[HN Gopher] How Big Tech got so big: hundreds of acquisitions
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How Big Tech got so big: hundreds of acquisitions
Author : kjhughes
Score : 343 points
Date : 2021-05-04 10:46 UTC (12 hours ago)
(HTM) web link (www.washingtonpost.com)
(TXT) w3m dump (www.washingtonpost.com)
| dkyc wrote:
| This is a strange analysis. "Number of acquisitions" seems like a
| weird metric, without accounting for their significance (in
| purchase price, impact on the business, or any other real-world
| metric).
|
| facebook buying Instagram was probably more significant than all
| the other acquisitions combined.
| Alex3917 wrote:
| > facebook buying Instagram was probably more significant than
| all the other acquisitions combined.
|
| Deja News was probably the biggest tech acquisition by a FAANG
| company. The average white collar worker spends ~6 hours a day
| in their Gmail, and about 5 min a day using search.
| sokoloff wrote:
| I'd have estimated more like 10x that on search and around
| 1/4 of that in gmail.
| jeffbee wrote:
| How did buying Deja's hard drives -- they did not acquire the
| company, only "significant assets" -- lead to Gmail?
| Alex3917 wrote:
| IIRC their email parsing code became the basis of Google
| Groups, which then became the basis of Gmail.
| jeffbee wrote:
| As someone intimately familiar with that software, I
| doubt this. Every line of the Gmail delivery stack is
| home-grown, but if you were to identify an acquisition
| that most influenced the project it would be Neotonic,
| not Deja.
| [deleted]
| throwaway3699 wrote:
| Gmail started life as a 20% project that was basically a
| Frankenstein version of Google Groups.
| jldugger wrote:
| I mean, the UI/theme was clearly borrowed, but that's not
| necessarily any indication of the backend implementation.
| And they probably both use bigtable, but so did basically
| everything customer facing at the time.
| Alex3917 wrote:
| Yeah, this is the version I remember also. PB has said
| many times that he built the first version that could
| only display threads of his own email in a day. But going
| from a series of raw email messages to an email thread
| that can be displayed conversationally on the web is a
| multi-year project, so clearly there was some already
| existing code doing the heavy lifting.
|
| E.g. the email parsing code in Thunderbird dates back to
| at least the late 80s, and even after decades of working
| on it at a cost of hundreds of millions of dollars, it's
| still a work in progress.
| [deleted]
| mrkurt wrote:
| Google buying Doubleclick helped them crush the ad market for
| publishers.
|
| Number of acquisitions is interesting, though, because you can
| also phrase it as "number of potentially viable independent
| companies that no longer exist". We are better off with more
| independent companies.
| dageshi wrote:
| They all learned from MS. MS tried to buy Netscape but didn't
| offer enough and got turned down. So MS set out to use its
| position to boost its own browser instead, anti-trust
| followed because it was obvious MS was using its position to
| muscle out an independent company.
|
| For the big Tech companies now, small acquisitions are win
| win wins, they get the people, they get whatever was
| developed and they permanently avoid Microsofts Netscape
| situation.
|
| That being said, I'm guessing no small number of these
| startups were setup with the express purpose of being bought
| out like this.
| pjmorris wrote:
| > For the big Tech companies now, small acquisitions are
| win win wins, they get the people, they get whatever was
| developed and they permanently avoid Microsofts Netscape
| situation.
|
| I have a theory that this is why MS treats its research
| division staff and interns so well. It reduces the amount
| of competitive pressure MS would face if they were all
| working elsewhere/on their own startups.
| the_duke wrote:
| Many corporate acquisitions have the sole purpose of killing
| off/absorbing companies early, before they gain traction in the
| market and become viable competitors.
|
| Focusing on real world metrics will give a very incomplete
| picture of the impact acquisitions might have had on the
| market.
| CarelessExpert wrote:
| > "Number of acquisitions" seems like a weird metric, without
| accounting for their significance (in purchase price, impact on
| the business, or any other real-world metric).
|
| This comment sounds like the nirvana fallacy striking again.
|
| There is no perfect metric for measuring something like overall
| market dominance.
|
| Thanks to a series of supreme court rulings, the traditional
| approach has been to look at consumer harms. But that metric
| alone fails to account for the way modern large conglomerates
| make money: not by gouging the consumer, but by dominating
| entire industries.
|
| So how else can you look at it?
|
| Acquisition are just another lens. Is it an imperfect lens?
| Yes, of course. I challenge you to find an analysis that isn't.
|
| But is it still meaningful? Yes, I absolutely think so! It is
| undeniably the case that these tech giants have used
| acquisitions as a way to protect their market position. So it
| absolutely makes sense to analyze their behaviour from that
| perspective.
|
| Furthermore, this is a news article not a whitepaper. Yes,
| there is an enormous amount of nuance in this kind of argument,
| and if you were prosecuting these guys for antitrust violations
| in a court of law, you'd probably do a deeper dive.
|
| > facebook buying Instagram was probably more significant than
| all the other acquisitions combined.
|
| How do you know that? There's simply no way to know how some of
| these companies would've fared because these anti-competitive
| practices have ensured that promising startups are smothered
| before they become a threat.
