I love Warren but I hope she and others in power make wise distinctions about what's important and where technological monopolies can be reined in by technology and where the market needs help. Subscription music services with interchangeable catalogs are the least of my worries about the direction of technology. Likewise e-books aren't really a market that needed immediate intervention when Apple and the publishers tried to work around Amazon's abuse of their position.
Monopolies at the ISP level where literally no competition exists is a major problem. Near permanent copyright monopolies granting extraordinary power for a century or more is a major problem. Patent trolls are a huge problem.
Privacy and fairness are major problems. Buggy OS upgrades, popular search engines, and built in music programs are not.
Buggy upgrades? I think it depends. If there's an updated iteration of a surgical tool or drug, it goes through a 3rd party vetting process, a significant portion of which is publicly transparent. There's a lot of shenanigans going on in OS upgrades under the disguise of, it's proprietary and no one has the right to see the code, as well as the EULA, as well as DMCA that'll prevent some forms of reverse engineering to find out what the changes entail.
That doesn't necessarily mean open sourcing all software. But it does mean having some kind of transparent testability of inputs vs outputs, a statement of expected behavior, tolerances, and so on. But what we seem to tolerate in software these days is, "oh fuck that upgrade just fucked up everything" with very heavy weight recourse like rollbacks or reverting to backups.
The problem with such regulation isn't the concept of regulating minimum quality standards in software, but rather the competency and delays in getting effective coherent legislation produced. It basically requires many people getting pissed to get a law passed, and that's not really the best way to set a standard is it?
I read the headline and shuddered, but seeing the examples she gives of the sort of behavior she'd like to curtail, it seems fairly reasonable:
"Apple uses control over the iPhone platform to advantage Apple Music over other subscription music services.
Amazon uses control over the world’s largest store for e-books to advantage books published by Amazon over books from rival publishers.
Google uses control over the world’s most widely used search engine to promote its own Google-generated content even when a straight implementation of Google’s algorithm would surface content by someone else."
It's all about the finesse in how these issues are worded. She reduces complex issues to a bite sized, strong, yet inaccurate argument. By leaving out the nuance of such issues, we could end up with overreaching legislation that leaves the market less competitive than previously.
A company can choose to sell their products through Apple's store front, however they have to play by Apple's rules. Target, Walmart, Amazon, etc all make products in their stores that compete with products from other vendors that sell items in their stores. If we change the rules because Apple is perceived to have an unfair advantage, should the other distributors change? And if so, what sustains the incentive to make services and products that could possibly compete on price and quality with other vendors.
> "Apple uses control over the iPhone platform to advantage Apple Music over other subscription music services."
Is this true? I don't feel like my iPhone compels me to use Apple Music over Spotify, Pandora, Tidal, etc. Shipping the app with the phone perhaps gives a slight advantage.
Of all the examples of tech companies overstepping their bounds, this seems particularly benign. The other two examples are more troubling.
I sort of agree with you, but I think the distinction is that the behaviors of Apple, Google, and Amazon aren't solely intended to lock in their marketshare. And, they all three compete with each other now, though in different ways.
I think what Elizabeth Warren is expressing, and I agree with it, is that these large monied companies control a growing part of our digital lives. We, as users and consumers, are largely powerless to find alternatives because the barriers to entry are so large that it is almost impossible for competitors to arise.
I like Senator Warren quite a bit, but I think we'd be better served if she and other legislators focused her efforts on regulations around privacy, continued work on network neutrality, and making sure that government-funded research is open to all.
I think technology is more accessible to people, and even if the general public doesn't understand it they at least feel they can refuse to participate. But it's hard to avoid a bank account and the finance industry manipulates the economy in secretive or abstract ways, which makes them distant and incomprehensible.
They can't opt-out of technology automating away their jobs. I was in an Uber the other day. The driver was a real estate agent talking about how terrible Redfin is. He didn't seem super excited about his gig economy future.
More than just a collection of weird and incorrect statements about tech companies, this is an example of the kind of "central planner" mindset that Warren has which is extremely threatening to the world economy. In particular, Warren complaining about the monopoly threat posed by Google+ is hilarious. Her overconfidence in assuming she knows enough this industry to divine regulations for breaking up large companies is frightening.
As other commenters have pointed out, the better role for government is in eliminating the monopoly rights they have already granted to ISPs. If she actually understood and cared about monopolies, she'd be attacking all of those deals signed by clueless and/or corrupt local politicians. Instead, she just wants to rail against the faceless enemy of "big business", in order to drum up. She's a Trump of a different suit, just another populist looking to derive power by exploiting simplistic ideas that don't work in the real world.
