The Federal Trade Commission and more than 40 states accused Facebook on Wednesday of becoming a social media monopoly by buying up its rivals to illegally squash competition, and said the deals that turned the social network into a behemoth should be unwound.
[…]The prosecutors called for Facebook to break off Instagram and WhatsApp and for new restrictions on future deals, in what amounted to some of the most severe penalties regulators can demand.
I hope it gets that far. Next on the list? Apple and Google.
According to media reports the EU is looking deeper into Googles use of algorithms and possession of its index and what monopoly and abuse issues arise from this. Facebook threatened the UK with pulling out of investing because the UK was allegedly hostile to technology after abuse became an issue.
I have no illusions about management in Google or Facebook or Apple or any of them. If they can abuse the market and get away with it and flannel to cover their tracks they will. At the extreme businesses fold and people die because of their behaviour. It is the role of government to hold them to account. Post brexit the EU will be correct to keep a very sceptical eye on the UK. Human rights are being blatantly eroded for politcal reasons and financial profit. As things stand I do not trust the UK government to do the right thing.
Hi! Welcome to capitalism.
Most for profit companies don’t require becoming a monopoly for their business plan to succeed. There’s something about the tech sector that requires every startup to have a plausible path to a monopoly to be funded, because becoming a monopoly is financially lucrative. To the extent that it’s lucrative, it’s harmful to society, which ends up paying inflated prices or having hostile terms imposed on it. Implicitly these business models require becoming monopolies without paying a price for that behavior; the real question is whether there’s enough political will to go after enough monopolies that future business plans will have to revolve around serving customers, not dominating them. I’d argue most capitalist markets are still competitive enough to encourage businesses to pursue socially beneficial goals, and there’s something rotten to the core about what the modern tech sector has become.
malxau,
I agree but I think it’s important to explicitly add that even duopolies and oligopolies involving multiple parties are bad for competition. Companies are at their best when their business models are built around making their products&services better and not simply by adding barriers to competition. The purpose of antitrust (ideally) is to ensure that companies choose to succeed by competing rather than creating barriers. Unfortunately it’s not just one or two tech who are at fault, all too often these days we see a lot of tech companies focusing on the barriers, which is sad and ultimately counterproductive for capitalism as a means of promoting progress.
I never really got the desire for antitrust on Apple. It’s completely trivial to ignore the Apple ecosystem – the products are easy not to buy and Apple doesn’t try to intrude otherwise. I’m far more concerned about Facebook and Google because of their active abuses of rights like privacy and how *unavoidable* they are.
I don’t understand it either. Apple takes marketshare away from Microsoft is that why people are mad?
Flatland_Spider,
It depends what market we are talking about. Apple only has a small share of the computer market. However they are the largest mobile manufacturer and there are legitimate antitrust concerns over its predatory behavior. They’ve been interfering with app store competition for a while. Because IOS users represent about 2/3 of every dollar spent on apps, most developers aren’t in any position to walk away. Apple uses the imbalance of market power to control the app market rather than compete in it fairly, and this is where antitrust enforcement could help.
“However they are the largest mobile manufacturer and there are legitimate antitrust concerns over its predatory behavior. ”
Apple are now down to number 5 (or 6) by sales volume (11%) and losing market share every year. They will be down to single digit market share within 2-3 years if current trends continue.
Brisvegas,
That’s not true in the US where the US government has jurisdiction over antitrust matters. Apple is clearly the dominant smartphone manufacturer.
https://www.counterpointresearch.com/us-market-smartphone-share/
I concede that apple has fared worse in eastern markets, where it’s pricing strategy puts it out of reach. But even so apple’s market share globally bounces between #1 and #4 depending on the quarter you look at (historically apple’s share is very cyclic with Q3 being weak and Q4 being strong, probably a result of holiday sales).
https://www.counterpointresearch.com/global-smartphone-share/
Different companies can be dominant in different parts of the world, but this doesn’t mean that dominant companies can or should be left unchecked with respect to antitrust in regional markets.
