Fall 2021
Dear Friends and Family,
Segment 2 of the Big Tech & AI series is broken down into five parts with respect to monopolistic action: (1) The Return of Monopolies, (2) Big Tech’s Vision, (3). How Did We Get to the Point? (4). Some of the Consequences, and (5). Potential Action that Could be Taken.
My Takeaways:
My takeaways for this segment are in the category of consequences.
Next: Segment 3 focuses on Big Tech’s Business Model: why has it been so successful and what has been the cost to us, the consumer, in terms of personal privacy.
Happy Learning,
Harley
Dear Friends and Family,
Segment 2 of the Big Tech & AI series is broken down into five parts with respect to monopolistic action: (1) The Return of Monopolies, (2) Big Tech’s Vision, (3). How Did We Get to the Point? (4). Some of the Consequences, and (5). Potential Action that Could be Taken.
My Takeaways:
My takeaways for this segment are in the category of consequences.
- By sorting information Big Tech makes decisions that shape our opinions on issues and politicians.
- Facebook lies to its customers yet refuses to admit any wrongdoing even after being caught and fined. They can’t be trusted.
- A serious question is posed: Can democracy survive given Big Tech has amassed such power and has a different vision for the country, one of aristocracy rule?
Next: Segment 3 focuses on Big Tech’s Business Model: why has it been so successful and what has been the cost to us, the consumer, in terms of personal privacy.
Happy Learning,
Harley
BIG TECH AND ARTIFICIAL INTELLIGENCE (AI) – SEGMENT 2
THE RETURN OF MONOPOLIES - EXCERPTS
THE RETURN OR MONOPOLIES: Back in September of 2019, Mark Zuckerberg paid me a visit. He arrived prepared to reason with me, I could see. His demeanor was polite. I decided to get to the heart of the matter. You talk about competition and privacy and ending unfair censorship, I said. But it’s your monopoly that gives you the power to do all those things. So, let’s get serious. Stop buying off competitors. Stop throttling competition. Prove you are ready to change. End your monopoly: sell Instagram and WhatsApp. Break up the Facebook empire. A moment later, Zuckerberg replied, his patient tone turned to outrage. “I don’t know what to say to this,” he said. “That’s absurd. That is not going to happen.” Which, of course, was the whole point.
Facebook was not about to give up its monopoly. Facebook and its fellow Big Tech platforms – Google, Twitter, Amazon, and Apple – wanted to run the American economy, they wanted to run the country. All I could think was that America had again entered the age of monopolists. They were back, as powerful and menacing to our republic as they had been a century before.
Consider the merest sampling of their power. Facebook: Of adults in America who use social media, 99% use Facebook. That’s nearly 70% of all adults in the country. News operations now optimize their stories for distribution on Facebook and go out of business when they don’t. Google is equally, if not more, powerful. Nine out of every ten searches on the Internet are performed by Google Search, and when you consider how many Americans now use Google to get their basic information on everything from weather to sports to current events, Google’s ability to direct the content we consume is unprecedented. Google’s browser, Chrome, holds 68% of the global desktop market share and 63% of the market for mobile browsing. Its phone, Android, represents 85% of smartphone market share worldwide. Even Google Maps is huge, controlling 67% of the smartphone map market. More than any other company, Google knows exactly where you are, what you are doing, and with whom. And more than any other entity, it has the ability to shape American’s first impression on any subject.
Then there’s Amazon. By 2020, the company boasted 126 million subscribers to its Amazon Prime subscription service, amounting to more than one-third of the nation. That same year Amazon also controlled at least 40% of all online sales in America, giving it power over retail and commerce undreamt of by other earlier American sales giants, to say nothing of the local retail stores, it was in the process of destroying.
Source: The Tyranny of Big Tech by Senator Josh Hawley (2021).