| scyzoryk_xyz wrote:
| Alot to agree with here - how would Google have faired
| without being able to strategically acquire companies that
| made specific tech for ads and search?
| divbzero wrote:
| Yes, I would have wanted to see the graph of acquisitions
| weighted by purchase price but that data is hard to find for
| many acquisitions. Impact on business ( _e.g._ , revenue
| contribution) would be even better but requires subjective
| judgment and estimation.
| ahartmetz wrote:
| It makes some sense. The more acquisitions, the higher the
| chance of doing well (that wording doesn't apply to price) in
| the metrics you mention. Especially if the perspective is
| extrapolating the past to the future.
|
| The thesis of the articles seems to be: Big tech will stay
| dominant because they will keep buying lots of companies and
| they will likely continue to win with some. To stop this, blah
| blah law changes or something (I only skimmed the article).
| richardwhiuk wrote:
| I'm always surprised that FAANG - or Big 4, excludes
| Microsoft....
| jasode wrote:
| _> I'm always surprised that FAANG - or Big 4, excludes
| Microsoft..._
|
| Because the _original context in 2013_ of Jim Cramer
| popularizing "FANG" / "FAANG" was _growth_ and even though
| Microsoft was already one of the biggest tech companies, their
| stock price wasn 't really _growing_ like the newer FANG.
|
| https://hackapedia.com/terms/f/faang
|
| Others later tried to revise the acronym to include Microsoft
| with variations like FANGAM -- but it doesn't seem to gain any
| popularity in internet discussions or mainstream media.
| tempfs wrote:
| MSFT not growing?
|
| https://www.nasdaq.com/market-
| activity/stocks/msft/advanced-...
| jasode wrote:
| _> MSFT not growing?_
|
| Are you talking about recently or _circa 2013_ when Cramer
| popularized his FANG acronym? Before 2014, MSFT growth didn
| 't compare to the newer web dominant companies like
| Facebook/Amazon/Netflix/Google. He also left out other
| giant tech companies with lower growth like IBM, Oracle,
| SAP, Yahoo!, Hewlett-Packard, etc.
| asiachick wrote:
| In Japan it's called GAFA at least in the news I watch
|
| https://ja.wikipedia.org/wiki/%E3%83%93%E3%83%83%E3%82%B0%E3.
| ..
| mrep wrote:
| In france, it is GAFAM: https://fr.wikipedia.org/wiki/GAFAM
| guerrilla wrote:
| > Jim Cramer
|
| The guy yelling on TV all the time?
| Analemma_ wrote:
| I think Microsoft likes it that way. It's a little thing, but
| it's just one more little piece that helps them go unmentioned
| in most of the culture war bomb-throwing about Big Tech.
| Closi wrote:
| FAMANG doesn't have quite the same ring to it.
| truth_ wrote:
| I have seen real people using FAANGMULA in official documents
| in real life. Some people don't care about the ring.
|
| U, L, and A are Uber, Lyft, and Airbnb.
| [deleted]
| annadane wrote:
| The fact Facebook used Onavo and lied out the ass about Instagram
| and Whatsapp automatically means they should be broken up, in my
| opinion
| ceilingcorner wrote:
| He's uh, not so popular here these days, but I recently heard a
| quote by Peter Thiel and thought it was insightful. Not sure
| where it was from, exactly.
|
| "The way to build a big company is to never get acquired."
| patfla wrote:
| Big Tech got so big because digital technology is different from
| preceding industries in that increasing (not decreasing) returns
| to scale prevail. In particular, in software where marginal costs
| are near 0. It's a different ballgame. I think regulators have
| figured this out but for the most part it appears that they don't
| know how to act upon it.
|
| https://en.wikipedia.org/wiki/Returns_to_scale
| rmah wrote:
| Um, the concept of "econommies of scale" is something that has
| existed since the start of the industrial revolution. This is
| nothing new to Big Tech.
| marcosdumay wrote:
| The GP is talking about the second derivative of the price,
| not the first one.
|
| What he talks about is new. And I believe he is wrong, it's
| just a negative value very close to zero, not positive.
| patfla wrote:
| Traditionally, you had _decreasing_ returns to scale. What's
| new with digital technologies is _increasing_ returns to
| scale. Very counter-intuitive for traditional economists - or
| even business people. People like Gates, Bezos, Brin & Page,
| Zuckerberg and so on have ridden this for all its worth.
| Let's out distance them as much as we can before they figure
| this out. Whether competitors or regulators.
|
| That said, I like the story about someone observing Gates at,
| I think, a graduation ceremony where Gates had brought along
| a biography of Rockefeller (John D.). Did Gates know before
| or after the fact that MS had in fact used a competitive
| strategy comparable to Standard Oil?
|
| Meaning, unlike increasing returns to scale that was
| something for which there was an historical precedent. The
| basic idea being: when my competitors revenues go up, my
| revenues also go up. A fatal long-term proposition for those
| competitors.
| akiselev wrote:
| GP is talking about the marginal benefits of scale. In
| manufacturing, there is a floor at which increasing scale
| doesn't decrease the cost of making each additional unit. No
| matter how much a widget company automates their factories,
| they can't bring down the cost of a widget below the cost of
| the raw materials. At some point, investing into making
| widgets becomes a negative ROI.
