Another Example of So-Called Tech Monopolies Not Acting Like Monopolies

 

When one looks at the size, scale, and influence of America’s tech titans (companies that jealous Europe would love to have), it’s not surprising to think of them as monopolies. But as competition scholar Nicholas Petit explains in a recent conversation with me, “When you look at what those companies do it seems very different from what the old school textbook monopolist would do.”

They don’t act like fat and happy forever companies with not a competitive care in the world. Such as being in cutthroat competition with other dominant tech titans. As Andreessen Horowitz tech analyst Benedict Evans recently tweeted:

Regardless of your personal preferences around smart screens/speakers for the home, it’s striking that we have 3-4 huge consumer tech companies aggressively competing here. In previous cycles it would’ve been just Microsoft or just a couple of cash-strapped start ups . . . That is people talk a lot about tech monopolies, but we have four huge and dynamic companies that overlap a lot, and when they do they compete with each other on a level that Microsoft or indeed IBM never really had to face.

Here’s another example. Google is the dominant digital advertising platform in the US with an estimated 37 percent share of digital ad budgets in 2018. Facebook has just shy of 20 percent. Together they have been a strong duopoly. Oh, but here comes Amazon. This from CNBC:

Amazon’s ad business is booming. Some advertisers are moving more than half of the budget they normally spend with Google search to Amazon ads instead, amounting to hundreds of millions of dollars, according to execs at multiple media agencies. . . . Amazon’s growing success could pose a rare threat to Google parent company Alphabet, which generated $95.4 billion in ad revenues last year, 86 percent of its total revenue . . . Nonetheless, Amazon appears to be emerging as the most credible threat to Google’s cash cow advertising business since Facebook conquered mobile advertising beginning shortly after its 2012 IPO. . . . Executives at six media agencies confirmed Amazon is making huge inroads in advertising, supporting the recent eMarketer report that the tech giant has become the third-largest U.S. digital advertising platform behind Google and Facebook. One exec from a large agency said some brands find Google search ads “quaint” and want their budgets moved to Amazon because it directly correlates to sales. About 49 percent of product searches begin on Amazon, according to Survata.

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There are 13 comments.

  1. Member

    “Google Must Move Away from ‘American Tradition’ of Free Speech to Expand Globally”

    A leaked Google briefing titled “The Good Censor” advises tech companies to move away from the “American tradition” of free speech if they wish to attract advertising revenue and continue global expansion.

    The briefing, leaked exclusively to Breitbart News, was the product of extensive research on the part of Google. This included expert interviews with MIT Tech Review editor-in-chief Jason Pontin, Atlantic staff writer and tech critic Franklin Foer, and academic Kalev Leetaru. 35 cultural observers and 7 cultural leaders from seven countries on five continents were consulted to produce it. It can be read in full here.

    The 85-page briefing admits that Google and other tech platforms have fundamentally altered their policies in response to unwelcome political events around the world, including the 2016 election and the rise of Alternative für Deutschland in Germany.

    Responding to the leak, an official Google source said the document should be considered internal research, and not an official company position.

    • #1
    • October 10, 2018 at 2:54 pm
    • 1 like
  2. Member

    Modern monopolies (and duopolies) don’t act like the ones from a century ago (or even thirty years ago) because things move so much faster now. An old monopoly would take decades to become one, and then even more to fall off of the peak of their power.

    Now, the big tech firms are scrambling just to not-quite keep up, and they lose their power in a few years, not decades.

    FaceBook is fourteen years old. They’ve been at the top of the social media world for less than a decade, and they’re already starting to lose customers (and power).

    Amazon is 23 years old. It’s still growing, but is already starting to lose cohesion. They’re getting into the “buy a new company instead of creating the new market ourselves” stage, which often ends badly for really big companies.

    Google is twenty years old. They’re incredibly important, but due to their actions, a lot of users are starting to bail on them, changing search engines and using other software. There’s not a lot to lock people into using their products, and it doesn’t take much to make people dump them for a competitor.

    All three of these got huge because they had no true competition for a number of years – and now the competition is starting to show up.

     

    • #2
    • October 10, 2018 at 3:14 pm
    • 2 likes
  3. Thatcher

    The more time I spend away from Facebook the more I realize how unhealthy it is.

    • #3
    • October 10, 2018 at 3:24 pm
    • 4 likes
  4. Member

    The idea that dominant position with prices falling means that monopoly is no problem was widely sold in the case of Standard Oil. That was an incorrect point, just as the current dominance of “Big Tech” as a harmless fuzzball of 21st century technology is not accurate. For starters, Standard Oil never censored free speech- but it did play evil and illegal games to drive potential competitors or barriers to its perfect vertical integration scheme out of business.

