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Elizabeth Warren Came Up with a Plan to Break Up Big Tech (newyorker.com)
193 points by Elof 58 days ago | hide | past | web | favorite | 338 comments



> The plan she released consists of several parts. Companies with revenue of twenty-five billion dollars or more that provide an online marketplace would be designated as “platform utilities” and would not be allowed to both own the marketplace and participate on it. Right from the start, Warren says, Amazon would have to separate its “Basics” business, which sells products under a house brand, from the rest of Amazon, and Google’s advertising business and its search business would have to be split apart. Secondly, she pledged to “empower” federal regulators to undo many of the tech-industry mergers that have already happened, such as Amazon’s acquisition of Whole Foods and Zappos; Facebook’s takeover of Whatsapp and Instagram; and Google’s purchase of Waze, Nest, and DoubleClick.

This would really change the landscape if implemented. On thing that it would do is force the companies to innovate themselves, knowing that they can't just acquire every innovative company that challenges their dominance.


So it's okay for supermarkets and brick/mortar retailers to offer house brands but not online retailers. Pretty arbitrary line.

And this would equally apply to Apple and Google who have a number of apps on their app stores. This would then lead to even more bundled apps on the phone e.g. Garageband which would decrease competition.

Most of these policies are really not well thought out.


The line is not 'you are not allowed to ever do this' but 'this particular instance is hurting competition'.

If the vast majority of people shopped at one supermarket, and that supermarket's most popular products were largely it's own brand products, and most industries that competed with such products had largely shrunk to providing specialty alternatives or cheap knockoffs because it was so hard to compete, then there might be a case for breaking that supermarket up.


This situation isn't just hypothetical. In the 1940s the grocery chain A&P was the largest retailer of any sort in the US and there was a real concern that they were anti-competitive because they owned a number of food processing plants in addition to their stores. The Federal government brought suit but didn't succeed in breaking up A&P. Ultimately, of course, A&P didn't succeed in monopolizing groceries, and even went bankrupt a decade or so ago, but they were the WalMart of their time.


It's funny that you mention supermarkets, because the A&P grocery store chain was from 1915 to 1975 the largest grocery retailer in the US. At its peak in the 1940s, A&P captured 10% of total US grocery spend. It too came under scrutiny and was accused of being a "monopoly", as its cheap prices forced smaller competitors out of business. And yet despite being a "monopoly", it began to decline in the 1950s when it failed to keep pace with competitors that opened larger supermarkets with more modern features demanded by customers. It continued its slow decline until it completely shuttered in 2015. A&P was once as recognizable as Google or Walmart is today, and yet most people have never even heard of A&P.

Sears too once had a "monopoly" on mail order products. People marveled at how amazing it was that you could order a product, mail in a check, and receive the product six weeks later, all without stepping into a store! Now they're bankrupt.

The whole concept of a business "controlling" the market is ridiculous. Amazon operates in a highly competitive, low margin industry that requires a tremendous amount of logistical overhead to function. The minute they stop innovating, they're toast.


So if we just let the market work, I can look forward to finally getting out from under the thumb of FAANG when I'm retired?


The fact that you feel like you’re “under the thumb” of companies that provide a majority of their software products for free is really a testament to how wealthy the market has made us.


The point is, the products aren't really "free". Maybe in pure money terms, but there is a price to be paid to make use of the services, in terms of data.


> companies that provide a majority of their software products for free

There's no such thing as a free lunch. You pay for that software even if you're unused to putting a dollar-price on its cost.


What exactly is your complaint against FAANG? You are free to buy a Linux or windows laptop, not create a Facebook account, subscribe to Hulu, not Shop amazon, use fast mail etc...

Hard for me to get too worked up about tech giants seeing as using them is optional and alternatives abound. I don’t see how my life is made worse if someone else buys a MacBook.

None of the things that do irk me about tech companies (security breaches, unethical advertising, spread of fake news, and so on) would be addressed in any way by a breakup.


> You are free to buy a Linux or windows laptop, not create a Facebook account, subscribe to Hulu, not Shop amazon, use fast mail etc...

Try participating in modern society without an Android or Apple smartphone or tablet. It's still possible, but becoming more difficult each day.

(And to clarify, I don't mean "leave your phone at home today". I mean not owning a smartphone or tablet at all.)


Well sure, I agree that there are only 2 smartphone OSes on the market. But how is that an argument for breaking up the tech companies? Breaking up the tech companies is not going to produce more smartphone OSes.


No, but it would make it harder for them to use that duopoly to gain market share elsewhere through bundling.


On the other hand, there are now a couple companies like Purism and Pine that are working on pure Linux smartphones. We'll see if any of them are successful in the long run, but I think that's a pretty good example of the market doing its thing and creating competition.


By biggest problem is when corporations start competing on their platforms with their own products which hurts competition FAANG or otherwise.


> The whole concept of a business "controlling" the market is ridiculous. Amazon operates in a highly competitive, low margin industry that requires a tremendous amount of logistical overhead to function. The minute they stop innovating, they're toast.

Those are two examples. What about Standard Oil for instance? AT&T?


That doesn't strike me as a very clear line. Let's change the scale a bit instead of nationally / internationally.

If there's only 1 Walmart store in a small town (no competitors near by), does that mean they can't sell their house brand there?

What about a Walmart in a town with a Target and 80% of the sales are at Walmart? Can Target sell their house brand if Walmart can't in this scenario?


You seem to be arguing that the same principles of government should apply at every scale. I don't think that can work. Should the small town consider purchasing a couple B2 bombers? Should the national government decide if my road needs to be repaved?

The plan we are discussing is a plan for national scale governance, and since your example is not on a national scale, the plan would not apply. If the isolated town wishes to enact their own laws to regulate Walmart, they may do so.

The locals may govern themselves locally. National leaders govern on a national scale.


Don’t be so cavalier in shrugging off the person you’re responding to. This kind of national scale governance is equatable to “centralized planning” governance. You have to consider it from the local economy perspective, otherwise you’ll be perpetuating inequality in many parts that you don’t see.


A town is more open to competition, anytime a third player can open up a store with relatively small investment. Meanwhile to take on a dominant player like Amazon is extremely hard.

I believe the line is drawn at ‘large-scale winner-takes-all players’. It doesn’t necessarily have to be fair but it is supposed to benefit the entire economy. As long as there’s a relative balance between the economical power of competitors no measures are required.


Except that the specific example everyone sites is Amazon, and Amazon isn't even in the double digits of all retail in the US [0]. WalMart on the other hand is 8.9% of all retail [1] -- nearly double what Amazon captures. Neither one is that much of the total market. Online is also a surprisingly small portion of total retail still, esp. when you start looking at the magnitude of the numbers.

[0] https://techcrunch.com/2018/07/13/amazons-share-of-the-us-e-... -- 49% of ecommerce, 5% of total retail [1] https://www.pymnts.com/consumer-insights/2018/walmart-amazon...


Just to get this out of the way, I’m not saying it’s a good measure but I think it’s trying to tackle a real problem.

Regarding the ecommerce market share I’d like to know the current numbers and the trend over the years. One should not wait for 99% to start taking measures, all competitors will be dead by then.

Regarding the physical stores Amazon isn’t really trying to capture it as the barrier to entry is much lower than online and margins are low anyway.


> A town is more open to competition, anytime a third player can open up a store with relatively small investment. Meanwhile to take on a dominant player like Amazon is extremely hard.

You think it's easier to open a physical store to compete with Walmart than to spin up an ecommerce site to compete with Amazon?


A physical store, at a minimum, has built in advertising based on location. Budget in local advertising and people will shop there if prices, service, location, and the products are good. I couldnt even imagine how a new online store would be able to start competing with Amazon. There are existing webstores that over the years have lost a lot of business to amazon (Newegg, Sweetwater, B&H Photo, etc). Even local stores are losing business to amazon.


For sure. There are so many more parameters to physical store. Proximity is a HUGE one. Quality of service. Specific items that they stock. These kinds of things allow smaller stores to exist in my small town even while there is a huge supermarket nearby.

On the other hand, I do not use ANY one-stop site for online shopping outside of Amazon.


How is a Walmart easier... Amazon style disruption was the only way Walmart could ever be challenged, precisely because Amazon’s logistics are easier. These kinds of brick and mortar decisions at the town level have like 10 year consequences at a minimum, if not more.

It’s extremely difficult to project forward 10 years in tech.


Sibling comments make a point on how a physical store is easier to bring to market.

> It’s extremely difficult to project forward 10 years in tech.

I think this is a common misconception. Tech giants rise mostly because they create new markets. Since their beginnings nobody beat Microsoft on operating systems, nobody beat Google in search, nobody beat Facebook on social network market share.

The point would be that once you're dominant in a market it's very hard to be moved away and it takes more than a decade. I find it hard to believe a 1T dollar company can be outcompeted during less than a few decades.

Also as the tech/online market matures things naturally tend to slow down.


> I think this is a common misconception. Tech giants rise mostly because they create new markets. Since their beginnings nobody beat Microsoft on operating systems, nobody beat Google in search, nobody beat Facebook on social network market share.

Isn't this just another way of saying survivor bias? They are big because they survived and out-competed the competition, no? There were and are other operating systems, other search engines, other social networks. And sometimes even having the same things said about them... Think MySpace before Facebook. Until they got conquered.

