Should We Break Up the Tech Giants? Not if You Ask the Economists Who Take Money From Them (fastcompany.com) 127
This week's FTC hearings on the growing power of companies like Amazon, Facebook, and Google only included economists who have taken money, directly and indirectly, from giant corporations that have a stake in the debate. From a report: Amid growing concern over the power of such behemoths as Amazon, Google, Facebook, and other tech giants, in recent months there's been a bipartisan push for better enforcement of antitrust rules -- with even President Trump saying in August that their size and influence could constitute a "very antitrust situation." The Federal Trade Commission (FTC) has launched its most wide-ranging study of corporate concentration in America in more than 20 years with a series of hearings being held around the country. Chairman Joseph Simons, a practical enforcement-minded leader, launched the hearings by expressing concern over the growing problem of monopoly, which is now found in nearly every sector of the economy. "I approach all of these issues with a very open mind," said Simons, "very much willing to be influenced by what I see and hear."
But there's a problem. The FTC organized these hearings so that Simons and the public would be hearing from many economists who have taken money, directly or indirectly, from giant corporations. For example, on Monday, the FTC convened a panel titled "The Current Economic Understanding of Multi-Sided Platforms" to look specifically at the most dynamic and dangerous set of concentrated economic actors, the big tech platforms. Every single one of the economists who testified had financial ties to giant corporations. One example is David Evans, the chairman of the Global Economics Group. Evans scoffed at the danger of platform monopolies. He indicated that the question of "whether Facebook and Google and Amazon are monopolies, it's all interesting, it's great to read in the New York Times," but it's "not all that relevant" to the practice of antitrust. His firm has taken money directly from Microsoft, Visa, the large investment bank SIFMA, and the Chinese giant tech giant Tencent. Another example is Howard Shelanski, a partner at Davis Polk. Shelanski is more enforcement-minded, but he expressed caution, testifying that we don't know enough for antitrust enforcers to understand whether powerful technology companies hold unassailable market positions. Shelanski pointed to his own children, saying that they've stopped using Facebook because it's uncool. As it turns out, his law firm's clients include Facebook, as well as Comcast, and Chinese search giant Baidu.
But there's a problem. The FTC organized these hearings so that Simons and the public would be hearing from many economists who have taken money, directly or indirectly, from giant corporations. For example, on Monday, the FTC convened a panel titled "The Current Economic Understanding of Multi-Sided Platforms" to look specifically at the most dynamic and dangerous set of concentrated economic actors, the big tech platforms. Every single one of the economists who testified had financial ties to giant corporations. One example is David Evans, the chairman of the Global Economics Group. Evans scoffed at the danger of platform monopolies. He indicated that the question of "whether Facebook and Google and Amazon are monopolies, it's all interesting, it's great to read in the New York Times," but it's "not all that relevant" to the practice of antitrust. His firm has taken money directly from Microsoft, Visa, the large investment bank SIFMA, and the Chinese giant tech giant Tencent. Another example is Howard Shelanski, a partner at Davis Polk. Shelanski is more enforcement-minded, but he expressed caution, testifying that we don't know enough for antitrust enforcers to understand whether powerful technology companies hold unassailable market positions. Shelanski pointed to his own children, saying that they've stopped using Facebook because it's uncool. As it turns out, his law firm's clients include Facebook, as well as Comcast, and Chinese search giant Baidu.
commentsubject (Score:3)
>ask the industry
Seems like wasted steps. Just write BUT INNOVATION on a sign and hold it up when necessary.
Re:Conflict of interest (Score:4, Insightful)
The tech giants have a monopoly. Facebook, Microsoft, Apple, Google
You listed 4 companies. That doesn't sound like a monopoly to me. I consider the tech companies and their size and prominence to be something to watch and be concerned about to watch out for their worst anti-competitive behaviours, but I wouldn't go so far as to break them up. Nothing any of them is really a monopoly at this point.
Facebook probably comes the closest; but there is still twitter and linkedin that are independent.
