6 ms·

Elizabeth Warren’s simple case for breaking up big tech

50 points by luu 7y ago

igravious 7y ago
Do nerds remember back in the day when many were calling out for Microsoft to be broken up? Into two parts: OS division, and Apps division. The idea was that time and again Microsoft's OS division would anti-competitvely design internal APIs in DOS and Windows that its App division would leverage. There were also instances where Microsoft subtley broke DOS (and maybe even Windows, but definitely DOS) for competing applications. People used to talk about "undocumented" API calls. In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux. Microsoft helped a key competitor (Apple) off its knees and look where we are now – Apple has a mobile OS, Microsoft has none. Microsoft didn't board the internet/web train quick enough, didn't forsee how big search and social media would become (in fairness, a vanishingly small number of people did) and so now they have Google and Facebook to compete with. Amazon parlaying their experience from a building an at-scale marketplace to a cloud-computing platform took everyone by surprise. Back in the day I lamented Microsoft's stranglehold on the software industry. They are still a behemoth but they no longer have the stranglehold they once had. Amazon has competition. Does Amazon unfairly leverage its marketplace monopoly to crush competitors? If they do, prosecute them. If they don't, out innovate and out compete them! Will Google's stranglehold on search ever be broken? Maybe we'll have to think laterally. Like distributed open-source search. Will Facebook's hegemony over social media (FB, FB messenger, WhatsApp, Instagram) ever be challenged? Do we have the luxury of finding out in a decade or two like we did with Microsoft? Microsoft never amassed the data on their "customers" that Google and Facebook and every Tom, Dick, and Harry do now. Of all these companies I intuitively feel that Facebook should be broken up. Into its constituent social media parts, that is. Either that or legally mandate interoperability so that we can move to a federated social media landscape to encourage genuine innovation and competition. We need the global equivalent of the ITU but for social media. Amazon are scary but that's only because they are bad-ass. If they break the law, fine. If it turns out in a decade that it hasn't been possible to unseat or challenge the enormous tech incumbents with FOSS challenges then maybe we ought to take a serious look at the economics, social dynamics, and network effects involved. edit: clarity edit ii: could people who have downvoted my comment explain why please?
- s_Hogg 7y ago
  There's an implicit assumption in this argument that the law as it stands is fine and not in need of changes itself.
  - igravious 7y ago
    There are interesting differences between US, Chinese, and European anti-trust/anti-monopoly laws. You make a very good point that we should consider if the current legal need changing. Definitely something is broken if Facebook can acquire not just Instagram but WhatsApp as well. One or both of those deals should have been blocked by regulators on at least one side of the Atlantic. And there's an argument to be made that Microsoft should not have been allowed to buy Skype.
- pgcj_poster 7y ago
  > In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux. Are you sure? Microsoft's monopoly was mostly on desktop PC operating systems, and almost all desktops are still running Windows. Most people have never heard of Gnu/Linux and wouldn't want or even know how to install it if they had. MacOS is exclusive to one luxury brand, and I really don't see it much outside of developers and college students.
  - igravious 7y ago
    At least there's genuine-ish choice now. Chromebooks, Apple desktops and laptops, Linux desktops and laptops. Not to mention that Windows has stiff competition in the server space. But I take your point.
  - basch 7y ago
    I think its a correct statement if you see Android/Chrome as having displaced Windows/IE as the way the majority of the word consumes the Internet/Web.
    - pgcj_poster 7y ago
kryptiskt 7y ago
As a foreigner, I'm amazed by how little weight Americans seem to put on international competitiveness. I mean, I guess I should be gleeful that you have presidential candidates that want to blow up the only companies that give you a competitive edge. But really, isn't Warren at all concerned that the ones to pick up the pieces after her plan is implemented are very unlikely to be American?
- mtgx 7y ago
  Your comment sounds a lot like the propaganda Google and Facebook have been pushing lately to avoid a breakup. And the "but China!" excuse is as patethic as the one about not jailing bankers 'because the economy will crash'. Excuse while I refuse to take these self-serving excuses at face value.
- jellicle 7y ago
  If you go by net income on a tax return, or by taxes paid, none of the companies you're talking about are American at all. 0%. You're also misunderstanding the effects and purpose of breaking up larger companies, which are: to restore and increase competitiveness.
- pgcj_poster 7y ago
  It seems like this sort of thinking would lead to a "race to the bottom" where every country gives maximum leniency to its biggest companies. I'm not sure that's good for anyone.
  - Radle 7y ago
    Exactly what we German did with the big automobile companies. It's incredible unhealthy. Once you start listening to their every whim, big corps start to rely on politics to solve their problems. Obviously it's then that they stop to perform, like a spoiled child.
  - Grue3 7y ago
    Why do you think Korean companies are so powerful? https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Chaebol
blargmaster33 7y ago
How can this 1/2020 fraud still be on elected office?
jessaustin 7y ago