    Google would be less of a problem if lovers of markets would embark on a campaign to steer search engine business to Bing (perfect? No, but just fine for 99% of web searches, which is why it is my default) until they were more of a 60-40 divide. Amazon still has to compete with brick-and-mortar, which will never disappear, plus the proprietary web sites of merchants (Home Depot, Walmart, Target, etc.) so it will never be Google in terms of current market dominance. 

    However, the FTC action against Internet Explorer was a reasonable one, and its outcome was also reasonable. Let the Windows OS set the standard, as long as everyone has equal access to applications.

    That suggests a good approach for FaceBook and Twitter. No “regulation” per se, just require an open architecture for the layers. Anyone who Tweets must be accessible to customers of rival public message broadcasters. FaceBook’s basic architecture OK at the “kernel” level, but the app layer that sells the ads must be equally open and accessible for all competing social network platforms. Log into the one you like, but you have cross-access/applicability to “GrinFolder”and vice versa.

    • #4
    • October 10, 2018 at 4:57 pm
    • Like
  5. Coolidge

    Ontheleftcoast (View Comment):

    “Google Must Move Away from ‘American Tradition’ of Free Speech to Expand Globally”

    A leaked Google briefing titled “The Good Censor” advises tech companies to move away from the “American tradition” of free speech if they wish to attract advertising revenue and continue global expansion.

    The briefing, leaked exclusively to Breitbart News, was the product of extensive research on the part of Google. This included expert interviews with MIT Tech Review editor-in-chief Jason Pontin, Atlantic staff writer and tech critic Franklin Foer, and academic Kalev Leetaru. 35 cultural observers and 7 cultural leaders from seven countries on five continents were consulted to produce it. It can be read in full here.

    The 85-page briefing admits that Google and other tech platforms have fundamentally altered their policies in response to unwelcome political events around the world, including the 2016 election and the rise of Alternative für Deutschland in Germany.

    Responding to the leak, an official Google source said the document should be considered internal research, and not an official company position.

    I wonder which James is going to do, wait until he receives talking points from Google before shilling for them, or ignore this entirely? 

    • #5
    • October 10, 2018 at 5:32 pm
    • Like
  6. Member

    lowtech redneck (View Comment):

    Ontheleftcoast (View Comment):

    “Google Must Move Away from ‘American Tradition’ of Free Speech to Expand Globally”

    A leaked Google briefing titled “The Good Censor” advises tech companies to move away from the “American tradition” of free speech if they wish to attract advertising revenue and continue global expansion.

    The briefing, leaked exclusively to Breitbart News, was the product of extensive research on the part of Google. This included expert interviews with MIT Tech Review editor-in-chief Jason Pontin, Atlantic staff writer and tech critic Franklin Foer, and academic Kalev Leetaru. 35 cultural observers and 7 cultural leaders from seven countries on five continents were consulted to produce it. It can be read in full here.

    The 85-page briefing admits that Google and other tech platforms have fundamentally altered their policies in response to unwelcome political events around the world, including the 2016 election and the rise of Alternative für Deutschland in Germany.

    Responding to the leak, an official Google source said the document should be considered internal research, and not an official company position.

    I wonder which James is going to do, wait until he receives talking points from Google before shilling for them, or ignore this entirely?

    Good question. @cirby 

    @cirby raised an interesting point about the possibility of the titans being so ossified that they are vulnerable to competition from an upstart. Isn’t that usually when lobbying and bribery goes on afterburner to promote laws and regulations to favor the titan and keep down the upstarts?

    It makes you think that Google has decided it has to doing various thing the Chinese like, including world wide suppression of speech even where it is nominally free.

    • #6
    • October 10, 2018 at 5:49 pm
    • 2 likes
  7. Coolidge

    Ontheleftcoast (View Comment):

    lowtech redneck (View Comment):

    Ontheleftcoast (View Comment):

    “Google Must Move Away from ‘American Tradition’ of Free Speech to Expand Globally”

    A leaked Google briefing titled “The Good Censor” advises tech companies to move away from the “American tradition” of free speech if they wish to attract advertising revenue and continue global expansion.

    The briefing, leaked exclusively to Breitbart News, was the product of extensive research on the part of Google. This included expert interviews with MIT Tech Review editor-in-chief Jason Pontin, Atlantic staff writer and tech critic Franklin Foer, and academic Kalev Leetaru. 35 cultural observers and 7 cultural leaders from seven countries on five continents were consulted to produce it. It can be read in full here.