You're right, it's worse: An oligopoly. (Score:2, Informative)
Doesn't sound like it?
It takes only ONE company for a monopoly.
You're right, we've got a oligopoly. Far worse.
Get Nationalized.
Re: Conflict of interest (Score:2)
This is encroachment of government. First, the idea was monopolies are bad, and they are. But, government is the only place to get a monopoly these days.
If there is a monopoly that forms, it won't stay a monopoly for long. At some point, it's profits will reflect its monopoly, and new entrants will raise the necessary capital to compete with it, based on a stronger value proposition (sacrificing those profits in the industry for market share).
Natural monopolies do not need to exist. We just got jinxed into
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Natural monopolies do not need to exist. We just got jinxed into believing they need to. Power companies are a great example. In Texas you can purchase power from any producer you choose, and the rates are pretty good.
I hope you realize that the only reason you can buy power from the producer of your choice is because the state of Texas mandates that distributors must deliver power from any supplier - and that is done by regulation. Without regulation, you would buy electricity from whoever your last mile provider said you would buy it from. Texas did go through "deregulation" in 2002, but that only refers to suppliers - the entire market only exists because of the regulation placed on the distributors and those in charg
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I realize this. And, I agree with you that some things the government should provide (roads are another example). Power infrastructure to carry power across public spaces should be maintained by the government. So should waterworks, so to should data connectivity infrastructure. The private party enters at the supply side, not the side that maintains the public ways.
The government should have the right to charge maintenance and construction fees to the two parties (supplier, consumer).
But, I am speaking abo
Re: Conflict of interest (Score:5, Informative)
If there is a monopoly that forms, it won't stay a monopoly for long. At some point, it's profits will reflect its monopoly, and new entrants will raise the necessary capital to compete with it, based on a stronger value proposition (sacrificing those profits in the industry for market share).
The big tech companies often benefit from "network effects". Facebook's value comes from the people you can connect to on Facebook. Social platforms have an inherent tendency to reward technologies with more users. Add to that the fact that software development is expensive, but is only done once and the cost is divided across all participants, and you get a market where large companies earn more dollars per new head and software improvements cost fewer dollars per head. That's a huge advantage to incumbents.
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MySpace will never be defeated?
Facebook is one really bad blunder away from being irrelevant. If all the hot chicks go elsewhere, so will everyone else.
I doubt the next one will be any better.
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MySpace will never be defeated?
Yes, I totally said that. Thank you for translating to the world that "That's a huge advantage to incumbents" is exactly the same thing as "Incumbents can never be defeated".
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What other 'huge advantages' are you aware of that just disappear, virtually overnight?
MySpace was dominant not that long ago. Its 'death' looked a lot like the rug being pulled from under them. They thought like you do.
They are in the 'fashion industry'. Like every business that is basically about getting laid (e.g. Bars).
Re: Conflict of interest (Score:4, Insightful)
They thought like you do.
Dunno. I think they did have a huge advantage, but that was overcome by several factors. First, the market was growing, so a competitor could gain fewer users, but still gain a measurable amount. Second, Facebook focused on higher education only, so they were able to become the dominant social network for a specific market segment, then counted on those users to want to continue to communicate with the people they knew back in college.
In summary, you can have a "huge advantage" and still lose. The evidence that Myspace lost is not evidence that incumbents don't have a huge advantage where network effects are significant. Your logic is flawed. You saying it again and telling me the story of Myspace doesn't fix your logic error. A single contrary event is not evidence of the non-existence of a trend.
If you could produce some sort of evidence that shows that competing against Facebook is no harder than competing against the TV repair shop down the street, then you would be on the right track from a logic perspective.
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Live by network effects, die by them.
It is just like a bar, everybody goes where the 'hot chicks' go. The population of 'hot chicks' is constantly rotating, as the old ones age out rapidly. Facebook is already the place for kid's parents to go.
