
Tech’s ruling class casts a big shadow - hollaur
http://www.theverge.com/2017/3/8/14848642/walt-mossberg-tech-gang-of-five-apple-google-microsoft-amazon-facebook
======
Bartweiss
> To be clear, I’m not alleging that the Gang of Five is colluding with each
> other to fix prices, or to actively suppress innovation; or to do anything
> illegal. I am certainly not suggesting they be sued for antitrust
> violations, like the once-sole dominant platform company, Microsoft, was in
> the late 1990’s.

I found this an odd comment, because we don't have to "allege collusion". It's
been documented and settled in court. It was wage fixing, not price fixing,
but it's still clear evidence that the "Gang" is willing to work together
against the market.

~~~
kyleschiller
To be clear, the "wage-fixing" was a no cold-call agreement that involved
Apple and Google, not the rest of the companies mentioned. [0]

I'm all for criticizing giant companies but can we at least get our facts
straight and not sound conspiratorial about it?

[0] [https://en.wikipedia.org/wiki/High-
Tech_Employee_Antitrust_L...](https://en.wikipedia.org/wiki/High-
Tech_Employee_Antitrust_Litigation)

~~~
drewrv
Is there a distinction between "a no cold-call agreement" and "wage fixing"
that I'm not aware of? This sounds a bit like "I didn't commit assault I only
hit him".

~~~
tynpeddler
>Our (Google's) policy only impacted cold calling, and we continued to recruit
from these companies through LinkedIn, job fairs, employee referrals, or when
candidates approached Google directly. In fact, we hired hundreds of employees
from the companies involved during this time period.

Not defending google here, but there is some nuance to the issue.

The scummiest part to me is that they made "agreements that, when offering a
position to another company's employee, neither company would counteroffer
above the initial offer."

From [https://en.wikipedia.org/wiki/High-
Tech_Employee_Antitrust_L...](https://en.wikipedia.org/wiki/High-
Tech_Employee_Antitrust_Litigation)

------
handsomechad
After reading the article I tried to think of all of the ways which I interact
with the "gang of five" and quantify their importance in my life.

Apple - I'm writing this on a brand new Macbook Pro, and my iPhone is sitting
right next to me. I have a $5/month subscription to Apple Music. It would be
painful, but with a gun to my head I could easily switch to Windows, Android,
and Spotify.

Google - I'm browsing HN in Chrome, by far my favorite browser. I use google
search dozens of times throughout the day to figure things out, it's truly an
extension of my brain. I could switch to a new browser, but I haven't tried
Bing enough recently to know if it would compare to Google.

Amazon - I have a Prime membership, but I'm only a sporadic online shopper.
That said, the Amazon shopping experience has provided me with a lot of value.
No real alternatives here.

Facebook - I don't use Instagram, I don't use WhatsApp, I do have a Facebook
but I don't use my real name and I have very few friends. I use the News Feed
Eradicator extension to get rid of the Trending section and the News Feed. Of
all of the companies, I consider Facebook the most dispensable from a personal
perspective . The only features I regularly use are Chat, which is
functionality that existed long before Facebook, and sometimes stalking people
that I just met to see more pictures and get a "life resume" on them, which is
a habit that I would rather not be able to indulge in to be quite honest.

Microsoft - My work computer runs on Windows, I use Office 365 at work, and of
course tons of companies that I rely on in my consumption supply chain and
infrastructure are dependent on Microsoft in some form or the other.

I'm truly shocked at Facebook's ascendance to the tech stratosphere. Obviously
the numbers don't lie, but Facebook just seems like it has so much lower
utility than all of the other companies mentioned here. Yes, it's younger and
in a newer category, but all of the other companies provide fundamental
building blocks to the modern technological experience. Social media seems so
much more superfluous by comparison.

~~~
Tharkun
By contrast, I don't use any products by any of this "gang of five". Gang, by
the way, is a pretty good description, considering most of these companies'
behaviour borders on criminal.

Apple with its reliance on child labour.

Amazon has been getting bad press for the way they treat their staff (suicides
and whatnot).

Facebook & Google's blatant disregard for everyone's privacy.