|
| That often never happens with software because network
| effects allow each unit of raw material (servers, data, etc.)
| to produce more value as part of the whole. It would be as if
| a widget factory could make 2 pounds of widgets out of 1
| pound of raw material when it double its sales.
| mastrsushi wrote:
| How are you guys able to read WP and NYT articles? I keep getting
| locked out with subscription ads.
| commandlinefan wrote:
| I always thought that a tech company buying another tech company
| was the strangest thing: if another company makes software, and
| you make software, and you want software that does what that
| other company's software does... why not just write new software
| to do that? But, clearly, these guys know something I don't know.
| fakedang wrote:
| Acquisition is not about buying the software, it's about buying
| the user base.
| bhupy wrote:
| Because of the time-value of money.
|
| https://www.investopedia.com/terms/t/timevalueofmoney.asp
| wott wrote:
| Sometimes they don't want the software that much that they want
| the customers.
| staysaasy wrote:
| I think that this is a very reasonable observation. It's
| definitely weird in theory, but the reasons that I've seen are:
|
| * Very large tech companies build software (relatively) slowly
| due to their size
|
| * Sort of like a toddler, you don't know what you want until
| you see that someone else has it. Another company hitting
| product/market fit + traction proves the value of a product
| that you might have just hypothetically wanted
|
| * You're often buying a go-to-market motion (marketing, sales,
| services, etc) that complements a product
|
| * In some cases, you're buying talent that would be difficult
| to hire + train on your own _fast_. Ie even if you could
| theoretically hire 50 traffic mapping engineers, you can get
| them onboarded onto your team faster by acquiring Waze
| throwaway3699 wrote:
| Software is about domain knowledge more than code.
|
| Also, userbase and customers are valuable.
| schnevets wrote:
| I'm sure there's some accounting wizardry that helps make this
| viable, but it could just be the optimal strategy if a Big Tech
| company has a warchest of cash, but knows some of it could be
| hemorrhaged by taxes (or the costs related to transferring
| funds) if it isn't spent. $20 million to acquire a development
| team for a few new features may seem like a lot, but it is a
| more surefire thing than spending $10 million to hire, design,
| and build a competitor.
| munificent wrote:
| Two key reasons:
|
| 1. You want to acquire the existing users of their software.
|
| 2. Buying them essentially stops progress on your competition.
| Let's say you _don 't_ buy them and instead decide to write
| your own software that does what theirs does. Maybe it takes
| you a year to write a program that does everything theirs does
| today. In that year, they've also made a bunch of progress, so
| you're still behind. If you have enough resources, you may be
| able to catch up and overtake, but they have the advantages of
| greater expertise, userbase, and lead time. Because of those
| advantages, it's often cheaper to buy them.
|
| In general, companies don't like to compete. Competition is
| spending resources to simply cancel out the expenditure of your
| competitor. Zero-sum games like that don't make you richer.
| Companies naturally prefer to be monopolies, or at the very
| least cabals. That way they can fully exploit their product
| area and can control prices as much as they want.
| jedberg wrote:
| I think it's disingenuous to say that Amazon acquired cloud
| computing companies as a new line of business. They built that
| unit in house and were well established before they started
| buying related companies. Those acquisitions should be on the
| "core business" side of the graph.
| narrator wrote:
| There is an enormous difference in how expensive capital is at
| the startup level vs public company level.
|
| Startups have to convince Angel investors $25k at a time to
| invest in their startup through a long and laborious sales
| process. Publicly traded companies just have to issue stock and
| the market just pays for it out of millions of people's dividend
| reinvesting 401k plans.
|
| The difference also comes into play in real estate. Putting
| together the money to do a multi-family apartment building takes
| lots of talking to banks, personal guarantees, developing
| relationships over decades with other investors, not hitting a
| bad market cycle, etc. Once a property becomes worth about $50
| million dollars, usually due to a growing economy in the area or
| the neighborhood becoming more valuable, a REIT will come in and
| buy it like it's nothing. That's because the REITs have all that
| public market money to play around with that they get for a much
| lower cost of capital. The REIT doesn't even have to run it that
| well because their cost of capital is so low that the
| profitability requirements for the project are much less. Same
| thing goes for big tech which has bought hundreds of startups and
| shut them down or run them poorly.
| 1vuio0pswjnm7 wrote:
| "You're probably reading this on a browser built by Apple or
| Google."
|
| Nope. Guess again. (Wait, I thought "new technology" makes
| websites all-knowing. I guess not.)
|
| "If you're on a smartphone, it's almost certain those two
| companies built the operating system."
|
| Not using a "phone" either.
|
| "You probably arrived from a link posted on Apple News, Google
| News or a social media site like Facebook."
|
| Nope. Link posted to HN.
|
| "And when this page loaded, it, like many others on the Internet,
| connected to one of Amazon's ubiquitous data centers."
|
| Nope. Using customised text-only browser with prefetch disabled.
| No suppport for autoloading resources. And I can fetch the page
| from archive.org, avoiding AWS, automatically with the loopback-
| bound forward proxy I use.
|
| Clearly those opening statement by the four authors were just
| assumptions. Tired ones at that. Not the most creative way to
| open an article about what is for many of usan old topic.