    The 85-page briefing admits that Google and other tech platforms have fundamentally altered their policies in response to unwelcome political events around the world, including the 2016 election and the rise of Alternative für Deutschland in Germany.

    Responding to the leak, an official Google source said the document should be considered internal research, and not an official company position.

    I wonder which James is going to do, wait until he receives talking points from Google before shilling for them, or ignore this entirely?

    Good question. @cirby

    @cirby raised an interesting point about the possibility of the titans being so ossified that they are vulnerable to competition from an upstart. Isn’t that usually when lobbying and bribery goes on afterburner to promote laws and regulations to favor the titan and keep down the upstarts?

    It makes you think that Google has decided it has to doing various thing the Chinese like, including world wide suppression of speech even where it is nominally free.

    They are also colluding with support industries (servers, payment systems, credit companies, etc) to block competition. Gab.ai and Bit Chute have run into this issue.

    • #7
    • October 10, 2018 at 5:57 pm
    • 1 like
  8. Member

    lowtech redneck (View Comment):

    Ontheleftcoast (View Comment):

    lowtech redneck (View Comment):

    Ontheleftcoast (View Comment):

    “Google Must Move Away from ‘American Tradition’ of Free Speech to Expand Globally”

    A leaked Google briefing titled “The Good Censor” advises tech companies to move away from the “American tradition” of free speech if they wish to attract advertising revenue and continue global expansion.

    The briefing, leaked exclusively to Breitbart News, was the product of extensive research on the part of Google. This included expert interviews with MIT Tech Review editor-in-chief Jason Pontin, Atlantic staff writer and tech critic Franklin Foer, and academic Kalev Leetaru. 35 cultural observers and 7 cultural leaders from seven countries on five continents were consulted to produce it. It can be read in full here.

    The 85-page briefing admits that Google and other tech platforms have fundamentally altered their policies in response to unwelcome political events around the world, including the 2016 election and the rise of Alternative für Deutschland in Germany.

    Responding to the leak, an official Google source said the document should be considered internal research, and not an official company position.

    I wonder which James is going to do, wait until he receives talking points from Google before shilling for them, or ignore this entirely?

    Good question. @cirby

    @cirby raised an interesting point about the possibility of the titans being so ossified that they are vulnerable to competition from an upstart. Isn’t that usually when lobbying and bribery goes on afterburner to promote laws and regulations to favor the titan and keep down the upstarts?

    It makes you think that Google has decided it has to doing various thing the Chinese like, including world wide suppression of speech even where it is nominally free.

    They are also colluding with support industries (servers, payment systems, credit companies, etc) to block competition. Gab.ai and Bit Chute have run into this issue.

    I hear Gab.ai may be about to crash and burn for other reasons.

    • #8
    • October 10, 2018 at 6:00 pm
    • Like
  9. Member

    Ontheleftcoast (View Comment):
    I hear Gab.ai may be about to crash and burn for other reasons.

    Part of the problem is that, due to Gab being a free speech zone, it’s easy for Twitter and the rest of the big dogs to find disreputable sections, and say things like “Gab hosts Nazis and Klansmen! They must be evil!”

    Discord is running into the same sort of tactics – “news” sites owned or linked to the major social media firms are digging around and finding a few nasty groups (literally dozens to hundreds of accounts out of over ten million users) that allow Nazi and Klan symbols and commentary.

    Meanwhile, YouTube and Twitter and FaceBook are all using that sort of excuse (“We’re kicking out the extremists!”) to delink or demonetize the accounts of people who are center-right to centrist – but the wrong kind of centrist. Which causes those people to move to places like Gab and Bitchute – and which then triggers the big search sites (mostly Google) to start doing things like downlinking and delinking those sites in search engines.

     

    • #9
    • October 10, 2018 at 8:03 pm
    • 1 like
  10. Member

    cirby (View Comment):

    Ontheleftcoast (View Comment):
    I hear Gab.ai may be about to crash and burn for other reasons.

    Part of the problem is that, due to Gab being a free speech zone, it’s easy for Twitter and the rest of the big dogs to find disreputable sections, and say things like “Gab hosts Nazis and Klansmen! They must be evil!”

    Discord is running into the same sort of tactics – “news” sites owned or linked to the major social media firms are digging around and finding a few nasty groups (literally dozens to hundreds of accounts out of over ten million users) that allow Nazi and Klan symbols and commentary.