These giants are huge because the internet -- to some approximation -- has no geographic boundaries. It's much easier to consolidate and hold power when you don't have to literally expand to every corner of the world where people physically live to capture them. Amazon and Facebook can acquire entire towns with nothing but a few more servers in the rack.


I agree that the internet is a more liquid and prone to winner-takes-all market. That’s why regulators tend to apply different rules.

I’m not sure if MySpace could be considered a giant at the time. Sure, it had popularity and market share, but it was not spraying billions around buying up competition or consolidating its business (Instagram, Whatsapp).

So Facebook didn’t take down any giants, instead it won a fair market competition. That was my point.


So not really a leading question, just curious... why shouldn't I be OK with buying the cheap mega-supermarket brand product? As the consumer, I just want a cheap price - I personally don't really care where the money is going. If small companies can't produce a less expensive alternative, then won't breaking up the larger company just increase costs to the consumer? Thanks for your thoughts.


Ultimately if all those other brands go out of business, the cheaper option may no longer be that cheap.


This comes up with predatory pricing antitrust claims, which are complex in themselves, but you shouldn't punish someone or an organization for behavior that they only have the potential to do, but have not done.


I think it's destined to happen when there is less competition. I don't think of it as punishment, but as prevention. Even if we assume a company was altruistic and kept prices artificially low, the lack of competition would at least prevent a product from getting cheaper faster due to less players innovating... and we wouldn't even be able to measure what we're missing out on.


To answer with another question: how can you tell the difference between big pseudo-monopolies truly providing the best product or service vs. smaller companies being unable to enter the market with a better one because a big company has locked them out?


I’m sorry, can you clarify what you mean by pseudo-monopoly? It’s not a term of art and I’m trying to understand your argument.


Maybe pseudo-monopoly was the wrong term… I'm basically saying that if a company has enough market or lobbying power, it can distort the market by blocking entrants who might make better/cheaper products or services. For example, ISPs lobbying to ban municipal competitors.


You as the consumer aren't the only entity that matters. The long term health of communities might not be aligned with short term consumer benefit.


> why shouldn't I be OK with buying the cheap mega-supermarket brand product

Just some random thoughts, in different contexts:

1. Buying the cheap mega-supermarket can lead to non-obvious degradations in your community (e.g. you find yourself in a news desert because the local paper went bankrupt, following the closure of the local stores who advertised there).

2. Competition keeps competitors honest, but if one company gets too much of a lead, it's competitors give up leaving fewer market-based checks on its behavior (even if it was fantastic and awesome in the first place). Eventually prices will go up or quality down, as the never-ending quest to provide increasing shareholder value continues.

3. The real costs may not be reflected in the sticker price. For instance, you pay for Facebook and Google with your data and privacy, not your money. A competitor that directly charges you $20/year may actually be a better deal.


Yes, and effective regulation is precisely about preventing broader emergent patterns that harm innovation, competition, and society as a whole as a result of the (inevitably) short sighted, individual actions of consumers who indeed often only care about the cheapest prices.


Then it should apply to walmart, target & costco then, which many of the same arguments applied now and 30 years ago and have a similar range of market cap. But these regulations never materialized.


I don't disagree with you but I think the argument there is that those three compete with each other so no one has absolute dominance over the market place. Oligopolies aren't much better for the public than monopolies but they seem to get a lot less scrutiny from regulators.

I am really not a fan of Walmart but I do shop at Costco and Target occasionally and I try to check both when making meaningful household purchases to see which one's cheaper. At some level, they do have to compete with each other on price and service.


Thing is the big tech cos also compete with each other. You can online shop at amazon, walmart, ebay and many other small online shops. Same with advertising. You can advertise at google, fb, twitter and a bunch of other small advertising providers.

Yes they distort their respective markets and put pressure on suppliers, but so does walmart and other big retailers. So if the law comes into place, it shouldn’t be limited to the online space


I don't think they can specifically address a single entity like that: the laws have to be applicable across the board. I believe otherwise it would be the constitutionally-forbidden "Bill of Attainder".


It would only be a Bill of Attainder if it targeted and punished specific entities. From what I can gather, this just sets parameters. It would likely fall under our existing antitrust framework.


if it targeted and punished specific entities

Ummm... that's exactly what I said. In response to

"The line is not 'you are not allowed to ever do this' but 'this particular instance is hurting competition'."

I replied

"I don't think they can specifically address a single entity like that: the laws have to be applicable across the board"


...or...it might lead to where we were in the 90s where you installed un-trusted apps from the web and took your risks with viruses or spyware. I actually like the idea of a central app store where at least there is some process. Perhaps we can have a better process, or more fine grained permissions rights, but to open up the gates seems like a big step backwards.


I want you to be right, but the truth is we already have that _with_ these centralized platforms.

The centralization benefits are not geared towards consumers, and they never were.


You can always add moderation on top of something, but once it's on you can't take it off.

What I mean by that is that Apple isn't the only company that could vet apps. Anyone could put together a list of "trusted" apps into a software repository/store and you could pick whichever one you trusted and use only it. This is already how Linux works.

In the long run, this is probably even better for people who want to only run vetted apps. Apple's app store policies have to cover everyone who runs iOS, which means that even with the best intentions, they can't be as permissive or as strict as some people want. If Apple wasn't in that boat, you could have an app store that had much harsher rules about data collection, performance, and permissions.

My experience has been that specialized platforms usually produce better results for their target audiences than generalized alternatives. As the sole gatekeeper to iOS, the best Apple is ever going to be able to provide is a generalized storefront.


Well, what about the EU browsers solution? Google could still have its own app store, but instead of being pre-installed and integrated, the user would have to select one or more during the initial system configuration (and have a menu for changing that later).


> Companies with revenue of twenty-five billion dollars or more that provide an online marketplace

I think Walmart fits that definition. Any sufficiently-large brick-and-mortar business inevitably expands to have an online marketplace, whether it's their main line of business or not.

Your average grocery-store chain would only not fall under these regulations for lack of size.


Presumably the wording of the bill would require separation in the online marketplace, but not the retail stores. That is, Walmart stores could still favor "their" own brands, while they would be forbidden from doing so online.


Is the average grocery store online? I wouldn't expect so..


The average $25bn grocery-store chain is. Which was my point. The two criteria really just boil down to one criterion—size—because internet presence follows from size.


The average grocery store chain, even the largest (Kroger) doesn't have online dominance and potentially anticompetitive practices on the same scale that Amazon/Google/Facebook do.


It would affect Safeway, Kroger, HEB, Publix, CostCo, WalMart, SuperTarget... which is a list of grocery stores that covers most of the US.


No more Kirkland brand?! No!!!


I'm unsure.

A significant quantity of stuff sold with the Kirkland label is just whitelabeled, with varying degrees of hidden-ness. Their recent beer for instance is labeled Kirkland up top, but also have the company (Hopf Malz something), and it's a pretty trivial amount of digging to get to the underlying Gordon Biersch.

I don't know where you draw the line though

* white labeled but not really because it's still got the original name on it

* white labeled without the original name

* self produced

Probably you could get finer grained than that too.

So it's entirely possible that you could pass a law banning large chains from doing whitelabeling, but actually you'd still get the same stuff on the shelves with their original labels and it'd be fine.

Or it's possible you could pass a law banning chains from selling their own produced stuff, but still have whitelabeled "house brand" be ok. But then if you were equitable about that in online space, - amazon couldn't sell fire phones or echo dot alexa things, but they could sell an "amazon choice" if it's just whitelabeled. So idk.


The line between "own produced" and "whitelabed" is also tricky (or maybe it's not, if you're an expert in the industry). Is it "own produced" even if it's by a contract manufacturer, as long as that particular product isn't produced for anyone else? Large retailers demand unique models of things like electronics to prevent comparison shopping/price matching.


Hah yes. My original list was much more than three long, you can find many places to draw the line.

Going in another dimension, you can introduce the kind of wonkiness you get around "made in the USA" labeling on products which have all their parts manufactured elsewhere and then some trivial last step done on US soil.


Key differentiation:

- Brick and Mortar stores buy inventory and choose from what they own to sell inside their stores.

- Online platforms make revenue by being open to anyone to sell their own inventory through.


I don't think it's quite that simple. I'm not in the business, but every time this comes up someone points out that stores don't actually always buy inventory. Often times they are simply selling the shelf space and it's up to distributors to stock it themselves.


It's still different. For those retailers (e.g. Best Buy is a good example) they're leasing floor space in what is essentially a public warehouse.

You still need to outbid existing inventory space, which is not the same as an open platform for anyone to sell through.


yep. Online platforms can just peek at the data and when they see something selling they can make their own version. They are taking zero risk.

In contrast brick and mortar has no idea what does well until they start buying the product to sell themselves.


I know a rep who leases freezer space from our local big chain grocery store and is responsible for that area. Ive heard of quality issues from this specific ice cream before, and it always reminded me of getting poor quality items from non-amazon sellers.


A lot this depends on what they mean by marketplace. Amazon (and Walmart I think) don't just buy and sell stuff. They also let you sell stuff through them.

Target on the other hand have an online store but you are always buying from Target.

So if the law considers "online marketplace" from "online store" then it doesn't apply to Target.


