Why Startups Aren't Pushing the Feds To Break Up Big Tech (axios.com) 75
An anonymous reader shares a report: Today's tech startups have largely stayed out of the debate over whether antitrust law should be used to humble -- and possibly break up -- giants like Facebook, Google and Amazon. Startups are often in position to lead the antitrust charge against major competitors. But entrepreneurs face a dilemma: If they go running to regulators, they have to admit they're in danger and tick off a powerful player in their world. If they do nothing, they risk bleeding out.
[...] Tech giants have immense leverage over startups. "The tech hypercaps have never been more powerful relative to startups, including Microsoft in the '90s," said Sam Altman, the president of startup accelerator Y Combinator. "[T]he resources are so mismatched it's an unfair fight." Startups (or larger competitors) can confidentially press their case before staff members at the Department of Justice or the Federal Trade Commission, or the startups can go public with their concerns. With the exception of Yelp, there are no major startups in the U.S. that have turned to regulators to take on today's biggest companies, like Facebook, Amazon, or Google. [...] Why startups don't lodge antitrust complaints: "Running a startup, running a growth company there's so many things to do, and every hour is precious," said Albert Wenger, a managing partner at Union Square Ventures.
[...] Tech giants have immense leverage over startups. "The tech hypercaps have never been more powerful relative to startups, including Microsoft in the '90s," said Sam Altman, the president of startup accelerator Y Combinator. "[T]he resources are so mismatched it's an unfair fight." Startups (or larger competitors) can confidentially press their case before staff members at the Department of Justice or the Federal Trade Commission, or the startups can go public with their concerns. With the exception of Yelp, there are no major startups in the U.S. that have turned to regulators to take on today's biggest companies, like Facebook, Amazon, or Google. [...] Why startups don't lodge antitrust complaints: "Running a startup, running a growth company there's so many things to do, and every hour is precious," said Albert Wenger, a managing partner at Union Square Ventures.
Most startups are in the end... (Score:1)
... funded by the same folks who also have stock in Big Tech.
Why would they push to break up their own venture capital?
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Tech doesn't need to stay rooted in any country. You can't break them up because if you try they'll just move. If you do break them up, another global tech firm can swoop in and put the smaller players out of business. If you break up Alphabet, then Baidu is waiting in the wings to replace them and out of reach of US regulators. Tech is a global arms race which is why you see things like Justin Trudeau making it a national initiative to poach AI experts.
And there's always the possibility... (Score:5, Insightful)
What would you rather do? Win the "good" fight, or work a few years, sell for a few billion dollars and be able to retire young and never have to work again?
I know which lines I'd be in....I'd be in the LOOOooooongggg line.
(with apologies to Richard Pryor).
Re: And there's always the possibility... (Score:2)
As long as you create enough buzz to be relevant for a while, chances are someone will buy you out to get your tech (and bury it maybe) and to get your customer DB.
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I remember going to some event at a startup accelerator facility a few years ago. Near the entrance, they had a huge wall full of all their success stories. Nearly every startup on that wall was exited by being bought out by someone. Only a very small handful went IPO.
By contrast, it seemed like during the dot-com boom everyone's goal was to go IPO. Of course that didn't work out so well, though perhaps for different reasons. (not having a good business model, needing too much capital too early for business
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During the dot-com boom it definitely felt like 25% plan A, and 75% plan C. :-)
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I have read this as well, mostly as a critique of the huge size of the top 5 companies as innovation killers.
The startups don't even *bother* with new ideas, they mostly look for ways to attack vulnerable niches in the large tech companies and hope to get just enough momentum that they get bought out.
I don't know how you fix this without some kind of new anti-trust theories and laws that prevent tech companies from basically buying out competition.
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They used to try and build up a company so they could have an IPO. The universities were under pressure to have "spin-off" companies to show how relevant their research was. So a couple of professors would set up a company, take some alumni students with them and try and grow the company. The hard part is filling in the middle management in such a rapid time. So the startups can really only get so big before they have to get bought out. They state it themselves; to build a lump of technology that's large en
Maybe... (Score:2)
...start ups have aspirations to be as big as Google one day and don't want the precedents set that would prevent them from obtaining their goal.
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...start ups have aspirations to be as big as Google one day and don't want the precedents set that would prevent them from obtaining their goal.
Temporarily embarrassed millionaires...
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This is normally the argument that is made against poor people who do not want more government regulations, or doesn't want additional social security.
The just assume their reason is that they expect to be rich one day and doesn't want to follow them then.
It is much more complex then that. Taking the modern news cycle out of the equation. People question the effectiveness of such rules and regulations. I have seen some (not all) people get worse off after having to fall back to government assistance. Beca
Re: And there's always the possibility... (Score:1)
Startups are not playing againt the giants. (Score:3)
Most startups today play in the Niche between the Gaps of the big companies.
