Tech Giants Spend $80 Billion To Make Sure No One Else Can Compete (bloomberg.com) 112
An anonymous reader quotes a report from Bloomberg: Google parent Alphabet and the other four dominant U.S. technology companies -- Apple, Amazon, Microsoft, and Facebook -- are fast becoming industrial giants. They spent a combined $80 billion in the last year on big-ticket physical assets, including manufacturing equipment and specialized tools for assembling iPhones and the powerful computers and undersea internet cables Facebook needs to fire up Instagram videos in a flash. Thanks to this surge in spending -- up from $40 billion in 2015 -- they've joined the ranks of automakers, telephone companies, and oil drillers as the country's biggest spenders on capital goods, items including factories, heavy equipment, and real estate that are considered long-term investments. Their combined outlay is about 10 times what GM spends annually on its plants, vehicle-assembly robots, and other materials. The splurge by tech companies is behind an upswing in capital-goods spending among big U.S. companies, which is seeing its fastest growth in years, according to a Credit Suisse analysis. The $80 billion tab also is a snapshot of why it's tough to unseat the tech giants. How can a company hope to compete with Google's driverless cars when it spends $20 billion a year to ensure it has the best laser-guided sensors and computer chips? There are a lot of physical assets behind all those internet clouds.
Stop trying to invent AI drivers and build cars!!! (Score:1)
"How can a company hope to compete with Google's driverless cars" - Easy, hire any competent driver. Google's AI will never match that in my lifetime. Any company trying to accomplish this impossible feat on a budget is business-grade retarded.
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Who says they are doing this on a budget? Google has deep R&D pockets.
I can see it gradually expanding: limit it to carefully mapped roads at first, and gradually expand the driving network. The trucking industry is salivating over this because drivers are a big cost of theirs.
Why pay drivers a living wage? (Score:2)
When you can now outsource the driving to Mexico.
The AI does not need to be perfect. Not nearly. We already have tech to remotely control trucks. So the AI just needs to do the easy bit, keep them in a lane, stop if things go wrong and they lose contact with their remote driver.
One remote driver in Mexico can then easily monitor several trucks driving down the interstate.
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Real life is that if liability is less than present liability it will happen. More so if liability can be externalized.
An autonomous driving AI doesn't need to be as good as the best drivers, it only needs to be as good as the average driver. One just needs to actually drive on the road to see that being better than the average driver is a low bar.
AI's will obey traffic and speed laws. They will not drive on the roads when conditions are too bad for them to be on the roads. Moreover for the purposes of tran
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Comp controlled cars dont have to be perfect as they are not replacing perfect drivers. They are replacing idiots. Cell phone taking, texting, drunk, sleep-deprived, angry idiots.
As long as they are good enough to reduce accidents they ARE an improvement.
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Know imagine the dumbest person THEY know.
Okay, I have a target in mind know.
Re: Why pay drivers a living wage? (Score:2)
The maximal failure mode - simultaneous, catastrophic loss of control - on remote-driven vehicles is really bad. The lesser failure modes - hijacking, sitting idle due to loss of connectivity , crashes due to sensor failure, etc etc - aren't too fun either.
Presumably the cost of insurance will reflect the insured risk and therefore be quite steep.
Re:Stop trying to invent AI drivers and build cars (Score:5, Interesting)
I have an idea to remove the need to complex AI for long haul.
You build a network of rails, and put the trucks on the rails, no steering required!
You could connect a hundred of the trucks together and then you'd only need one driver for the whole lot!
You could also power the rail-trucks through a wire above them and the steel rails they ride on, no more diesel!
Re:Stop trying to invent AI drivers and build cars (Score:4, Funny)
That's so stupid. You would never get enough resources together to get such a network to cross a state, let alone the entire continent!
This is one of those stupid ideas that sound good on paper when implemented in small scale, like in New York City, but it will never work on a trans-continental scale in practice.
only city-scale ? (Score:2)
the public rail system of several European countries (Switzerland, Germany, etc.) seem to disagree with your statement.
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Did not get the joke, I see....
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You know, you have something there. Getting help from the Chinamen is possibly the only chance to get this infeasible idea done.
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Now remove the rails. And make the trucks run asynchronously, with embedded driving software. With little onboard gensets exchanging power with the transmission. That's what Gooberla and friends are doing.
But I still like your idea better and think trains are the most natural fit for autonomous driving. I don't know why lidar and computer vision are not used to augment train drivers. Figure out if that train is on a collision course, whether the track is flooded, whether a boulder is across the tracks on a
The trouble with that (Score:2)
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Maybe we need a set of specialized "long-haul" roads just for carrying stuff long-distance. Instead of one motorized unit pulling one or two trailers (3 trailers in the flyover states) we could use bigger motorized unit with a couple hundred trailers. We could make these long-haul roads out of specialized materials so they're more impervious to weather conditions. I wonder if that would work...
