Category Archives: Monopoly

Judge Throws Out Two Antitrust Cases Against Facebook

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There’s been much jubilation in the tech industry as a result of US District judge James Boasberg (an Obama nominee, incidentally) summarily dismissing antitrust lawsuits brought against the company by the Federal Trade Commission and more than 40 states.

The judge eviscerated one of the federal government’s core arguments, that Facebook holds a monopoly over social networking, saying prosecutors had failed to provide enough facts to back up that claim. And he said the states had waited too long to bring their case, which centers on deals made in 2012 and 2014.

The judge said the F.T.C. could try again within 30 days with more detail, but he suggested that the agency faced steep challenges.

As it happens, I agree with the judge but draw different conclusions about the significance of the case. I really liked his succinct critique of it.

Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed. The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services. The Complaint contains nothing on that score save the naked allegation that the company has had and still has a “dominant share of that market (in excess of 60%).” Such an unsupported assertion might (barely) suffice in a Section 2 case involving a more traditional goods market, in which the Court could reasonably infer that market share was measured by revenue, units sold, or some other typical metric. But this case involves no ordinary or intuitive market. Rather, PSN services are free to use, and the exact metes and bounds of what even constitutes a PSN service — i.e., which features of a company’s mobile app or website are included in that definition and which are excluded — are hardly crystal clear. In this unusual context, the FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague “60%-plus” assertion too speculative and conclusory to go forward. Because this defect could conceivably be overcome by re-pleading, however, the Court will dismiss only the Complaint, not the case, and will do so without prejudice to allow Plaintiff to file an amended Complaint.

What the failure of the FTC and the States’ complaint shows is that old conceptions of ‘monopoly’ don’t map accurately onto the monopolistic-like power of some tech giants — Facebook in this instance. So pursuing old-style antitrust actions on the basis of ‘monopoly’ is likely to come unstuck, especially with a judiciary that’s been conditioned by decades of Borkism. What’s needed, therefore, is lots of legislative creativity to develop conceptions of corporate power that are appropriate to the power that these corporations actually wield.

In the case of Facebook, for example, a more promising line of inquiry might be that suggested by my colleague Jennifer Cobbe — and also by Josh Simon and Dipayan Ghosh. This line of argument locates the real monopolistic power of social media companies in the algorithms that determine users’ newsfeeds, i.e. what kinds of information users are presented with. One can think of these algorithms as constituting the critical infrastructure of the public sphere. Or to put it another way: once upon a time, John D. Rockefeller & Co exerted (and abused) their monopoly control over the railroads that other oil-drillers needed to use to get their oil to market. Mark Zuckerberg plays an analogous role today — as the controller of the virtual railroad that conveys ideas and information to individual citizens. The implication is that regulation as infrastructure might be a more appropriate way of asserting democratic control.

Finally, the Johnson government appears to have had a good idea

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This morning’s Observer column:

On Tuesday, in a rare break with recent practice, a branch of the UK government did something clever. The Competition and Markets Authority (CMA) outlined plans for an innovative way of regulating powerful tech firms in a way that overcomes the procedural treacle-wading implicit in competition law that had been designed for an analogue era.

The proposals emerged from an urgent investigation by the Digital Markets Taskforce, an ad hoc body set up in March and led by the CMA with input from the Information Commissioner’s Office and Ofcom, the telecommunications and media regulator. The taskforce was charged with providing advice to the government on the design and implementation of a pro-competition regime for digital markets. It was set up following the publication of the Treasury’s Furman review on unlocking digital competition, which reported in March 2019 and drew on evidence from the CMA’s previous market study into online platforms and digital advertising.

This is an intriguing development in many ways. First of all it seems genuinely innovative – unlike this week’s antitrust lawsuits brought against Facebook in the US…

Read on

If this survives the ‘consultation’ (i.e. lobbying) phase and makes it onto the statute book, then things could get interesting.

Sunday 15 November, 2020

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Metropolitan life

Quote of the Day

”A trip through a sewer in a glass-bottomed boat.”

  • Wilson Mezner, describing his time in Hollywood.