There are lots of things we don't have specific laws about because they haven't become a problem to everyday people - online retailers absolutely have abused market control to enrich themselves - but if a brick and mortar store ever managed to Amazon things up then I'd be happy to see this law expanded to include them... to my knowledge, as terrible as Walmart is, it isn't quite up to Amazon's level of terrible.


> And this would equally apply to Apple and Google who have a number of apps on their app stores. This would then lead to even more bundled apps on the phone e.g. Garageband which would decrease competition.

...or it could cause Google and/or Apple to spin off their app store as an independent company, and allow other independent companies to offer their own competing app store.


Supermarkets purchase their inventory so it's in their best interest to sell it. Amazon doesn't really care if the 3rd party seller's inventory never moves because it doesn't cost them anything.


Supermarkets are not marketplaces. Amazon is. This is well thought out and it’s a very clear distinction.

If Wal-Mart started allowing anyone to set up shop and sell there, it would be a more apt comparison.

Apple and Google will have to spin out divisions that sell apps on their app stores. They can still partner under this plan, but must be independent entities. What’s the problem there?


So people would have to pay money for the official Gmail application?

I sure hope not!


It always amuses me how people spend 4$ on a cup of coffee, but refuse to pay 99 cents for an essential productivity tool. If payed GMail means that they actually listen to their users when desigining their interfaces, it sounds like a positive change.


Yup. The law books are stuffed with well intended laws that simply shifted the incentives in another direction.

The 80/20 rule for insurance companies is a good example - now they have an incentive for prices to go up, not down.


I agree, Amazon having a house brand while knowing the sales numbers and margins for other products is completely analogous to Walmart and CostCo having house brands while selling competing products.


> Walmart and CostCo having house brands while selling competing products

Not really. CostCo and supermarket house brands are often manufactured by the same companies that makes name brands. Also retail stores aren't "marketplaces" like Amazon is, they buy the products they offer. In short, it's often not competition, just a way to segment customers.

Amazon, on the other hand, runs an actual marketplace AND competes in it, which has different dynamics.

Though, personally, I'd rather Amazon shut down its marketplace and go back to something more like a traditional store. Either that, or they need to be make responsible for the rampant fraud that they've allowed in their marketplace.


It's OK for competitive businesses to offer house brands but not monopolies.

Bundling Internet Explorer into Windows was only disallowed because Windows was a monopoly.


This isn't quite true. It was never disallowed for IE to be bundled.

There was a court case about it, and then they lost the case, and then Bush took over the White House and the DOJ just completely dropped the whole case, so MS was never punished nor made to unbundle IE.

IE is still bundled in Windows to this day.


Which demonstrates that the fear of Microsoft, and before that the fear of IBM, was unjustified.


Wrong. These companies held us back because of their size, and it took a lot for a competitor to come along and unseat them because of their market inertia. Generally, tech had to advance enough to make their dominance obsolete, instead of a better competitor being able to unseat them just by having a better product.

If this hadn't been the case, we'd be farther along now.


> These companies held us back because of their size

I don't see how, for example, Explorer being free held anyone back.


I guess you don't remember ActiveX, do you?


Yes, I do, I've even written ActiveX code. If you could be specific about your claims, I'm interested.


IE used ActiveX. Lots of websites back then used ActiveX because IE was "the standard". ActiveX was MS proprietary, so other browsers couldn't use it. This made many websites only usable on Windows.

Do I need to spell this out any more for you?


Anybody could write their own implementation of ActiveX. (Sun did, if I recall correctly.) It was little more than an API built on top of COM.

Besides, many other browsers are available on Windows. ActiveX failed in the marketplace.


Wrong. ActiveX ran binary code directly on the machine. You can't do that if you're not on a Windows platform. I suppose maybe you could have used ActiveX to run Sun binaries on a Sun platform, but how useful is that? Any website is only going to have Windows/x86 code, and will fail on a Sun or other platform.

And no, at the time, many other browsers were not available on Windows, as they had a tiny market share, largely due to how incompatible they were with sites.

ActiveX failed eventually because of the rise of Javascript, and also because ActiveX was a giant security nightmare.


Well not sure how it is in the USA but the big supermarkets in the UK defiantly abuse their position to bully farmers and even big multi nationals.

Forcing then to cut costs and corners (hence the adulterated meat scandals a few years ago) and bullying them into paying for in store promotions even big companies like Heineken have been shaken down.

The big 4 probably should be forced to divest themselves of their audit functions as well.


Wait? What?

Would this not apply to Walmart and Target too?

If this only applies to digital stores, then yeah, it's total bull. Because Amazon could just build some stores like Target and Walmart.


> Right from the start, Warren says, Amazon would have to separate its “Basics” business, which sells products under a house brand, from the rest of Amazon, and Google’s advertising business and its search business would have to be split apart.

What exactly does this mean? Google ads can't show on Google search? Couldn't they just lease out ad space to whatever Alphabet company gets spun off to handle search? Same thing with Amazon basics.


Well, one of them wouldn't be an Alphabet company anymore, much like AT&T had to divest from its Baby Bells.


I'm curious how people imagine this would even work in practice. Those departments share the same internal code base[1] and I would expect splitting those dependencies up would take a decade of work, especially when code is constantly changing so almost all development has to be frozen while the split is happening which essentially means those services stop making updates which means it's a dead Internet company.

[1] https://news.ycombinator.com/item?id=17605371


I think this is kind of the point. If Google’s broad portfolio of products are so coupled together that they massively leverage data/technology from their other products to the point where no startup can meaningfully compete with any of their products, they should be broken up.

I’m sure it was really inconvenient and difficult for the once-shared infrastructure of Standard Oil or AT&T to be broken up among different companies, but it was necessary. Google can’t hold the market hostage because it’s “too big to be split”. Changing the status quo is difficult, but that doesn’t mean “too hard, just leave a monopoly, oh well!”


Why split the code? Both get a full copy of the repo, except one can only run¹ the ad system and the other the search engine.

¹ I mean by law, not technically unable.


I used to work at Google, so let's look at the practical difficulties with this idea of splitting. It's not impossible - AdSense exists after all - but it'd create a lot of problems.

Firstly, it's not simply about drawing some arbitrary lines between search and AdWords and saying, right, split done. Other companies have to be able to compete on equal footing. Today Google is one company with a unified infrastructure for everything. It's not a bunch of unrelated businesses loosely strapped together as Warren seems to be imagining. For instance "undoing" the merger of DoubleClick would be impossible as DoubleClick doesn't exist anymore, in any form. One of the first things Google did after the acquisition was reinterview everyone and fire about half the staff. Their tech infra is long gone, etc.

So what does that mean in practice. Well, the ad auction has to run physically very close to the search engines, because search responds very fast which means ads must also run very fast. This would be hard for other firms to do well because Google datacenters are often built in the middle of nowhere for various reasons. If a search has to hit a Google DC then go back out and across America to some other DC run by some other ad firm, then search latency will go up and people will search less, or more likely, those ads will just miss their deadline more often, won't run, and lose out to son-of-AdWords which is faster.

Could competing firms run colocated in Google datacenters? Maybe. Google Cloud exists. But you can't choose in Google Cloud to run in space allocated next to existing Google services, in fact their locations constantly change and isn't public. Ads datasets and processing requirements can be very large. If a building is full, and a new ad company says "to be competitive we must be physically close", that means something else has to move out to make space. To what extent is Google allowed to say, no, we need that space to run Maps servers or something like that? How often can Google force co-located servers to move? Does a regulator start micro-managing Google's datacenter space?

Now what about the rest of the integration? Clickfraud detection involves deep integration between web search and the ads system. Is Google obliged to make all that infrastructure on the web side available to any ad firm that requests it? What stops me creating a trivial "legit" ad firm, obtaining all of Google's secrets and then selling them to click fraudsters for massive profit?

In theory all these problems can be solved, but likely only by creating constant political fights, everywhere, all the time. And for what? Warren is engaged in leftist populism: the vast majority of people in the real world don't care about splitting tech firms up like that. Even in anti-US-tech Europe, polls show people's top concerns are usually immigration and terrorism. "Can other firms compete in the AdWords auction" doesn't appear in the list at all, it's a non issue.


Right, telecom is a great example of where breaking up an entity benefited the consumer and prevented monopoly. /s (all the bells merged back in some form or another into present day AT&T and Verizon).


Mostly because the SEC has been asleep at the wheel when it comes to breaking up telco merges - and the FCC has been happily steered to help reinforce anti-competitive practices... like, for instance, blocking municipality internet build-outs.


I think a strong case can be made that breaking up Ma Bell has provided all sorts of benefits that have lasted since then. If nothing else, at least we have two behemoths in AT&T and Verizon rather than one.


It would mean the search company would be different than the ad company. They could still work together but it would probably result in lawsuits (by shareholder claiming they're not looking after their interests by not looking to higher profiting contracts) if google search didn't do due diligence in offering up the ad space to auction by other companies.

Worst outcome would be that your search history would be up for sale to multiple companies unless an exclusivity deal was financially more reasonable (or the backlash could be argued to make the sale unprofitable in other ways).

It would also be interesting to see how other parts of the company are split up and whether their sole source of revenue would be charging for previously free services to customers or out right selling user data to the Google Ad division or whatever company will pay the most.

Meanwhile Google Ad would have to be doing it's due diligence in buying this data. Does it make sense to pay for redundant data when someone runs google ads, analytics, recaptchas, and apis, does that mean the slow death of one.