Apple, Google & Facebook are all turning into awful walled gardens governed by
some weird, moralistic principle where anything that might offend an
advertiser is Verboten. Nipples be gone. You want to communicate with someone
outside of our walled garden? Tough shit.

Microsoft seems to be the lesser of evils these days.

~~~
anon1385
What hardware manufacturers do you buy from that don't have child labour in
the supply chain?

I fear you may just be fooling yourself.

[https://www.theguardian.com/commentisfree/2013/apr/25/smartp...](https://www.theguardian.com/commentisfree/2013/apr/25/smartphone-
samsung-tin-bangka-island)

>As Nokia, which seems to have done more than any other such firm to
investigate its own supply chain, told me, "there has been no credible system
in the electronics industry that allows a company to determine the source of
their material".

~~~
mattnewton
Because apple has so much scrutiny, and is able to get away with less, it may
even be the most child-labor free option.

[http://www.apple.com/supplier-responsibility/labor-and-
human...](http://www.apple.com/supplier-responsibility/labor-and-human-
rights/)

------
epberry
I'm not sure what the point of this piece is. There is fierce competition
between these five and consumers are better for it. I think you can look at
the cloud war between Google, Amazon, and Microsoft as a great example of
competition among these companies producing better technology and lower
prices. If there was collusion, we would see cloud costs and technology
stagnate like cars from Detroit in the 70s and 80s. Instead the opposite is
happening.

~~~
Apocryphon
I guess the natural question is whether or not having markets be owned by a
small number of companies prevents new entrants from competing successfully. I
leave that point to be debated by others.

On a different note, it's interesting how the presence of the giants affects
the startup world. I am reminded of a passage from No Exit by Gideon Lewis-
Kraus [0]:

'All the while, Martino’s ultimate warning—that they might someday regret
actually getting the money they wanted—would still hang over these two young
men, inherent to a system designed to turn strivers into subcontractors.
Instead of what you want to build—the consumer-facing, world-remaking
thing—almost invariably you are pushed to build a small piece of technology
that somebody with a lot of money wants built cheaply. As the engineer and
writer Alex Payne put it, these startups represent “the field offices of a
large distributed workforce assembled by venture capitalists and their
associate institutions,” doing low-overhead, low-risk R&D for five corporate
giants. In such a system, the real disillusionment isn’t the discovery that
you’re unlikely to become a billionaire; it’s the realization that your
feeling of autonomy is a fantasy, and that the vast majority of you have been
set up to fail by design.'

[0]
[https://news.ycombinator.com/item?id=7643902](https://news.ycombinator.com/item?id=7643902)

~~~
dave_sullivan
> whether or not having markets be owned by a small number of companies
> prevents new entrants from competing successfully

If you consider markets to be an optimization strategy for resource
allocation, I think an industry being owned by a small number of successful
companies represents a signal that a local maximum has been reached. That's
assuming there aren't artificial barriers put up to prevent competition--there
often are and I consider a patent an artificial barrier.

If your mission is to generate billions of dollars of value where there was
none before, a mature industry is not where you should be looking. "The next
google" is not a search engine company as we understand the concept today.

It's not that consolidation makes it hard to compete, it's that the value has
fundamentally been wrung out already. In fact, that "value being wrung
out"/profit-growth-at-the-top-of-the-sigmoid-curve is what drives
consolidation in the first place.

~~~
frgtpsswrdlame
>I think an industry being owned by a small number of successful companies
represents a signal that a local maximum has been reached.

Why do you think that?

~~~
dave_sullivan
Because it happens over and over. Can you point to an example where it doesn't
apply?

I mean, easiest example is probably cars. Sure, Elon started Tesla, but
they're tiiiiiny compared to other auto manufacturers. They're also doing some
things very differently, so it's not quite the "same industry" now. In 1908
there were 253 auto makers, in 1929 only 44, and now there are ~10? So what
happened?

There was an initial boom (lower half of the sigmoid curve/hockey stick),
followed by lots of competition from startups (because they can compete on
method there's some nice profit margins there), followed by brutal competition
and diminished profit margins (as best method is adopted and firms sell
against each other, things get cheaper), followed by consolidation (because
when profit margins are shrinking, next step is consolidation and "belt
tightening"), followed by an industry no one wants to touch anymore (because
it's run by a bunch of idiot middle managers). If you wait long enough, those
idiots eventually miss some major developments and this creates a new
opportunity to do things very different (eg Tesla). Or nothing really changes,
as in the case of air travel.

