9 ms·

The author specifically cites large tech companies (Google, Amazon, Facebook) as examples of monopolies that have formed due to lack of state intervention. He

by nanny 8y ago

The author specifically cites large tech companies (Google, Amazon, Facebook) as examples of monopolies that have formed due to lack of state intervention. He also says bad rules have led to monopolies as well (through regulatory capture, lobbying, etc.). So bad things (like monopolies) can happen due to the state or due to lack of the state. Maybe the problem here isn't the state at all.

Buldak 8y ago
Peter Thiel has made similar remarks. He said that IT has been only area to see major progress in recent decades, in contrast to e.g. transportation, because it is relatively unregulated. (Hence Twitter rather than flying cars.) Of course, Thiel also holds the view that monopolies are often a good thing.
- pdonis 8y ago
  > Thiel also holds the view that monopolies are often a good thing. I spotted this (IMO badly mistaken) view of his when he first came out with it quite a while back: http://blog.peterdonis.com/opinions/monopoly-money.html http://blog.peterdonis.com/opinions/monopoly-money.html
- losteric 8y ago
  Software is unlike any prior field because it's so... clean. Energy, agriculture, transportation - all built on the unintuitive building blocks of physics, and our approximate understanding of the universe. The clean abstraction layers and separation of concerns in IT is unparalleled, with powerful positive feedback begetting further innovations. Applying advances to other fields also grew economies of scale rapidly, supporting innovation while barriers to entry were low. We're now approaching the end to low-hanging fruit and maturing into the consolidation phase, as further innovation requires greater capital and time commitment.
  - tjr225 8y ago
    just because software exists on layer(s) of abstraction means nothing. It still requires hardware to run on - and still adheres to the laws of physics. I don't take much stock in your clean argument at all.
  - jungler 8y ago
    That makes it like finance, then: good at hiding the bodies.
- adrianN 8y ago
  I'm sure that it's all the lack of regulation and not the fact that there wasn't any software more than a few decades ago whereas cars and planes are twice as old as electronic computers.
- pjscott 8y ago
  Thiel's monopoly comments seem to provoke a lot of confusion; they make more sense if you replace the word "monopoly" with "a position in the market such that customers are willing to pay significantly more for what you sell than for their best available alternative." Some examples: * Apple is able to charge a premium on iPhones relative to the best non-Apple alternatives because a lot of people are willing to pay it. (Do they have a monopoly on smartphones? Definitely not; there are loads of companies selling good phones. But they have a monopoly on their smartphones.) * Fast food joints are forced into heated low-margin competition with each other because they're pretty interchangeable. If McDonald's starts charging too much, people will just shrug and buy basically the same food from Burger King. * Classic monopolies are extreme cases. At one point if you wanted telephone service in the US you either paid whatever AT&T was charging or you didn't get telephone service. When people hear Thiel's comments they tend to think of classic monopolies, but most of the examples he gives are of companies that have plenty of competitors -- and a durable advantage that they can use to maintain decent profits margins without customers jumping ship.
  - Deganta 8y ago
    There are loads of products that I would consider classical monopolies in tech. E.g. Youtube/Facebook/Android/Whatsapp. Sure you could use one of the alternatives, but then you won't get the content/people/apps/audience/... that are on those large platforms, which makes them basically useless.
- tengbretson 8y ago
  For what it's worth, if a private company held a monopoly on the roads in this country I would bet dollars to donuts that we'd have flying cars by now.
  - fingerlocks 8y ago
    I think about this often. I imagine self-driving cars built on 30 year old tech in which the road drives the car via curbside sensors (much easier problem to solve). I daydream about service reps walking through bumper-to-bumper traffic handing out coupons and apologizing for the unexpected delays. Pay to drive the premium roads when you’re in a rush, or take the discount lanes with advertising printed along the roadway. We could have quiet, porous asphalt with better water absorbtion. So many fantasies, I digress.
cheez 8y ago
They aren't monopolies, they will be taken out eventually.
omeid2 8y ago
I believe overreaching IP protection laws, specifically in regards to patents and copyright are in large to blame for creation of these monopolies. In tech, one of the largest hurdles is patent wars, where the player with the biggest pockets and arsenal screws over little players just about all the time. So the assertion that the lack of state intervention is to blame for formation of these monopolies is perhaps true, but in a different light.
- jerkstate 8y ago
  IP laws? The algorithm behind PageRank was published in Larry and Sergey's dissertation. Amazon started as an online bookstore. Facebook was not the first social network by a long shot. I think IP laws and patent wars are a lot more salient when it comes to hardware (like Apple, Samsung, Motorola, etc), less so for those 3 examples.
- Eridrus 8y ago
  While I think copyright was a very relevant law when selling boxed products, it's less clear that copyright is the relevant law in the age of SaaS. I think trade secrets law is much more relevant these days. And in any case, many tech giants exist around natural monopolies, either in network effects, either obvious ones, or those from two sided marketplaces or simply economies of scale.
  - freedomben 8y ago