Musical alternative to the radio news of the Day

Mark Knopfler | Going Home | Royal Albert Hall | 2019

Link

When it comes to Amazon, breaking up is hard to do

This morning’s Observer column

The European commission has opened an antitrust investigation of Amazon, on the grounds that the company has breached EU antitrust rules against distorting competition in online retail markets. Amazon, says the commission, has been using its privileged access to non-public data of independent sellers who sell on its marketplace to benefit the parts of its own retail business that directly compete with those third-party sellers. The commission has also opened a second investigation into the possible preferential treatment of Amazon’s own retail offers compared with those of marketplace sellers that use Amazon’s logistics and delivery services.

The good news about this is not so much that the EU is taking action as that it is doing so in an intelligently targeted manner. Too much of the discourse about tech companies in the last two years has been about “breaking them up”. But “break ’em up” is a slogan, not a policy, and it has a kind of Trumpian ring to it. The commission is avoiding that.

It is also avoiding another trap – that of generally labelling Amazon as a “monopoly”…

Read on

Long Read of the Day

Welcome to Apple: A one-party state

The tech giants have as much money and influence as nations. So what if we reported on them like countries? What would Apple be? A liberal China…

Read on

The generational impact of Moore’s law

Lovely post by Venkatesh Rao about the mindset induced by living in a world governed by Moore’s Law.

Moore’s Law was first proposed in 1965, then again in revised form in 1975. Assuming an 18-month average doubling period for transistor density (it was ~1 year early on, and lately has been ~3y) there have been about 40 doublings since the first IC in 1959. If you ever go to Intel headquarters in San Jose, you can visit the public museum there that showcases this evolution.

The future of Moore’s law seems uncertain, but it looks like we’ll at least get to 1-3 nanometer chips in the next decade (we were at 130nm at the beginning of the century, and the first new computer I bought had a 250nm Celeron processor). Beyond 1-3nm, perhaps we’ll get to different physics with different scaling properties, or quantum computing. Whatever happens, I think we can safely say Gen X (1965-80) will have had lives nearly exactly coincident with Moore’s Law (we’ll probably die off between 2045-85).

While there have been other technologies in history with spectacular price/performance curves (interchangeable parts technology for example), there is something special about Moore’s Law, since it applies to a universal computing substrate that competes with human brains.

GenXers are Moore’s Law people. We came of age during its heyday…

Original and interesting, like almost everything Rao writes. Worth reading in full.

Other, hopefully interesting, links

  • Diane Coyle’s Longlist for the economics book of 2020. Link. Damn: I’ve only read one of them.And she’s missed out Zachary Carter’s fine biography of Keynes (and Keynesianism).

  • iFixit’s iPhone 12 mini teardown looks at how Apple fit so much into such a tiny device. iFixit does wonderful analyses of intricate devices. This ‘teardown’ of the new mini version of the iPhone 12 is a gem. Link

  • Hermione Lee on what it’s like writing a biography of a living subject. Link In her case it’s the playwright Tom Stoppard. The book is out — and on my list. My friend Gerard is enjoying it. And I loved her biography of Virginia Woolf.

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Tuesday 27 October, 2020

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Soho, London.

Quote of the Day

“A family with the wrong members in control — that, perhaps, is as near as one can come to describing England in a phrase.”

  • George Orwell, 1941, in The Lion and the Unicorn: Socialism and the English Genius.

Musical alternative to the morning’s radio news

Bach | Toccata and Fugue, BWV 565 | Edson Lopes

Link

Thanks to Ross Anderson for suggesting it.

Gatekeepers redux?

Ben Smith (who writes about media for the New York Times) has an interesting piece about how Trump’s associates tried to plant a phoney scandal story about Joe Biden on the Wall Street Journal, and how the Journal didn’t take the bait. It’s an interesting story in itself, but it’s also about a larger shift in the American media ecosystem which suggests that maybe the editorial gatekeepers of the pre-Internet ecosystem still have some clout.

It has been a disorienting couple of decades, after all. It all began when The Drudge Report, Gawker and the blogs started telling you what stodgy old newspapers and television networks wouldn’t. Then social media brought floods of content pouring over the old barricades.

By 2015, the old gatekeepers had entered a kind of crisis of confidence, believing they couldn’t control the online news cycle any better than King Canute could control the tides. Television networks all but let Donald Trump take over as executive producer that summer and fall. In October 2016, Julian Assange and James Comey seemed to drive the news cycle more than the major news organizations. Many figures in old media and new bought into the idea that in the new world, readers would find the information they wanted to read — and therefore, decisions by editors and producers, about whether to cover something and how much attention to give it, didn’t mean much.