BIG TECH’S VISION: Big Tech considers the concentration of power in its companies – in the networks they control – an urgent social good, the precursor to global harmony, a necessary condition for undoing the alienation of humankind. Silicon Valley’s craving for monopoly stretches back, strangely enough to the counterculture of the 1960s, where it emerged from the most lyrical of visions of peace and love. In Silicon Valley, this naïve belief has been handed down through the ages. Even the most hard-nosed corporations have internalized it. There is no doubt they believe in their own righteousness, but they also practice corporate gamesmanship, with all the established tricks: lobbying, purchasing support in think tanks and universities, quietly donating money to advocacy groups that promote their interests.
Source: World Without Mind: The Existential Threat of Big Tech by Franklin Foer (2017)
HOW DID WE GET TO THIS POINT? How is it that Big Tech has, in a matter of 20 years, so reshaped our economy? Key to understanding this: Many platform technology firms operate as natural monopolies. Natural monopolies are often a product of network effects, meaning that the more users a platform has, the more attractive it is to new users. Barriers to entry, be they capital costs or simply getting there first and controlling the physical or virtual territory, are huge, and prevent others from entering the market in an effective way. Big Tech companies so dominate their spaces that they don’t just lay claim to a market but seize the market entirely. Then, they use that power to move into new ones, creating vast meta-networks that are astonishing in their power and reach.
Netflix and Amazon are no longer content being the uncontested leaders in the video streaming market, now they are also dominant content producers, becoming in effect TV and movie studios, spending billion of dollars on original television programming. Google has lurched into the transportation business with its bid to create a self-driving car, and Facebook is trying to launch its own financial system with the creation of a bespoke cryptocurrency Libra. Big Tech, in other words doesn’t just want to become a leader in one sector. It wants to become the platform for everything, the operating system for your life. The network effect is one way the big get bigger. Another is simply by intimidating smaller players and stealing their intellectual property. As the tech companies get bigger and bigger still, they are increasingly using that market power to squash their rivals, by buying up competitors as fast as possible or by poaching their talent.
Given all this, one might ask why the Big Tech firms haven’t yet been treated as monopolies by the federal government and broken up, or at least transformed and constrained by the threat of regulation. The legal rationale for Big Tech’s unimpeded global dominance became the basis of a 1979 Supreme Court decision that is still being upheld today. Monopoly should no longer be defined as it always has been under the Sherman Act, as a company that took unfair advantage of a commanding market position to stifle competition. Instead, monopoly occurred when a company unfairly boosted prices it charged consumers. If a dominate player didn’t raise prices, it was not engaged in monopoly. Big Tech firms, however, have no need to raise prices, because they have a business model by which they are not paid in money: they are paid in data, via a system of barter.
Source: Don’t Be Evil: The Case Against Big Tech by Rana Foroohar (2021)
“Shared” computing, today, is what companies like Amazon, Facebook, Google, and Twitter use. You give them your data, which is then housed on their computer servers and owned by them. In exchange, you get a chance to use their services. My source says that the public’s decision to accept this devil’s bargain – convenience, in exchange for a loss of control over your data – is what led to the current predicament.
Source: #Deleted by Allum Bokhari (2020)
The failure to regulate and break up the advertising duopoly of Facebook and Google has allowed them to grab control over media and centrally edit the flow of information.
Section 230 is a censorship law. This has always been its primary purpose. Indeed, one paragraph in the law specifically protects tech companies from lawsuits over restricted speech—whether or not the speech is constitutionally protected. Here is what it says: “No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”
Section 230 needs to be replaced with better, industry-wide standards that impose fair due process on tech platforms that wish to suspend service to a user. But it’s also clear that competing tech platforms are essential and must be encouraged.