Meanwhile google cloud might be making bank charging all the little googlets as they slowly transition to azure or aws.

Definitely be a huge shakeup though it's reasonable that transition plans and deals would significantly slow this down to a longer time scale rather than over night.


I dont understand the reality of this either. So how does 'google search' pay the infrastructure costs? Do they open search to allow other SSPs to bid? but 'google search' would still have to take a % of the price. what about youtube and DCM?


> What exactly does this mean? Google ads can't show on Google search?

I think it means they couldn't both be google, any more.

[edit]: to be specific, they couldn't both be alphabet companies anymore, I worded that sloppily but following the quoted material.


One is Google. The other is some ads company owned by alphabet. They're separate companies, in the same vein that YouTube is not the same as Google.


Presumably it means they also couldn't both by Alphabet anymore. For the law to be meaningful in any way, it would have to be written such that they have to be separate companies that do not share a common ancestor.


Why in the world would you want another company to run the App Store?? I for one have no interest in returning to the PC days of crapware.

A part of Microsoft’s 2001 consent decree with the DOJ was they couldn’t dictate what middleware couldn’t/ should be installed. The second order effect of that is bloated terrible PC’s with massive security vulnerability surface area.


The consent decree was also used by not-really competitors like Symantec to try to block MS from hardening the OS kernel in Vista/Win7.

https://searchsecurity.techtarget.com/tip/Microsoft-PatchGua...


Why restrict it to online marketplaces? Should Wal-Mart have house brands? Should Comcast own NBC?


Walmart has an online marketplace, and has 500B in revenue. I'm not sure who this wouldn't apply to. Costco, Target, even Macys would fall under this?


I think the implication is it should also apply to sales within their brick and mortar shops too, otherwise it's a bit hypocritical. It would also create a disincentive to use online sales channels, which could create knock on negative economic effects.


The bigger question is whether this would affect in-store (vs online) house brands.

If the rule only affected online house brands, it would tilt the field in favor of Walmart, Costco, and Kroger, who could all continue selling their house brands in stores. For e.g. Kroger, where online sales are a tiny percentage, this would essentially represent a carve-out.

Looked at another way, this could be seen as a tax on people with mobility challenges. (Because no house brands on the delivery services => higher costs.)


I think it would change the VC market too. A lot of companies are funded because they potentially make good acquisitions for larger companies.


I can definitely see that happening. I wonder if that would reduce the amount of unprofitable/unsustainable but heavily VC-invested companies. The big players we all think of (Uber, WeWork, etc) aren't looking to get acquired anymore, but would investors have been more cautious to invest in these companies if they knew the only exit plan was IPO'ing?


What about Google apps on the Play Store or Apple apps on the app store? Would google be allowed to have videos on Youtube? What about Netflix? It makes sense for Basics but there are many other areas where it kinda breaks down.


We're a nation of laws, so it would apply to all of them too.

Of course, in some of these cases, it only increases the stranglehold. Because now no one else can be a large app distribution platform and an app dev for instance. (Think about it, Steam and Epic would have to really think about the way forward.) Or, famously, for Netflix, no one else can distribute video and create video. So Disney would be forced to license their stuff to Netflix. The only reason Netflix started creating content in the first place was because the creators wouldn't license their content to Netflix. So now Netflix can dump all of that content creation, confident that content creators will be forced to license their offerings to Netflix. Not only that, Netflix can be confident in the knowledge that large content creators would never be allowed to go into distribution.


So Valve Software would no longer be allowed to distribute Dota 2 through Steam? Most of the people I know who installed Steam were drawn there by Dota 2, CS, Half Life, Portal or Left 4 Dead (all Valve titles). In this case, the third party sellers directly benefited from the user base who were drawn to the platform.

Who really benefits if Valve stops developing games?


Who says that the company running Steam must be the same company that adds new hats to TF2? Valve could easily be split into two companies. It might even force the gamemaker Valve to come up with some new games, which AFAICS they largely stopped doing in recent years.

Having said that, Valve would probably be way below the 25-billion-dollar revenue threshold that Warren proposes.


> AFAICS

You see incorrectly. Valve has released Underlords (doing well) and Artifact (doing badly) in the last 7 months, while also continually updating Dota 2 and reaching an all time high in quality.


Why would they be forced to license to Netflix specifically? They could still only license to other platforms who offered them better conditions.


If they license to one distribution utility, and not the other, then they are in violation by trying to vertically integrate. (The legal term would be "cartel".)

It's like American Sugar. It's not only when you have your own stores, it's also illegal if you only sell to certain stores. Basically, American Sugar had to sell to all stores without discrimination. Anything short of that means that you are still in the business of distribution. So in Netflix terms, it means that whatever deal that, say, Hulu or Amazon Prime gets, Netflix would get too. Or else Disney is colluding with Hulu to skirt their restriction on being a distributor.

For businesses like Netflix, plans like Warren's are music to their ears. I bet creating all that content is a huge part of their costs. Now they can dump all of that, and acquire content at the same terms as all their competitors.


Right, but those equal terms can still be quite expensive, essentially forcing those platforms into a bidding match. If Amazon can afford $100M and Netflix only $80M, Disney can offer their catalog to anyone for $100M, and Netflix would be unable to afford it.


But it would be brain dead for Netflix to not take the deal. If the base cost of everyone is going to be USD100M, then everyone's base cost is USD100M. The law would also require Amazon to give Netflix the same access to its networking platform that it gives its own divisions. (In fact, by my understanding of this whole "platform utility" thing, I'm pretty sure Amazon Prime would have to split from Amazon and buy access to the Amazon network services at the same market price as Netflix and everyone else.)

So any way this whole thing shakes out, Netflix wins. Because whatever it costs, it costs that much for everyone, and Netflix gets the same content catalog as everyone.


Netflix was the initial leader simply because they started earlier; now that other competitors appeared, they have a vertically integrated platform holding some extremely popular exclusive content (House of Cards, Stranger Things, Casa de Papel). And you're telling me they'd rather become an undifferentiated platform, competing only on the technical merits of their streaming tech (part of which runs on their competitor's machines!) and price?

I'm no business expert, but that doesn't sound likely at all to me. There's a reason why ISPs are always trying to vertically integrate with content production. Moving bits around is a low-margin business.


>(part of which runs on their competitor's machines!) and price?

Only the new law ensures that none of it will be running on their competitors machines. A stricture mandated by law for Natflix.

That's the brilliance of the law! (Well, for Netflix anyway.)

And if you think House of Cards and Stranger Things are as valuable as franchises as Star Wars, Star Trek, and the Disney Archive, I have a bridge in Brooklyn to sell you. As far as content swaps go, you happily make that trade every time.


I would absolutely love to see the Play Store and App Store spun off into independent governance as an effect of this law... the Play Store is less terrible, but Apple users are pretty much locked into exclusively using the App Store.


In Apple's case I think it would be more like they can't set up the App Store's rules or iOS to privilege Apple apps as the default for things. So like, default mail clients or browsers.


Netflix isn't a marketplace.


Wouldn't this basically start by destroying many American companies? Nest would have nothing but it's IP seeing as Google owns the platform, same for IG. On the other hand, what is stopping IG/ Nest from licensing the old parent's services? seeing as I imagine all of these post-breakup companies would still have the same investors, what's the difference?

Basically, how would you stop Google from shadow-running Google Ads? What would stop them from preferring Google Ads?


This is very troubling to me. My employer's revenue is quite to this level yet, but it's within view. We're a LAR/VAR of computer products, so naturally we've got an ecommerce website. A minority of the products available on it are for services we provide. This seems to be saying that we wouldn't be allowed to do business this way anymore.


I believe you'd be quite able to continue as long as your business either exclusively listed their own products... or stopped participating on the open marketplace you're hosting.

It'd be interested to see if this law would interact poorly with partner product reselling - "Oh yea, if you buy our CAD module we'll throw in a free copy of CAD with it" might actually come afoul the law, depending on the specifics. I'm sorta okay with losing that though.


Do your services compete with those of third-parties you sell on the site?


Is that a distinction Warren has made? It doesn't appear to be a distinction made in the article.


You're right; I went looking for the plan, and it's not there: https://medium.com/@teamwarren/heres-how-we-can-break-up-big...

That said, it only seems to apply to marketplaces and platforms, not to regular retailers. I'm not sure what a LAR/VAR counts as, though.


I think it would apply to companies with $xX billions in annual revenue.


Right. So my employer is at $10B today, and our growth is such that achieving that arbitrary $25B is a reasonable goal.

I've been with the company since we were less than $500M.

So at what arbitrary point do we cross from being a good guy to being an evil corporate titan that must be broken up? I don't feel like we've gotten evil; it feels like as we've grown we've built a greater capacity to server our customers better.


>On thing that it would do is force the companies to innovate themselves, knowing that they can't just acquire every innovative company that challenges their dominance.

I don't know man?

My reading, at least how I understand it, they wouldn't be allowed to claim that they "innovated" their way into those other markets either.

I think if they are "platform utilities", they just can't do any of the other stuff period. Doesn't matter if they write the code themselves.


These attacks on tech companies are extremely disappointing. Candidates are too cowardly to go after true evil, such as the Chinese government torturing protestors. https://joelx.com/torture-in-hong-kong/15239/


I’m always curious how much I should trust this sort of reporting. Without more info, it’s possible this is manufactured anti state propaganda. And, in general, I’d rather have a lack of beliefs than a portfolio of beliefs that are 25% fake.