    > many tech giants exist around natural monopolies, either in network effects Yes, network effect is a huge part of the problem. So much in tech requires user adoption, and typically users won't adopt until others adopt, thus creating chicken and egg problem. Overcoming the network effect is extremely difficult, as we've seen from competing platforms trying to unseat facebook and twitter (tho network effect is not limited to social networks, but they are the most obvious examples)
- throwawayjava 8y ago
  If this were true, then other large patent holders would be toe-for-toe in spaces like web advertising. Spoiler: they're not.
PavlovsCat 8y ago
> Maybe the problem here isn't the state at all. I would say it can be, but more importantly, it doesn't have to be: > Well okay, there's plenty to blame the government about, but the government is the one institution that people can change... the one institution that you can affect without institutional change. That's exactly why all the anger and fear has been directed at the government. The government has a defect - it's potentially democratic. Corporations have no defect - they're pure tyrannies. So therefore you want to keep corporations invisible, and focus all anger on the government. -- Noam Chomsky And even if consumers are to be able to "vote with their wallets", if workers are supposed to to have a choice of employer and certain protections, there needs to be some regulation that goes for everybody, and is enforced for everybody. It's not going to happen out of generosity, or consumers researching everything on their own. How would you even make sure the food you eat is not toxic? Not that regulations make it 100% safe, but they can be a lot more efficient and very helpful, just like they can be horrible and backwards. I really think a major obstacle is that people see government as something that acts on them, instead of something through which they ideally would act together as equals and improve their lot in a way that transcends the scope and lifespan of the individual. Yes, there is a lot of corruption, but the thing is, that's something one can get to work at -- when it comes to (some) corporations, it's too often consumers talking about them amongst each other, "hoping" things will change as they often get worse. > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. -- Adam Smith When drug dealers or street gangs carve up territory, you might call that a form of local monopoly, and it comes from people themselves, no state intervention required. Usurping parts of the government for that purpose is something bigger gangs or corporations may do (also see "War is a Racket"), but it's not technically required I would say.
- drdeca 8y ago
  A gang (afaict) is a little bit like a government in that it enforces things through its own capability for violence (or through its own violence), though I'm not sure quite how important that similarity is. If something is almost a government, but not quite, and creates a monopoly, that would I suppose technically be a counterexample to the claim that monopolies are all caused by governments. However, while it would demonstrate the claim to be false, it wouldn't demonstrate that it is far from being true. However, I wouldn't claim that all monopolies are all from government or nearly from government. I probably wouldn't even claim that almost all monopolies are.
afjl 8y ago
It's hard to not mention and ascribe some degree of responsibility to the government. This is especially true of current events books written with a majoritarian viewpoint, which believes that the government has a strong role to play in the market. The only writers/journalists/etc that I've seen advocate for a non-state oriented POV are Austrian libertarians, and I have encountered very few of them.
abecedarius 8y ago
Come to think of it, I don't understand how Google keeps its near-monopoly on search. It has the users because it can afford to invest more in search quality, because of a near-monopoly on search ads; and advertisers buy those ad clicks because Google has the users. So this loop might seem hard to break. But what stops an aggregator from offering to put your ad on multiple search engines, so you pay for clicks from Google and whatever other search engines people are using? There may not currently be a lot of extra clicks available that way, but it's more than nothing, and you'd benefit from whatever improved competition might come up, and incidentally give it more resources to improve with and to cut Google's margins to your further benefit. AFAIK this isn't happening, but why? Is there another moat I don't know of?
- bemmu 8y ago
  The aggregator might lack some targeting options of the native platform, the UI could be different, it would be a new point of failure and I would need to trust my money with the intermediary.
- jldugger 8y ago
  > AFAIK this isn't happening, but why? Is there another moat I don't know of? Well, Adsense / Analytics is another. Google can track you across the internet, and offer that information to search query bidders. If you don't want to bother spending money advertising to people who read HN, it's achievable. Less so for say, Bing or Yahoo. Being able to target better than other platforms alters your willingness to pay to advertise there vs elsewhere. I suspect they also have a better grasp of the value of traffic acquisition. They pay a lot of web related tech firms to use their search engine over competitor's. We know the only time they lost a bid for Firefox's search placement was when a former Google executive was working for a competitor. It's not clear whether Marissa brought Yahoo some better insight into the value, or if she just needed to accept a higher risk of overpaying for traffic.
  - abecedarius 8y ago
    Good points. So, overall, I guess an effective competitor is quite possible (given enough tons of capital and patience), but that capital isn't on offer because it would only yield a "competitive" profit, not a monopoly profit, and these days competition is for losers. (To exaggerate some. And I'm really ignorant about this. Thanks.)

