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I'm starting to think the reason why tech companies are so well-valued is purely due to regulatory evasion skills and a dash of political engineering. Effective

I'm starting to think the reason why tech companies are so well-valued is purely due to regulatory evasion skills and a dash of political engineering. Effectively, every tech company has been given a pass on something. Facebook doesn't have to worry about defamation lawsuits. Google doesn't have to worry (as much) about copyright. Amazon built it's business on evading sales tax. Uber broke the back of your local city's taxi medallion scheme. And so on and so forth. All of those are things their legacy competitors have had to spend millions of dollars on compliance for, but tech companies don't. Here's the thing: the market really does not give two shits about "smarts". You can engineer the best mousetrap in the world and get it into everyone's homes, but the market won't care about the company that makes them... as much as they will care about a company that's found a way to break the rules. That's what they really want. People in tech are being paid massively not because they're postdocs with good credentials and amazing skills, but because they know how to bend governments to their will.

lupire 6y ago
This isn't a webtech thing. Look at Superfund as one of many examples of the conventional wisdom that business winnby cheating. Most theft in USA is wage theft by employers. Corporations are constantly getting caught breaking the law and not getting punished, defrauding customers or polluting the environment. Sports stadiums being built my governments and given away to corporations.
- missedthecue 6y ago
  "Most theft in USA is wage theft by employers" This is something I hear repeated ad infinitum on the net, but has a calculation ever been done the other way? That is, workers stealing from employers by deliberately clocking out early/late, or by goofing off on HN while on the clock. I would hazard a guess that this number is an order of magnitude greater than seedy business owners short changing their staff.
  - WrtCdEvrydy 6y ago
    Yeah, the guy mowing the lawn and getting dicked on overtime is totally goofing off on HN
  - nullandvoid 6y ago
    Spotted the guy who underpays their staff
    - pc86 6y ago
      > Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community. > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. > Please don't post shallow dismissals https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - capableweb 6y ago
    Yes, calculations have been done. Search for "wage theft" and there is bunch of research about this. The US is not alone in this and it's also not a new problem, it's been like this for a while now. Here's a good starting point: https://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/ https://www.epi.org/publication/epidemic-wage-theft-costing-... > If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year. > All of the robberies, burglaries, larcenies, and motor vehicle thefts in the nation cost their victims less than $14 billion in 2012, according to the FBI’s Uniform Crime Reports > in the United States in 2012, there were 292,074 robberies of all kinds, including bank robberies, residential robberies, convenience store and gas station robberies, and street robberies.3 The total value of the property taken in those crimes was $340,850,358 Worth noting that that report is from 2012. Things are surely worse now. Edit: Sorry, I misunderstood what you meant. I'm not sure if there is any research around employees slacking off on work time. If there is, it's probably conducted by companies themselves and therefore private.
  - ska 6y ago
loceng 6y ago
Regulatory evasion and/or regulatory capture - I never thought about it being called evasion but it certainly fits: get big enough with a large amount of the population now depending/relying/using the service, and then it causes a problem for policy makers - who aren't skilled or knowledgable enough to understand the intricacies of the business models in order to safely adjust policy to benefit society, society more than the profits of the business anyhow - that business who is lobbying and manipulating regulators as well to get policy to fit their needs, and coining the narrative for the users who benefit from the lack of regulations as well (e.g. Airbnb hosts who side-step worrying or dealing about the externalities on society of rents going up further due to higher pressure and less supply).
op03 6y ago
On the flip side in India atleast they are competing against well known crony monopolists who own the govt. Nothing simple or obvious about the rules of that game. As long as they are preoccupied with ruthlessly competing against each other things tend to head in positive directions for everyone. Its when they have no competition is when the the mindless ambition and ruthlessness causes the most damage.
- TT3351 6y ago
  Depending on which side of the bed I wake up on, I can lambast the US status quo as crony monopolists who own the government as well; yet I'm still nervous about the move "fast and break things" philosophy when it comes to real world markets, societies, and governments.
1996 6y ago
> I'm starting to think the reason why tech companies are so well-valued is purely due to regulatory evasion skills and a dash of political engineering. And how exactly is that a bad thing? You assume regulations are good, but as a customer this is incredibly short sighted. > Facebook doesn't have to worry about defamation lawsuits. Google doesn't have to worry (as much) about copyright. Amazon built it's business on evading sales tax. Uber broke the back of your local city's taxi medallion scheme. And so on and so forth So are you sad that you can use freedom of speech without fear of defamation lawsuits, read newspapers on google news without paying, have cheaper goods thanks to businesses forgetting to collect taxes, and better quality cabs that will come to you immediately? > they know how to bend governments to their will. That's one of the best points about tech :)