But the last two weeks have proved the opposite: that the old gatekeepers, like The Journal, can still control the agenda. It turns out there is a big difference between WikiLeaks and establishment media coverage of WikiLeaks, a difference between a Trump tweet and an article about it, even between an opinion piece in The Wall Street Journal suggesting Joe Biden had done bad things, and a news article that didn’t reach that conclusion.

Interesting throughout.

College Application Essay Prompts For the 2020-2021 Cycle

By Eric Shan in McSweeney’s.

1 Write about a personal challenge you have recently faced and how it has shaped who you are today. While we would prefer you write about something other than the pandemic, we are resigned to the fact that you will probably write about the pandemic. Please just avoid using the word “unprecedented.”

2 Why do you want to attend our university? This is the only year we would actually believe you if you wrote, “I like your rural environment, secluded from the rest of humanity.”

and then all the way down to…

8 Which opportunities would you take advantage of while on campus (i.e., in your childhood bedroom)? Please visit our redesigned student website to browse extracurricular activities like tutoring local students but on Zoom, performing a capella but on Zoom, and playing intramural frisbee but on Zoom.

9 Who inspires you? Is it our university president, who instituted mass layoffs and a hiring freeze before increasing his own salary by 35%?

10 At the end of the day, what’s really the point of doing any of this anyway?

The App Store Debate: A Story of Ecosystems

Steven Sinofsky was at one time a very senior Microsoft executive — responsible for the development and marketing of Windows, Internet Explorer, and online services such as Outlook.com and SkyDrive. He left Microsoft in 2012 and is now a board partner at Andreessen Horowitz, the prominent venture capital firm. He writes a fascinating blog in which he occasionally picks up a topic that interests him and in the process reveals an astonishing depth of knowledge about the tech industry. (He also seems to have an encyclopedic knowledge of the Japanese camera industry.)

He’s just published the latest of his deep dives, triggered by the analogies being drawn between the current DoJ antitrust suit against Google and the 1998 DoJ prosecution of Microsoft, about which Sinofsky probably knows more than almost anyone. This is a VERY long read, and not for anyone who isn’t interested in the history of the PC industry, but it’s also a startling reminder of how complicated this stuff can get. If you never used MS-DOS or don’t remember Sony Vaio laptops, then this isn’t for you. If, on the other hand, you have experienced these products and that period in the tech industry’s evolution, it’s pure bliss.

Trump’s debts

Source: Financial Times today.

Other, possibly interesting, links

  •  470 West Vista Chino, Palm Springs, California. Yeah, but where do the humans live? Link

  • Canadian book makes shortlist for oddest book title of the year. A Dog Pissing at the Edge of a Path competes with 5 other contenders. You do wonder about people sometimes. Link

  • The longest-lived institutions in the world. From the Long Now Foundation, which tres to take the long view of everything. Link.

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Tuesday 20 October, 2020

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English pastoral

From our afternoon cycle ride today.

Quote of the day

”The making of a journalist: no ideas and the ability to express them.”

  • Karl Kraus

Musical alternative to the morning’s radio news

Gillian Welch: Acony Bell

Link

New to me. Thanks to my friend Andrew Ingham (who plays in that splendid band, Acoustic Grandads, currently grappling with this streaming business) for the suggestion.

At last, Google gets taken to court by the US

Pardon me while I yawn. Suddenly the US Department of Justice (and the Attorneys-General of 11 states) have become shocked at what evil Google has been doing for decades in plain sight, while US regulators — under Obama as well as Trump — politely looked the other way. But now, all of a sudden, Attorney-General Barr has decided to strike.

Why?

Simple, there’s an election coming and Trump swore he would ‘do something’ about the tech companies who were suddenly annoying him rather than merely relaying and amplifying his propaganda. Barr is trying to show that he is delivering on the Boss’s threat.

And the rest of us are sitting around saying “What took you so long?”

What will be Google’s defence? Steve Lohr summarises it thus:

We’re not dominant and competition on the internet is just “one click away.”