Top 4 largest tech companies vs. 1 auto? (Score:2)
What is the point of stating that top 4 companies of a very large sector spend more combined than one company of some other sector? Why not turn it around, do top 4 auto manufactures combined spend more on long-term investments than just Google?
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Okay: On average, they each spend 2.5x what GM (an iconic heavy-capital company) spends on cap-ex.
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The title could just as easily have been "Tech Giants Spend $80 Billion To Make Sure They Can Continue To Compete", but that wouldn't give the same spin, now would it?
They have money to spend, so they're figuring out things to spend it on, some stupid, but some to be able to offer better products, increase efficiency, do more for customers and make more money in the future.
What else are they going to do with their cash? Give it to shareholder
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There's a big difference between competing and monopolistic behavior. One is good, the other not so much because it stifle's innovation and harms consumers.
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Marketing is primarily about discoverability. Ensuring that customers realize you are selling a solution to their problems. PR is about trying to convince people to like you more than they otherwise would.
So while they certainly aren't perfect (what is?), they're literally the opposite of keeping customers uninformed.
That's small potatoes (Score:5, Insightful)
Re: That's small potatoes (Score:3)
How much do they spend on lobbying in all its forms?
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The answers are here [opensecrets.org].
Also worth reading about Dark Money [opensecrets.org].
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If they're not spending it, it should be going back to the shareholders.
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If they're not spending it, it should be going back to the shareholders.
Well, that's a cute opinion that's not based upon anything legally compelling. How, as a shareholder, would you know if they don't have future plans to spend that money? You do realize that getting the cash back would also lower the value of your shares by a similar amount, right?
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Snapchat and Twitter come to mind. More Snapchat than Twitter.
Twitter is from 2006 (Score:2)
Re:That's small potatoes (Score:5, Informative)
Last year our CEO used exactly that pitch to the shareholders of our biggest competitor.
"If we buy you out, just think how much we will be able to jack our prices up!"
That's not exactly what he said, but that's what he meant, and everybody knew it.
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Why do you think other people's resources somehow belong to you and you should have a say in what they do with it?
Re:That's small potatoes (Score:5, Insightful)
Why do you think other people's resources somehow belong to you and you should have a say in what they do with it?
Well, in principle I agree with you, until enough of those people come for your stuff with pitch-forks, and don't seem to be particularly interested in your protestations that they are breaking a sacred moral code.
Re: That's small potatoes (Score:2, Insightful)
I'm going to pretend the notion isn't socialism but rather originalist thinking.
One bit of forbidden knowledge that nobody teaches in the US is how the founders handled corporations. They were quite familiar with multinational megacorps, having dealt with and been abused by the British East India Company, which was basically the Wal-Mart of its time period.
So they knew all about companies buying laws and using wealth to block competition because they'd had it done to them.
This is the big reason the founder
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trouble with letting these companies hold onto so much cash
Why do you think other people's resources somehow belong to you and you should have a say in what they do with it?
Corporations are legal fictions created by the government which supposedly belongs to The People. If the people involved in the venture owned that property personally, then a) it would get taxed, unlike when corporations do it and b) they would be liable if it was misused, unlike when corporations do it.
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Profit from corporations is currently double taxed, once when it's made by the corporation, then again when the corporation gives any of it back to it's investors as a return on their investment.
There are some shenanigans someone can play short term with a small corporation, essentially a handful of people at most, to avoid taxes which would otherwise get paid by changing some tax treatments, but for large public corporations and their investors (who eventually have to get the actual profit out of the corpo
And why do those resources belong to them? (Score:2)
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It makes more sense to spend the money on a M&A than do the research yourself. Let's say you want to offer a new widget/service, you could invest $10m yourself to develop it, or you could let the VC community invest $10m per startup and then you pick the best one. Sure it may cost you most than $10m, but from a financial reporting standpoint, the millions more you spend on the acquisition is better than the $10m you'd spend on R&D. Plus, you're picking the winner out of all the startups out there
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It makes more sense to spend the money on a M&A than do the research yourself.
Could be, could be. That was definitely the Cisco approach in the '90s. Many companies seem to do that now and many pre-IPO investors have that as their exit strategy (to be acquired instead of going public).
OTOH, if I'm a VC and invest $10 million in 10 companies, and one does well, I'm going to want a lot more than $100 million for my stake in the winner. The acquiring company will need to pay a premium for the reduced risk. Neither strategy seems fundamentally wrong to me, it's all how one wants to run y
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How about the single biggest customer (.gov) can't by law negotiate drug prices - how'd that happen? It's not like they don't charge us in taxes, the government itself pays for nothing, nada, zero. We're always holding every single bag.