KorematsuFred 6y ago
> regulatory evasion skills You will be surprised to know that from your corner store florist to Walmart and from Bank of America to your child's babysitter everyone is obstructed by regulators of all kinds and to some or large extent all businesses are successful because they have learned how to evade government regulation. I remember a lecture by Aetna CEO who said the only competitive advantage they have over competitors is that they have far better handle on the regulation. If I were Amazon, I would do the same and as an Indian citizen I am greatly happy to see Amazon going so out of the way to help me get what I want. > People in tech are being paid massively not because they're postdocs with good credentials and amazing skills, but because they know how to bend governments to their will. It is other way around. The regulators in DC are confused as to how they will regulate the tech. They simply can not as the people are hooked to Instagram and Snapchat. If you give a free hand to DC people they would want every internet user to have a "internet license" and their search history be made available to every possible alphabet soup of government agency.
- nerbert 6y ago
  Somalia must be so nice without all these regulations. A godsend for all these business!
random5634 6y ago
At least locally, breaking the taxi medallion cartel was a godsend if you lived in a poorer part of time / needed to get places on a weekend. There had to have been some deals on backend to keep things the way they were - insane shortages of vehicles on weekends and no service to minority areas - with Uber you can get dropped and picked up most places I've found even dicey ones.
dexen 6y ago
>defamation lawsuits >copyright >local city's taxi medallion scheme Arguably the three areas of law where special protections & privilleges got expended so far, repeatedly and over decades, as to create ample opportunity for easy arbitration. Especially in case of copyright and taxi medallions, mafia-like structures were created through very one-sided markets; the only distinction from mafia being that those were gradually introduced through layers upon layers of legislation. The fault, if any, lays with the legislators. The tangible result of tech businesses is cheaper music for the consumers and cheaper transportation for the consumers. >special protections for local businesses online Good luck with that./s France also tried similar legislation, targeted specifically at extracting more tax revenue from Amazon under the guise of "protecting local bookstores". That's neither moral nor productive.
- Bayart 6y ago
  More tax revenue ? Anything's more than 0.
fallingknife 6y ago
FB - Congress passed a law (before FB existed) exempting all companies that post user generated content. You may not like this law, but FB is not "evading" anything, and it is not a competitive advantage because section 230 applies to all companies in the industry. Google - How does Google not have to worry about copyright? What exactly is their evasive behavior here? Amazon - Until the rules changed in 2018, Amazon was following the same tax treatment that existed for mail order catalog sales decades prior to Amazon's existence. These same rules applied to other online retailers as well. They are not "evading" anything. https://www.nbcnews.com/politics/supreme-court/supreme-court-rules-states-can-require-online-retailers-collect-sales-n873416 https://www.nbcnews.com/politics/supreme-court/supreme-court... Uber - OK you have a point here. I'm glad they did it, but that doesn't change the fact that they did evade regulations.
908B64B197 6y ago
> Uber broke the back of your local city's taxi medallion scheme. Posted it in an other thread [0] but do we really want to go back to the medallion system? Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid). The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it. And I'm not even touching the usual pain points and often discriminatory practices of medallion drivers (refusing card payments, refusing rides to non-white passengers and to non-white neighborhoods...). [0] https://news.ycombinator.com/item?id=24225648 https://news.ycombinator.com/item?id=24225648
- c22 6y ago
  Uber is just a different rent seeker, though. Over time the situation will likely just keep getting worse until it is as bad as the system it is replacing (many things about the ride-sharing ecosystem are already not great...) While it's always nice to see a broken rent-seeking system in our world become eroded we should not laude the transfer to another fiat regency.
  - portpecos 6y ago
    By that statement, you can claim TaskRabbit and the like are also rent-seekers.
    - c22 6y ago
      Yes.
  - isoskeles 6y ago
judge2020 6y ago
So the 'cheating' isn't cheating, but simply lobbying to maintain power. None of the points you made are inherit to illegal or even immortal acts, rather it's an issue of regulators and politicians not update all of the existing laws to account for the internet. - Facebook doesn't have to deal with defamation lawsuits because they're not the ones making those defaming claims - it's the users posting them. With the scale of the world it literally isn't possible to have an anyone-can-post site that has to screen what its users write for legally risky text. That's bad for commerce and why section 230 exists. - Google doesn't have to worry about copyright because businesses love to be able to take down content ID-detected content without involving legal resources. - Amazon built its business on evading sales tax because sales tax didn't affect internet businesses for some reason. Governments had years to change their laws and impose it on them.

