Cake
  • Log In
  • Sign Up
    • Elizabeth Warren is proposing new regulations that would significantly impact the tech giants.

      Or read it in her own words here:

      I expect we'll be hearing furious pushback from Silicon Valley. It will be interesting to see whether this proposal gains traction (the time seems to be ripe) and how it affects 2020 politics.

    • Great idea for a conversation, Richard!

      Definitely a lot here to digest from that Medium article and I’m still processing it all, so it’ll be a few hours before I respond properly.

    • Wow. This is an incredibly bold policy position for an American presidential candidate. Even for Elizabeth Warren.

      I'm still digesting what I've just read, but I'd say my feelings on this are...complex. 😬

      I think Warren's intent is good. Ensuring room for healthy competition, ensuring that users' privacy is protected, and preventing the use of mergers to limit competition are all admirable goals. And I agree with her that it's concerning how large Google, Amazon, and Facebook have become.

      But I'm not sure that what she proposes — breaking up the large tech companies — can actually accomplish those goals. At least, not without potentially causing a lot of damage to consumers and the tech industry in the process.

      Let's look at Google, for example. Warren proposes breaking Google Search and Google's ad exchange out into separate companies. This sounds good on the surface, but the reality is that most of Google's revenue comes from their ad exchange. And a huge portion of the revenue generated by selling ads comes via ads sold on Google Search.

      Splitting those two businesses out from the rest of Google means that the rest of Google suddenly has to support its own weight without relying on the lucrative ad and search businesses. That means free services are likely to be shut down or scaled back and Google will be less able to invest in blue-sky projects like their self-driving car program. It may even make it harder for them to compete with Amazon via Google Cloud.

      This also ignores the significant economies of scale Google currently benefits from by sharing codebases and infrastructure between all their products and services. If Google Search and AdWords have to split their codebases and infrastructure from the rest of the company, this creates both a massive engineering headache (what happens to shared code that all three companies use?) and a higher cost of operating overall.

      The ultimate goal of regulation like this has to be to improve things for consumers. But I'm not sure if the net effect of this approach would actually be an improvement. It feels heavy handed to me — like using an axe when what we really need is a scalpel.

      I also wonder if the tech industry should really be at the top of the "needs more regulation" list right now. I don't disagree that it could use more regulation, but I feel like society could benefit a lot more from better regulations on the financial industry. And I honestly think that would be easier to accomplish.

      So yeah, I'm divided on this. I want Elizabeth Warren to achieve her goals of increasing competition and improving things for consumers, but I'm not sure this is actually the best way to do that.

    • I should add: I do think the argument for breaking Amazon up is much more clear than for some other companies.

      AWS should probably be split from Amazon's retail businesses. Amazon's consumer products business (AmazonBasics, Echo, etc.) should also be separate from its retail operations. This kind of thing is much more in keeping with traditional antitrust regulation and I think would be easier to accomplish than splitting up Google or Facebook.

    • Researchers working at Bell Labs are credited with the development of radio astronomy, the transistor, the laser, the charge-coupled device (CCD), information theory, the Unix operating system, and the programming languages CC++, and S. Nine Nobel Prizes have been awarded for work completed at Bell Laboratories.

      (source)

      Google is not Bell Labs. Not even close. The anti-trust breakup of AT&T led to the demise of Bell Labs, but innovation didn’t die in the subsequent thirty plus years.

      The irony of separating Google Ads from Google Search is not lost on me. Google took away a huge chunk of classified advertising that newspapers relied upon, decimating many of them. Considering that Google has manipulated search results to favor its products and services, as well to engage in unfair restraint of competition, it seems appropriate to spin off Google Search from everything else.

      How will Google Search survive? I’m okay if it doesn’t: Duck Duck Go or Bing will be usable alternatives.

    • I do not have enough knowledge of antitrust law to have a clear opinion, but your thinking about breaking up Google search sounds imminently logical. It doesn't seem like Google has engaged in anti-competitive practices in search, they have simply made a better mousetrap. The consumer has full choice. They can switch to Bing or Duck Duck Go with a click, but very few people want to.