Also, history of all kinds of consumer electronics.

Also, how many companies on the fortune 100 50 years ago are still on it?
Nothing lasts. If you're lucky and successful, you eventually hit the top of
the sigmoid curve.

Also, software (yes, it's true)

What industry does this trend not apply to? What's the argument for "I think
an industry being owned by a small number of successful companies represents a
signal that a local maximum has NOT been reached (there's tons of opportunity
there, just have to unlock it!)"?

------
AndrewKemendo
The exascale technology corporation of the 21st century is a completely
different beast than the mega-corporations of the 20th century in one
absolutely key way: They are disrupting themselves to successfully stay
relevant in a fast moving market.

Back before Google became Alphabet, they made a huge decision to realign
themselves around Machine Learning as the core of how they do business in all
aspects [1].

It could do that because 1. Their services could benefit from the improvement
directly and 2. it didn't need to build a new machine factory, or assembly
line like GE would have had to, if it wanted to completely realign themselves
to eg. solar production or a 21st century technology.

It sounds trivial and obvious but Google, Amazon, Facebook, Microsoft and
Apple are all information management companies. They are all trying to become
the central nervous system for consumer behavior in all aspects. That means
collecting ungodly amounts of data, having a dense psychometric profile of
users and then feeding users what they want to feed them. The better data they
have the more locked in people become and there are fewer sources of data
available for other people.

So they most important thing is to get users to become part of their ecosystem
- that means having some kind of insight into every digital system that a user
interacts with. Unless you can create a new ecosystem that people interact
with at such scale (Snap is probably the closest) then you can't compete with
them. Also notice that Snap is still relying on Google Cloud [2] so Google
wins either way.

The fact that the top 5 have so much money, talent etc... also means that any
company that isn't a leap beyond in user interaction, can be easily wooed
through a lucrative acquisition and access to user data at massive scale.

It's only going to get more consolidated because the average person only cares
about usability and interoperability - so even if you aren't locked into just
Apple, or Google, they all touch each other in some way that you are going to
be part of the big 5 ecosystem no matter what.

[1][https://www.wired.com/2016/11/google-facebook-microsoft-
rema...](https://www.wired.com/2016/11/google-facebook-microsoft-remaking-
around-ai/)

[2] [http://www.recode.net/2017/2/2/14492026/snap-
ipo-2-billion-c...](http://www.recode.net/2017/2/2/14492026/snap-
ipo-2-billion-contract-with-google-cloud)

------
friedman23
I don't think you can consider 5 companies to be an oligopoly especially when
you don't see monopolistic practices. These companies regularly undercut each
other and innovate.

~~~
tabeth
I find this kind of learned helplessness to be fascinating. Do you think big
companies need apologists? Do you think there would be more or less innovation
with more smaller firms?

~~~
friedman23
Helplessness? Apologist? I don't consider Google/Facebook/etc my enemy like
you seem to. These companies are not exploiting me, I have no reason to be
hostile to them (profit is not exploitation).

> Do you think there would be more or less innovation with more smaller firms?

Likely less, I do not think that private space exploration or self driving
cars would be possible without the massive accumulation of capital enabled by
tech giants.

Now let's look at the counterfactual, the US has massive tech giants and the
majority innovation comes from or to the US. Other countries don't, other
countries don't have nearly as much innovation bar a few exceptions.

And truthfully, I find people that are anti capitalism to be far more
interesting. It's amazing that people can convince themselves that private
ownership is wrong while living in the most prosperous time in history and
also believing that stripping those better off of their wealth will somehow
lead to a more prosperous society when every time it has been done it has lead
to disaster.

~~~
sharemywin
It's funny you make it sound sound like Darpa had no part in self driving
cars. or that the government space program didn't set the standard and the
foundation for private space exploration.

Yes Capitalism and Liberal Democracy is the most powerful system man has ever
created. Hopefully we don't screw it up by giving all the credit to the guy
handing you the apple from the orchard we call the "western world"

Football is an awesome game but without the guys in the black and white
uniforms it would be nothing but chaos.