Source: Break’em Up by Zephyr Teachout (2020)
SOME OF THE CONSEQUENCES: The Federal Trade Commission began investigating Facebook as early as 2011 over allegations that it took and broadcasted personal information customers had designated as “private,” while telling its customers just the opposite. Facebook eventually agreed to pay a hefty fine for these bad acts, only to find itself back on the firing line eight years later for violating the settlement terms and continuing to take its customers’ personal, private data. This time Facebook paid $5 billion for its misdeeds, still refusing to formally admit any wrongdoing. Source: The Tyranny of Big Tech by Josh Hawley
The algorithm is a novel problem for democracy. Technology companies boast, with little shyness, about how they can nudge users toward more virtuous behavior – how they can induce us to click, to read, to buy, or even to vote. The tactics are potent, because we don’t see the hand steering us. We don’t know how information has been patterned to prod us. But the knowledge monopolists have unique power in our democracy. They don’t just have the ability to pick the fate of a book, they can influence the fate of the Republic. By sorting information, they make decisions that shape our opinions on issues and politicians. Every writer, every media outlet, every book publisher depends on these companies for financial survival. These companies, therefore, have unique ability to inhibit criticism of themselves. They don’t need to lift a finger to ward off naysayers. By virtue of their size, the fact that they dominate much of the market for disseminating ideas, criticizing them often seems like a suicidal gesture.
Source: World Without Mind: The existential Threat of Big Tech by Franklin Foer (2017)
Big Tech controls all the access points to the consumer – web browsers, app marketplaces, and of course the social media platforms themselves. In the dissemination of apps and browser plugins, Big Tech is both player and referee. This is, of course, nakedly anticompetitive behavior.
Source: #Deleted by Allum Bokhari (2020)
Some Big Tech firms have responded to the growing public concern about privacy and anticompetitive business practices by playing to a long-standing American fear: it’s us versus China. Monopoly power, more than China itself, threatens the most important advantage that America has in the race for the high-growth industries of the future: a fair and open market system. In the U.S. these days, it is not only the small firms that are being squashed, but medium-sized and even large players, too. The country cannot compete with China on top-down approaches to competitiveness. Nor should it. But it could reassert the merits of a more decentralized system by curbing the companies that threaten it.
Source: Don’t Be Evil: The Case Against Big Tech by Rana Foroohar (2021).
I will argue that monopoly is tyranny: that no democracy can survive for long once a few corporations have amassed government power in such a massive form and scale. Amazon, Google, Facebook represent a new political phenomenon, a 21st century form of centralized, authoritarian government. They regulate, tax, extract, and terrify. They spy on workers and tell them what to think. They fund foundations that shape editorial boards. They are the biggest lobbyists. They don’t pay taxes. The embed themselves in federal, state, and local law enforcement. They build moats around their power and use predatory pricing or mergers to keep out competitors.
Source: Break’em Up by Zephyr Teachout (2020)
The concentration of economic power is an accepted fact of our lives. When the Economist analyzed the question last year, it found that most sectors of the economy – two-thirds of the nine hundred areas it examined – were far more concentrated than they were in 1997. Perhaps we should worry about how they squelch competitors, but there’s little reason to fret about the inefficiency of these industries. That, however, is a fairly incomplete view of the role theses companies play in American life. The threat of bigness posed by Amazon, Facebook, and Google is a threat to self-government.
Source: World Without Mind: The Existential Threat of Big Tech by Franklin Foer (2017)
Big Tech’s power, its hold on information and news and commerce, its business model of addiction and manipulation, is a danger not just to the working-class economy. Not just to our culture. This is a danger to the republic. The dominance of Big Tech threatens self-government by the great American middle, by the common man and woman. These modern-day robber barons threaten to centralize power in the hands of a few, while undermining the independence, economic standing, and cultural influence of everyone else.
Source: The Tyranny of Big Tech by Josh Hawley (2021)
POTENTIAL ACTION THAT CAN BE TAKEN
You may think that stopping mergers and breaking up companies are the only anti-monopoly tools. That’s too narrow. We can build any kind of corporate law and market structure we want. We can limit corporations by size, break up corporations by function, clarify rules for unfair business practices, demand neutrality for intermediaries, change the maximizing-profit model of businesses, outlaw certain forms of surveillance capitalism, and structure finance so that it can’t overtake commerce for starters. We can force Google Search to divest from Google Shopping and Google Maps. Amazon Marketplace can be separated from Amazon Web Services, AmazonBasics, and Alexa.
