6 ms·
It is pretty strange to blame the "more relaxed antitrust environment in the 1980s" when it was the 1982 anti-trust breakup of Ma Bell that destroyed Bell Labs
by mobilefriendly 6y ago
It is pretty strange to blame the "more relaxed antitrust environment in the 1980s" when it was the 1982 anti-trust breakup of Ma Bell that destroyed Bell Labs and ended the monopoly profit flows that subsidized the telecom labs.
- lumost 6y agoA monopoly can only grow revenue by increasing prices, or by creating new use cases and growing the market. The latter tends to pay off better in the long-run. Research tends to take a long-time to hit the market, in a dynamic market there is no reason to expect that a company funding open research would get a strong first mover advantage. A monopoly doesn't have this concern, Intel could fund semi-conductor research with decade+ time horizons and still be the first to put it to use.
- bleepblorp 6y agoModern business management doesn't care about the long-term. Research pays off future managers and owners in years, or decades, but increasing prices now pays off now in bonuses and dividends for current managers and owners. Behavior follows incentives.
- scarface74 6y agoI agree with you in general, but I don’t think any of the 5 big tech companies are only concerned about short term profits. Two are run by founders (Facebook, Amazon), two are run by hand picked successors of founders (Apple, Microsoft) and I can never tell what Google is doing. It has been rudderless for over a decade.
- eru 6y agoWhat makes you think that business management doesn't care about the long term? Business management is rumoured to care about share prices. And as we can see in the current stock market, shareholders are long term enough to eg see past the current pandemic. They also managed to see past Tesla's losses or Amazon's slim profitability.
- iorrus 6y agoThat was always my default assumption but the argument in this article also seems logical.
- mobilefriendly 6y agoYeah another thing that happened in 1981 was Congress created the first R & D tax credit. I wonder if that impacted the structure of labs-- it definitely has increased net research spending but has a lot of rules.
- mrosett 6y agoThat was my reaction as well. Also, a lot of the most interesting corporate research these days is done by quasi-monopolies like Facebook and Google.
- chillacy 6y agoI believe Peter Thiel made a similar point when he said that monopolies (or at least, profit margins beyond sustenance) give companies breathing space to fund these types of things.
- Reimersholme 6y ago“Monopolists can afford to think about things other than making money; non-monopolists can’t. In perfect competition, a business is so focused on today’s margins that it can’t possibly plan for a long-term future. Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits.”
- kkylin 6y agoAnd I've wondered if the blurring of the line between research and product development at the likes of Google and Facebook (MS Research seems to still be an exception) is because they feel they have less breathing space?
- usrusr 6y agoBreathing space can also be taken up by stock market expectations. Did that old guard of research lab owners ever reach a similar level of valuation? My spontaneous guess explanation is that back then, stock markets were far more reluctant to price in immaterial advantages like market dominance or tech leadership if it wasn't backed by tangible assets like mining rights or factories.
- mkoubaa 6y agoalso they have to signal some value to society to hedge against future breakup threats
- 6y ago
- hindsightbias 6y agoWe would still have an Apple phone, but it would have a cord. It would be a really nice cord, but subject to fraying every year.
- kps 6y agoNo, it would stand up to any abuse, because you'd only be renting it. (Arguments about whether you really own an iPhone may now commence.)
- the-dude 6y agoAh, you must be talking about my beloved T65. You could commit a murder with it and nobody would notice. https://www.telefoonmuseum.eu/index.php/1980-tot-2000/toestellen-tot-2000/item/234-t65-tdk https://www.telefoonmuseum.eu/index.php/1980-tot-2000/toeste...
- kps 6y agoHere it's the Northern Electric 500, which is the same as the Western Electric 500 in the USA. The fact that I can no longer place a call from mine (due to the central office^W^W line card not supporting pulse dial) is deeply disappointing.
- the-dude 6y agoIn NL, you could choose ISDN and get a 4-port adapter, and the first port supported pulse dial. Had a working T65 up to 2010. It was divorce, not deprecation which ended that.
- bbarnett 6y agoTrue, but there are a lot of cheap pulse->tone adapters for just this purpose. Does it matter whether the line card, or you, handles the pulse? Bring back the joy, revel in your antiquties, buy one!
- marcosdumay 6y agoYes, and that's the mainstream argument. Yet, Bell Labs weren't the only corporate research lab. And on the big picture, they did disappear at the time that merges become common and most markets turned into monopolies. This article has a very good argument for why only the market leaders would invest on those labs, and yet they are caused by the enforcement of competition rules.
- jandrese 6y agoIt's worth noting that Bell Labs existed because the government recognized that the Bell monopoly was a social ill and insisted that to counteract the problem some of the money had to be earmarked for research. Today the government doesn't even dream of that kind of regulation anymore. The idea of doing something purely for the public good seems to be lost in the race to make the quarterly numbers as big as possible.
- devonkim 6y agoThe trend changed partly due to the 80s cult of shareholder value worship enthused by Milton Friedman / Reagan that permanently altered the social contract of corporations. If the only responsibility of corporations is shareholders, then long-term growth and investment is difficult to justify given market tendencies to be so short-term focused over time.
- eru 6y agoShareholder value capitalism was only ever an aspiration. In practice companies have always been run for the benefit of corporate insiders. Not the widows and orphans who might own a few stocks.
- scott_s 6y agoThese days, those corporate insiders have a lot of their wealth tied up their company's stock. So while it's a terrible way to think about running a company, a lot of companies are run that way because it benefits the people running them.
- hammock 6y ago"Giant bull market in the 1980s" more generally speaking
- Merrill 6y agoThe Bell System, IBM and Xerox, which all had corporate research labs were all monopolies in effect - the Bell System by regulation and the '56 Consent Decree, IBM by overwhelming market dominance, and Xerox by patent protections. This gave all three corporations excess monopoly profits, some of which could be devoted to research. Although the antitrust suit against IBM was settled, it did modify IBM's behavior and it ultimately failed to compete well with mini and microcomputer companies. In Xerox case, the expiration of patents allowed competitors into the market. Without a monopoly a corporation will find it very difficult to justify research that can be used by other businesses. The transistor was a disaster for the Bell System. It was not particularly useful in the telephony system of the day, which used high voltages in tube transmission equipment and high, intermittent currents in electromagnetic switching equipment. On the other hand, the 1956 Consent Decree forced the Bell System out of other businesses (audio, computer, consumer electronics, etc.) and out of other countries (Canada, Caribbean). So the Bell System could not use it's new transistor to expand in the businesses where it fit, and having a fundamental patent on it exposed the Bell System to great anti-trust scrutiny and greater regulatory duress, such as the FCC Computer Inquiries.
- yborg 6y ago>having a fundamental patent on it exposed the Bell System to great anti-trust scrutiny I don't understand how this follows, having fundamental patents should lead to the breakup of basically every large US company by the government by this logic. AT&T licensed the transistor to a number of companies, so even if the Bell system didn't have a use for the device (it did in fact, in order to reduce the size of telephone exchanges) so they derived revenue from the invention. How this translates into a 'disaster' for the Bell System is unclear since it was eventually broken up because of the decision that long distance and local service should be different markets long after the patent on the transistor had expired.
- SpicyLemonZest 6y agoThe argument is that, if I invent the Telephone 2.0, I can pretty confidently predict I won't be allowed to capture so much of the profit from it. This provides an incentive for companies to shift their R&D spending towards product development rather than foundational research.
- hooande 6y agoHis point was that it's cheaper for big companies to innovate by buying startups than it is for them to do that research and testing in house