They ought to, or they simply have at least one possible motivation to? IMO just because something is in someone's best interest by one metric doesn't mean that they should take that course of action. I don't have any opinion on Warren's statements one way or another yet, but I would hope that legislators would actively try to ignore the revenue stream aspect when determining what the right thing to do is here.
Many police departments rely on ticketing drivers as a source of income, but I wouldn't take that to mean that the police ought to redirect their resources into ticketing as many drivers as possible.
Right. Strictly speaking, based on an unbiased ethical consideration of the whole mess, I think you raise a good point.
But I think that money motivation proves quite powerful.
The cover story for, or rhetorical face of, the CA politician's defense of these companies will look something like: high tech companies are the future. They're clean and green. And CA is leading the way. And CA is superior to everywhere else because those tech giants are mostly here (as opposed to one of our competitors: TX, MA, NY or even WA).
And if we let this kind of misguided regulatory regime get started, we'll endanger not just CA's economy, but that of the entire US tech industry...
Most of us in tech know this: existing tech firms and markets disappear very quickly. It is exceedingly rare for a company to survive because of innovation and 'creative destruction' aka 'disruption.'
How do you recognize a person out of their depth when they discuss tech? When they have little experience in tech.
If she's not smart enough to know that tech trends last as long as produce at the grocery, many of us would not want her making or influencing decisions about tech.
Having consulted (software development, training programmer teams to write code) at once-strong firms like Sun, Silicon Graphics, Global Village, and others, it's pretty shocking how fast a tech giant can disappear.
Palm; Borland; Amiga; Napster; Friendster; GeoCities; InfoSpace; Gateway; Netscape; and others. Dying slow deaths: HP; Yahoo; Zynga; etc.
Warren knows nothing about how the tech economy eats its own. No need to take actions like she proposes.
I would like to see antitrust authority focus on technology protocols / standards rather than, or perhaps in addition to, corporate mergers. Prohibit "embrace-and-extend" for example. Place limitations on use of proprietary formats where there is widespread third-party reliance on a technology.
No. That's a Microsoft reference. A strategy for coopting open protocols, then adding proprietary extensions so no one else can use them. It does not have anything to do with open source, and I don't think is something that Microsoft particularly does anymore. Though there are ample analogies to behavior of all large tech companies.
I challenge you to come up with a way to differentiate between "embrace-and-extend" and "fork-and-commit" that does not involve your personal feelings about the actor's motivation.
Not exactly, no. I'm not concerned about using antitrust authority to police open source. Regular copyright law, combined with usefulness of open source project, is enough and should work (or fail) on its own. What I think does merit some review is a corporate policy to build a market or platform around a widely-used protocol (whether or not technically open source), then extend the protocol so that you break other implementations of whatever you're doing. For example, let's say you build a SIP telephony service that's extremely popular. Then you introduce some proprietary elements so that all traffic that you route uses SIP + your proprietary extension. Suddenly everyone has to pay your toll to use SIP, unless they want to give up access to most of the market.
That was the straw that broke the camel's back. Back then Microsoft was an abusive monopoly in many more ways than that (e.g. punishing their OEM customers by refusing to sell them Windows if they offered any other OS as an option).
This is the truth. The late '90s antitrust case arose after many, many years of what many would consider anticompetitive abuse of market dominance.
One example: there were various competitors to MS-DOS and Windows throughout the '80s and '90s. However, due to their relationship with IBM, MS had a huge natural advantage in the PC OS market in the early- to mid-'80s. They pressed this advantage to enforce licensing fees on computer makers. If a company wanted to sell an MS OS on any of their computers, they had to pay MS for a license for every computer, regardless of which OS was sold on it. This guaranteed that any system sold without an MS OS would cost more, because the customer had to buy the computer + the MS OS + OtherOS even if the MS OS wasn't installed on the purchased system. This created a huge barrier to entry for any MS competitor in the OS market.
Software vendors are within their rights to make such deals, of course. It's only a problem if the vendor has so much of a market presence that it would be suicide for a system vendor to decline from being an MS reseller altogether. In this case, it was a problem.
This illustrates some aspects of antitrust law that a lot of people misunderstand:
(1) Being a monopoly doesn't mean having 100% market share, it only means having overwhelmingly dominant market share, which in some industries could be as small as 30%. It's a somewhat arbitrary number that might be very different from one industry to the next.