|
| The authors had little power to predict what I am using with
| seemingly zero effort.
|
| (Not to suggest predicting these things would be impossible, but
| it is not as effortless as the authors would have us believe.)
|
| Maybe it has something to do with the software, inlcuding the OS,
| I choose to use. But I guess that does not make for an
| interesting topic for WaPo.
|
| The point here is that none of the "technology" developed by the
| "talented engineers" assumed by the authors as the driving force
| behind the subject "tech" companies was necessary for me to read
| the same article as everyone else, without any of the tracking or
| negative baggage that comes with companies like Apple, Google or
| Amazon and the economic havoc in which they are content to
| thrive.
|
| Choices matter.^1 Tech companies want to (effectively) remove as
| much choice as possible.
|
| They have been very successful at this, to the point where people
| can write articles that begin with blind assumptions about what
| software readers are using.
|
| 1. As in "defaults matter".
| throwaway823882 wrote:
| Mergers & Acquisitions are a foundational part of building any
| major conglomerate or corporation. Every industry does it.
| Energy, Media, Technology, Healthcare, Finance, Food, Clothing,
| whatever. Big _Anything_ can be measured by this, but the sheer
| number of them does not mean as much as how much of the market
| they suck up through each one.
|
| The unstated end goal of every capitalist organization is to
| become a monopoly. Do people just not want to acknowledge this?
| Because that's kind of what every decision of competing
| corporations is always leading towards. You can't gain infinite
| capital unless you are always absorbing or eliminating more of
| the competition. The whole point of competition is not co-
| existence, it's domination.
| neonate wrote:
| https://archive.is/WmkqB
| jareklupinski wrote:
| ty for the link. i love how the source only shows the url for a
| second before replacing it with the root domain to prevent
| people like me from copy/pasting the story url into an
| incognito tab
|
| the cat and mouse game goes on, wapo engineers!
| brobdingnagians wrote:
| Software had the promise of massively decentralizing business;
| anyone with a computer and a bit of knowledge could start hacking
| away at a new product. It is a bit sad to see big tech becoming a
| way of even more centralization of power. I guess it had the
| potential for either; individuals being able to easily capitalize
| on it, or businesses being able to replicate infinitely and have
| huge margins from very little input capital. But maybe both are
| happening at the same time. A double edged sword, like so many
| other things.
| dredmorbius wrote:
| That's the myth we were sold. It's the myth many of us
| believed. I certainly did.
|
| In truth, greater efficiencies _don 't_ decentralise, they
| _centralise_. The market area expands. Suppliers or vendors,
| rather than competing locally, compete regionally or globally.
| In winner-take-all markets, there is only one winner,
| worldwide.
|
| There are some twists on this, having to do with regional
| customs, language, and law, mostly. There's also the time
| element, where tech monopolies tend to be ascendent, then
| (often but not always) replaced. Still, a technological
| advantage can last a _very_ long time, as with IBM and AT &T.
| Two of today's FAANG date from the 1970s, another two from the
| 1990s. Dominance can be long-lived.
|
| There were some who saw this coming. Andrew Shapiro's _The
| Control Revolution_ (1999) kinda-mostly saw this coming, and
| certainly called out the major aspects. Shoshana Zuboff
| recognised at least some of the potential in the 1970s and
| 1980s.
|
| The crowd still believes the lie, for the most part.
| api wrote:
| In biology we understand fairly well that environmental
| complexity leads to greater biodiversity. If the Earth's
| environment were entirely uniform there would probably be
| only a few species and nothing would ever change.
|
| Global highly efficient markets are like a polished flat
| globe with a uniform climate everywhere. Evolution would
| produce only one or two species in permanent equilibrium.
| TeMPOraL wrote:
| The more I think of it, the more I realize, biology is very
| much unlike the market in such analogies.
|
| In a way, the market is biology flipped on its side, like a
| transposed matrix - where in nature, life forms mostly
| cooperate within their species (or at least ignore each
| other) and prey on other species, on the market, companies
| of the same type fight it out, while ignoring or
| cooperating with companies of different types.
|
| But I think the main difference is _scale_. The area of
| influence of a life form - where they live, hunt, reproduce
| - is _very limited_. Same is true with companies serving
| local markets. A local glass factory. A corner market. You
| say:
|
| > _Global highly efficient markets are like a polished flat
| globe with a uniform climate everywhere._
|
| But it's not just a _flat_ globe. It 's a globe with a
| surface of couple dozen square kilometers! It's literally a
| single niche. Not even that - it's a cage. Imagine a zoo
| that decided to put all its animals in a single, large
| cage. You won't have to wait much before there's only one
| big animal standing (and a bunch of insects scattering
| about).
|
| On a more general note: biology is a good example that you
| can make a complex and robust system by giving imperfectly-
| self-reproducing agents a lot of space to play in, and then
| throwing calamities at them to keep things interesting. But
| I honestly don't like using it as a recipe for designing
| systems, because of all the _waste_ that 's involved. Waste
| of effort, waste of resources, waste of life. I feel we
| should avoid this kind of hard self-regulation whenever we
| can.
