Sic transit gloria

The New York Times today reports that Sears, which more than a century ago pioneered the strategy of selling everything to everyone, filed for bankruptcy protection early on Monday. In terms of ambition, its only rival is Amazon, but even Amazon hasn’t yet got round to selling houses in kit form, as Sears did as long ago as 1908. Here’s one from the catalogue: two bedrooms, two reception rooms, a kitchen and a splendid porch — yours for $1248.00. No mention of a bathroom, though.

Amazon’s minimum wage

Interesting commentary by Alex Tabarrok:

Amazon’s widely touted increase in its minimum wage was accompanied by an ending of their monthly bonus plan, which often added 8% to a worker’s salary (16% during holiday season), and its stock share program which recently gave workers shares worth $3,725 at two years of employment. I’m reasonably confident that most workers will still benefit on net, simply because the labor market is tight, but it’s clear that the increase in the minimum wage was not as generous as it first appeared…

Worth reading in full.

Controlling digital giants: new ideas wanted

This morning’s Observer column:

The five biggest companies in the world are now all digital giants, each wielding monopolistic power in their markets. We are increasingly aware that some of their activities are socially damaging: they are deepening inequality, avoiding taxation, undermining democratic processes, creating addictive products, eroding privacy and so on. And yet, with the odd exception (mostly represented by the European commission), our societies seem transfixed by them, like rabbits paralysed in the tractor’s headlights. Politicians bleat about the need to do something about the digital giants, but so far it’s been all talk and no action.

This is strange because democracies have extensive legal toolkits for dealing with overweening corporate power. We have antitrust and competition laws, monopolies and merger commissions and federal trade commissions coming out of our ears. And yet – again with the single exception of the European commission – they seem unable to deal with the digital giants. Why?

The answer is partly historical and partly ideological…

Read on

Amazon’s move into healthcare

This morning’s Observer column about the collaboration between Amazon, Warren Buffett and JP Morgan:

Launching the initiative with his customary folksy bluntness, Buffett said that “the ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable.” If this – plus the fact that the new venture is to be a not-for-profit enterprise – was intended to be soothing, then it failed. The announcement immediately wiped billions off the valuations of the corporate tapeworms that have for decades fastened like leeches on the US healthcare system. And it’s not Buffett that scares them, but Jeff Bezos, Amazon’s chief executive and founder.

They’re right to to be scared…

Read on

How things change

The €2.4B fine on Google handed down by the European Commission stemmed originally from complaints by shopping-comparison sites that changes in Google Shopping that the company introduced in 2008 had amounted to an abuse of its dominance in search. But 2008 was a long time ago in this racket, and shopping-comparison sites have become relatively small beer because Internet users researching possible purchases don’t start with a search engine any more. (Many of them start with Amazon, for example.)

This is deployed (by the Internet giants) as an argument for the futility of trying to regulate behaviour by dominant firms: the legal process of investigation takes so long that the eventual ruling is so out of date as to be meaningless.

This is a convenient argument, but the conclusion isn’t that we shouldn’t regulate these monsters. Nevertheless it is interesting to see how the product search scene has changed over time, as this chart shows.

Source

The obvious solution to the time-lag problem is — as the Financial Times reported on January 3 — for regulators to have “powers to impose so-called “interim measures” that would order companies to stop suspected anti-competitive behaviour before a formal finding of wrongdoing had been reached.” At the moment the European Commission does have powers to impose such measures, but only if it can prove that a company is causing “irrevocable harm” — a pretty high threshold. The solution: lower the threshold.

Amazon and the long game

This morning’s Observer column:

The news that Amazon had acquired Whole Foods Market for $13.7bn sent shivers down the spine of every retailer in America. Shares in Walmart fell 7%, and rival Kroger by 17%. Amazon’s market capitalisation, in contrast, went up by $11bn. So why the fuss? At first sight it seemed straightforward: Amazon wanted to get into food sales, and it fancied having a network of 400 urban stores; and Whole Foods (which some of my American friends call “whole wallet” because of the cost of its products) was ailing. There was also a small political angle: John Mackey, co-founder of Whole Foods, had been enmeshed in a row with an activist investor that threatened to drive him from power; by selling to Amazon, he gets to keep his job. So: small earthquake in food retailing, not many dead?

