things go bad. This is the problem from my perspective that we face here and no amount of protectionism will change that. On the other hand I'm truly amazed what risks people take to start businesses in more capital intensive sectors in the EU. I wouldn't have the stomach to do this, to me these people seem almost insane.
      - scholia 10y ago
        All of which may be true but misses the point. The size of the US market, and the availability of venture capital, means that there is no level playing field, and it's therefore almost impossible for most non-US tech companies to compete. For various reasons, this may not wholly apply to Russian and Chinese companies, for example, but it certainly applies in Europe. There are no European tech companies with the size and power of Google , Facebook, Microsoft, Intel, Apple etc. Indeed, there are no European tech companies with the size and power of BMW, VW, and Fiat etc. Nokia, briefly, was a notable exception. If a non-US company is successful, it frequently gets taken over. Nokia, PayPal, Skype, and Minecraft are examples. > no amount of protectionism will change that. I wasn't suggesting protectionism. I was merely pointing out the facts of life in the tech market. Incidentally, none of this is new: it's been happening for decades. US companies also wiped out the European mainframe, minicomputer and PC companies before we got to the point where they are wiping out the internet companies. From the array that included companies such as Siemens, Nixdorf, ICL, Bull, Olivetti, Norsk Data, Acorn, Sinclair and dozens more, really only Siemens has survived, and that's because of its broad industrial base.
Aelinsaar 10y ago
Do you think that Comcast and Verizon have won because they're the best? The best service providers, or the best at killing competition and bribing politicians?
- DominikR 10y ago
  This happens in every sector in every country and should be persecuted. But I just can't believe that the Silicon Valley tech sector dominates the West just because they are somehow the best at bribing politicians. I just take a look at Google or Apple products and then compare it to the competition. Sorry to say it, but the US counterparts are far better in almost every way. That's why we in the EU mostly copy stuff we see in the US and not the other way around. Of course everyone copies ideas, there's nothing bad about that, but to win you also have to be innovative. I miss that here in the EU tech sector.
  - Aelinsaar 10y ago
    Google and Apple are impressive both as companies, and in terms of many of their products, absolutely. They are not the norm, just the biggest.

strictnein 10y ago

> "Especially when these services need to bend to the whims of American government." In what way are they doing that today? How is Netflix bending to the whim of the US government?

wolfgke 10y ago
> How is Netflix bending to the whim of the US government? National security letters.
- strictnein 10y ago
  Netflix has received those? Nope, they haven't.
  - wolfgke 10y ago
    It isn't allowed to talk about for a company when they received an NSL. So does Netflix at least have a warrant canary online?

JoshTriplett 10y ago

I'd certainly agree with the second half of the problem; jurisdiction is a growing concern. No matter what service you use, you need to be concerned about what legal systems have (or claim) jurisdiction over them. Regarding the first half, though: if you want to stop people from using a particular service, build a better service that everyone wants to use instead. If no such service exists, people will use what exists.

JustSomeNobody 10y ago

If the current crop of tech companies can supersede MS, AOL, Yahoo, MySpace, etc. Why can't companies from other parts of the globe do it as well? It just takes one company to do something different and build inertia. That's all. What is keeping European companies from toppling Google or FB or Twitter? Edit: Keyboard fail.

tensor 10y ago
There are definitely companies from other countries that do well. For example, Skype, Spotify, Shazam, and Soundcloud are all European.
- sievebrain 10y ago
  Don't forget SAP. Clearly, the key to succeeding as a tech firm in Europe is to start your company's name with an S.
  - orbifold 10y ago
    Software AG too :).
Daishiman 10y ago
Here's a brief list: difficulty for funding or capitalization, an existing concentration of tech talent on a few hubs, smaller market sizes that are less attractive as first launch sites, costs of translation into said markets (not just textual translation, but brand, intention, marketing, etc). The examples of the companies you mention have been superseded for the most part, but that's also been due to the fact that new players managed to get huge amounts of cash through funding. Believe it or not cash is not just that liquid globally that you can fundraise like it's SV anywhere else.
apozem 10y ago
Because competing in internet services gives a tremendous advantage to the first mover who can amass the largest network. Metcalfe's Law states that the value of a network (and, implicitly, how hard it is to topple) is proportional to the square of the number of connected users. https://stratechery.com/2014/uber-fights/ https://stratechery.com/2014/uber-fights/