The war on Big Tech

Issue 41/2019

It's on. All of these articles are from last week:

That European regulators are coming down hard on Big Tech is a given; harming consumers by limiting choices or driving up prices in the name of protecting them is what the European Union does best. But what is unusual are the attacks from within the United States, where antitrust is running riot (and not just against Big Tech). Here's how the antitrust lawyers might target Google:

"Experts believe the investigation could focus on at least one of three areas that have caught regulators’ eyes.

A good first place to look might be online advertising. Google will control 31.1% of global digital ad dollars in 2019, according to eMarketer estimates, crushing a distant second-place Facebook. And many smaller advertisers have argued that Google has such a stranglehold on the market that it becomes a system of whatever Google says, goes, because the alternative could be not reaching customers. “There’s definitely concern on the part of the advertisers themselves that Google wields way too much power in setting rates and favoring their own services over others,” King said.

Another visibly huge piece of Google’s business is its search platform, often the starting point for millions of people when they go online. Google dwarfs other search competitors and has faced harsh criticism in the past for favoring its own products over competitors at the top of search results. European regulators also have investigated in this area, ultimately fining Google for promoting its own shopping service. Google is appealing against the fine.
...
The US justice department opened a sweeping investigation of big tech companies this summer, looking at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers. The Federal Trade Commission has been conducting its own competition probe of big tech, as has the House judiciary subcommittee on antitrust."

Just because a company has a large market share in a narrowly-defined market does not mean it's a monopoly. Largely obsolete antitrust legislation, inappropriately applied to Big Tech, will only result in an inferior outcome. It's a waste of time for both the regulators - who could be addressing real problems - and Big Tech companies, which have to hire small armies of lawyers to defend themselves.

Who pays for all of those wasted resources? Consumers, the supposed victims for whom antitrust was originally created to assist. The same people who actually don't mind Big Tech:

"Consider Facebook: It’s hard to imagine a more backlashable company. Facebook is widely associated with data breaches, the spread of dubious information and a basic deterioration of interpersonal communication. It was recently fined nearly $5 billion by the Federal Trade Commission for mishandling its customers’ data. And, given its ubiquity, it’s also a handy stand-in for the corporatization of online life in general. If you’re going to make a show of quitting a tech service, Facebook may be your best choice.

But according to its most recent quarterly report, the number of Facebook accounts used daily (1.59 billion) and monthly (2.4 billion) each increased by 8 percent over the prior quarter. Despite all the anecdotes you’ve heard about people deleting their accounts, the company’s flagship app added about a million new daily users in the United States alone. Revenue was up 28 percent. Even factoring in the F.T.C. fine, Facebook recorded a profit of $2.6 billion.

Facebook is not the only demonized tech platform; social media companies in general are routinely criticized as toxic swamps full of trolls, liars and bots. But again, there’s no evidence of any exodus. In the same quarter, Twitter added five million new daily users, and Snap reported that the daily user base of its flagship Snapchat app grew 7 percent, its best-ever performance as a public company. According to the Pew Research Center, 72 percent of Americans use some form of social media, a percentage that has risen steadily for years and shows no sign of flagging. (The people I know who quit Facebook all use Facebook-owned Instagram, WhatsApp, or both.)"

I personally don't use Facebook, try not to use Google and don't worry about any Big Tech company eventually behaving like a monopoly, because if they did the dynamism of the sector within which they operate would quickly relegate them to history's scrapheap of has-beens.

Ultimately the war on Big Tech is nothing but a witch hunt by politicians and regulators serendipitously preying on people's fears to further their own careers. If they succeed, the products many people enjoy using every day will become worse, or stop improving, with the major risk being that the war on Big Tech results in what it's supposed to be preventing: the utilitification of the incumbents.

Enjoy the rest of this week's issue. Cheers,

— Justin

Note: this will be the last weekly update until after the Rugby World Cup, or the Wallabies are eliminated, whichever comes first (who am I kidding; it's definitely going to be when the Wallabies are eliminated).


The bits


California has a lot of bad ideas

If something sounds too stupid to be true, you can be sure they've got it in California. First, rent control:

"Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law."

Second, forcing Uber and Lyft drivers to become employees, thus eliminating "multihoming" (i.e. driving for multiple rideshare companies at once):

"When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting."

Learn more:



Image of the week

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Goodbye brick and mortar

Goodbye brick and mortar, hello e-commerce.


This week's data breaches



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Issue 41/2019: The war on Big Tech was compiled by Dr Justin Pyvis and delivered on 17 September, 2019. Feel free to send feedback, suggestions for future issues, ideas, insults, or pretty much anything that crosses your mind to his Keybase or Twitter account.