That is the essence of recent testimony in Congress by Google executives. Google’s share of the search market in the United States is about 80 percent. But looking only at the market for “general” search, the company says, is myopic. Nearly half of online shopping searches, it notes, begin on Amazon.

Next, Google says the deals the Justice Department is citing are entirely legal. Such company-to-company deals violate antitrust law only if they can be shown to exclude competition. Users can freely switch to other search engines, like Microsoft’s Bing or Yahoo Search, anytime they want, Google insists. Its search service, Google says, is the runaway market leader because people prefer it.

The first of these defences — the one about competition being just “one click away” brings back memories.

Just over eight years ago I played host at Cambridge for four days to Eric Schmidt, who at that time was the Executive Chairman of Google. He was that year’s Humanitas Professor of Media in Cambridge, an appointment that required him to give three lectures and participate in a public symposium. The presence of such a powerful figure in the tech world gave rise to much interest among students and staff. And it was fascinating for me — like getting an intravenous injection of a certain kind of ideology.

When Schmidt was among us, we did naturally raise the power of the big digital monopolies like the one he headed. He had a reassuring bedside manner on that topic. His spiel went like this: if Google had a monopoly of search, then that was because it was providing the kinds of search facilities that people valued. After all, the service was free, and other search engines were merely a click away.

But what keeps us [i.e. Google] honest, he went on, is the fact that we know that somewhere in a garage two kids are planning to do to us what Larry page and Sergei Brin did to Alta Vista — the best search engine prior to Google’s arrival in 1998. The implication was that the barriers to entry to the marketplace were so low that a couple of smart kids with a better idea could triumph.

What he omitted to mention of course is that while that might have been true in the late 1990s, by 2012 — in addition to the fabled garage — those kids would have needed a global network of giant server farms, together with exabytes of user data on which to train and refine their algorithms. The barrier to entry had become as high as Everest, and Google and the other winners who took all were secure.

And one of the many ironies of the pandemic is that they will emerge from it even more secure, with their grip on the world even more consolidated. During the pandemic the tech companies have been on a mergers-and-acquisition spree not seen in a decade.

The DoJ case will drag on for quite a while, in the way that these things do. But the inquiry I’d like to see is into why the relevant Federal regulators did little or nothing about tech monopolists’ behaviour. That’s something that all the politicians on the House of Representatives investigation into monopoly power of the tech giants seemed to have agreed on.

As Shira Ovide says,

House members said that the F.T.C. and others too often left unchallenged Big Tech’s pattern of getting more powerful by acquiring competitors, and that the agencies did not crack down when these companies broke the law and their word. I couldn’t agree more.

For one small example, look at what happened in 2013. The F.T.C. said that it was getting harder for people to tell the difference between regular web search results and paid web links on Google’s search engine. This risked hurting both those trying to use the site, and companies that had no choice but to spend more money with Google to get noticed.

The F.T.C. urged Google and others to make it more clear when people were seeing web search results rather than paid links.

What happened since that warning in 2013? Not very much. If anything, it’s gotten even more difficult to tell Google’s ads from everything else.

Why US regulators were asleep at the wheel is a long story involving neoliberal ideology and judicial doctrine that saw nothing wrong with a monopoly so long as its services were ‘free’ (Google, Facebook) or undercutting competitors with higher operating costs, including paying taxes (Amazon). So for now let’s just sit back, secure in the knowledge that this anti-monopoly case will run and run.

Tips for journalists covering the US election

Here’s a summary of the advice from Media for Democracy:

1 Covering the Election Amid Attempts to Undermine It

  • Deny a platform to anyone making unfounded claims
  • Put voters and election administrators at the center of elections.
  • Strive for equity in news coverage.
  • Make quality coverage more widely accessible to expand publics for news.

2 What to do in the case of contested election results when the outcome is unclear or a candidate does not concede

  • Publicize your plans and do not make premature declarations.
  • Develop and use state- and local-level expertise to provide locally-relevant information.
  • Distinguish between legitimate, evidence-based challenges to vote counts and illegitimate ones that are intended to delay or call into question accepted procedures.
  • In the event of a contested or unclear outcome, don’t use social media to fill gaps in institutionally credible and reliable election information.
  • Cover an uncertain or contested election through a “democracy-worthy” frame.
  • Recognize that technology platforms have an important role to play.
  • Embrace existing democratic institutions

3 How to prepare for the possibility of post-election civil unrest?

  • Help Americans understand the roots of unrest.
  • Uphold democratic norms.
  • Use clear definitions for actions and actors and provide coverage appropriate to those definitions.
  • Do not give a platform to individuals or groups who call for violence, spread disinformation, or foment racist ideas.