Source: Break’em Up by Zephyr Teachout (2020)
If there’s any opportunity for government to get involved, it’s at the antitrust level. Specifically, enforcing existing antitrust law against the Apple/Google App Store duopoly, which controls 98% market share of mobile app distribution channels. “If Gab was on both app stores today, we would have tens of millions of users.”
Source: #Deleted by Allum Bokhari (2020).
The unabbreviated version of the above can be found in the pdf document below.
THE RETURN OF MONOPOLIES - EXCERPTS
THE RETURN OR MONOPOLIES: Back in September of 2019, Mark Zuckerberg paid me a visit. He arrived prepared to reason with me, I could see. His demeanor was polite. I decided to get to the heart of the matter. You talk about competition and privacy and ending unfair censorship, I said. But it’s your monopoly that gives you the power to do all those things. So, let’s get serious. Stop buying off competitors. Stop throttling competition. Prove you are ready to change. End your monopoly: sell Instagram and WhatsApp. Break up the Facebook empire. A moment later, Zuckerberg replied, his patient tone turned to outrage. “I don’t know what to say to this,” he said. “That’s absurd. That is not going to happen.” Which, of course, was the whole point.
Facebook was not about to give up its monopoly. Facebook and its fellow Big Tech platforms – Google, Twitter, Amazon, and Apple – wanted to run the American economy, they wanted to run the country. All I could think was that America had again entered the age of monopolists. They were back, as powerful and menacing to our republic as they had been a century before.
Consider the merest sampling of their power. Facebook: Of adults in America who use social media, 99% use Facebook. That’s nearly 70% of all adults in the country. News operations now optimize their stories for distribution on Facebook and go out of business when they don’t. Google is equally, if not more, powerful. Nine out of every ten searches on the Internet are performed by Google Search, and when you consider how many Americans now use Google to get their basic information on everything from weather to sports to current events, Google’s ability to direct the content we consume is unprecedented. Google’s browser, Chrome, holds 68% of the global desktop market share and 63% of the market for mobile browsing. Its phone, Android, represents 85% of smartphone market share worldwide. Even Google Maps is huge, controlling 67% of the smartphone map market. More than any other company, Google knows exactly where you are, what you are doing, and with whom. And more than any other entity, it has the ability to shape American’s first impression on any subject.
Then there’s Amazon. By 2020, the company boasted 126 million subscribers to its Amazon Prime subscription service, amounting to more than one-third of the nation. That same year Amazon also controlled at least 40% of all online sales in America, giving it power over retail and commerce undreamt of by other earlier American sales giants, to say nothing of the local retail stores, it was in the process of destroying.
Source: The Tyranny of Big Tech by Senator Josh Hawley (2021).
BIG TECH’S VISION: Big Tech considers the concentration of power in its companies – in the networks they control – an urgent social good, the precursor to global harmony, a necessary condition for undoing the alienation of humankind. Silicon Valley’s craving for monopoly stretches back, strangely enough to the counterculture of the 1960s, where it emerged from the most lyrical of visions of peace and love. In Silicon Valley, this naïve belief has been handed down through the ages. Even the most hard-nosed corporations have internalized it. There is no doubt they believe in their own righteousness, but they also practice corporate gamesmanship, with all the established tricks: lobbying, purchasing support in think tanks and universities, quietly donating money to advocacy groups that promote their interests.