I would take Warren more seriously if she started out by talking about ATT/VZN/Comcast. The "big tech" companies have the potential to harm consumers, but telcos have been harming consumers for decades.
- dgacmu 7y ago
  To her credit, she gets net neutrality: https://www.warren.senate.gov/newsroom/press-releases/senator-warren-delivers-floor-speech-on-vote-to-save-net-neutrality https://www.warren.senate.gov/newsroom/press-releases/senato...
  - jessaustin 7y ago
    "...under this administration the FCC has become a puppet for giant internet providers." If she actually believed this, it would be a fundamental misunderstanding of FCC. FCC helps monopolies and hurts consumers because that is its purpose, since 1934. Neither Democrats nor Republics have ever done anything to change this. Net neutrality is a fine network policy, but it wouldn't need to be mandated by regulation if actual competition existed in this market. FCC throughout its history has acted mostly to prevent such competition.
    - dgacmu 7y ago
      That's an oversimplification that ignores the fact that spectrum allocation is useful. very few things in politics are completely black and white as you presented them.
- geofft 7y ago
  By harming do you mean on price? Big tech has the potential to harm through externalities (privacy, control of the media, etc.). A sufficiently free market - with appropriate safeguards to ensure competition and prevent regulatory capture - tends to deal with price just fine, but not with externalities. Warren's argument here is a straightforward free market one: free markets only work when there's a free flow of information. If Amazon both runs the market and participates in it, it's an inherently unfair playing field. Her argument is not that we should break up companies that we don't like or even those that hurt consumers; her argument is we should break up companies whose intact existence threatens the fundamental nature of free markets. All that said, as it happens, she opposed Comcast's attempt to buy Fox https://thehill.com/policy/technology/396559-senate-dems-urge-justice-department-to-review-comcast-bid-for-fox https://thehill.com/policy/technology/396559-senate-dems-urg... and the T-Mobile / Sprint merger https://thehill.com/policy/technology/429618-dem-senators-urge-fcc-justice-department-to-reject-t-mobile-sprint-merger https://thehill.com/policy/technology/429618-dem-senators-ur... — opposing both on the grounds that they're anticompetitive.
peanutgal2600 7y ago
America is business-first, consumer-last. Always has been, always will be. Pre-election year fud. Microsoft won the anti-trust lawsuit. Its' primarily penalty was an embarrassment, they gave free copies of their software to schools.
brianliou91 7y ago
I think Warren is fantastic but I feel like her argument for Amazon is flawed and I'm curious to hear counter arguments. In her example of Amazon being a platform and information aggregator, wouldn't a brick & mortar grocery chain like Safeway/Vons/CVS be guilty of the same anti-competitive practices when they sell "Safeway Brand Fruity Os" next to Kellogg Fruit Loops? Businesses seem to have been able to be platforms and information aggregators for a very long time and we've had plenty of innovation and competition
- geofft 7y ago
  IMO there's a difference of scale - Amazon has quasi-monopoly power in the "buying things online" space, so much so that e.g. Anker, which makes cables and chargers and competes directly with Amazon Basics, has no distribution channel other than Amazon. If I make Unprovable Loops ("Part of this Turing-complete breakfast") and I'm not satisfied with the distribution deal I get from Safeway, I can always call up Von's or CVS or Target or Whole Foods or Walmart and see what they'll do, and in most cities there are multiple such options. I do wonder if the problem here is inherent to being an online store. If there's a Safeway in one part of town, a new Walmart in another part of town will sell roughly as much cereal as a second Safeway. But if Amazon.com exists and is generally useful, why would people go to another site? So perhaps some of the traditional/historical safeguards against any one store becoming a monopoly on the market no longer apply.
  - igravious 7y ago
    Amazon e-commerce market share 2016: 38%, 2018: 49% What's the US market share of the largest offline retailer? Also, consider this chart: https://www.thebalancesmb.com/worlds-largest-us-retail-chains-2892856 https://www.thebalancesmb.com/worlds-largest-us-retail-chain... Walmart, Costco, and Kroger are bigger than Amazon in terms of revenue. (Kroger only just.) > But if Amazon.com exists and is generally useful, why would people go to another site? Why wouldn't they? What's stopping them? I agree we may need to reconsider some of our laws to better take into account online behaviour. But Amazon should not be penalised for mere success. They ought to be penalised for abusing market dominance if that is indeed what they are doing. No abuse, no penalty. Questions about tax payments on the other hand… Amazon have nowhere near the quasi-monopoly in their sphere that Microsoft has in desktop operating systems, Google has in web search, and Facebook has in social media.
dingo_bat 7y ago
Imagine being the nerd working hard day and night to create truly behemoth companies like Amazon and Google. Watch Bezos' interview from 1999. His office looks like that of a company going out of business, his desk is made of old office doors. He was already a billionaire, but the razor focus of efficiency made him the richest person in the world. Now a scummy politician who has built her career and education by lying about her family is being seriously considered when she talks about using state coercion to take away from Bezos what he has rightfully and legally earned. Shame on you HNers who partake in this.