Yeah, I hate apple and their store policies, but I also remember early “smart” phones where each OEM and each Carrier had their own “store” with apps and rigntones for insane prices. I’m just afraid with Apple that they’d make the remedy worse than the current situation. Before the iphone, the carriers called all the shots on what could and could not be on a phone.
These kinds of arguments are used in the UK by Virgin Media. They claim because they are the smallest network provider (the own cable) they should not be opened up to internet service suppliers. What this argument and chinless regulators do (and the Uk has a real problem with weak to look the other way regulation) is it props up an oligopoly which with a nod and a wink likes things as they are thank you very much.
There is a key difference between US and European market abuse law. The US tends to view abuse only happens when a company threshold crosses 50%+1 and the US traditionallly has a hands off approach so companies act first and regulators regulate later. The European approach is more geared towards challenging market abuses whether by single or multiple companies either because of complicity or a simple system failure creating the problem. US regulators and, I suspect, US citizens view is slowly changing to be more like the European view. This is long overdue. It also cannot be disconnected from international trade. Europe has problems with the US abusing its market size and influence internationally as well as the US having lots of cute ways of subsidising indistries and companies. The way US defence and space direct money towards private companies is one such problem which has both landed the US in the WTO court and has actually been openly admitted in testimony to the US congress. Now this doesn’t excuse any European failures of governance or misbehaviour but the perpetuation of the meme that US companies including Apple espeically are not abusing their position has passed far beyond the point of being questionable.
Network providers are a lot harder to not deal with – due to the physical limitations and increasing actual need for service of some kind,. It’s trivial to boycott Apple (if anything, it’s easier to *not* buy their products), much less so possibly the only ISP on your physical area.
We’re fairly lucky in the UK that network providers are forced by law to one degree or another to open their networks to service providers. It’s not all joy. There is still a lot of trying it on at the business end and agressive sales.
I was pestered by BT not just once but three times the other month during the pandemic and they weren’t being too careful about social distancing. I complained about safety and told them “wayleave” had been withdrawn. (Wayleave implies consent. You have to actively withdraw wayleave. When wayleave is withdrawn stepping onto the property is tresspass.) Whether BT took this onboard and this makes any difference or not I have no idea.
Everyone should switch to mewe.com and be done with “fassbook”.
Actually this is the only valid concern I have about Facebook.
As I work in the tech industry, I see the competition to be the best, and working hard to stay there as normal part of the business. Acquiring small companies for specific talent also makes sense most of the time.
However absorbing a large and successful “upstart” is anathema to competitive progress. WhatsApp owners would have real difficulty to earn the $19 billion on their own if they had not sold the company. That is a fact. However by merging of the two, the playground really diminished in the personal communication area.
I no longer hear about Viber, Kik, and many other smaller apps that once had vibrant communities.
There seems to be only enterprise apps (like Slack), WhatApp, and Signal left in the Western world. (China has their own apps with their own issues).
sukru,
I think you’re right. I think the same was true of facebook itself with insane valuations that it was unlikely to earn on it’s own except in the way of power plays by the bigger companies. This is the modern silicon valley model: don’t even bother making money directly, instead make billions selling pieces of yourself to bigger fish. This has proven to be an effective shortcut and a confirmation of the old adage that it doesn’t matter what you know, only who you know. Billionaires of today are likely going to choose many of tomorrow’s billionaires too, for better or worse, putting on that makeup and looking pretty can be an effective path to success.
Alfman,
Yes, the valuations does not make sense. Even Elon Musk tells his Tesla shares are overvalued.
I think VCs are just using these large payouts to settle things among themselves. It might be an easy way to move several billions around.
Even for established companies with long term paying customers, like Microsoft, the “price to earnings” is over 34! That means, if you invest $1,000 today in MSFT, it would take most of your adult life to get it back.
That also means, people are not actually investing in the business.
Facebook is getting slapped by Germany over linking Occulus with Facebook.
You need normal software in such situations so you don’t lose money later on. We know that already and therefore from experience I can tell that it is important to think about knowing professionals in order to build this kind of software. Since technological equipment is not adequate to create difficulties. Because I think I can help if I suggest that it is worth finding and approaching a committed professional dedicated software development . These guys have greatly helped me, too, I suppose. Happiness!