Source: World Without Mind: The Existential Threat of Big Tech by Franklin Foer (2017)
HOW DID WE GET TO THIS POINT? How is it that Big Tech has, in a matter of 20 years, so reshaped our economy? Key to understanding this: Many platform technology firms operate as natural monopolies. Natural monopolies are often a product of network effects, meaning that the more users a platform has, the more attractive it is to new users. Barriers to entry, be they capital costs or simply getting there first and controlling the physical or virtual territory, are huge, and prevent others from entering the market in an effective way. Big Tech companies so dominate their spaces that they don’t just lay claim to a market but seize the market entirely. Then, they use that power to move into new ones, creating vast meta-networks that are astonishing in their power and reach.
Netflix and Amazon are no longer content being the uncontested leaders in the video streaming market, now they are also dominant content producers, becoming in effect TV and movie studios, spending billion of dollars on original television programming. Google has lurched into the transportation business with its bid to create a self-driving car, and Facebook is trying to launch its own financial system with the creation of a bespoke cryptocurrency Libra. Big Tech, in other words doesn’t just want to become a leader in one sector. It wants to become the platform for everything, the operating system for your life. The network effect is one way the big get bigger. Another is simply by intimidating smaller players and stealing their intellectual property. As the tech companies get bigger and bigger still, they are increasingly using that market power to squash their rivals, by buying up competitors as fast as possible or by poaching their talent.
Given all this, one might ask why the Big Tech firms haven’t yet been treated as monopolies by the federal government and broken up, or at least transformed and constrained by the threat of regulation. The legal rationale for Big Tech’s unimpeded global dominance became the basis of a 1979 Supreme Court decision that is still being upheld today. Monopoly should no longer be defined as it always has been under the Sherman Act, as a company that took unfair advantage of a commanding market position to stifle competition. Instead, monopoly occurred when a company unfairly boosted prices it charged consumers. If a dominate player didn’t raise prices, it was not engaged in monopoly. Big Tech firms, however, have no need to raise prices, because they have a business model by which they are not paid in money: they are paid in data, via a system of barter.
Source: Don’t Be Evil: The Case Against Big Tech by Rana Foroohar (2021)
“Shared” computing, today, is what companies like Amazon, Facebook, Google, and Twitter use. You give them your data, which is then housed on their computer servers and owned by them. In exchange, you get a chance to use their services. My source says that the public’s decision to accept this devil’s bargain – convenience, in exchange for a loss of control over your data – is what led to the current predicament.
Source: #Deleted by Allum Bokhari (2020)
The failure to regulate and break up the advertising duopoly of Facebook and Google has allowed them to grab control over media and centrally edit the flow of information.
Section 230 is a censorship law. This has always been its primary purpose. Indeed, one paragraph in the law specifically protects tech companies from lawsuits over restricted speech—whether or not the speech is constitutionally protected. Here is what it says: “No provider or user of an interactive computer service shall be held liable on account of any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”
Section 230 needs to be replaced with better, industry-wide standards that impose fair due process on tech platforms that wish to suspend service to a user. But it’s also clear that competing tech platforms are essential and must be encouraged.
Source: Break’em Up by Zephyr Teachout (2020)
SOME OF THE CONSEQUENCES: The Federal Trade Commission began investigating Facebook as early as 2011 over allegations that it took and broadcasted personal information customers had designated as “private,” while telling its customers just the opposite. Facebook eventually agreed to pay a hefty fine for these bad acts, only to find itself back on the firing line eight years later for violating the settlement terms and continuing to take its customers’ personal, private data. This time Facebook paid $5 billion for its misdeeds, still refusing to formally admit any wrongdoing. Source: The Tyranny of Big Tech by Josh Hawley
The algorithm is a novel problem for democracy. Technology companies boast, with little shyness, about how they can nudge users toward more virtuous behavior – how they can induce us to click, to read, to buy, or even to vote. The tactics are potent, because we don’t see the hand steering us. We don’t know how information has been patterned to prod us. But the knowledge monopolists have unique power in our democracy. They don’t just have the ability to pick the fate of a book, they can influence the fate of the Republic. By sorting information, they make decisions that shape our opinions on issues and politicians. Every writer, every media outlet, every book publisher depends on these companies for financial survival. These companies, therefore, have unique ability to inhibit criticism of themselves. They don’t need to lift a finger to ward off naysayers. By virtue of their size, the fact that they dominate much of the market for disseminating ideas, criticizing them often seems like a suicidal gesture.