50 points by luu 7y ago

Do nerds remember back in the day when many were calling out for Microsoft to be broken up? Into two parts: OS division, and Apps division. The idea was that time and again Microsoft's OS division would anti-competitvely design internal APIs in DOS and Windows that its App division would leverage. There were also instances where Microsoft subtley broke DOS (and maybe even Windows, but definitely DOS) for competing applications. People used to talk about "undocumented" API calls. In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux. Microsoft helped a key competitor (Apple) off its knees and look where we are now – Apple has a mobile OS, Microsoft has none. Microsoft didn't board the internet/web train quick enough, didn't forsee how big search and social media would become (in fairness, a vanishingly small number of people did) and so now they have Google and Facebook to compete with. Amazon parlaying their experience from a building an at-scale marketplace to a cloud-computing platform took everyone by surprise. Back in the day I lamented Microsoft's stranglehold on the software industry. They are still a behemoth but they no longer have the stranglehold they once had. Amazon has competition. Does Amazon unfairly leverage its marketplace monopoly to crush competitors? If they do, prosecute them. If they don't, out innovate and out compete them! Will Google's stranglehold on search ever be broken? Maybe we'll have to think laterally. Like distributed open-source search. Will Facebook's hegemony over social media (FB, FB messenger, WhatsApp, Instagram) ever be challenged? Do we have the luxury of finding out in a decade or two like we did with Microsoft? Microsoft never amassed the data on their "customers" that Google and Facebook and every Tom, Dick, and Harry do now. Of all these companies I intuitively feel that Facebook should be broken up. Into its constituent social media parts, that is. Either that or legally mandate interoperability so that we can move to a federated social media landscape to encourage genuine innovation and competition. We need the global equivalent of the ITU but for social media. Amazon are scary but that's only because they are bad-ass. If they break the law, fine. If it turns out in a decade that it hasn't been possible to unseat or challenge the enormous tech incumbents with FOSS challenges then maybe we ought to take a serious look at the economics, social dynamics, and network effects involved. edit: clarity edit ii: could people who have downvoted my comment explain why please?