Unclear, but what's known is that China is trying desperately to change the narrative and spread disinformation on HK, making it seem like the protestors don't have legitimate concerns. I can attest from both friends in HK as well as more than plenty of qualified media that the protestors are being peaceful and have real concerns, but the feeling of people in HK seems to be split generationally (older people mostly want peace and not for Chinese forces to be coming over the border).


Because it's something they can control, so it makes them feel better to control it even if they are doing so for the worse.


You are being downvoted, but you are right.


Google search would not exist without AdSense


You mean AdWords I suspect...

AdWords vs AdSense https://www.google.com/search?q=adwords+vs+adsense&ie=UTF-8


How did it exist before it, and successfully?


Did it? AdSense and AdWords are nearly as old as Google itself according to Wikipedia.


Counter example; Duck Duck Go and Mozilla.

Breaking them up doesn't mean that Google Search may not monetize by placing AdSense ads, it means that the Corporate structure exists such that Facebook could offer monetization to Google Search at a competing price.

And with disparate boards/shareholders.


Duck Duck Go isn't a search engine - they don't index the web except in the most misleading sense of the term. It aggregates results from real search engines like Bing and Yandex, who cover the cost of indexing the web with their own version of adsense.


People say google is a filter bubble, but I've forced myself for years to use DDG on most of my machines and it's not a filter bubble. DDG is just terrible at finding useful results even for basic things. Especially searching for programming related things it seems to prefer sites or posts that are a few years old. 95% of my searches retreat to using !g pretty quick. I don't know why I keep adding the extra step. It's like I'm pitching a penny of idealism into a bottomless well hoping it'll turns into a geyser.


People advocate for DDG not because it's better search but because it's better for you. In the similar way that people advocate using free and open source software and not proprietary.


I get that and that's why I use it. But the 95% !g rate makes it a cargo cult exercise. DDG is our best option, but it's not even close to what it needs to be and that's probably because it's copying the biz model of the big guys but can't do well because of the restrictions that make it attractive as an idol. I suspect that if anything ever delivers on an open promise of web search it will operate very differently and may not show up in the next 5-10 years.


Except DDG is a for-profit company that is not open source - one which doesn't submit to third party audits or validate their privacy claims. As a small company, they don't have much to lose either if they did sell your data since they're essentially just a reskin of other search engines.


Wouldn't exist =/= wouldn't be as wildly profitable


This is one of the few things I disagree with her on. With that said she is my favorite candidate thus far.


The time will surely roll itself back if we put it in the law!!

TBH I don't see any difference from her platform then the one Trump had, which is to turn back the clock and make America like its in the 80s, perhaps just with less racism.


Alternatively, it would just cause small companies and startups to never innovate, because they know that they can't make money off of it by selling to a bigger company.


Big companies aren't charities, they only buy startups because they expect it will make them money. Why wouldn't they make money by remaining independent?


Because sometimes a technology in and of itself is not profitable, and is instead only profitable to specific large companies that would purchase them.

There are tons of reasons why it would make sense to purchase a company, that would never be profitable on its own.


"No Bill of Attainder or ex post facto Law shall be passed."

- US Constitution, Article 1 Section IX Clause 3

Undoing the mergers sounds like ex post facto law. I'd appreciate it, Senator Warren, if you would amend the constitution first. And I can't wish you luck with that amendment.


The Supreme Court has held that this applies to criminal law - you can't change the punishment of a crime or change rules of evidence to convict someone who was acquitted.

You can certainly pass laws to undo a merger or (equivalently) break up a company.

https://en.wikipedia.org/wiki/Calder_v._Bull


The problem's not the "ex post facto". The problem is the "Bill of Attainder". You can't pass a law that, e.g., breaks up Amazon - to do so would be to deprive them of property without trial.

But you can create a law that Amazon (and potentially others) will be in violation of, and following proper trial, they are broken up.


That makes absolutely no sense. An ex post facto law is a law that criminalizes behavior after the fact. No one is saying the mergers were criminal, nor is breaking up the companies intended to be a legal punishment.


A bunch of folks have pointed out how factually incorrect this comment is in the specifics but I'd also like to mention that amending the constitution isn't a bad thing. "Originalists" are a weird bunch since they seem to hold the original state of the document as immutable while the founders had the foresight to include remedies to amend the constitution within it... it's a living document.

Also, just to reinforce the point other folks have mentioned - that clause doesn't work like that.


Ex post facto only applies to criminal laws (Calder v. Bull). And it generally only applies to punishments for crimes. See how sex offenders had to register even if their crimes were committed before the Adam Walsh bill was passed, because registering as a sex offender is not a punishment.


Requiring a divestiture is not the same as undoing a merger.


> The companies make money by monitoring their customers’ online activity and selling the data, largely to advertisers.

Not true. They make money by monitoring their customers' online activity and using the data to target ads, which they sell to advertisers.

I can't take anyone's reporting or opinion on FB and Google seriously if they don't understand this extremely important distinction.


> Not true. They make money by monitoring their customers' online activity and using the data to target ads, which they sell to advertisers.

That's only half the truth. In real-time bidding system, personal identifiable information is actually sent to advertisers at scale.

It's not directly selling the information, but advertisers who make generate too little revenue can't participate in those RTB platforms, so there is effectively a minimal amount that advertisers pay per potential click, so close enough to actually selling the data.


Indeed; if Google is selling users' data, where do I sign up to buy some?


Unfortunately you are not the target audience


While this distinction is accurate, I'm not sure it's useful?

If you can target with enough granularity, which is fairly typical of these modern ad networks like Facebook/Google, then you have the data about those users who click through by the fact that they saw that targeting. It may not be perfect data, but it's close enough to be incredibly valuable to companies.

I can't buy an email list from Facebook with salaries attached, but I can target those who have a salary in the range I'm interested in and see who I get through.

You're right that this is a distinction, but I think it has very similar outcomes.


It's an important distinction because without it, it implies some human being is reviewing information linked to your name somewhere, when in reality the information is being anonymously evaluated by algorithms to target ads.


Disagree. The important point isn't whether or not an actual human is "spying" on my activity, it's that the platforms providing the targeted ads are not behaving responsibly with regards to the content being shown.

I don't care about being shown ads for products I might buy. I care about targeted disinformation being fed to "persuadables" in order to affect massive political upheaval (current political breakdown in the United States, Brexit in the UK, other instances all across the globe in smaller nations.)

The only important thing here is that e.g. Facebook has the data and sells access to nefarious actors. Selling the data "directly" or not isn't the point.


It's completely different and meant to be inflammatory rather than accurate


I actually think this would just make things worse.

If you were strip Google to just search and Facebook to just Facebook then they would have to more aggressively go after advertising dollars to ensure they are growing revenue. And since they would've already been broken up they would surely do this by invading privacy even more.

Surely the smarter move is to focus on heavily regulating their ability to track users. And make approaches like Apple did with WebKit mandatory.


They would still have business relationships with the other entities they were split from; they'd just be only business relationships, done in public and appearing on the balance sheets, and able to be regulated "between."

An example of the type of business relationship Warren probably wants to encourage: the way Google pays Mozilla to keep Google Search as Firefox's default search provider.

So, if Google were split up into Google-the-search-engine and Google-the-ad-agency, Google Search's main source of revenue would still be from ads—but it'd be via the separate company of Google Ads, paying Google Search for ad placement.


> Google Search's main source of revenue would still be from ads—but it'd be via the separate company of Google Ads, paying Google Search for ad placement.

This would almost certainly lead to less privacy. Google Search, instead of just sourcing ads from Google Ads would have to open bidding to a wide variety of ad networks.

That means your personal search history wouldn't just be accessed by Google, it would be publicly available to any upstart ad network that wanted to bid for Search ad placement.


Yes, by default. But opening that interface exposes that previously company-internal leak of information to the government-as-regulator to step in and clamp down on. If they say both that Google must not run its own ads but must rely on a third-party for ad placement, and that Google isn't allowed to show its search data to third-parties, then that has a meaningful impact on how Google operates as a business.


I don’t have as much faith in the system as you. And I wouldn’t want to wait a decade for it to be fixed.


I think personally Google gets a bad rap by a media industry jealous of their success, and that the majority of customers are sending their data to Google's servers for good services.

But, saying that breaking them up would only make them invade privacy more in your view, that's the view of someone in an abusive relationship. Whether or not Facebook and Google are violating your privacy rights should be a separate question that calls for other regulatory action, regardless of the entity's size. We need to have both conversations.

Disclaimer: I work as a lowly grunt for Google, but my opinions are my own and do not represent them.


> then they would have to more aggressively go after advertising dollars to ensure they are growing revenue

Aren't you assuming that they are not already giving it all they've got?


What about privacy regulation? Why is that not also feasible?


There are a lot of things that make that hard.

The first is how many industries are against it -- Google's not the half of it. Google would still make a mint if all they could do was show ads for car insurance when people search for car insurance and so on. But meaningful privacy regulation would effectively prohibit the likes of Equifax, and then you would get huge pushback from the finance industry and realtors.

Then there's the fact that a lot of politically powerful government surveillance agencies want all your stuff to be in The Cloud instead of on your own device where they can't read it, so they'd fight it too.