    • The problem I have with Warren's proposal is that I don't believe existing antitrust law addresses the current problems comprehensively. Distortion of markets is only one part, albeit an important one. But privacy is another. The Sherman and Clayton antitrust acts are over 100 years old, and certainly never anticipated appropriation and exploitation of personal information as a business model. If you are concerned with privacy (as I am), forcing Facebook to spin-off Instagram, WhatsApp and Messenger will not make much difference as long as it's legal for data brokers to aggregate your data from all of those sources (and others) and sell your profile without your knowledge or consent.

      Ever since I read The Age of Surveillance Capitalism, I've become convinced that new legislation is needed. Big tech firms can rightly argue that their spying is not against the law, but that's because the needed laws have not been enacted yet. The EU has made a timid start with the GDPR, but governments face a daunting task getting ahead of the privacy challenge, as corporations are far more nimble. In the meantime, I don't think it's a bad idea to subject Amazon, Google and others to scrutiny under existing laws. Just don't expect miracles.

    • I thought Alex Stamos made some great points about this on Twitter:

      As I've thought about this more myself, I've lost a little bit of respect for Elizabeth Warren. I liked her a lot before this and thought she was one of the smartest people in Congress on regulatory matters, but her stance here feels naïve, as if she didn't get good advice from experts before planting her flag.

      I hope she listens to feedback on these proposals and evolves them into something more realistic and less likely to have far-reaching unintended consequences.

    • but her stance here feels naïve,

      I agree--it feels like she's fighting the last war, not the one we need to be fighting. Still, I think it's a good thing that she has raised the issue and hope that something constructive comes of it.

    • Anti-trust laws are all written to remedy the situation where a company with dominant market position uses it to gouge the consumers. Google most definitely doesn't do this (search is free, Android is free). Amazon uses its position to drive the prices down. Intervening here would probably have the effect of actually driving the prices up or shutting down of free services. That probably would not play well with the public.

      I'm not entirely convinced that break-up is the desired solution to advance competition. Nokia was massively dominant, but still fell with no government intervention. Microsoft used to rule the desktop and browser markets. Got disrupted organically. IBM before them.

      Where I see the need for adjustment is the tendency of tech giants to just buy up and absorb potential competitors. And even there, with very careful and deliberated intervention.

    • Microsoft used to rule the desktop and browser markets. Got disrupted organically. IBM before them.

      Both Microsoft and IBM were subject to major antitrust actions in the US and EU and were forced to change their business practices as a result. Not sure what you mean by 'organically.'

      As for Google, the EU has fined them billions over Android, Google Shopping and Ad-Sense antitrust violations, though some of those judgments are still under appeal.

    • IBM faltered because of the rise of PC clones, enabled by Microsoft (Windows) and Intel (x86 CPUs). Microsoft missed the boat on mobile. Both of them got disrupted because their 'impenetrable castles' (mainframes and Windows, respectively) got obsoleted by newer tech. Neither outcome had anything to do with anti-trust actions by the government.

    • Cheers, @jpop, good write up. Seems to me that using traditional antitrust thinking largely overlooks the dangers that Amazon, FB and Google pose to personal autonomy and privacy, which concern me more than their impact on, say, Internet startup formation. That's not to dismiss the old concerns about size and market control or other abuses, but rather to emphasize that we're dealing with new threats as well, and these seem more ominous.

    • Indeed. But the thing to keep in mind here is that none of them are invincible. As noted in the article, tech giants get their influence by users voluntarily flocking to them. And if users start feeling the privacy trade-offs are not worth it any more, they might flee. Which is probably the prime motivation behind the Zuck's "'whoa, privacy is good, we will definitely do the privacy thing" statement made the other day. They live and die by their users' satisfaction. We do have the power to influence their behaviour.

    • I think he makes an interesting point. If it’s an accurate reflection of public sentiment, it may make sense for Google and Facebook to get ahead of the story and implement realistic solutions. Otherwise Warren’s proposal may end up the lite version of what’s ultimately implemented by Congress in 2021.