s_Hogg 7y ago
There's an implicit assumption in this argument that the law as it stands is fine and not in need of changes itself.
- igravious 7y ago
  There are interesting differences between US, Chinese, and European anti-trust/anti-monopoly laws. You make a very good point that we should consider if the current legal need changing. Definitely something is broken if Facebook can acquire not just Instagram but WhatsApp as well. One or both of those deals should have been blocked by regulators on at least one side of the Atlantic. And there's an argument to be made that Microsoft should not have been allowed to buy Skype.
pgcj_poster 7y ago
> In the end Microsoft's OS gained proper competition through the paradigm shift of FOSS, specifically with Linux. Are you sure? Microsoft's monopoly was mostly on desktop PC operating systems, and almost all desktops are still running Windows. Most people have never heard of Gnu/Linux and wouldn't want or even know how to install it if they had. MacOS is exclusive to one luxury brand, and I really don't see it much outside of developers and college students.
- igravious 7y ago
  At least there's genuine-ish choice now. Chromebooks, Apple desktops and laptops, Linux desktops and laptops. Not to mention that Windows has stiff competition in the server space. But I take your point.
- basch 7y ago
  I think its a correct statement if you see Android/Chrome as having displaced Windows/IE as the way the majority of the word consumes the Internet/Web.
  - pgcj_poster 7y ago

kryptiskt 7y ago

As a foreigner, I'm amazed by how little weight Americans seem to put on international competitiveness. I mean, I guess I should be gleeful that you have presidential candidates that want to blow up the only companies that give you a competitive edge. But really, isn't Warren at all concerned that the ones to pick up the pieces after her plan is implemented are very unlikely to be American?

mtgx 7y ago
Your comment sounds a lot like the propaganda Google and Facebook have been pushing lately to avoid a breakup. And the "but China!" excuse is as patethic as the one about not jailing bankers 'because the economy will crash'. Excuse while I refuse to take these self-serving excuses at face value.
jellicle 7y ago
If you go by net income on a tax return, or by taxes paid, none of the companies you're talking about are American at all. 0%. You're also misunderstanding the effects and purpose of breaking up larger companies, which are: to restore and increase competitiveness.
pgcj_poster 7y ago
It seems like this sort of thinking would lead to a "race to the bottom" where every country gives maximum leniency to its biggest companies. I'm not sure that's good for anyone.
- Radle 7y ago
  Exactly what we German did with the big automobile companies. It's incredible unhealthy. Once you start listening to their every whim, big corps start to rely on politics to solve their problems. Obviously it's then that they stop to perform, like a spoiled child.
- Grue3 7y ago
  Why do you think Korean companies are so powerful? https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Chaebol

blargmaster33 7y ago

How can this 1/2020 fraud still be on elected office?

jessaustin 7y ago

I would take Warren more seriously if she started out by talking about ATT/VZN/Comcast. The "big tech" companies have the potential to harm consumers, but telcos have been harming consumers for decades.