lupire 6y ago

This isn't a webtech thing. Look at Superfund as one of many examples of the conventional wisdom that business winnby cheating. Most theft in USA is wage theft by employers. Corporations are constantly getting caught breaking the law and not getting punished, defrauding customers or polluting the environment. Sports stadiums being built my governments and given away to corporations.

missedthecue 6y ago
"Most theft in USA is wage theft by employers" This is something I hear repeated ad infinitum on the net, but has a calculation ever been done the other way? That is, workers stealing from employers by deliberately clocking out early/late, or by goofing off on HN while on the clock. I would hazard a guess that this number is an order of magnitude greater than seedy business owners short changing their staff.
- WrtCdEvrydy 6y ago
  Yeah, the guy mowing the lawn and getting dicked on overtime is totally goofing off on HN
- nullandvoid 6y ago
  Spotted the guy who underpays their staff
  - pc86 6y ago
    > Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community. > Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. > Please don't post shallow dismissals https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- capableweb 6y ago
  Yes, calculations have been done. Search for "wage theft" and there is bunch of research about this. The US is not alone in this and it's also not a new problem, it's been like this for a while now. Here's a good starting point: https://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/ https://www.epi.org/publication/epidemic-wage-theft-costing-... > If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year. > All of the robberies, burglaries, larcenies, and motor vehicle thefts in the nation cost their victims less than $14 billion in 2012, according to the FBI’s Uniform Crime Reports > in the United States in 2012, there were 292,074 robberies of all kinds, including bank robberies, residential robberies, convenience store and gas station robberies, and street robberies.3 The total value of the property taken in those crimes was $340,850,358 Worth noting that that report is from 2012. Things are surely worse now. Edit: Sorry, I misunderstood what you meant. I'm not sure if there is any research around employees slacking off on work time. If there is, it's probably conducted by companies themselves and therefore private.
- ska 6y ago

loceng 6y ago

Regulatory evasion and/or regulatory capture - I never thought about it being called evasion but it certainly fits: get big enough with a large amount of the population now depending/relying/using the service, and then it causes a problem for policy makers - who aren't skilled or knowledgable enough to understand the intricacies of the business models in order to safely adjust policy to benefit society, society more than the profits of the business anyhow - that business who is lobbying and manipulating regulators as well to get policy to fit their needs, and coining the narrative for the users who benefit from the lack of regulations as well (e.g. Airbnb hosts who side-step worrying or dealing about the externalities on society of rents going up further due to higher pressure and less supply).

op03 6y ago

On the flip side in India atleast they are competing against well known crony monopolists who own the govt. Nothing simple or obvious about the rules of that game. As long as they are preoccupied with ruthlessly competing against each other things tend to head in positive directions for everyone. Its when they have no competition is when the the mindless ambition and ruthlessness causes the most damage.

TT3351 6y ago
Depending on which side of the bed I wake up on, I can lambast the US status quo as crony monopolists who own the government as well; yet I'm still nervous about the move "fast and break things" philosophy when it comes to real world markets, societies, and governments.

1996 6y ago

> I'm starting to think the reason why tech companies are so well-valued is purely due to regulatory evasion skills and a dash of political engineering. And how exactly is that a bad thing? You assume regulations are good, but as a customer this is incredibly short sighted. > Facebook doesn't have to worry about defamation lawsuits. Google doesn't have to worry (as much) about copyright. Amazon built it's business on evading sales tax. Uber broke the back of your local city's taxi medallion scheme. And so on and so forth So are you sad that you can use freedom of speech without fear of defamation lawsuits, read newspapers on google news without paying, have cheaper goods thanks to businesses forgetting to collect taxes, and better quality cabs that will come to you immediately? > they know how to bend governments to their will. That's one of the best points about tech :)