For more detail on each heading, check the link.

Reading through the document I don’t know whether to cheer or weep. Mostly the latter, because of its revelation that this is stuff that every journalist should know but apparently doesn’t. I’d have thought that almost everything in the above lists is taught in Journalism 101.

Other possibly interesting links

  • Clockmaking — Link Yes, you read that correctly. Part of a series by one of the most interesting thinkers on the Web. He’s been building a clock.

  • Arnold Kling: Social media are really “gossip at scale”. Link

  • Explaining Brexit to Americans. Astute blog post by Alina Utrata, an American graduate student who had been studying in Belfast.

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Correction:

In yesterday’s edition I incorrectly attributed the mantra “pessimism of the Intellect, optimism of the Will” to Nietzsche. Many thanks to the readers who emailed to point out that Gramsci should have got the credit. Confirms my belief that Rule One for bloggers is: always assume that somewhere out there is someone who knows more than you. Never fails.

Sunday 16 August, 2020

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Quote of the Day

““Most people would sooner die than think; in fact, they do so.”

  • Bertrand Russell

This was the quote that came to mind when I realised that Trump was going ahead with his Tulsa rally.

Musical alternative to the morning’s radio news

Glenn Gould plays Mozart’s Rondo Alla Turca (4 minutes).

Link

Working from home: a dream now turning into a nightmare?

This morning’s Observer column:

Remember when it was so exciting to be able to WFH – work from home? When your boss, instead of being grumpy and taking a grudging “well-if-you-must” attitude was suddenly insisting that you had to work remotely? And how refreshing that seemed at the beginning? No more dispiriting 90-minute commutes, for example. Suddenly, extra hours were added to your day. A better work-life balance beckoned, because we had developed a technological infrastructure that had made distance irrelevant. What was not to like?

Of course there were glitches. Childcare, for example, became a nightmare when schools and nurseries closed. Not everyone had good, reliable broadband. And it turned out that not every household had multiple laptops either. Likewise, many people lived in small apartments where the choice of workspace boiled down to either the kitchen table or the cubbyhole that masqueraded as a spare bedroom. And there were still large numbers of “critical” workers whose work couldn’t be done from home. But still, wasn’t it wonderful that so many of us could?

Well, that was then and this is now…

Read on.

Reagan and the withering of the American state

Perceptive essay in Noema Magazine:

The great historical irony of America is that, for all its valiant efforts as a global power fighting off external threats from fascism to Soviet communism, its ultimate demise will likely be the result of its own internal doings — or undoings.

The paradox is that the politics of former President Ronald Reagan, who is credited with winning the seminal ideological battle of the 20th century, the Cold War, is also the politics that undermined America’s future. The inability to come to grips with the COVID-19 pandemic can be traced directly to his notion in the 1980s that “government is not the solution to our problem, government is the problem.”

Reagan saw it as his mission to undo the ambitions of the welfare state, such as it was, that came into existence through the New Deal as a response to the Great Depression, and the Great Society, that sought to cushion the security of the elderly and mend the racial injustice decried by the civil rights movement. His mantra celebrated the cult of the entrepreneur who could create wealth freely without the burdens of society weighing on his or her profit margins, while demoting the importance of education to upward mobility and dissing the role of taxation and regulation as critical pillars for maintaining the operating capacity of a complex modern society. Public administration was demeaned as nothing more than meddlesome bureaucrats clogging up free enterprise with cumbersome paperwork.

That sums it up nicely. Trump has done his best to finish the job. If he wins in November, he will have time to tidy up the loose ends of this destructive project.

(btw Michael Lewis’s fine book, The Fifth Risk: Undoing Democracy provides a sobering progress report on Trump’s efforts to continue Reagan’s project.)

Johnson’s ‘mandate’

I was just about to use this front page of the FT of December 14/15 2019 for wrapping garbage and realised that that would be a really appropriate use for it.