| shkkmo wrote:
| > where in nature, life forms mostly cooperate within
| their species (or at least ignore each other)
|
| This is blatantly not true. There are condiserable levels
| of intra-species competition in many species. Even in
| "cooperative" species, those animals cooperate in groups,
| but then those groups compete against each other. Most
| predators prey on a very limited subset of the ecology.
| You seemly cannot reliably predict inter vs intra species
| like you seem to think.
|
| Also "preying on" is pretty different that "competeing
| with" and at the ecological scale, predation looks much
| more like interactions between industries than
| competition within an industry.
|
| Thus the correct mapping of the analogy in this case is
| between ecological niches and industries.
|
| Regarding your more general note: I think there is a
| trade off between efficiency and robustness. Top down
| heirachical structures (most companies, militaries, etc)
| are generally more efficient in terms of resources used
| but are vulnerable to broken/inefficient/disengenous
| nodes, especially for the higher nodes. Bottom up
| solutions (markets, grassroots movements, etc) tend to
| use more total resources but do better at dealing with
| bad nodes and are thus less failure prone.
|
| I would argue that the best systems tend to layer
| combinations of these two types of systems.
|
| Edit: In the US for example, we (simplistically) have a
| bottom up democracy that governs a top down government
| that regulates bottom up markets that are participated in
| by top down companies that increasingly rely on
| outsourcing core functionality to other bottom up markets
| that that top down particpants.
| mikechen233 wrote:
| It depends on the product. But software has stronger the
| ecosystem effect and data lockin more so than any previous
| technology. Think facebook, youtube, Windows, office, apple
| ecosystem of products. They have two market characteristics: 1.
| People need to be on the platform that others are in 2. Once
| you are in you it's hard to leave. Both creates tendency for
| winner takes all economics. And I think many people knows this.
| Part of the reason why software companies since the 90s have
| higher valuation than other industries.
| coliveira wrote:
| People didn't think well about the other side of the coin: if
| anyone can hack away a product, then what you need to make a
| lot of money is somehow gather the best minds that can make
| this machine work for you and monopolize their ideas. This is
| exactly the strategy behind the FAANG.
| api wrote:
| Software doesn't favor decentralization at all... at least not
| the current software and Internet ecosystem.
|
| The complexity of software coupled with its absolute rigidity
| makes it hard to build systems that talk to each other even
| when specifications are public. When things are proprietary
| take the difficulty of making software interoperable and add a
| total lack of documentation and a possibly adversarial
| relationship with the vendor where they'll try to deliberately
| shift things to keep you out. (There could also be legal
| barriers, but I'm just talking about technical ones.)
|
| Then consider the added difficulty of opening systems to
| interoperability with other systems while maintaining security.
| If you allow connections from _untrusted_ systems, now you have
| to be particularly meticulous in the design of your software to
| ensure there are no exploitable bugs, undefined behaviors, or
| holes in your permission system. We still mostly program in
| language that are "insecure by default" and make this hard.
|
| Then there's the Internet itself which is intrinsically
| hierarchical. DNS, BGP, and the hierarchy enforced by NATs and
| firewalls that separate endpoints from the "real" Internet all
| make the network favor a "feudal" client-server model. We
| shouldn't be surprised that the Internet produces a lot of
| monopolies and closed silos; software built around the Internet
| takes on its shape.
|
| Last but not least there's the use of cryptography to enforce
| walled gardens: certificates, code signature requirements,
| closed app stores, etc. This adds an artificial barrier on top
| of everything I mentioned above.
|
| Compare this with older mechanical and analog systems. Even
| complex mechanical and analog electronic systems are
| straightforward to examine, measure, characterize, and
| understand. Ignoring patents and other legal restrictions it's
| straightforward to build replacement parts or interoperate with
| physical systems.
| breck wrote:
| Big Tech got so big because of Intellectual Slavery laws. That is
| the gravity here.
| guerrilla wrote:
| > Intellectual Slavery laws
|
| What is this intended to refer to?
| breck wrote:
| Copyrights and patents.
| CPLNTN wrote:
| Probably the H1B
| alexott wrote:
| McAfee is a good example when acquisitions didn't went well...
| goatcode wrote:
| Reminder that WaPo is owned by Jeff Bezos.
| olliej wrote:
| As opposed to the car companies, military contractors, airline
| manufacturers
| kartoolOz wrote:
| How big tech got so big, passive funds.
| lotsofpulp wrote:
| I would rather point to the astronomic profit margins and ever
| increasing cash flow for 10+ years.
| notacoward wrote:
| The article seems to overlook that they also got big by going on
| _insane_ profit-fueled hiring binges. Or at least I didn 't find
| it skimming through that _awful_ format.
|
| Tens of thousands of engineers, at salaries that make other
| companies turn green with envy, churning out products and
| features and supporting infra at an unprecedented rate. Then the
| cycle repeats. I think that counts for something too.
| jyu wrote:
| This is lazy reporting. Where did the money come from to do the
| acquisitions? Google and Facebook have great monetization by data
| mining their audiences for advertisers. All they needs is to buy
| more eyeballs (youtube, whatsapp, instagram, etc).
|
| Amazon is slightly different. They benefit from the creative
| destruction caused by physical retail purchases migrating to
| ecommerce and the subsequent value capture by Amazon. Any revenue
| increase from them is from behavior changes, efficiency gains,
| and death of inefficient retail.