by nanny 8y ago

Buldak 8y ago

Peter Thiel has made similar remarks. He said that IT has been only area to see major progress in recent decades, in contrast to e.g. transportation, because it is relatively unregulated. (Hence Twitter rather than flying cars.) Of course, Thiel also holds the view that monopolies are often a good thing.

pdonis 8y ago
> Thiel also holds the view that monopolies are often a good thing. I spotted this (IMO badly mistaken) view of his when he first came out with it quite a while back: http://blog.peterdonis.com/opinions/monopoly-money.html http://blog.peterdonis.com/opinions/monopoly-money.html
losteric 8y ago
Software is unlike any prior field because it's so... clean. Energy, agriculture, transportation - all built on the unintuitive building blocks of physics, and our approximate understanding of the universe. The clean abstraction layers and separation of concerns in IT is unparalleled, with powerful positive feedback begetting further innovations. Applying advances to other fields also grew economies of scale rapidly, supporting innovation while barriers to entry were low. We're now approaching the end to low-hanging fruit and maturing into the consolidation phase, as further innovation requires greater capital and time commitment.
- tjr225 8y ago
  just because software exists on layer(s) of abstraction means nothing. It still requires hardware to run on - and still adheres to the laws of physics. I don't take much stock in your clean argument at all.
- jungler 8y ago
  That makes it like finance, then: good at hiding the bodies.
adrianN 8y ago
I'm sure that it's all the lack of regulation and not the fact that there wasn't any software more than a few decades ago whereas cars and planes are twice as old as electronic computers.
pjscott 8y ago
Thiel's monopoly comments seem to provoke a lot of confusion; they make more sense if you replace the word "monopoly" with "a position in the market such that customers are willing to pay significantly more for what you sell than for their best available alternative." Some examples: * Apple is able to charge a premium on iPhones relative to the best non-Apple alternatives because a lot of people are willing to pay it. (Do they have a monopoly on smartphones? Definitely not; there are loads of companies selling good phones. But they have a monopoly on their smartphones.) * Fast food joints are forced into heated low-margin competition with each other because they're pretty interchangeable. If McDonald's starts charging too much, people will just shrug and buy basically the same food from Burger King. * Classic monopolies are extreme cases. At one point if you wanted telephone service in the US you either paid whatever AT&T was charging or you didn't get telephone service. When people hear Thiel's comments they tend to think of classic monopolies, but most of the examples he gives are of companies that have plenty of competitors -- and a durable advantage that they can use to maintain decent profits margins without customers jumping ship.
- Deganta 8y ago
  There are loads of products that I would consider classical monopolies in tech. E.g. Youtube/Facebook/Android/Whatsapp. Sure you could use one of the alternatives, but then you won't get the content/people/apps/audience/... that are on those large platforms, which makes them basically useless.
tengbretson 8y ago
For what it's worth, if a private company held a monopoly on the roads in this country I would bet dollars to donuts that we'd have flying cars by now.
- fingerlocks 8y ago
  I think about this often. I imagine self-driving cars built on 30 year old tech in which the road drives the car via curbside sensors (much easier problem to solve). I daydream about service reps walking through bumper-to-bumper traffic handing out coupons and apologizing for the unexpected delays. Pay to drive the premium roads when you’re in a rush, or take the discount lanes with advertising printed along the roadway. We could have quiet, porous asphalt with better water absorbtion. So many fantasies, I digress.

cheez 8y ago

They aren't monopolies, they will be taken out eventually.

omeid2 8y ago

I believe overreaching IP protection laws, specifically in regards to patents and copyright are in large to blame for creation of these monopolies. In tech, one of the largest hurdles is patent wars, where the player with the biggest pockets and arsenal screws over little players just about all the time. So the assertion that the lack of state intervention is to blame for formation of these monopolies is perhaps true, but in a different light.

jerkstate 8y ago
IP laws? The algorithm behind PageRank was published in Larry and Sergey's dissertation. Amazon started as an online bookstore. Facebook was not the first social network by a long shot. I think IP laws and patent wars are a lot more salient when it comes to hardware (like Apple, Samsung, Motorola, etc), less so for those 3 examples.
Eridrus 8y ago
While I think copyright was a very relevant law when selling boxed products, it's less clear that copyright is the relevant law in the age of SaaS. I think trade secrets law is much more relevant these days. And in any case, many tech giants exist around natural monopolies, either in network effects, either obvious ones, or those from two sided marketplaces or simply economies of scale.
- freedomben 8y ago
  > many tech giants exist around natural monopolies, either in network effects Yes, network effect is a huge part of the problem. So much in tech requires user adoption, and typically users won't adopt until others adopt, thus creating chicken and egg problem. Overcoming the network effect is extremely difficult, as we've seen from competing platforms trying to unseat facebook and twitter (tho network effect is not limited to social networks, but they are the most obvious examples)
throwawayjava 8y ago
If this were true, then other large patent holders would be toe-for-toe in spaces like web advertising. Spoiler: they're not.