“Stonking”, I gather (having checked some dictionaries), means “of exceptional size or quality”, and is believed to derive from the verb “stonk”, which means “to bombard (soldiers, buildings, etc) with artillery”. In that sense Johnson has used his mandate to bombard the hapless British public with florid BS.

It turned out also that the electorate had given him a mandate to screw up the country’s response to Covid.

Peter Geoghegan’s Democracy for Sale

My Observer review is in today’s paper. This is how it concludes…

Remainers will probably read Geoghegan’s account of this manoeuvring by Brexiters as further evidence that the Brexit vote was invalid. This seems to me implausible or at any rate undecidable. Geoghegan agrees. “Pro-Leave campaigns broke the law,” he writes, “but we cannot say with any certainty that the result would have been different if they had not. Instead, the referendum and its aftermath have revealed something far more fundamental and systemic. Namely, a broken political system that is ripe for exploitation again. And again. And again.”

And therein lies the significance of this remarkable book. The integrity and trustworthiness of elections is a fundamental requirement for a functioning democracy. The combination of unaccountable, unreported dark money and its use to create targeted (and contradictory) political messages for individuals and groups means that we have no way of knowing how free and fair our elections have become. Many of the abuses exposed by Geoghegan and other researchers are fixable with new laws and better-resourced regulators. The existential threat to liberal democracy comes from the fact that those who have successfully exploited some inadequacies of the current regulatory system – who include Boris Johnson and his current wingman, Cummings – have absolutely no incentive to fix the system from which they have benefited. And they won’t. Which could be how our particular version of democracy ends.

Summer books #5

Goliath: the 100-year War between Monopoly Power and Democracy by Matt Stoller, Simon and Schuster, 2019.

One of the things I found puzzling when I started to think about the societal menace of tech platforms was how apparently relaxed so many people, especially in the US, felt about the new generation of corporate giants that were acquiring monopoly power. This led to a deep dive into the history of antitrust and the pivotal influence of Robert Bork’s 1978 book, The Antitrust Paradox which essentially argued that so long as there was no evidence of consumer harm (e.g. by price gouging) then the size and reach or a corporation should not be a matter for concern. Since some of the tech giants I was interested in offer ‘free’ services, this view (which became very influential in US legal circles) gave outfits like Google, Facebook et al a mostly free pass from legislative scrutiny. Which baffled me: corporate power is unaccountable power, something that no democracy should be able to accept. While I was stuck in those weeds, I longed for a synoptic history of the monopoly problem — so you can imagine how pleased I was when Matt Stoller’s book arrived. It does what it says on the tin. And Stoller shares my combative mindset about these matters.

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Tuesday 28 July, 2020

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Quote of the Day

A handful of very large, very rich companies that need fewer and fewer workers doesn’t add up to an economy.

  • Rana Foroohar, Financial Times, 27.07.2020.

Today’s musical alternative to Radio 4’s ‘Today’ programme

BB King and friends, live in the Albert Hall in 2011

So will Congress holds tech bosses to account tomorrow?

Er, don’t hold your breath. The New York Times set the scene this morning:

The captains of the New Gilded Age — Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook and Sundar Pichai of Google — will appear together before Congress for the first time to justify their business practices. Members of the House judiciary’s antitrust subcommittee have investigated the internet giants for more than a year on accusations that they stifled rivals and harmed consumers.

The hearing is the government’s most aggressive show against tech power since the pursuit to break up Microsoft two decades ago. It is set to be a bizarre spectacle, with four men who run companies worth a total of around $4.85 trillion — and who include two of the world’s richest individuals — primed to argue that their businesses are not really that powerful after all.

Last Saturday I highlighted Scott Galloway’s wonderful list of searching questions that the law-makers should ask, but probably won’t. We’ll just have to wait and see.

Interestingly, this will be the first time that Jeff Bezos has appeared before Congress.

The fact that the House judiciary’s antitrust subcommittee has been thinking about antitrust questions in relation to the tech giants is interesting, though. My hope is that the researchers have moved beyond “break ’em up” sloganeering and have started to think about the kinds of policy measures that would stand a chance of having an impact on the companies.

In that context, Benedict Evans published a very thoughtful essay on the regulation issue this week.