| NortySpock wrote:
| Under Amazon, I would also include commoditizing compute and
| selling you their spare compute cycles (AWS) as their major
| efficiency win.
|
| Finally, Amazon is automating warehousing in their logistics
| (first using automated checklists for people walking around the
| warehouse, now using Amazon Robotics, formerly Kiva Systems)
| scarface74 wrote:
| The myth that Amazon "sold their excess computer capacity"
| has been disproven for years.
|
| Just think about it. If Amazon had excess computer capacity
| and sold it to other companies, what was it going to do when
| it needed that excess computer capacity? Kick others off?
| pessimizer wrote:
| > death of inefficient retail.
|
| More like lobbying to maintain a tax holiday for a very long
| time. I suspect retail will slowly come back due to the end of
| that tax holiday, and Amazon's devaluing of their platform with
| counterfeits.
|
| I'm also not sure that the distinction that you're making here
| is super-significant. Facebook and Google are plundering
| advertising spend from print just like Amazon took over retail.
| miguelrochefort wrote:
| For those wondering how big "Big Tech" companies are, I compiled
| a spreadsheet of over 600 products and services that illustrates
| the scope of their offering.
|
| https://news.ycombinator.com/item?id=27040162
| gregwebs wrote:
| My understanding is that the vast majority of these M&A destroy
| capital. The reason to own dividend stocks is not because they
| pay dividends but because they don't have tons of cash lying
| around to spend on low value projects or M&A.
|
| It would be a lot more insightful to discuss the aquisitions that
| have a known positive impact. The truth is probably that each
| company had just a few very important acquisitions (that should
| be more closely scrutinized).
|
| Our current tax laws make vertical integration or even
| conglomerates more tax efficient. Greater scrutiny of anti-
| competitive mergers is needed, but we should also make separate
| companies just as tax efficient (VAT tax, etc) and otherwise
| closely examine how we can change economic incentives here.
| hogFeast wrote:
| Yes, tech firms incinerate capital on these deals (generally,
| Google particularly). It is confusing cause and effect: these
| firms are large (with little to no shareholder oversight), and
| so can spend large amounts of money on useless acquisitions.
|
| The effect on innovation is the opposite: ppl start up
| companies knowing they will get bought (I wouldn't call this
| innovation but others would).
|
| And your point about dividend stocks is wrong. Dividend stocks
| are usually cash-generative businesses that have high ROI but
| are capital constrained. For various behavioural reasons,
| people underpay for these stocks...although you have to factor
| in that dividend stocks will generate taxable income, so the
| returns tend to be overstated. Either way, it is neither here
| nor there...the question is about what you pay and what you
| get. You pay a certain price for marginal ROIC, the question is
| whether the price you are paying allows a decent return
| (generally speaking, I don't like dividend stocks, they are
| slow-growth, I will have to pay tons of taxes, and I will have
| to work out how to recycle the capital...I would much rather
| own a stock that can retain my capital and invest it for me at
| a high rate).
|
| Btw, the reason why M&A happens and destroys capital is because
| it is a very easy route to growth, investors aren't
| sophisticated about value-destroying deals (if they result in
| growth in EPS), and comp is usually based on growth. It is a
| pretty toxic combination (you can't push on a string, most
| businesses can't grow fast, paying execs doesn't change that so
| the execs walk away with a big sack of your money and you end
| up with nothing).
| taurath wrote:
| I'm sitting here wondering whether there might ever be a tax on
| user data. It sounds a bit strange but I do feel like we
| underestimate how much data consolidation creates uncompetitive
| environments.
| Kadathan wrote:
| Even worse is that all of this data can be used to infer
| other data. Once you know enough about a person, you can
| start making some alarmingly accurate guesses about them. I'm
| hoping for a lot more than a tax on this kind of data,
| myself.
| dcolkitt wrote:
| > My understanding is that the vast majority of these M&A
| destroy capital.
|
| It'd be interesting to see whether the modern tech industry is
| an anomaly with regards to this longstanding pattern. In
| particular, I wonder there's an exception for the typical
| acquisition of smallish, fast growth startups by a tech giant
| who can generate synergies by quickly integrating the tech on
| to their platform. Historically these types of acquisitions
| wouldn't show up in the M&A literature, because the targets are
| private companies, and the standard estimation techniques rely
| on public equity returns.
| Wowfunhappy wrote:
| Ideally, we wouldn't have corporate taxes. They're well-
| intentioned as a tax on the wealthy, but it would make much
| more sense to just tax the _people_ who are wealthy! Tax them
| more than we do today, and get rid of carve-outs like Capital
| Gains.
| dalbasal wrote:
| "Destroy capital" is unavoidably speculative, I think. I'm not
| sure it's the most useful frame. No need to be abstract if
| we're referring primarily to a few large
| companies/conglomerates.
|
| Instagram, Whatsapp, Youtube, Android, Doubleclick, etc.. Those
| acquisitions are undoubtedly a major part of how Google & FB
| got to here... and here is a good place for shareholders. IMO,
| it's hard to argue management destroyed value, but we don't
| ever know alternate realities.