Three's a crowd (Score:2)
You have 50 states that need a system to keep the voting even among them called the electoral college, but any 3 large corporations in an industry, are called competition.
--
Four score and seven years ago - Abraham Lincoln
I'm failing to see the problem (Score:2)
Microsoft, IBM, Union Pacific, US Steel, Sears, GM (Score:1)
Nobody thought they could fall. They were too big, too powerful, too important.
Someone came along with a business model that pulled the rug out from under them.
It's only a matter of time.
I find myself wondering... (Score:5, Insightful)
...just what spending on capital equipment has to do with "making sure noone else can compete".
Have we actually reached the point of thinking buying machine tools is anti-competition? And if so, does that mean that when a small company buys machine tools, they are also "making sure no one else can compete"?
When I saw the headline, I assumed that "make sure no one else can compete" meant they'd spent the $80B in Washington buying legislation. Because it never occurred to me that buying the machinery required to make your product could be seen as anti-competitive. By anyone
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I made the same assumption, but the number seemed too high. Washington is full of cheap whores.
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I made the same assumption, but the number seemed too high. Washington is full of cheap whores.
Having lived in the DC burbs since '82, I've yet to find the cheap ones. Could you please send directions?
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Having lived in the DC burbs since '82, I've yet to find the cheap ones. Could you please send directions?
Point taken. They're pricey whores and totally worth every small, unmarked bill.
OR: "Tech giants spend $80B to reduce their costs" (Score:4, Informative)
That's what I was thinking. It appears to be money invested in reducing costs, increasing capacity.
It may have the effect of making it difficult for younger companies to compete, but, if you are a small company trying to compete with a large company, you have already failed if you plan to offer a small cost reduction to your potential customers.
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I had similar thoughts from a different angle. The headline represents a twisted view.
Would we rather they just continue to remove massive piles of cash from the economy? Even as an investor, I'd much rather see money being invested in research, development, and production growth than to have it sit doing nothing.
The fact that the cash reserves are still growing reflects a crisis of innovation in my mind. Please, innovate, grow, take risks. Don't just remove money from the economy and sit on it.
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I'm left with the impression that the author was trying to make good news look bad.
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Monopoly laws (Score:3, Informative)
Although I realize the current monopoly laws wouldn't make either Apple or Google/Alphabet (or similar competitors) a monopoly, they both effectively have a single 'monopoly' of the entire market, but because the current laws would allow them to claim the other's marketshare doesn't make them a monopoly, they both get to enjoy their duopoly. We know how duopolies have totally worked out for the consumers' interest in the telecom space (/sarcasm).
I think the laws need to be changed, either better inline with the EU's (where competition is the primary thing they protect, instead of only protecting consumers from harm), or consider any duopoly the same as a single monopoly.
(No, I'm not going to work out the specifics of dealing with that - it's not my job, since I'm the one paying through my taxes for the government to do it).
Which market am I (Score:2)
You stated that Apple and all of the various Android-using companies and / or Google don't compete, right? They each have completely separate markets and each has a monopoly, correct?
My house has an iPhone, an Android phone, an iPad, and Android tablet, MacBook Pro, a Chromebook, and a Linux computer. Which market am I? Which company am I forced to buy from?
I had no choice, there was no competition when I bought the iPhone, and no competition when I bought the Android, phone, right? Wife wants to replace he
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In the US, it's not illegal to be a monopoly (or part of an oligopoly, the word you're apparently looking for), but it IS illegal to abuse that position in certain ways (e.g. leveraging control over unrelated markets). Oligopolies generally abuse their position via colluding with one another to keep supply from rising or prices from dropping (price fixing), which violates anti-trust laws. Patent cross-licensing agreements (e.g. between Intel and AMD) are a grey-area that could be a problem, if used by an ol
how (Score:2)
"How can a company hope to compete with Google's driverless cars when it spends $20 billion a year to ensure it has the best laser-guided sensors and computer chips?"
by developing laser-guided sensors and chips that don't cost $20 billion/year?
The red queen's race (Score:2)
They're running as fast as they can to do tasks that require centralized, warehouse-scale computers before the technology advances make my phone and laptop capable of joining a distributed cloud of machines that can do the same tasks. If they don't hurry and make a lot of money, they won't get to buy into the next big thing.
"Quick! Use the money to buy into something else amazing!"
just a little bit of history... (Score:2)
How can a company hope to compete with Google's driverless cars when it spends $20 billion a year to ensure it has the best ..
How has this happened in the past? In some cases, the big competitor becomes a dead weight bureaucracy and smaller competitors gain the advantage. Or a new technology removes the advantage. Or, for instance, where does Uber get all its money?
An unfortunate headline (Score:1)