Tech has gone from being just one of many industries to being systemically important to society. My old colleague Marc Andreessen liked to say that ‘software is eating the world’ – well, it did.

The trouble is, when tech becomes the world, all of tech’s problems matter much more, because they become so much bigger and touch so many more people; and in parallel all of the problems that society had already are expressed in this new thing, and are amplified and changed by it, and channeled in new ways. When you connect all of society, you connect all of society’s problems as well. You connect all the bad people, and more importantly you connect all of our own worst instincts. And then, of course, all of these combine and feed off each other, and generate new externalities. The internet had hate speech in 1990, but it didn’t affect elections, and it didn’t involve foreign intelligence agencies.

When something is systemically important to society and has systemically important problems, this brings attention from governments and regulators. At a very high level, one could say that all industries are subject to general legislation, and some also have industry-specific legislation. All companies have to follow employment law, and accounting law, and workplace safety law, and indeed criminal law. But some also have their own laws as well, because they have some very specific and important questions that need them. This chart is an attempt to capture some of this industry-specific law. Banks, airlines and oil refineries are regulated industries, and technology is going to become a regulated industry as well.

It’s a great, wise essay. Worth reading in full.

How not to win friends in Silicon Valley

I’ve just learned that my Observer piece about Trump and Zuckerberg on Sunday had over a million page-views.

That’s even more than the piece I wrote in the Summer of 2013 about Edward Snowden.

‘Hygiene Theatre’ is a huge waste of time

Really interesting piece by Derek Thompson in The Atlantic arguing that surface transmission is not such a big threat compared with airborne transmission. In other words, “people are power scrubbing their way to a false sense of security”.

To some American companies and Florida men, COVID-19 is apparently a war that will be won through antimicrobial blasting, to ensure that pathogens are banished from every square inch of America’s surface area.

But what if this is all just a huge waste of time?

In May, the Centers for Disease Control and Prevention updated its guidelines to clarify that while COVID-19 spreads easily among speakers and sneezers in close encounters, touching a surface “isn’t thought to be the main way the virus spreads.” Other scientists have reached a more forceful conclusion. “Surface transmission of COVID-19 is not justified at all by the science,” Emanuel Goldman, a microbiology professor at Rutgers New Jersey Medical School, told me. He also emphasized the primacy of airborne person-to-person transmission.

So “hygiene theatre” may be the Covid equivalent of the security theatre that goes on in airports.

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Tech monopoly: the long view

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Just been listening to a terrific conversation on the ‘Talking Politics’ podcast between the host, David Runciman, and Gary Gerstle (who is the Mellon Professor of American history at Cambridge1) about the great campaigner and journalist Ida Tarbell — the woman who brought down John D Rockefeller and his company, Standard Oil.

The conversation left me musing about why (and how) Tarbell (and her fellow ‘muckrakers’) managed to get so much traction with the American public?

One reason was outrage at the way ordinary smallholders were driven out of business by Rockefeller & Co. (Remember, as David Runciman pointed out in the podcast, that in the early days drilling for oil was what small farmers did in Pennsylvalia.) You could drill for your own oil, but if you needed to get it to market you’d have to pay freight rates determined by the railway monopolist — and beat the prices that Rockefeller could set. So even small folks felt the heat.

Another was that the idea of ‘monopoly’ had unique historical resonance for American citizens: it was linked in the public mind with the American revolution — seen in part as a revolt against the charter-granting proclivities of the English Crown.

Also, the rise of new industrial Titans was seen as a challenge to the American dream — of how lowly immigrants seeking a better life in the New World could flourish by their own efforts with no monarch or grandee to stop them. The big trusts could therefore be portrayed as an attack on the very idea of what the US was supposed to be — and thus as a threat to its democracy.

As a result, Tarbell and her peers may have been preaching to people who were ripe for conversion. At any rate, public hostility to the monopolists of the first Gilded Age seems to have flourished and spread. This was manifested in the 1912 presidential election, for example, where the three main candidates were extremely hostile to the monopolists, though in different ways.