PavlovsCat 8y ago

> Maybe the problem here isn't the state at all. I would say it can be, but more importantly, it doesn't have to be: > Well okay, there's plenty to blame the government about, but the government is the one institution that people can change... the one institution that you can affect without institutional change. That's exactly why all the anger and fear has been directed at the government. The government has a defect - it's potentially democratic. Corporations have no defect - they're pure tyrannies. So therefore you want to keep corporations invisible, and focus all anger on the government. -- Noam Chomsky And even if consumers are to be able to "vote with their wallets", if workers are supposed to to have a choice of employer and certain protections, there needs to be some regulation that goes for everybody, and is enforced for everybody. It's not going to happen out of generosity, or consumers researching everything on their own. How would you even make sure the food you eat is not toxic? Not that regulations make it 100% safe, but they can be a lot more efficient and very helpful, just like they can be horrible and backwards. I really think a major obstacle is that people see government as something that acts on them, instead of something through which they ideally would act together as equals and improve their lot in a way that transcends the scope and lifespan of the individual. Yes, there is a lot of corruption, but the thing is, that's something one can get to work at -- when it comes to (some) corporations, it's too often consumers talking about them amongst each other, "hoping" things will change as they often get worse. > People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. -- Adam Smith When drug dealers or street gangs carve up territory, you might call that a form of local monopoly, and it comes from people themselves, no state intervention required. Usurping parts of the government for that purpose is something bigger gangs or corporations may do (also see "War is a Racket"), but it's not technically required I would say.

drdeca 8y ago
A gang (afaict) is a little bit like a government in that it enforces things through its own capability for violence (or through its own violence), though I'm not sure quite how important that similarity is. If something is almost a government, but not quite, and creates a monopoly, that would I suppose technically be a counterexample to the claim that monopolies are all caused by governments. However, while it would demonstrate the claim to be false, it wouldn't demonstrate that it is far from being true. However, I wouldn't claim that all monopolies are all from government or nearly from government. I probably wouldn't even claim that almost all monopolies are.

afjl 8y ago

It's hard to not mention and ascribe some degree of responsibility to the government. This is especially true of current events books written with a majoritarian viewpoint, which believes that the government has a strong role to play in the market. The only writers/journalists/etc that I've seen advocate for a non-state oriented POV are Austrian libertarians, and I have encountered very few of them.

abecedarius 8y ago

Come to think of it, I don't understand how Google keeps its near-monopoly on search. It has the users because it can afford to invest more in search quality, because of a near-monopoly on search ads; and advertisers buy those ad clicks because Google has the users. So this loop might seem hard to break. But what stops an aggregator from offering to put your ad on multiple search engines, so you pay for clicks from Google and whatever other search engines people are using? There may not currently be a lot of extra clicks available that way, but it's more than nothing, and you'd benefit from whatever improved competition might come up, and incidentally give it more resources to improve with and to cut Google's margins to your further benefit. AFAIK this isn't happening, but why? Is there another moat I don't know of?

bemmu 8y ago
The aggregator might lack some targeting options of the native platform, the UI could be different, it would be a new point of failure and I would need to trust my money with the intermediary.
jldugger 8y ago
> AFAIK this isn't happening, but why? Is there another moat I don't know of? Well, Adsense / Analytics is another. Google can track you across the internet, and offer that information to search query bidders. If you don't want to bother spending money advertising to people who read HN, it's achievable. Less so for say, Bing or Yahoo. Being able to target better than other platforms alters your willingness to pay to advertise there vs elsewhere. I suspect they also have a better grasp of the value of traffic acquisition. They pay a lot of web related tech firms to use their search engine over competitor's. We know the only time they lost a bid for Firefox's search placement was when a former Google executive was working for a competitor. It's not clear whether Marissa brought Yahoo some better insight into the value, or if she just needed to accept a higher risk of overpaying for traffic.
- abecedarius 8y ago
  Good points. So, overall, I guess an effective competitor is quite possible (given enough tons of capital and patience), but that capital isn't on offer because it would only yield a "competitive" profit, not a monopoly profit, and these days competition is for losers. (To exaggerate some. And I'm really ignorant about this. Thanks.)