KorematsuFred 6y ago

> regulatory evasion skills You will be surprised to know that from your corner store florist to Walmart and from Bank of America to your child's babysitter everyone is obstructed by regulators of all kinds and to some or large extent all businesses are successful because they have learned how to evade government regulation. I remember a lecture by Aetna CEO who said the only competitive advantage they have over competitors is that they have far better handle on the regulation. If I were Amazon, I would do the same and as an Indian citizen I am greatly happy to see Amazon going so out of the way to help me get what I want. > People in tech are being paid massively not because they're postdocs with good credentials and amazing skills, but because they know how to bend governments to their will. It is other way around. The regulators in DC are confused as to how they will regulate the tech. They simply can not as the people are hooked to Instagram and Snapchat. If you give a free hand to DC people they would want every internet user to have a "internet license" and their search history be made available to every possible alphabet soup of government agency.

nerbert 6y ago
Somalia must be so nice without all these regulations. A godsend for all these business!

random5634 6y ago

At least locally, breaking the taxi medallion cartel was a godsend if you lived in a poorer part of time / needed to get places on a weekend. There had to have been some deals on backend to keep things the way they were - insane shortages of vehicles on weekends and no service to minority areas - with Uber you can get dropped and picked up most places I've found even dicey ones.

dexen 6y ago

>defamation lawsuits >copyright >local city's taxi medallion scheme Arguably the three areas of law where special protections & privilleges got expended so far, repeatedly and over decades, as to create ample opportunity for easy arbitration. Especially in case of copyright and taxi medallions, mafia-like structures were created through very one-sided markets; the only distinction from mafia being that those were gradually introduced through layers upon layers of legislation. The fault, if any, lays with the legislators. The tangible result of tech businesses is cheaper music for the consumers and cheaper transportation for the consumers. >special protections for local businesses online Good luck with that./s France also tried similar legislation, targeted specifically at extracting more tax revenue from Amazon under the guise of "protecting local bookstores". That's neither moral nor productive.

Bayart 6y ago
More tax revenue ? Anything's more than 0.

fallingknife 6y ago

FB - Congress passed a law (before FB existed) exempting all companies that post user generated content. You may not like this law, but FB is not "evading" anything, and it is not a competitive advantage because section 230 applies to all companies in the industry. Google - How does Google not have to worry about copyright? What exactly is their evasive behavior here? Amazon - Until the rules changed in 2018, Amazon was following the same tax treatment that existed for mail order catalog sales decades prior to Amazon's existence. These same rules applied to other online retailers as well. They are not "evading" anything. https://www.nbcnews.com/politics/supreme-court/supreme-court-rules-states-can-require-online-retailers-collect-sales-n873416 https://www.nbcnews.com/politics/supreme-court/supreme-court... Uber - OK you have a point here. I'm glad they did it, but that doesn't change the fact that they did evade regulations.

908B64B197 6y ago

> Uber broke the back of your local city's taxi medallion scheme. Posted it in an other thread [0] but do we really want to go back to the medallion system? Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid). The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it. And I'm not even touching the usual pain points and often discriminatory practices of medallion drivers (refusing card payments, refusing rides to non-white passengers and to non-white neighborhoods...). [0] https://news.ycombinator.com/item?id=24225648 https://news.ycombinator.com/item?id=24225648

c22 6y ago
Uber is just a different rent seeker, though. Over time the situation will likely just keep getting worse until it is as bad as the system it is replacing (many things about the ride-sharing ecosystem are already not great...) While it's always nice to see a broken rent-seeking system in our world become eroded we should not laude the transfer to another fiat regency.
- portpecos 6y ago
  By that statement, you can claim TaskRabbit and the like are also rent-seekers.
  - c22 6y ago
    Yes.
- isoskeles 6y ago

judge2020 6y ago

So the 'cheating' isn't cheating, but simply lobbying to maintain power. None of the points you made are inherit to illegal or even immortal acts, rather it's an issue of regulators and politicians not update all of the existing laws to account for the internet. - Facebook doesn't have to deal with defamation lawsuits because they're not the ones making those defaming claims - it's the users posting them. With the scale of the world it literally isn't possible to have an anyone-can-post site that has to screen what its users write for legally risky text. That's bad for commerce and why section 230 exists. - Google doesn't have to worry about copyright because businesses love to be able to take down content ID-detected content without involving legal resources. - Amazon built its business on evading sales tax because sales tax didn't affect internet businesses for some reason. Governments had years to change their laws and impose it on them.