Turning to the present…

The contemporary tech giants are also a threat to democracy but in rather different ways. This means that they might be more difficult to bring under democratic control. Apart from anything else, there is much less public outrage about them than there was in 1912 United States. Among the reasons for this public lassitude are:

  • the nature of the threat is more indirect and requires a relatively sophisticated mental model of democratic essentials to be properly appreciated
    • Unlike in late 19th-century America, the contemporary public benefits from — and enjoys using — many of the services provided by the modern monopolists (think WhatsApp, Skype, YouTube, Instagram, Facebook); in the late 19th century the benefits to the public of the great wealth and power being accumulated by the Robber Barons were less obvious or perceived as non-existent; the new tech titans may not look like middle-aged bastards in Homburg hats, but they are just as ruthless and acquisitive
    • there’s little public understanding of the implications of the implicit Faustian data-bargain that users have struck with the surveillance capitalists
    • official reactions to digital monopoly have been neutered by a combination of neoliberal ideology, Chicago Law School judicial thinking and tech lobbying.
    • Rockefeller, Carnegie, Vanderbilt, Morgan & Co had operations mostly concentrated in a single jurisdiction. Their Trusts were not global operations in the way that modern transnational corporations are.

Since the shocks of 2016 we have seen the growth of a degree of public unease about the dangers of our current generation of Robber Barons (the so-called ‘techlash’). We see this, for example, in the presidential campaigns of Bernie Sanders and Elizabeth Warren at the moment. And there is also some evidence of tech-disaffection on the Right in the US. But the diagnoses and remedial policies that are being discussed seem inchoate, incoherent and unlikely to be fit for contemporary purpose. And — most importantly — there is, as yet, no sign of the kind of public outrage that would motivate serious political action.

One final historically-inspired thought. It took about 35 years for the public outrage that was manifested in the 2012 election to find its full expression in legislation in FDR’s first term as President. Gary Gerstle attributed much of the delay to the length of time it took the US Supreme Court to change its collective mind on some of the key issues involved. That problem remains— maybe in more acute form if Trump gets re-elected. So if anyone is hoping to see rapid and effective control of our current monopolists, they will need the patience of Job.

  1. Ironically in the present context, Gary’s Chair is endowed by the foundation established by the last of the great monopolists, Andrew Mellon! ↩

What took governments so long to wake up to the tech giants’ power?

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Interesting NYT column by Kara Swisher:

Here’s a little quiz. When was the last time a significant social media network was founded in the United States? And what about a competitive search engine company? An online ad network? And what about a truly wide-ranging e-commerce start-up?

Here are the depressing answers. The social network Snapchat, in 2011. For search, Microsoft’s Bing appeared in 2009, a replacement for its Live Search. I’m drawing a blank on an ad network. With e-commerce, the answer is probably Wayfair, which arrived in 2002, and still has only 1.3 percent of the market (most retail innovation has been in niche areas, like luggage (Away) or special fashion (The RealReal)).

To put this another way: Facebook and its Instagram unit have close to 50 percent of the social media market, dwarfing all the other companies in monthly active users tenfold. Google has about 90 percent of the search market, with Bing and Yahoo dwindling ever further behind by the month. Google and Facebook also suck up 60 percent of the digital ad spend, with only Amazon moving up aggressively in that fast-growing space. And speaking of Amazon, the retail giant has about 50 percent of total e-commerce sales in the United States, with eBay and Walmart at 7 percent and 4 percent, respectively.

Finally, it looks as though the US government is beginning to think that there might be something wrong here. Which prompts three questions:

  1. What took them so long? Was it just that they were still in thrall to Robert Bork’s The Antitrust paradox?
  2. Have they left it too late?
  3. And how do you punish companies that can absorb a $5B fine without missing a beat?

(Interestingly, Amazon.co.uk is currently selling a paperback copy of Bork’s book for £207.02!)

Fines don’t work. To control tech companies we have to hit them where it really hurts

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Today’s Observer comment piece

If you want a measure of the problem society will have in controlling the tech giants, then ponder this: as it has become clear that the US Federal Trade Commission is about to impose a fine of $5bn (£4bn) on Facebook for violating a decree governing privacy breaches, the company’s share price went up!

This is a landmark moment. It’s the biggest ever fine imposed by the FTC, the body set up to police American capitalism. And $5bn is a lot of money in anybody’s language. Anybody’s but Facebook’s. It represents just a month of revenues and the stock market knew it. Facebook’s capitalisation went up $6bn with the news. This was a fine that actually increased Mark Zuckerberg’s personal wealth…

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