|
| Either way, I think there's a strong case that "competition for
| monopoly" is the key dynamic here. A business similar to
| adwords-google but with only 1% of the market share is worth
| way less than 1% of adwords-google. Think of Yahoo/MSFT's
| attempts at adwords' runner ups. How much is reddit worth,
| relative to FB? There are lots of examples. Even if the market
| does have multiple contenders, the power curve tends to be
| mighty in modern, software-centric economics.
|
| For a variety of reasons, strong pressure to consolidate
| appears to be the case often. Whatever those reasons, this
| creates/describes a strong incentive to consolidate. We know
| empirically that consolidation happened, and acquisitions
| played a role. Consolidation also happened in cases where
| acquisitions didn't play a major/obvious role.
|
| Tax laws are one of those reasons, but not the only ones.
| There's low interest rates, the laws of other countries, the
| business cycles, financial markets, etc. It's financial markets
| that have the operative say on capital creation vs destruction.
| _They_ value FB highly, and have usually seem pleased with M &A
| in terms of demand for the stock.
|
| There are also "natural" reasons for M&A, and consolidation
| more broadly. Software is cheap to replicate/scale and is often
| winner-take-most. Media is similar. Ad markets (and
| marketplaces generally) exhibit network effects. Networks (like
| social networks) exhibit network effects.
|
| IMO the whole theoretical/legal framework of antitrust is quite
| bougus, in 2021. Monopoly isn't just about pricing power, and
| whatever else ancient economists observed in previous
| centuries.
| andrewjl wrote:
| > Monopoly isn't just about pricing power, and whatever else
| ancient economists observed in previous centuries.
|
| This understanding of monopoly has only existed since the
| mid-20th century. Prior to that, the definition of a monopoly
| was more expansive and included analysis of market & industry
| structure.
| timy2shoes wrote:
| The start of this line of thought was Robert Bork in 1978:
| https://en.wikipedia.org/wiki/The_Antitrust_Paradox
| dalbasal wrote:
| cheers both. I thought these were from the 20s.
| andrewjl wrote:
| The IMO best contemporary overview of the legal issue as
| it pertains to tech is this piece[1] by Lina Khan. Love
| the subtle irony I did not catch until today in the
| title, "Amazon's Antitrust Paradox". It cites and argues
| the opposite of the Bork piece in many respects.
|
| [1] https://www.yalelawjournal.org/note/amazons-
| antitrust-parado...
| marcosdumay wrote:
| > we should also make separate companies just as tax efficient
|
| Corporation taxes should be progressive too. Huge corporations
| are harmful to society, we should incentive many small ones to
| take their place.
| crazygringo wrote:
| > _the vast majority of these M &A destroy capital_
|
| Even if true, it's irrelevant. The vast majority of VC
| investments also lose money, or as you put it "destroy capital"
| -- that's just high-risk investment generally. Nobody knows in
| advance what the future holds, which is why you spread your
| risk with _lots_ of investments (or acquisitions).
|
| But as long as you have enough runaway successes, then
| acquisitions are an _overall_ profit-making, not profit-
| destroying, strategy. Even if the profit only comes from a
| small minority of them.
|
| And that's only if you're counting the direct future
| profitability of an acquisition. Many times, the acquisition is
| also for key expertise or employees that may otherwise be
| prohibitively difficult to get, patents, the only way to
| compete in time, or is even strategically defensive -- to
| prevent your main competitor from acquiring the same critical
| technology/team.
| hedora wrote:
| I think the point is that there is some real business
| subsidizing the failed M&As. If a VC lost money on average
| (mean) with each investment, they'd run out of money, and the
| problem would self correct.
|
| If a company is able to print unlimited cash, they can use
| the revenue on unlimited ill-advised acquisitions, and do
| unbounded damage to the economy.
| caseysoftware wrote:
| > _If a company is able to print unlimited cash, they can
| use the revenue on unlimited ill-advised acquisitions, and
| do unbounded damage to the economy._
|
| At some point, they're still bound by what lenders will
| give them or how much investors will buy their stock for.
|
| But apply the same to a government that can print unlimited
| cash..
|
| (We may quibble over "unlimited" but it has been US Fed
| policy for decades and appears to be accelerating now.)
| crazygringo wrote:
| > _there is some real business subsidizing the failed M
| &As_
|
| Citation needed. This is a common claim, but it flies in
| the face of common sense and financial incentives.
|
| Corporate boards simply do not approve acquisitions because
| they've got no better ideas of what to do with cash, that's
| a fantasy. Boards are held accountable to investors, and
| investors want to make money, not fritter away cash.
| Investors want rising stocks or dividends at the end of the
| day, period.
|
| Like I said, acquisitions are investments and investments
| can be risky, and so it's super easy to say in hindsight
| that an acquistion was dumb and that the board must be
| irresponsibly frittering away money instead of returning it
| to investors. But hindsight is always 20/20, right? As a
| general rule, companies simply are _not_ "subsidizing"
| M&A's. It's just not how businesses or boards work _at
| all_.
| mrep wrote:
| Instagram was bought for 1 billion and is now estimated
| to be worth over a hundred billion dollars. Facebook has
| acquired 89 companies according to crunchbase so even if
| all of those cost a billion each which they didn't,
| Instagram would have made up for all of them single
| handedly.