And the biggest problem is that you need the rules to be good rules that are at the same time effective without destroying small entities and entrenching the incumbents, which is really hard and there is a high probability they'll screw it up (especially with the aforementioned constraints), but doing it wrong can easily be worse than doing nothing. Then you don't get privacy but you destroy the upstart alternatives that might have made it possible for the people who most need it, or could have presented a challenge to the incumbents given more time.


Equifax may not be a great example here, since Congress already stomped on it explicitly because it was concerned about the privacy implications of digitizing the information they held. That fear led to the Fair Credit Reporting Act, which substantially curtailed many of Equifax's most egregious business practices.


The Fair Credit Reporting Act was passed in 1970, and credit reporting agencies continue to collect personal data on everybody they can, without their consent, and provide it to just about anyone who pays them to.


Yep. The difference is in what they don't do anymore. Once upon a time they literally collected rumors and sold them, and took great pains to ensure that you couldn't see what information had been collected or sold about you or to whom. Those practices were curtailed by Congress; given that, it seems foolish to assert that current practices, hated as they are by the electorate, might not also be curtailed through legislative action.


> Those practices were curtailed by Congress; given that, it seems foolish to assert that current practices, hated as they are by the electorate, might not also be curtailed through legislative action.

The problem is you don't just need some law to be passed, it also has to be a good law, which is the really hard part.

And it's a lot easier for Equifax than tech because if Equifax would dry up and blow away it would only make the world better. Their entire business is doing the thing nobody should be doing at all. No part of what they do actually needs to be saved.

The problem with Google is that they also make a search engine. We need search engines and email providers and video hosts to continue to exist even if their funding source changes. So it's no help to pass a law that just makes them impossible, or makes it so that nobody can do it unless they're a multibillion dollar corporation. That makes it worse rather than better, because competition is the greatest practical method of thwarting corporate misbehavior. Laws alone can't do it -- see also pre-breakup AT&T, post-breakup AT&T and Comcast, various failed attempts at totalitarian communism, etc.

Especially if you make rules that cause the incumbents to get so big and entrenched that it becomes inevitable that they capture the regulators.

The best thing laws can do is to ensure that competition is thriving. But most of them in practice do the opposite.


So, I note you've gone from "it can't be done" to "it can't be done well". And yet, Equifax is unquestionably less abusive than it once was. It still exists and still makes money. It's clear that legislative action is both possible (contrary to your point in your first post) and survivable (which you imply isn't possible in the more recent post). The odds that regulatory action could be taken which left intact much of the good that Google does while curtailing its most egregious abuses seem correspondingly good to me.

Regarding competitive markets being the antidote to bad behavior, that's simply counterfactual. Examples from Uber to Boeing to Wells Fargo to Foxconn to Equifax itself prove that simply because you have strong, viable competitors does not mean that you have to treat anyone or anything well.

And the truth is that many markets are naturally winner-take-all. In the absence of regulatory releveling, there is no natural market force which prevents behemoths from emerging and creating the regulatory capture you fear. The conclusion to draw from that is that regulatory action must be taken before capture is possible, and therefore potentially before actual abuse. Such is the position we are broadly in with giants like Amazon.


> So, I note you've gone from "it can't be done" to "it can't be done well".

Can you find the quote that says "it can't be done" instead of saying it's really hard and there is a major risk that we screw it up and make it worse? Because I've been saying the same thing since the first post.

> And yet, Equifax is unquestionably less abusive than it once was.

That's debatable. It's only differently abusive. They collect different kinds of information now than in 1969, but they collect more of it now and sell it to more people, and have invested a lot more in ensuring regulatory capture. The legislative response to that data breach should have been that their industry would cease to exist, so the fact that it hasn't demonstrates that the relevant legislators are under their thumb.

> It's clear that legislative action is both possible (contrary to your point in your first post) and survivable (which you imply isn't possible in the more recent post).

You're still using Equifax as an example, which I've already explained the problem with -- they don't need to be saved so anything that hurts them is irrelevant and comes at no significant cost.

> The odds that regulatory action could be taken which left intact much of the good that Google does while curtailing its most egregious abuses seem correspondingly good to me.

How? So much of what they do is ML on large data sets. They use the same data for targeting ads, but they also actually need it to provide the service. How do you propose to make Waze operate without user location data? But regardless of the ads, the risk is then that they know too much and it could be compromised or used for more nefarious purposes in the future. It's inherently a trade off which will be more acceptable to some people than others, so what's needed isn't laws prohibiting what they're doing, it's more competitors who do something different for the people who prefer better privacy.

> Regarding competitive markets being the antidote to bad behavior, that's simply counterfactual. Examples from Uber to Boeing to Wells Fargo to Foxconn to Equifax itself prove that simply because you have strong, viable competitors does not mean that you have to treat anyone or anything well.

Why are you holding up uncompetitive industries as examples of strong competition? Boeing is the only major US commercial aircraft manufacturer and one of only two in the world. And all of your other examples, even the ones with limited competition, have done well for their customers. But you are not the customer of Equifax. You can't choose not to patronize their service, in the way that you can choose not to use Facebook or Gmail and block all of their tracking bugs with browser plugins. The problem is the limited competition, which comes from laws like DMCA 1201 and the CFAA which prohibit adversarial interoperability and lock customers into vertically integrated platforms.

> And the truth is that many markets are naturally winner-take-all.

Hardly any real markets are winner-take-all. Making them that way is the primary goal of regulatory capture, which is why enabling it by passing rules that destroy small competitors is so problematic. Even classic textbook examples like utility companies are only that way because of rules that favor large statewide entities with uniform rates and build out requirements that exist to implicitly subsidize rural areas at the expense of urban ones. There is no natural market force preventing a new ISP from forming at the scale of an individual neighborhood, it's only regulatory capture by the incumbents (or other political forces that have the same effect).

> Such is the position we are broadly in with giants like Amazon.

Amazon is the least monopolistic of all the tech companies. They have a single digit percentage of the US retail market, maintain their market share almost entirely through competitive pricing and compensate their employees as well or better than most of their competitors do. The people complaining about them aren't customers, they're sore loser competitors who don't like aggressive price competition.


One does not exclude the other. We can break up these companies and restrict what they are allowed to do in terms of tracking users. That would make it harder for them to misbehave and easier for governments to do something about it if they do.


Or they could just give stable dividends and stop growing which is honestly completely reasonable for a company that makes most of its money on super passive activities like google.

Google is growth oriented because it has so much money that it can experiment with things. Maybe that’s dumb?


No, that's completely impossible. Publicly-traded corporations in America simply can't operate that way these days, they have to be constantly growing or else they implode.


Hoping that companies won't explore every possible avenue for cash just because they have a lot is not a good plan. Google and FB are already aggressively going after advertising dollars.


It won't even get that far. This proposal will be watered down and will be implemented in such a way that Google, Facebook etc will be protected from any harm and this law will only serve to hamper new entrants and protect the incumbents position.

At this stage of the election cycle a few presidential elections ago Obama was promising socialized medicine if elected, what we got from a democratically controlled house and senate was Obamacare. This is what always happens.


Uhh, he never campaigned for a single payer model.


In what way is a "public option"[0] not socialised medicine?

> In the 2008 Obama-Biden health care plan on the campaign’s website, candidate Obama promised that “any American will have the opportunity to enroll in [a] new public plan.”

[0]https://thinkprogress.org/flashback-obama-repeatedly-touted-...


Correct! At least not when he was running for the presidency.

https://www.politifact.com/truth-o-meter/statements/2009/jul...


People forget that his healthcare proposal as a candidate was to the right of Clinton's.


Only online marketplace? Why not physical too?

Walmart?

Then why not telecom? By the same logic shouldn't Comcast no longer be allowed to own NBCUniversal?

Or for media - would Disney not be allowed to launch their new video platform thing? Does Newscorp also have to be broken up? Certainly they have platforms for distributing media, but also a staggeringly large amount of content being generated.


Elizabeth Warren is also targeting telecom. She wants net neutrality, to overturn state laws targeting local governmental plans to build broadband networks, and a public option for broadband. Her stated policy proposal technically doesn't mention breaking up telecom, but it would drastically change the industry.

https://www.theverge.com/2019/8/7/20758388/elizabeth-warren-...


Walmart doesn't have a physical marketplace. A marketplace implies multiple sellers, and Walmart is the only seller at their B&M locations.


Ah sorry for walmart I meant their online marketplace. I guess my first reply was sort of incoherent, I was thinking along three separate lines:

1. why only online, and not also physical? (Are there just not large enough physical marketplaces?)

2. What about walmart (in the context of online) - would they need to divest their online marketplace too?

3. What about telecom/media industries? Would they need to be broken up as well?


For telecom, Comcast probably shouldn't own NBC. Or at least, the FTC should do their job as a competition monitor and use teeth to make sure NBC content doesn't get preferential treatment on Comcast cable/Internet properties.


>The companies make money by monitoring their customers’ online activity and selling the data, largely to advertisers.

I can't buy reams of data from Google. There are data brokers out there, but big adtech companies won't sell me the source of their ad success. Most of the data market is composed of smaller companies which don't run ad networks and wouldn't even come close to the eye of an antitrust program.


It's also not like physical stores don't do it either. They all have membership cards that track your purchases and visit data.


Reciprocity with credit cards is a thing too. It's how Amazon was able to re-target me with a product carousel for something I impulse bought at a Macy's.