dgacmu 7y ago
To her credit, she gets net neutrality: https://www.warren.senate.gov/newsroom/press-releases/senator-warren-delivers-floor-speech-on-vote-to-save-net-neutrality https://www.warren.senate.gov/newsroom/press-releases/senato...
- jessaustin 7y ago
  "...under this administration the FCC has become a puppet for giant internet providers." If she actually believed this, it would be a fundamental misunderstanding of FCC. FCC helps monopolies and hurts consumers because that is its purpose, since 1934. Neither Democrats nor Republics have ever done anything to change this. Net neutrality is a fine network policy, but it wouldn't need to be mandated by regulation if actual competition existed in this market. FCC throughout its history has acted mostly to prevent such competition.
  - dgacmu 7y ago
    That's an oversimplification that ignores the fact that spectrum allocation is useful. very few things in politics are completely black and white as you presented them.
geofft 7y ago
By harming do you mean on price? Big tech has the potential to harm through externalities (privacy, control of the media, etc.). A sufficiently free market - with appropriate safeguards to ensure competition and prevent regulatory capture - tends to deal with price just fine, but not with externalities. Warren's argument here is a straightforward free market one: free markets only work when there's a free flow of information. If Amazon both runs the market and participates in it, it's an inherently unfair playing field. Her argument is not that we should break up companies that we don't like or even those that hurt consumers; her argument is we should break up companies whose intact existence threatens the fundamental nature of free markets. All that said, as it happens, she opposed Comcast's attempt to buy Fox https://thehill.com/policy/technology/396559-senate-dems-urge-justice-department-to-review-comcast-bid-for-fox https://thehill.com/policy/technology/396559-senate-dems-urg... and the T-Mobile / Sprint merger https://thehill.com/policy/technology/429618-dem-senators-urge-fcc-justice-department-to-reject-t-mobile-sprint-merger https://thehill.com/policy/technology/429618-dem-senators-ur... — opposing both on the grounds that they're anticompetitive.

peanutgal2600 7y ago

America is business-first, consumer-last. Always has been, always will be. Pre-election year fud. Microsoft won the anti-trust lawsuit. Its' primarily penalty was an embarrassment, they gave free copies of their software to schools.

brianliou91 7y ago

I think Warren is fantastic but I feel like her argument for Amazon is flawed and I'm curious to hear counter arguments. In her example of Amazon being a platform and information aggregator, wouldn't a brick & mortar grocery chain like Safeway/Vons/CVS be guilty of the same anti-competitive practices when they sell "Safeway Brand Fruity Os" next to Kellogg Fruit Loops? Businesses seem to have been able to be platforms and information aggregators for a very long time and we've had plenty of innovation and competition

geofft 7y ago
IMO there's a difference of scale - Amazon has quasi-monopoly power in the "buying things online" space, so much so that e.g. Anker, which makes cables and chargers and competes directly with Amazon Basics, has no distribution channel other than Amazon. If I make Unprovable Loops ("Part of this Turing-complete breakfast") and I'm not satisfied with the distribution deal I get from Safeway, I can always call up Von's or CVS or Target or Whole Foods or Walmart and see what they'll do, and in most cities there are multiple such options. I do wonder if the problem here is inherent to being an online store. If there's a Safeway in one part of town, a new Walmart in another part of town will sell roughly as much cereal as a second Safeway. But if Amazon.com exists and is generally useful, why would people go to another site? So perhaps some of the traditional/historical safeguards against any one store becoming a monopoly on the market no longer apply.
- igravious 7y ago
  Amazon e-commerce market share 2016: 38%, 2018: 49% What's the US market share of the largest offline retailer? Also, consider this chart: https://www.thebalancesmb.com/worlds-largest-us-retail-chains-2892856 https://www.thebalancesmb.com/worlds-largest-us-retail-chain... Walmart, Costco, and Kroger are bigger than Amazon in terms of revenue. (Kroger only just.) > But if Amazon.com exists and is generally useful, why would people go to another site? Why wouldn't they? What's stopping them? I agree we may need to reconsider some of our laws to better take into account online behaviour. But Amazon should not be penalised for mere success. They ought to be penalised for abusing market dominance if that is indeed what they are doing. No abuse, no penalty. Questions about tax payments on the other hand… Amazon have nowhere near the quasi-monopoly in their sphere that Microsoft has in desktop operating systems, Google has in web search, and Facebook has in social media.

dingo_bat 7y ago

Imagine being the nerd working hard day and night to create truly behemoth companies like Amazon and Google. Watch Bezos' interview from 1999. His office looks like that of a company going out of business, his desk is made of old office doors. He was already a billionaire, but the razor focus of efficiency made him the richest person in the world. Now a scummy politician who has built her career and education by lying about her family is being seriously considered when she talks about using state coercion to take away from Bezos what he has rightfully and legally earned. Shame on you HNers who partake in this.