Source: World Without Mind: The existential Threat of Big Tech by Franklin Foer (2017)
Big Tech controls all the access points to the consumer – web browsers, app marketplaces, and of course the social media platforms themselves. In the dissemination of apps and browser plugins, Big Tech is both player and referee. This is, of course, nakedly anticompetitive behavior.
Source: #Deleted by Allum Bokhari (2020)
Some Big Tech firms have responded to the growing public concern about privacy and anticompetitive business practices by playing to a long-standing American fear: it’s us versus China. Monopoly power, more than China itself, threatens the most important advantage that America has in the race for the high-growth industries of the future: a fair and open market system. In the U.S. these days, it is not only the small firms that are being squashed, but medium-sized and even large players, too. The country cannot compete with China on top-down approaches to competitiveness. Nor should it. But it could reassert the merits of a more decentralized system by curbing the companies that threaten it.
Source: Don’t Be Evil: The Case Against Big Tech by Rana Foroohar (2021).
I will argue that monopoly is tyranny: that no democracy can survive for long once a few corporations have amassed government power in such a massive form and scale. Amazon, Google, Facebook represent a new political phenomenon, a 21st century form of centralized, authoritarian government. They regulate, tax, extract, and terrify. They spy on workers and tell them what to think. They fund foundations that shape editorial boards. They are the biggest lobbyists. They don’t pay taxes. The embed themselves in federal, state, and local law enforcement. They build moats around their power and use predatory pricing or mergers to keep out competitors.
Source: Break’em Up by Zephyr Teachout (2020)
The concentration of economic power is an accepted fact of our lives. When the Economist analyzed the question last year, it found that most sectors of the economy – two-thirds of the nine hundred areas it examined – were far more concentrated than they were in 1997. Perhaps we should worry about how they squelch competitors, but there’s little reason to fret about the inefficiency of these industries. That, however, is a fairly incomplete view of the role theses companies play in American life. The threat of bigness posed by Amazon, Facebook, and Google is a threat to self-government.
Source: World Without Mind: The Existential Threat of Big Tech by Franklin Foer (2017)
Big Tech’s power, its hold on information and news and commerce, its business model of addiction and manipulation, is a danger not just to the working-class economy. Not just to our culture. This is a danger to the republic. The dominance of Big Tech threatens self-government by the great American middle, by the common man and woman. These modern-day robber barons threaten to centralize power in the hands of a few, while undermining the independence, economic standing, and cultural influence of everyone else.
Source: The Tyranny of Big Tech by Josh Hawley (2021)
POTENTIAL ACTION THAT CAN BE TAKEN
You may think that stopping mergers and breaking up companies are the only anti-monopoly tools. That’s too narrow. We can build any kind of corporate law and market structure we want. We can limit corporations by size, break up corporations by function, clarify rules for unfair business practices, demand neutrality for intermediaries, change the maximizing-profit model of businesses, outlaw certain forms of surveillance capitalism, and structure finance so that it can’t overtake commerce for starters. We can force Google Search to divest from Google Shopping and Google Maps. Amazon Marketplace can be separated from Amazon Web Services, AmazonBasics, and Alexa.
Source: Break’em Up by Zephyr Teachout (2020)
If there’s any opportunity for government to get involved, it’s at the antitrust level. Specifically, enforcing existing antitrust law against the Apple/Google App Store duopoly, which controls 98% market share of mobile app distribution channels. “If Gab was on both app stores today, we would have tens of millions of users.”
Source: #Deleted by Allum Bokhari (2020).
The unabbreviated version of the above can be found in the pdf document below.
| 2l_big_tech_return_of_monopolies_--__segment_2.pdf |