I'm not really complaining but even tech savvy people can underestimate just how much of their information is out there.


You don't buy the data directly. You buy access to who you want data and tracking info on.

The only difference is that Google/Facebook/Similar get to pretend to be clean, even though they are the enablers.


The only difference is that one of these two things involves giving a whole bunch of private, sensitive data about everyone to anyone who'll pay and the other does not. If that distinction doesn't matter to you then I'd say that this isn't actually about privacy at all.


Considering quite a few people here browse with Javascript disabled, and how angry they get when an adblocker becomes worse. It's pretty obvious that the people who are likely to be most knowledgeable on the topic (as tech people on a SV news aggregator website), that Google/Facebook/whatever aren't enabling "friendly neighbors".

Running enough ads with your own tracking on SV platforms, will get you the data you want about your targets.


As an engineer with a math degree, this all seems like unnecessary complexity, imposed by a pro-complexity politician in the interest of preventing feigned-natural-selection of markets from evolving a proper fit solution.

What am i missing?


The part where 20 years of natural selection by markets has resulted in a few ginormous companies owning the Net?


Yahoo "owned" the net not that long ago, now they're completely irrelevant. Microsoft "owned" the browser market with Internet Explorer not that long ago, now people cringe when they have to use IE. MySpace was at one time the most visited social media site in the world, now it's merely a quirky bit of internet history.

Google, Facebook, Amazon, etc. do not "own" anything. They are businesses that exist in a fiercely competitive environment in which consumers have zero loyalty and will gladly switch to the next hot thing at the drop of a hat. These businesses are successful because they continually innovate and deliver products that people want. There's no guarantee that any of these companies will still be around in a decade, much less "own" the market they operate in.


> Microsoft "owned" the browser market with Internet Explorer not that long ago

And monopoly regulation put an end to that and allowed Netscape to come in and make it a competition.


Microsoft bundled Internet Explorer for free into its operating system, whereas Netscape Navigator was not free at the time. This was deemed "unfair" because Navigator was Netscape's flagship product, so if users were given a free alternative, Netscape would be put out of business.

It was really an absurd case considering that 100% of internet users use a free browser these days.


That a handy assertion, but what replaced IE was not Netscape, but Firefox and later Chrome. IE6, IE7, and IE8 had massive market share up until recently. Now Chrome is the king.


Sorry, but that's backwards.

Netscape was selling their browser before Microsoft got smacked down by the DOJ.

In fact, Microsoft's bundling of IE with Windows was some of the strongest evidence showing that they were abusing their market position. By bundling a free alternative they basically destroyed the market of for-pay web browsers, and killed off Netscape while they were at it.


A "competition" where MS owned the market with IE at 90% right up until Google ate their lunch with Chrome and became the 90% player. Google probably could have done that without the monopoly action, and now we need that action against Chrome because the real issue is the influence the 90% player has on the open standards, not the regulable bundling with operating systems.


Where is Netscape now?


Mozilla is its offspring, isn't it?


Don't forget MySpace.


I am guessing/wondering if they really own the net, in the sense that they can squash any would-be competitors, in which case breaking them up is (in the US) an application of antitrust legislation?


yeah but is that just a snapshot of a process before a "refactoring" that would occur naturally? i mean, i don't know the answer, but wonder that question.


As a Senior Software Architect with a PhD in Computational Hermeneutics, you can take my word for it: Elizabeth Warren is a pro-ontology politician with no understanding of poisson distributions or Bayesian inference. Her solutions are stochastic and would appear puerile to an individual in the right-tail of the IQ distribution, such as myself.


:)


I think that a lack of regulation can make markets less free. Natural monopolies exist, and Peter Thiel talks about how startups need to create a monopoly. Consumer choice in broadband providers is a great example of this.


Consumer choice in broadband is restricted mainly by regulatory capture. Consider the trouble Google Fiber had to actually get into cities because they were constantly fighting red tape brought about by telecoms.


You're missing the fact that it's actually in the interest of pandering to voters with no understanding of technology or economics.


Capitalism is, in theory, supposed to result in the most efficient allocation of resources. I assume this is what you meant by "proper fit solution". What you are missing is that there is very little relation between the most efficient allocation of resources and the most desirable society.

Also, even if we wanted unregulated capitalism and natural selection of markets, we would need to first eliminate the existing monopolies, oligopolies, and externalities, since they all cause market failure.


The "most desirable society" is subjective. Value is subjective. Trade, and the market, is based on that fact.

Trade in the market creates wealth. The efficiency of the market lowers the costs of goods. These two things work together to make everyone richer.

> Also, even if we wanted unregulated capitalism and natural selection of markets, we would need to first eliminate the existing monopolies, oligopolies, and externalities, since they all cause market failure.

Market failures are only made worse by government intervention. Unforeseen negative consequences distort the market which causes more problems.


> The "most desirable society" is subjective.

Yes, I agree. That's basically why politics exists.

> Market failures are only made worse by government intervention.

This is a blanket statement that doesn't really make sense. There is no way to correct externalities without regulation, right? Genuine question, I am obviously not an economist. Government intervention distorts the market, which is desirable in some cases. This seems like a pretty uncontroversial statement. There would be a market for paid assassinations, but we've made that market "worse" by outlawing them. I feel like it's impossible to argue that the market is always "right".

> Unforeseen negative consequences distort the market which causes more problems.

Government intervention doesn't have to be unforeseen. Good regulations are announced in advance, and businesses are informed during the legislation process and given guidelines to adapt and comply.


First, I'll address this, as it's important for the rest to make sense

> Government intervention doesn't have to be unforeseen. Good regulations are announced in advance, and businesses are informed during the legislation process and given guidelines to adapt and comply.

You seem to not understand what is meant by "unforeseen negative consequences". These are results of a policy which weren't foreseen by the proponents of that policy. Often, policies meant to have positive_effect_A have negative_effect_B, C, D, etc. Sometimes they entirely fail to have positive_effect_A and even have the opposite of that effect. Rent control is one popular example (meant to reduce the cost of housing for the poor, but in reality raises the cost of housing by reducing the supply). Sometimes nobody sees these issues coming, but often opponents of the policy point out these problems but the policies are pushed through anyways, due to emotional support.

Now for the rest

> This is a blanket statement that doesn't really make sense.

Yeah it is a little too absolute, I should have said "Market failures are rarely improved by government intervention, and often made worse".

> There is no way to correct externalities without regulation, right?

Common misconception. Often externalities are caused by government policy in the first place, so reversing that policy can fix it. Another option is increased liability tort law: allow individuals to sue for damages and you'll quickly see companies make changes.

In my opinion, one of the policies with the most negative consequences is the creation of "limited liability corporations". Of course when the owners and operators of a firm aren't liable for the actions of the firm, they don't have a vested interest in instituting internal policies to limit the firm's harm.

> Government intervention distorts the market, which is desirable in some cases.

Desirable to some, again it's subjective. Often distortion is created and used by rent-seekers at the expense of everyone else.

> There would be a market for paid assassinations, but we've made that market "worse" by outlawing them.

Assassinations are in an entirely different class of action, one which is not part of an ideal free market. A free market is one in which all interaction is purely voluntary. Violent crimes, fraud, theft, etc are actions in which the victim did not consent.

Actions which violate consent should be illegal, and the justice system should be focused on taking every possible action to make the victims whole. This is different from how the justice system currently works, which is focused on punishment of criminals rather than reparations to victims.

Market failures result from actions which do not violate consent but do still cause harm to a third party. Air pollution is one strong example, and regulations for that (and other forms of pollution) are the most justified regulations IMO.

People will also bring up "natural monopolies" and "oligopolies" when talking about market failures. However, there is very little evidence of a hostile monopoly or oligopoly ever existing without government assistance, while there are countless examples of cartels failing and diseconomies of scale destroying large organizations.

> I feel like it's impossible to argue that the market is always "right".

Because "right" is subjective, that is impossible. There are things like so-called "price gouging" in disaster situations which many people perceive as wrong, but in actuality are a necessary signalling behavior of the market in order to allocate more resources to those areas. Banning such things only results in shortages which _do have_ measurable negative consequences.

We can look at metrics like cost-of-living adjusted standard of living, inequality, innovation, economic growth, etc and all of those correlate strongly with how free an economy is.


Thank you, this is very helpful for understanding your position.

I am having trouble putting my thoughts in order to respond. One thing I can say is that I agree with your criteria for justifiable regulations, I think I (and Elizabeth Warren) just have a much more expansive definition of "harm to a third party". I think a lot of important harm is not captured by metrics like average standard living and economic growth and "innovation", and I was unable to find any correlation between inequality and the Fraser Institute's economic freedom ranking.

> There are things like so-called "price gouging" in disaster situations which many people perceive as wrong, but in actuality are a necessary signalling behavior of the market in order to allocate more resources to those areas. Banning such things only results in shortages which _do have_ measurable negative consequences.

It doesn't make sense to talk about appropriate market behavior in a disaster situation, which can never be a functioning free market. In a disaster, buyers are forced to buy immediately, they cannot shop around, compare products, and choose not to buy if the price is too high. A key feature of a free market is that nobody is forced to buy or sell. High prices are only an effective signal when there is a low barrier to entry to enter the market, and willingness to pay roughly correlates with need. Neither of these are true in a disaster.