~~~
sanderjd
I didn't read the parent's comment as anti-government. It is certainly pro-
business, but the two aren't mutually exclusive. Your analogy with sports and
referees seems apt: referees are important but it wouldn't be a very good game
without having the players as well.

------
sputknick
IS this not just a symptom of a maturing industry? At one point America had
hundreds of automotive companies, those hundreds consolidated down to three.
100 years later, those three are still dominate. I'm not saying it's good or
bad, but it sounds like something that has happened before and from that we
can drive the discussion on weather this is good or bad, or something we can
ignore.

~~~
antisthenes
It is a symptom of capitalism in general. Capital tends to consolidate in
monopolies or colluding oligopolies within 1 industry, because of economies of
scale.

------
thomasthomas
Funny how amazon gets thrown in with facebook under the 'consumer tech
industry' moniker. facebook sells ads to make money. amazon sells physical
stuff. how are they related besides both using technology? I think we should
group businesses by how they make money and who they compete against.
'technology company' doesn't mean anything in a world where every company has
technology.

~~~
golemotron
Google is a technology company that sells ads. Amazon is a technology company
that sells goods. It's not what you have, it's what you are.

The future isn't bright for companies that just "have" technology.

~~~
johnsmith21006
Agree and why these latest "tech" companies that do NOT actually sell their
tech will not fall as easily from industry changes.

I have a tough time seeing the new three, Google, Amazon and FB going away. I
can see it with MS and Apple.

------
Apocryphon
It's quite interesting to speculate who would be the sixth empire. Based on
their attempts to dip their fingers into as many pies as possible, I'd say
Uber is a would-be contender, and the platform they've been trying to own is
the real world. As far as on-demand service economy startups go, they're
certainly preeminent.

~~~
empath75
Verizon just bought aol and yahoo and are looking for more companies to buy.

~~~
Bartweiss
Verizon seems like a strong contender. They're well placed to follow the
Gang's general model of using a profitable near-monopoly business to enable
lots speculative purchases and projects. (Amazon: AWS and sales, Google:
search/ads, Apple: hardware, Facebook: FB and Instagram)

If we're going to see a sixth player, it will be someone who can get massive,
hard-to-threaten control over some major part of the web ecosystem. Data
access sounds like a winner to me, especially if net neutrality crumbles.

------
amyjess
> In fact, I’d be amazed if there weren’t plenty of startups whose main goal
> is to be purchased by the Gang.

This happens whenever an industry has a dominant player with deep pockets. For
example, back when telecom was a much healthier industry, the main reason why
anyone would start a telecom startup was to get acquired by Cisco.

------
swframe2
Very large companies are keeping a lot of money overseas. It seems be very
inefficient if their saving are not used in investments that are closely
connected to consumer financial benefits.

Should society be concerned with the flow of money out of the local economy?
Isn't it a idea (for the companies) to move hundreds of billion dollars out of
the economy their customers need to make a living?

I wonder if these companies should offer low interests loans to people to buy
their products in much the same way that China buys US treasury bonds.

Maybe there should be limits to how much a company should be allowed to save
and it should return the rest to investors.

------
hd4
The way I deal with it is not to put all my eggs in one basket. For instance,
don't link your online accounts to one email, have one separate email address
just for those. And try to use a different email provider to the company who
makes your mobile OS. And just don't use proprietary OSs where possible, go
with Linux or BSD. In fact these days I'd recommend BSD if you really want to
avoid too much bad data-gathering practice (even though I still use Linux
myself out of habit), just because BSD still has a relatively unsullied rep.

------
diego_moita
As everything else on HN, this is a very American-centric perception. There
are a lot of other companies that are not "big whales in the see but are
crocodiles on the Yang-Tse", as Jack Ma once said.

China is the most obvious example (Alibaba, Taobao, Weibo) but there are also
some European and Indian companies worth paying attention. If Asian growth
takes a hold on this century and if Europe keeps getting freaked out about
American espionage then this "Gang of five" will face some tough competition.