What happens when someone owns facebook (or insider), messengers all subs the most embarrassing thing facebook knows about them? People that bought out of the money put options get rich?
Your prognostication is no more logical than mine. You just believe 'past p
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Your prognostication is no more logical than mine. You just believe 'past performance is predictive'.
I said no such thing. All I said was that incumbents have a huge advantage. I never said they couldn't lose, or that they wouldn't lose, or made any other prediction for the future of any of the tech giants. You equated my statement that they had a "huge advantage" to a prediction... and I've been trying all day to inform you that it was the little man in your head that said that, not me.
What I did say (huge advantage) is simply the network effect and is believed by pretty much anyone that has given this mo
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They just haven't pissed off the hot chicks yet.
Social networks are like 'meat market' bars. Every hot chick hangs at one, until, for no apparent reason, they hang at another.
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... new entrants will raise the necessary capital to compete with it...
Much easier said than done. What happens when the necessary capital to enter the market is tens or hundreds of millions of dollars. See, for example, trying to run cables to start an ISP.
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Two-thirds of the paid English language digital music marketplace. Perhaps 10% of the total one.
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The tech giants have a monopoly. Facebook, Microsoft, Apple, Google
You listed 4 companies. That doesn't sound like a monopoly to me.
Perhaps the OP meant they have a monopoly in their specific focus, not tech as a whole. Does any of the mentioned companies come close to competing with Google for search? Or Microsoft as a desktop OS? Or Facebook for social media?
I
don't recall Bell Telephone defending their monopoly because of CB radios, or ham radio, or cans attach by a string. The reason was a monopoly on telephone communication, not communication on general.
While I'm not a fan of Apple, I don't know how they can be considered to
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Perhaps the OP meant they have a monopoly in their specific focus, not tech as a whole. Does any of the mentioned companies come close to competing with Google for search? Or Microsoft as a desktop OS? Or Facebook for social media?
Bing... sure not as good, and not as many people use it, but it has a big enough following that Google isn't a monopoly. From what I understand Google, despite being very healthy, is actually losing a littel market share now- so that couldn't be considered a monopoly.
MS as a monopoly makes less sense now than 20 years ago. Apple is bigger than it once was, Chromebook is a significant player in the light-weight sector. Even Linux desktop is bigger than it used to be.
Facebook for social media... that proba
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Google's business is not search. Google's business is advertising. Everything that Google does, from giving away free GSP Maps to letting people upload videos to search is to get money from advertisers.
Facebook is in the same business. The only reason Facebook lets anybody post for free on a page they provide is to support their advertising business.
So are Facebook and Google colluding together? If they are then we something to talk about. If they are not, and it appears they are competitors. then we don't.
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Anybody taking money from the tech giants are in a conflict of interest and so need discounted.
The tech giants have a monopoly. Facebook, Microsoft, Apple, Google, If they aren't going to be broken up, then Bell telephone and GM both need to sue the government because they were broken up and they were smaller and less controlling than the tech giants of today.
Ever look at the the market capitalization of the companies that were formed from the breakup of AT&T?
Going even further back, when John D. Rockefeller was asked for advice about Standard Oil being broken up, his reply was, "Buy Standard Oil stock." [newsok.com]
When you look at the market capitalization for the multitude of companies Standard Oil was broken into [wikipedia.org], you're not going to get many shareholders wanting to go back.
Same with AT&T.
The only reason breakups are opposed is control - AKA egomania for guys lik
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Conflict of interest (Score:1)
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Facebook is different. We would need a magic-box-software install from which non-tech people could publish their own content, then a
Re: Conflict of interest (Score:1)
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The real issue isn't getting the service as practical as facebook, IMO it's already there.
Well, you're wrong. Critical social-mass requires an ease-of-use that is equivalent to FB's. Ease of use is what hooked people. Unfortunately, there's probably not any money in solving this problem.
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The difference is that unless the people you want to connect to are also on the same platform it's useless.