    Meanwhile, YouTube and Twitter and FaceBook are all using that sort of excuse (“We’re kicking out the extremists!”) to delink or demonetize the accounts of people who are center-right to centrist – but the wrong kind of centrist. Which causes those people to move to places like Gab and Bitchute – and which then triggers the big search sites (mostly Google) to start doing things like downlinking and delinking those sites in search engines.

    Thanks. That makes sense.

    • #10
    • October 10, 2018 at 8:09 pm
    • Like
  11. Member

    cirby (View Comment):
    Amazon is 23 years old. It’s still growing, but is already starting to lose cohesion. They’re getting into the “buy a new company instead of creating the new market ourselves” stage, which often ends badly for really big companies.

    I agree with the cohesion comment. I clearly remember the advent of conglomerates and how that ended. But I think buying up small companies in potential new markets can be a rewarding strategy. As can buying existing large but under valued firms, such as Whole Foods. (Granted it’s a controversial move, but fits in with their stated goals.)

     

    • #11
    • October 11, 2018 at 7:46 am
    • Like
  12. Member

    Think of Amazon as an exporting country. Japan, for instance bases it’s market power on monopsony not monopoly power. It can’t be a monopoly outside its borders because it must compete with the whole world. Toyota and Honda as well as giant Keiretsu integrated trading companies own their suppliers, do not let them sell to others, finance them but if they make too much, they extract lower prices or higher quality. They also help them through tough times. Independent suppliers are dependent feudal vassals belonging to responsible paternalistic nobles. This is one of the reasons US companies find it so difficult to penetrate their vast supplier market. In the US Japan is building grain storage to exercise monopsony leverage over our farmers. They pay good prices even when prices fall a little. So far our farmers like it.

    Amazon is growing storage everywhere, can deliver as quickly as most of us can visit a retail story, buy and return. Their buying power, i.e. monopsony power enables them to extract lower prices. Manufactures here or abroad, are not in a position to stiff arm them because they have such huge buying power. Amazon must compete with all retailers, they will not have monopoly power.

    Monopsony is stronger, not covered by our laws, and unlike monopoly, endures. Monopoly was a neat text book example of market phenomena, but it never lasts unless the company captures the government. All new products enjoy monopoly for a little while but not for long. Standard Oil was not a monopoly but it did exercise some monopsony power because it could pay suppliers more, brought order to the supply, and made a safer product, their “standard” kerosene didn’t explode. Monopsony is ok, as are these short term monopolies. Certainly we don’t want anti trust to extend to such market leverage. Every giant company is a problem because they get into a position to affect the political system, but lets remember that it’s the political system that threatens tyranny.

    • #12
    • October 11, 2018 at 2:25 pm
    • 1 like
  13. Member

    I Walton (View Comment):

    Think of Amazon as an exporting country. Japan, for instance bases it’s market power on monopsony not monopoly power. It can’t be a monopoly outside its borders because it must compete with the whole world. Toyota and Honda as well as giant Keiretsu integrated trading companies own their suppliers, do not let them sell to others, finance them but if they make too much, they extract lower prices or higher quality. They also help them through tough times. Independent suppliers are dependent feudal vassals belonging to responsible paternalistic nobles. This is one of the reasons US companies find it so difficult to penetrate their vast supplier market. In the US Japan is building grain storage to exercise monopsony leverage over our farmers. They pay good prices even when prices fall a little. So far our farmers like it.

    Amazon is growing storage everywhere, can deliver as quickly as most of us can visit a retail story, buy and return. Their buying power, i.e. monopsony power enables them to extract lower prices. Manufactures here or abroad, are not in a position to stiff arm them because they have such huge buying power. Amazon must compete with all retailers, they will not have monopoly power.

    Monopsony is stronger, not covered by our laws, and unlike monopoly, endures. Monopoly was a neat text book example of market phenomena, but it never lasts unless the company captures the government. All new products enjoy monopoly for a little while but not for long. Standard Oil was not a monopoly but it did exercise some monopsony power because it could pay suppliers more, brought order to the supply, and made a safer product, their “standard” kerosene didn’t explode. Monopsony is ok, as are these short term monopolies. Certainly we don’t want anti trust to extend to such market leverage. Every giant company is a problem because they get into a position to affect the political system, but lets remember that it’s the political system that threatens tyranny.

    That makes a great deal of sense. Off the top of my head, it looks as though Amazon’s recent abandonment of the HR AI because it wasn’t hiring “enough” women is more government-like than business–like (unless the business is in a state controlled environment,) but in this case Amazon did it to itself.

    • #13
    • October 11, 2018 at 2:30 pm
    • Like