There is no way I can out Google Search Google, or be more popular then Facebook.
But I can work with Google use their tools to create and sell products that isn't in Google scope, which I can sell to a smaller group of people who really wants it.
Fighting big tech will only kill off a lot of your functionality and ability to make a good product.
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But I can work with Google use their tools to create and sell products that isn't in Google scope
I think this is another big part of it. So many startups are basically using tools the "big boys" provide to build their own business off of. They basically exist as a side-effect of something the big boys are doing. So of course they won't fight them. They live and die at their mercy.
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Just look at all the startups based on computer vision with OpenCV. They build some kind of camera chassis, maybe a robot or a golf cart, bolt on a few cameras, get some video streaming to a PC, then advertise like mad to find the computer vision people to actually get all the image data to stitch together and process.
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Biggest reason (Score:2)
Because the purpose of a modern start up (Score:2)
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I came here to say much the same thing. The push to "MVP" seems to be more like a group job interview than anything else at some of these places. I doubt that anyone seriously believes that their "app" is going to turn into a multi-billion dollar product company. They mostly want to get bought out for some absurdly huge amount and then go do their app with someone else paying the overhead. Some of them may rinse and repeat.
Breaking up Facebook would be like breaking up Standard Oil. All that would happen
Re: Because the purpose of a modern start up (Score:1)
Don't bite the hand you want to feed you (Score:2)
The goal is not to create a competitor for Google. The goal is to be bought by Google for a couple billions and have more money than you can spend in a lifetime.
Competing with someone is hard. And risky. Now why would anyone want that?
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"Competing with someone is hard. And risky. Now why would anyone want that?"
High Risk = High Reward (if successful).
There are people competing successfully against Google all the time. Not the search engine, but with other units and services. They may even partner with Google to make a competing product that Google has. The easiest example are Android Phones that are competing against the Pixel.
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But why bother? I'm not greedy, I take a billion or two and be happy with it, I don't have to have 150 of them.
break up the single points of failure (Score:3)
Goal oriented (Score:1)
Why would startup want to risk annoying big players when the goal of a tech startup is to be bought by a big player?
Most of us remember... (Score:5, Informative)
We remember the time when MySpace was king and Facebook was a startup and Zuckerberg was a nobody. Or we remember MySpace knocking off Tribe, which knocked out Friendster, which stole away all of the LiveJournal user base.
Or we remember when Google was just a cute misspelling of the word for a 1 followed by 100 zeros, and we did our searching with Lycos, AltaVista, LookSmart, AskJeeves, or just welled on the Yahoo directory to find cool pages.
Or we remember when Microsoft was the unstoppable evil empire. And Apple was "beleaguered" and Mikey Dell was threatening a hostile takeover so he could "shut it all down and refund the money to the shareholders."
Or we remember when there was no Amazon and Barnes & Noble and Borders were the monolithic behemoths putting neighborhood bookstores out of business.
The real oldsters remember the days of IBM being the evil empire that even the US government was incapable of reigning in, and no one would buy a computer named after a fruit, and Gates and co. were rotting in a New Mexico desert writing an OS for a computer that communicated vis das blinkenlights.
Dominance in tech is fleeting, and has been for at least 50 years. I expect most startup founders are as aware of that history as anyone. And they probably all have dreams of. themselves, being that scrappy underdog that punches out an established player to become the king of the mountain. So it shouldn't be too surprising that they're wary of inviting the government in to interfere.
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I remember all these things.
But for better or (probably) worse, we aren't in the Wild West days of the 'net or computing technology anymore. The Powers That Be are invested and dependent and in fact if not one and the same with the current crop of tech companies, are most certainly propped up by them.
Economic wars are fought through the proxy of monopoly and patent law. Governments seem to be at the point of rising or falling based on the impact of social media. The entire global banking system comprises
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We remember. So do the tech-giants. They learned from it and are adamant to not let it happen again.
Why do you think all the walled gardens have been created? Why the gatekeeper positions are constantly chased after by every one of them? Why vertical integration is so sought after?
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Dominance in tech is fleeting
Is it? Sure it was decades ago, but now? Google, Youtube and Facebook have gone unchallenged for so long I doubt there'll be competition for a long time. They can simply afford to buy ANYTHING that starts nipping at their heels. Which is exactly what they're doing.
"Best" case some behemoth that's currently content with doing business in China starts gunning for them. That's about all that's even remotely a threat to them because they can't just buy those.
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Google has been the dominant search engine for about 15 years. No serious threats to its future dominance are currently visible.
Google has been the dominant cell phone operating system for about 10 years. No serious threats to its future dominance are currently visible.