That's exactly what Google found out with Google+. No one uses Google+ because none of the people they want to connect with are on Google+. Businesses don't have Google+ pages because most of the customers they want to attract aren't on Google+. No one goes to Google+ to view a business page because the chances are the business they are interested in isn't on Google+.
Critical social mass is everything.
Re:Conflict of interest (Score:5, Insightful)
Break 'em up,specially google and facebook!
Under what context? Just because you don't like them? Because they're too big and successful? They're not really monopolies- and yes, they do abuse their power with anti-competitive behaviours at time, but the courts slap them when they do. I don't see any legal justification to break them up.
"I don't like them" isn't a good reason.
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No, but "too big and successful" is. And "they do abuse their power with anti-competitive behaviours" is.
After all, it was for those same reasons that Bell telephone and GM were broke up. Even though Ford and Chevy existed.
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Too big and successful isn't.
Abuse their power definitely is though, if this is actually believed.
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No, but "too big and successful" is. And "they do abuse their power with anti-competitive behaviours" is.
After all, it was for those same reasons that Bell telephone and GM were broke up. Even though Ford and Chevy existed.
When was GM broken up? Do you have more information on that? I know they've dropped some of their less successful brands (Ford dropped Mercury, and Chrysler dropped Plymouth- so GM isn't the only company to drop brands).
I'm not aware of the government breaking up GM (Chevy IS part of GM).
Re: Conflict of interest (Score:2, Informative)
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If they cannot be broken up under tge current laws then I am of the opinion thye must then be changed,for Google has a monopoly of search engines and FB on the social network scene. They have done more harm than good and are already far too embedded into the life of ther average individual. This isnt about laws,but public health.
If we're redefining "monopoly" to mean >60% of a market, then the anti-trust lawyers are going to be busy for the next century.
By that definition:
Raytheon is too big.
Lockheed Martin is too big.
Boeing is too big.
Kraft Heinz is too big.
General Mills is too big.
Procter & Gamble is too big.
Dow Du Pont is too big.
GlaxoSmithKline is too big.
Walmart is too big.
News Corp is too big.
Walt Disney is too big.
NBC Universal is too big.
Comcast is too big.
General Electric is too big.
Bank of America is too big.
Adobe
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Thanks for compiling a list of companies many of whom should be broken up. But pretending, as surely you know, that corporation break-up for monopolistic practices is the only remedy possible is deception.
Also your phrasing "has a >60% marketshare in something" is telling. When a diversified corporation (GE, say) has a monopoly position in some significant market, only that portion of the corporation needs to addressed, possibly by divesting in part of that business -- micro-breakup if you will.
Observati
Re:Conflict of interest (Score:4, Insightful)
"I don't like them" isn't a good reason.
What? Have you been living under a rock?
"I don't like them" is now considered a great reason for just about anything! Evidence be damned!
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Except search isn't their business. Their business is advertising. Do they have a monopoly on advertising?
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Re: People paid by big Corps say things pro Corps (Score:2)
Itâ(TM)s insidious and endemic tech that fosters healthy economics numbers against a reality of unaffordable unsustainable rents. From housing, transportation to eats whether WholeFoodsPRIME or UberEATS apps inflate through subscription and inflated expectations prices.
Economist donâ(TM)t want to talk rent. SO what we have is a tech driven rent culture masquerading as apps, subscriptions and services that disrupt and destroy the affordable alternative
Counter Argument. (Score:2)
This isn't necessarily my view on it.
However Economist who theories seem to favor the big companies, may choose to work for such companies.
Economist working with big companies may see and realize things that other may not notice.
That being said, we should listen to their explanation, however take it with a grain of salt knowing that their self interest is towards getting paid by such a company.
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That being said, we should listen to their explanation, however take it with a grain of salt knowing that their self interest is towards getting paid by such a company.
In a similar move, the Pope* has assembled a council of experts to advise on the sex scandal coverups in The Roman Catholic Church . . . consisting of convicted pedophiles.
* Not you, Ratzo, the other guy.