Er, not quite, and only if you avoid taking the long view. And, with Amazon, the long view is the only one that makes sense…

Read on

Why AI Home Assistants Need a Screen

From MIT Technology Review:

You may control your home with your voice, but having it speak back is often impractical. Asking Amazon’s Alexa to play a specific song, for instance, is a joy. But if you’re not sure what to listen to, the voice-only system can feel limiting. At the same time, voice assistant apps grow in number but go unused because people simply forget about them. Speaking to the [Tech Review] Download, Andrew Ng, chief scientist at Baidu, explained that, while a 2016 study by Stanford researchers and his own team showed that speech input is three times quicker than typing on mobile devices, “the fastest way for a machine to get information to you is via a screen.” He continued: “Say you want to order takeout. Imagine a voice that reads out: ‘Here are the top twenty restaurants in your area. Number one …’ This would be insanely slow!” No surprise, then, that Baidu has been working on a smart assistant device called Little Fish that includes a screen, and Amazon is also rumored to be developing a similar piece of hardware. The AI assistant revolution, it seems, may be televised.

Yep. My experience with Amazon Echo chimes with this.

Digital Dominance: forget the ‘digital’ bit

Some reflections on the symposium on “Digital Dominance: Implications and Risks” held by the LSE Media Policy Project on July 8, 2016.

In thinking about the dominance of the digital giants1 we are ‘skating to where the puck has been’ rather than to where it is headed. It’s understandable that scholars who are primarily interested in questions like media power, censorship and freedom of expression should focus on the impact that these companies are having on the public sphere (and therefore on democracy). And these questions are undoubtedly important. But this focus, in a way, reflects a kind of parochialism that the companies themselves do not share. For they are not really interested in our information ecosystem per se, nor in democracy either, if it comes to that. They have bigger fish to fry.

How come? Well, there are two reasons. The first is that although those of us who work in media and education may not like to admit it, our ‘industries’ are actually pretty small beer in industrial terms. They pale into insignificance compared with, say, healthcare, energy or transportation. Secondly, surveillance capitalism, the business model of the two ‘pure’ digital companies — Google and Facebook — is probably built on an unsustainable foundation, namely the mining, processing, analysis and sale of humanity’s digital exhaust. Their continued growth depends on a constant increase in the supply of this incredibly valuable (and free) feedstock. But if people, for one reason or another, were to decide that they would prefer to be doing something other than incessantly checking their phones, Googling or updating their social media statuses, then the evaporation of those companies’ stock market valuations would be a sight to behold. And while one can argue that such an outcome seems implausible, because of network effects and other factors, then a glance at the history of the IT industry might give you pause for thought.

The folks who run these companies understand this. For if there is one thing that characterizes the leaders of Google and Facebook it is their determination to take the long, strategic view. This is partly a matter of temperament, but it is powerfully boosted by the way their companies are structured: the founders hold the ‘golden shares’ which ensures their continued control, regardless of the opinions of Wall Street analysts or ordinary shareholders. So if you own Google or Facebook stock and you don’t like what Larry Page or Mark Zuckerberg are up to, then your only option is to dispose of your shares.

Being strategic thinkers, these corporate bosses are positioning their organizations to make the leap from the relatively small ICT industry into the much bigger worlds of healthcare, energy and transportation. That’s why Google, for example, has significant investments in each of these sectors. Underpinning these commitments is an understanding that their unique mastery of cloud computing, big data analytics, sensor technology, machine learning and artificial intelligence will enable them to disrupt established industries and ways of working in these sectors and thereby greatly widen their industrial bases. So in that sense mastery of the ‘digital’ is just a means to much bigger ends. This is where the puck is headed.

So, in a way, Martin Moore’s comparison2 of the digital giants of today with the great industrial trusts of the early 20th century is apt. But it underestimates the extent of the challenges we are about to face, for our contemporary versions of these behemoths are likely to become significantly more powerful, and therefore even more worrying for democracy.


  1. Or GAFA — Google, Apple, Facebook, Amazon — as our Continental friends call them, incorrectly in my view: Apple and Amazon are significantly different from the two ‘pure’ digital outfits. 

  2. Tech Giants and Civic Power, King’s College London, 2016.