This is similar to healthcare, another "market" that by definition cannot be free and should never be treated as such. Participants are coerced into buying, knowledge about quality and price of goods is hidden from buyers, comparison shopping is impossible in an emergency, and ability to pay has nothing to do with need. A market cannot function when many mandatory purchases cost more than many participants' net wealth.


Apparently everything.


Sarcasm points for sure, but really I do wonder if the dominance is truly dominant, as customers are only loyal until competitors arise, no?


Well, the argument is that competition gets bought up before it can rival them - ie Instagram, Whatsapp, Waze, etc.


It's a nonsense argument. Companies tried to buy Google and they didn't sell. Yahoo (among others) tried to buy Facebook and they didn't sell. There will come along a startup with a visionary founder who doesn't want to sell and they will topple one of these giants with better tech.

There have been quite a few technology IPO's over the last couple years and I'm sure many of these companies were approached by incumbents but did not sell. And some of these companies will become giant slayers.


In the US, the federal trade commission (FTC) i think has to approve those purchases, to prevent exactly what Facebook got away with.


Most people here will seize on Better Markets' phrasing rather than addressing the merits of this part of what Warren proposes: (1) "Right from the start . . . Amazon would have to separate its 'Basics' business, which sells products under a house brand, from the rest of Amazon," (2) Google’s advertising business and its search business would have to be split apart. (3) regulators can "undo many of the tech-industry mergers that have already happened, such as Amazon’s acquisition of Whole Foods and Zappos; Facebook’s takeover of Whatsapp and Instagram; and Google’s purchase of Waze, Nest, and DoubleClick."

Friendly reminder that (1) through (3) are the actual stakes of the policy, not what Vaheesan says to the reporter about forcing companies to "behave in more socially responsible ways." That editorializing will never, ever become law, and it is entirely secondary to the actual debate here.


How about splitting the cable companies between content production and connectivity?


Or how about even the portions of the companies working on infrastructure and the portion that interface/provide service to customers? Why can’t we have Comcast Infrastructure build out using those billions of tax payer dollars donated to them and then have an array of smaller players providing competitive service leasing out that infrastructure?


This is basically how Texas sells electricity.[1] I'm not an expert on it but it makes a ton of sense.

Of course, it may be easier to do this for electricity, where the fundamental technology doesn't change quickly anymore (as far as I know), than for internet connectivity, where we are still undergoing fairly rapid technological change, relatively speaking.

[1] https://en.wikipedia.org/wiki/Deregulation_of_the_Texas_elec...


It has worked in other countries.

Essentially you take the "last mile" (from home/business to exchange) and either turn it into a full public utility or turn it into a private utility that needs to treat all service providers equally. You ban the private utility from also running an ISP on their own network.

You'd still get service from an ISP (inc. Comcast), they would run the exchange side of things, rent space on the last mile utility (fee used for maintaining/upgrading it), and their competition would do the same.

Competition would substantially increase, prices would fall, and we'd stop laying redundant cabling just due to "ownership."


What, and give up all that lobbyist money?


How exactly is Big Tech depressing wages? Apple, Facebook, Amazon, Google, Microsoft all pay more than almost any other companies, regardless of role. Amazon pays all its employees at least $15 and offers far better benefits than any other large employer to those lowest on the totem pole. Compare Amazon to Walmart and then tell me who the bad guy is. Google and others have raised the median wages for tech workers through the roof, to the point that a career that barely existed 20 years ago is now one of the best-paying jobs you can get. Tech employs millions of people making six figure starting salaries, many of them self-taught or with very affordable educations. Tech has created the largest crop of millionaires in generations.

I'm not saying there aren't problems with large companies, tech or otherwise, but how exactly are they depressing wages? Who's getting screwed?


Other than the time Apple and Google (and others) got sued for exactly that[1], some economists believe that the large size of many companies is why wages have been stagnating. Specifically, that they've become big enough that there's essentially a monopsony on hiring[2].

[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...

[2] https://www.npr.org/sections/money/2019/06/18/733510647/appl... which references https://harvardlawreview.org/wp-content/uploads/2018/12/536-...


you are. you should actually be getting paid much more. Just because you are getting paid more than everyone else doesn't mean that you still aren't getting underpaid.

That is the scarcity mindset. Instead, engineers should be getting million+ salaries instead of the measly 150k+.


Well, none of this applies to me personally, since I'm not working at all, and would never work for one of the big tech companies. Most people I see making six figures aren't actually all that productive. I don't believe in the 10X engineer, but I may believe in the -10X engineer.


> I don't believe in the 10X engineer, but I may believe in the -10X engineer.

I think you mean a X/10 Engineer. A -10X engineer would have to work backwards.


That is what I meant. I've worked with a lot of expensive engineers who created net negative value, drained the resources of everyone around them, and would have created a more productive team simply by departing and being replaced with no one.


I think it’s possible to have a -X engineer.. someone who might accomplish some amount of work but then also create a lot more work for everyone else, enough that they’re actually a net drain in productivity. I’m sure there are quite a few -NX managers as well


In this case, it isn't the wage of each employee that matters. Companies like Amazon and Google and especially Facebook have become so digitally automated that they pay much lower wages per dollar of income than any competitor can hope to do.

While this depresses jobs more than it does wages, it makes it equally as hard for a competitor to compete on the cost of labor as suppressing wages would do. Either way, the net effect is to suppress competition.

A greater problem comes when a market dominator extends their power into other market niches controlled only by cost, like generics and foodstuffs, as Amazon especially is doing.

One solution is to disable entry of a monopolist into these downstream markets, as Warren is proposing. But a more lasting redress must somehow diminish the company's position of monopoly.


> Who's getting screwed?

SWE's who do not get hired at all because there are so few competitive ecommerce, search, online advertising, and social networking companies.

From a politician's perspective, it may be a far more powerful vote-getter to have policies where 3X people are employed at $70K than one where X people are employed at $210K.


Amazon at least is out-competing a lot of retail nationally, essentially moving tax revenue from brick and mortar stores throughout the country to Seattle. So a lot of people not living in costal cities are getting screwed.


Warren and Sanders have made it clear that they dont understand economics or the constitution. They have just resorted to making promises and elaborate plans to capture media attention, and gain voters.


What part of this is unconstitutional? Progressives breaking up big companies has a long and (mostly) celebrated history in the US.


Sorry, I was referring to Warren's planned wealth tax, which is unconstitutional under the 16th Amendment. I support antitrust laws, and they have done a lot of good for America.

https://taxfoundation.org/warren-wealth-tax-constitutionalit...


> “But it’s not a slam-dunk case, as the precedents go both ways, and it’s not an area the Court has opined on for a long time.”

Sounds like she might have a case, rather than just naked pandering.

I think it’s good to have a variety of intellectual positions and to work the best possible policies, and to ask if we would be better off without some some sacred cows


It is a slam dunk case. If you read all the articles for the wealth tax, they argue it isn't a direct tax simply because nobody knows what a direct tax is. Or that the tax actually taxes income. Both of those are wrong. Wealth tax is a direct tax, since it is paid by an individual on their possessions, rather than any transaction. The constitution only allows a direct tax on INCOME, not possessions. If I have 100 million dollars in cash, do not make any money, I would still owe 1 million dollars under the wealth tax. Is that an income tax? No.

https://www.law.cornell.edu/constitution/amendmentxvi

https://jonathanturley.org/2019/02/20/reductio-ad-absurdum-a...

https://slate.com/news-and-politics/2019/02/elizabeth-warren...

This article, for the wealth tax, basically makes the argument that the justices should stay true to their 'originalist' principles and uphold it, rather than actually examining the law.

I think this is the best precedent for something like this: When the court ruled that a federal tax on property was unconstitutional, which is similar to what Warren is trying to do. The court has ruled on this in the past.

https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni...

> ...Congress cannot impose a duty or tax upon personal property...


The 16th Amendment doesn't prohibit anything; it only allows things.

You could argue that the preceding parts of the constitution prohibit a wealth tax, though, and that the 16th doesn't carve out space for one.


https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni...

> When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property... including invested personal property, bonds, stocks, and investments of all kinds...

The court has clearly ruled on this issue in the past.


Yes, and if something is not allowed in the constitution, then the federal government does not have the power to do it. The states could do it, but I find the likelihood of all 50 states adopting a wealth tax to be extremely unlikely.

https://constitutioncenter.org/interactive-constitution/amen...


If it's popular enough to get through the House and Senate, it would have to be drawing widespread public support across the political spectrum.

At that point, there would be a lot of pressure on state legislatures to ratify an amendment. Anyone who voted against it would be putting a target on their back in the next election.


Even that article shows it's not as clear cut as you're making it out to be, because the 16th amendment covers direct taxing of income.

Like everything involving new laws and the constitution, it will fall to the surpreme court to decide whether or not it is constitutional.


Your own link says that opinions are mixed, not that it's unconstitutional.


https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni...

> When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property... including invested personal property, bonds, stocks, and investments of all kinds...

Its unconstitutional.


I'm not a lawyer. Lawyers disagree on this subject. Seeing as how that quote is part of a case that predates the amendment, it's not at all clear to me what if any bearing it has. I'm guessing this is one of the many, many areas of law where the only way to find out if it's constitutional with any degree of certainty is to pass the law and see what the Supreme Court says.


Asher Edelman would like to have a word with you.


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