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I would expect paid experts, the whole point is find people who can make a convincing argument for why your solution is better than other proposed ones.
Not breakups. Guillotines. 3 easy steps. (Score:2)
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If you NEED your next paycheck, you're a wage slave.
If you NEED your next paycheck, you're also a moron who can't manage money. Almost certainly have a $100/month cable TV bill.
Lifetime wage slaves exist as a warning to the young. Don't make the decisions they made.
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On the other, that exact same thing is what reduces risk so that progress can go forward and enrich all of humanity with bountiful product.
LOL, right - before Citizens United, there was no innovation or progress, because corporations weren't legally people.
Seems legit.
the "poor" today in 1st world nations are still richer than the richest person 200 years ago.
Not even close. The "richest person" in 1818... was still fucking rich, even by modern standards. Hell, it was probably a king somewhere.
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Corporate personhood goes back to common law. Citizens united simply says that corporate persons have free speech rights.
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Yes we should break them up (Score:1)
Yes we should break them up because it will benefit Russia and China.
Slice em and dice em (Score:2)
No company, tech or otherwise, should grow to the point of eliminating the value of private enterprise.
Companies that grow too fast or too powerful will implode, destroying the market beyond them. Nobody licensed them to be surrogate fragmentation grenades.
Evolution, adaptation, awareness - these should be emphasized. Profit should not. Profit motives are the prime cause of failure, not success.
Good businesses, like good houses, should last 500 years.
Not that kind of monopoly. (Score:1)
Breaking up the tech companies isn't going to help because they're not a monopoly in the sense that they're the only game around. You have a freedom to use ANY social network you wish. There's alternatives to Facebook, there's alternatives to Twitter, there's alternatives to YouTube. The problem here is kind of a reverse monopoly.
Instead of a traditional monopoly where there is one company and everyone is forced to use that one. You have one company that everybody uses, to the exclusion of everything else.
F
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I forgot to explain the thing I said about group forums and stuff.
So let's say you tell someone switch from FB to something else.. Well I follow XYZ fashion YouTuber or tech YouTuber or tech influencer whatever. I belong to XYZ gym. All these places use FB Groups to communicate with each other.
If someone deletes their FB account they cannot use those groups. But if they keep it and join another social network, it becomes like IM in the pioneer era of the Internet where there were like 1217174987 different I
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I think that you're right that the purpose of breaking a monopoly might not really work in this situation. There is no physical link to pivot around that creates greater friction for the competitors. All of the market resistance is created by exposure.
I think this better compared to early radio market monopolies, where free speech was demonstrably abrogated by tacit collusion of the radio networks. This resulted in the FCC requiring certain content or content types to be carried. In this case I think that t
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Replying to my own post:
I should definitely proofread more, but switching from coding to wording and back apparently made my brain clutch stick.
Please excuse the clumsy phrasing.
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I have to say I disagree about the Kavanaugh thing, but on the notion of "Don't be evil" I agree. But the problem is that "evil" is a subjective notion.
On that though I think part of what allowed the current situation to exist is the notion of honor in IT.
I can't speak for everyone only myself and everyone I have encountered in the IT world. We always had this kind of honor. You have access to peoples' home directories, all their files, all their personal information. You do not look at that information, yo
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Can you be more specific as to why you disagree on the Kavanaugh example?
Fact: Harry Reid was leading the Senate (Joe BIden as VP) when the rule was changed.
Fact: The R's would have not had the votes to approve Kavanaugh, therefore they would have had to pick someone who appealed to the D's, who de-facto would have to be more leftist.
What is my logical error?
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Well I would say that your error would be in suggesting that someone who would be more leftist would be better. The left is ruining this country with their radicalism.
I'm not familiar with those alleged facts.