(2) Being a monopoly is not a bad thing in and of itself. There is a concept of some industries being skewed towards natural monopolies. Natural monopolies aren't inherently bad things either.
(3) Antitrust action is only taken when someone abuses their monopoly to alter the very market that they compete in. This is using your strength in the market to bias the market itself in favor of you, thus undermining free market dynamics. Of course no market is 100% free, or rational, or efficient, but that doesn't matter. What matters is that the monopolist is taking steps to make it tangibly less free.
Unfortunately the nature of antitrust law is such that it is ripe for abuse by bad actors or (legitimately) vanquished competitors. As a result even seemingly clearcut situations like the MS OEM deals go on for years without anything being done about it, because there are inherently so many legal gray areas surrounding antitrust. But it did establish a record of patterns of behavior that could be referenced in the eventual late '90s antitrust case.
IANAL so this should be taken with many grains of salt and I would love to hear from actual L's if any of this is wrong or oversimplified.
I'll play a bit of devil's advocate here and suggest that an even broader approach would be appropriate; cracking down on _all_ giants. Not just when they use their size to manipulate the market (i.e. when Apple uses its platform to bolster their music service), but just in general when a company is considered "giant."
The primary benefit of a giant company is efficiency. They are able to provide their goods and services at a lower cost to the rest of the economy because of their scale. The downside is that any level of corruption/cheating within the company will become magnified by an order of magnitude, again because of their scale. And the thing is, the majority of companies are anti-competitive or otherwise have some tendency to "cheat" the market. That's human nature mixing with the incentives of the economy. Usually that's fine in the sense that we tolerate it as fellow, flawed humans. But when the company is giant that foul play becomes a big problem, and we see all the pain that tends to accompany giant corporations like those pointed out in the article.
So, is the increased market efficiency worth it? Doesn't the anti-competitiveness cancel out any benefit that that efficiency may have had? Or worse, perhaps the anti-competitiveness out-weighs the improve efficiency, and giants are actually hurting the overall efficiency of the market?
That would be my devil's advocate argument. If giant corporations tend toward anti-competitiveness by their nature, and if that anti-competitiveness is out-weighing any benefit from increased efficiency, then it makes economic sense to "ban" giant corporations altogether.
Another, perhaps playful, way to look at it is as an optimization problem. We can view market efficiency as the loss function, which we wish to maximize. Our current economy roughly applies Stochastic Gradient Descent (SGD) to this problem. Try a couple things at once, measure average loss, and then propagate that loss to the entities within the market roughly proportional to their contribution to the loss. In other words, companies that helped make the market more efficient are rewarded. Companies that did the opposite are punished. Those companies adjust one direction or the other, and we iterate again. The problem with naive SGD like this is that it _overfits_. Any data scientist will tell you that. Overfitting the economy results in a very optimal loss in the short-term (training set), but terrible loss (market efficiency) in the long-term (testing set). And that's exactly what we see. Giant corporations like Walmart give us really low prices, but in the long run they are a strain on local and global economies and stamp out competition that would have helped find a more optimal, global efficiency.
Digressing, this is of course idealistic. Making large companies outright illegal would be insane in the current political environment, would not be practical, and ultimately won't solve the issue. A more nuanced approach is appropriated, and perhaps that's exactly what Warren is attempting here. To that end, and if the above argument holds water, I'd have to say I agree with her approach and wish her luck. A little L2 regularization will go a long way to making out economy more robust.
What stops multiple companies from forming pacts to stomp out the little guys? What happens when smaller companies cannot fulfill niche needs of their market whereas a larger company could afford to do so?
Commenting a bit further: it's interesting that a lot of US politicians extol the virtues of policies that favor US tech giants simply because they are here in the US.
The argument often looks something like "if we don't adopt New Policy X then big US high tech companies will no longer be globally competitive and the US economy will be permanently damaged."
Back in 1999, when they passed Graham-Leach-Bliley (repealing Glass Steagall) and encouraged the expansion of US big banks and the growth of US based financial services companies (think Citigroup) we saw a similar argument.
There's always a background theme that looks like: "The US must retain its global leadership in industry X -- or else."
Monopolies at the ISP level where literally no competition exists is a major problem. Near permanent copyright monopolies granting extraordinary power for a century or more is a major problem. Patent trolls are a huge problem.
Privacy and fairness are major problems. Buggy OS upgrades, popular search engines, and built in music programs are not.