Microsoft has been the dominant desktop, laptop, and corporate operating system for about 25 years. No serious threats to its future dominance are currently visible.
Amazon has been the dominant online retailer for about 15 years. No serious t
Temporarily Embarrassed Millionaires (Score:2)
I think this is just the "temporarily embarrassed millionaires" concept on a corporate stage. If your start-up is going to be "the next big thing", you do not want to shoot yourself in the foot by limiting your ability to grow.
funding also (Score:2)
Bar Association (Score:2, Interesting)
"You don't understand. Ferengi workers don't want to stop the exploitation. We want to find a way to become the exploiters."
I think that's one of the strongest insights about capitalism. The only regulations capitalists want are the kind that shut down startup competitors from entering their turf. They have no interest in pushing for or utilizing regulation that goes after large, domineering companies precisely because it encourages regulators to in the future go after them when their goals are reached.
Anti-trust is too unwieldy - KISS (Score:4, Insightful)
The problem is: anti-trust just serves to shovel money into the pockets of lawyers, lobbiests and politicians. It takes years, even decades to come to an end. Remember the anti-trust hearings against IBM? By the time they were over, they were irrelevant.
What's needed is a simple, objective solution that avoids eternal hearings and court cases. For example, how about the following two rules:
- Any company with a valuation over $x may no longer merge, or acquire other companies.
- Any company with a valuation over $x * y must divest within z months, with the largest resulting fragment is valued under $x.
Valuation of public companies is easy: stock market capitalization. Privately held companies are somewhat more difficult, but they still file financial documents: if valuation is too difficult, one could substitute total turnover. Penalties for failing to divest must be massive: immediate and permanent closure, plus criminal liability for the corporate officers.
What values are reasonable? The threshold needs to be low enough to avoid large monopolies, and also to avoid companies becoming "too big to fail". Lower is better - I suggest that y = 4, and x = $25 billion, putting the upper limit at $100 billion.
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Sadly, in my experience, simple solutions lead to complex problems.
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I was in the second grade when AT&T was split into the Baby Bells, so I was never able to compare then-to-now. In conversations with my Dad and Grandfather, I was quite surprised to hear them talk about how it was much better when AT&T was still a single company, and their rates were actually lower. After researching it a little, it seems that the ones who benefitted the most from divesture were corporations, who spent way more money on long distance calls than the standard consumer.
I don't know i
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The big problem is how competitive a company is (Score:2)
For a start-up, the question is always, "What are you bringing to the table that the existing players do not?". Are these startups actually better in any way, other than being NOT one of the current big players? I see replacements for the big social media and search being extremely hard for a startup to get a foothold, just because they will probably not have a technical advantage over the big players. Where startups can break in is the way they always have, coming up with a better implementation of c
Bite The Hand That Feeds You (Score:1)
99% of startups' big dream is to get bought by Google, Facebook, or Apple. That's the business model - make a successful product that fits near the wheelhouse of one of the giants, and just wait for the offer to come in.
You start calling regulators on the guys you want to have buy you, and they're not only not going to buy you, but they're going to put you out of business. There's more profit to be made in the former than the latter, obviously.
Two Things To Consider: (Score:2)
1. Startups venture capital (and often board and C-suite execs) are heavily invested in Big Tech (tm), and often funded at least indirectly by it.
2. Startups are able to explore ideas that would be far more costly for Big Tech (tm) to research, with far lower risk to stock value and other bread and butter initiatives, and on the chance that they are successful, are already positioned to be bought out.
Why in the world would there be a push to break up Big Tech?
They don't want them broken up (Score:2)
If they cared... (Score:3)
There's an invisible elephant in the room (Score:2)
The main reason most start-ups don't go to regulators is pretty simple and direct. They don't want to piss off their future owners. Let's face it. For a lot of start-ups that's the unspoken goal: get bought out by one of the big players for a ridiculous amount of money and either stay on as a figurehead or just go off and play.
pay day (Score:2)
Make a startup, get bought out by Google for $$$,
go and enjoy your new found wealth and leisure,
fuck, that'd really suck
Startup? Yelp is 14 years old (Score:2)
With the exception of Yelp, there are no major startups in the U.S. that have turned to regulators to take on today's biggest companies, like Facebook,
It was founded just a couple of months after Facebook. How about this: companies that can't count their birthdays on one hand have to take off the Startup hat?
Yes, you can still string your employees along into thinking they are about to become millionaires, you just can't say Startup!!! while you do it.
Maybe too busy to do anything but survive (Score:2)
Seriously, lobbying/calling/etc takes time away from the necessities of keeping your company alive. What's the ROI in whining to legiglators vs calling another potential client?