What I mean by the "Kavanaugh example" and what I thought you were talking about was the Christine Blasey Ford fiasco. In which there was absolutely no corroborating evidence to support Ford's claims of sexual assault. Then the democrats insane "Believe All Women" stance which comes right out of the ra
We must make them obsolete (Score:2)
We need to transform Internet-based services, chat, blogs, news (aka facebook, whatsapp, instagram, twitter etc.) into decentralized peer to peer services. Key for this transition is IPv6 because it enables us to give every human a set of personal IP addresses. For anonymization, we can use tor like overlays. Of course we need IPv6 routing without NAT.
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We need to transform Internet-based services, chat, blogs, news (aka facebook, whatsapp, instagram, twitter etc.) into decentralized peer to peer services. Key for this transition is IPv6 because it enables us to give every human a set of personal IP addresses. For anonymization, we can use tor like overlays. Of course we need IPv6 routing without NAT.
You also need high speed symmetrical connections. Given that the majority of the money spent on the Internet is spent by people with radically asymmetrical connections under the thumb of companies with zero effective competition and a natural monopoly, this isn't going to change, and none of those services will ever be decentralized.
Quite aside from the fact that running Internet-facing services is technically difficult without getting pwned. How many consumer machines are part of botnets? To a first app
Re: We must make them obsolete (Score:2)
True. Symmetric connections are supportive of that move. However, it would start going in that direction when people start complaining about bad upload speeds.
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So, NAT is too expensive/complex to get right, but Tor is fine?
Personally... (Score:2)
I would be amenable to breaking up the tech giants, but only we break up the cable monopolies first. The tech giants are a problem, yes, but not as much of a problem to everyday people as the fact that they're being exploited mercilessly by att&t and comcast. If you're going to break up anyone, you need to think about them first.
Give me one scenario (Score:3)
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I mean, as a condition for some jobs or to work at some companies. And then all the services that assume you have a FB account. For instance, if you want to use Tinder, it requires a facebook account. And then all the companies that use FB's authentication instead of rolling their own....
The govt (Score:2)
Re:What about ISIS? (Score:5, Insightful)
I hate Google and Facebook with a burning passion, and would love to see them fail, but even for those stinkers: what right would the government have to break them up? The whole discussion makes no sense to me.
If they were engaged in specific abuses of monopoly power, hold them accountable for that (as the EU has been doing with Google), but this seems like a straight-up desire to punish success. Heck, as much as I hate the lack of an alternative to e.g., YouTube and it's bizarre and arbitrary censorship, it's not like Google has been unfairly stomping competing products - people just like YouTube.
Regulate them as carriers? Sure, that's an interesting discussion, and the conclusion isn't obvious. But break them up? On what basis other than envy?
Re: What about ISIS? (Score:5, Insightful)
You need to read up on the history of standard oil and ATT.
The government has a vested interest in not allowing businesses to become 500lbs gorillas.
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The government has a vested interest in not allowing businesses to become 500lbs gorillas.
The government has a vested interest in preventing abuse of monopoly power. But that's not what we're talking about here. There's nothing implicitly wrong with a company being very successful.
I think the real topic is "how do we regulate social media to prevent corporate abuse of communication platforms for political ends?" This is something we've figured out for other carriers and broadcast companies: you're either just a pipe, or you're a publisher responsible for what's published.
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Regulate them as carriers? Sure, that's an interesting discussion, and the conclusion isn't obvious. But break them up? On what basis other than envy?
Really the only basis is anti competitive practices with their hardware platforms or software services. If there are contracts that force customers, partners or vendors to only use big tech company A's products, then sure antitrust issue there especially if the market intrusion is significant. I suspect this has more to do with the free speech argument floating around; aka political pages, channels and media creators being banned because of TOS violations and then their supporters crying a violation of fre
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Companies are associations of people. People have rights. The only creation of government is "limited liability". It's not obvious why a group of people should lose their natural rights for limited liability.
The reasonable argument (IMO and the O of the SCOTUS) is that a public corporation has fewer rights than a group of people who all know each other, but even then, what rights would you deny the New York Times?
We have plenty of laws on how people get to treat other people, in groups or otherwise. Bei