| gogopuppygogo wrote:
| And yet the "other bets" from Google don't yet have a hit...
|
| "The next big thing" is super hard work.
| [deleted]
| s1artibartfast wrote:
| > My understanding is that the vast majority of these M&A
| destroy capital.
|
| I think this would be very difficult to tease out of the data.
| Many acquisition are de facto defensive, even if they or not
| anti-competitive from a legal monopoly perspective.
|
| How could one measure the the loss of brand value if the
| acquired companies were allowed to mature or be acquired by a
| competitor?
| RC_ITR wrote:
| It's also a 'number of acquisitions' vs. 'value of
| acquisitions' argument.
|
| If you had to guess the 'value' of TurboTax, The Microsoft
| Office Suite, Macromedia, Instagram, YouTube, NeXT, Pixar,
| VMware, etc. etc., you'd probably find that the good M&A
| outweighs bad.
|
| It's just that bad M&A happens a lot can be really bad (AOL
| Time Warner).
| iicc wrote:
| >Our current tax laws make vertical integration or even
| conglomerates more tax efficient. >...we should also make
| separate companies just as tax efficient (VAT tax, etc) and
| otherwise closely examine how we can change economic incentives
| here.
|
| related:
|
| "Biggest companies pay the least tax, leaving society more
| vulnerable to pandemic - new research (2020)" --
| https://theconversation.com/biggest-companies-pay-the-least-...
| -- (https://news.ycombinator.com/item?id=22786371)
| andrewjl wrote:
| > My understanding is that the vast majority of these M&A
| destroy capital.
|
| The FAANG stocks have very high compound annual returns
| stretching over more than a decade. I don't think there's
| evidence that those returns would be higher without their many
| acquisitions or evidence of capital destroyed.
|
| It can be argued that whether M&A on net is capital generative
| or destructive depends on the management team and their ability
| to successfully integrate the acquired company's team,
| products, and technologies. Which translates to bad management
| destroys capital, which is an obvious truism.
| gregwebs wrote:
| I agree that returns would not be much different if they had
| avoided bad M&A. They have tons of cash and have to do
| something with it if they don't give it back to shareholders.
| Amazon has historically had the least amount of cash sitting
| around and thus has done the fewest acquisitions (FB may be
| less, but their market cap is smaller and their business is
| less diverse).
|
| I also agree that returns have been greatly improved by a few
| key acquisitions for Google (Double Click, Youtube) and FB
| (Instagram). For Apple and Amazon I don't know where they are
| benefiting from their M&A (this is likely my ignorance, I
| would be interested to know).
|
| I just think it makes more sense to focus on a few key (anti-
| competitive) acquisitions than to complain that big companies
| do hundreds of M&A deals over a couple decades.
| varispeed wrote:
| Not paying taxes, using all possible loopholes and paying as
| little to workers as they could get away with...
| asdff wrote:
| Investing in psychological research to make their product more
| addictive, practically buying legislation to further profitable
| abuses of labor, the list goes on.
| banbanbang wrote:
| Share repos afforded by low interest rates really helped big tech
| and other profitable enterprises. It allowed them to make
| acquisitions and retain talent.
| Animats wrote:
| As the article points out, weak antitrust enforcement has allowed
| companies to become monopolies, or near-monopolies. It's not just
| "tech". Look at banking. The US is down to four big banks. Until
| 1995, US banks couldn't operate in more than one state.
|
| Right after deregulation, there are new entrants. Twenty years
| later, there are a very few giant companies. See telecom,
| airlines, etc.
| adrianb wrote:
| And the ones you mentioned have major regulatory hurdles to
| expand internationally. In industries where a single player can
| dominate multiple markets we are down to 2-3 major competitors,
| worldwide. See airplane or train manufacturers, beer companies,
| computer chips...
|
| This has all been financed by more than a decade of low
| interest rates which fuelled the M&A.
| omgwtfbyobbq wrote:
| Low interest rates have helped, but I feel like it's
| primarily the relaxation of regulations that fueled things.
| We had really low interest rates for a decade or two after
| WWII, but I don't think we saw the same rate of business
| consolidation.
| Accujack wrote:
| "Relaxation" of regulations has been sliding downhill since
| about the 50s, but it reached a fever pitch during the
| Reagan presidency.
|
| The "new conservatives" and religious fundamentalists found
| they had a president they could control who was slowly
| forgetting everything he knew, and they used that to the
| fullest advantage.
|
| Much of where we are today is due to the processes that
| began then, from (lack of) fairness in news reporting to
| the permissive corporate laws that allowed private equity
| and corporate raiding to relaxation of banking and
| securities laws that allowed 2008 to happen.
|
| There have been some ups and downs between the 80s and
| today, and a few Democratic years, but in general the slide
| has continued because once money gets into politics, it
| won't leave quietly... it has to be forced out.
| s1artibartfast wrote:
| I think it is entirely the opposite. It is all about
| regulatory capture. You put in place firm regulations that
| only the largest multinationals can comply with, and in
| most cases have written themselves to set the bar high and
| exclude competition
| coachtrotz wrote:
| "Until 1995, US banks couldn't operate in more than one state"
|
| Can you clarify what you mean? The National Bank Act was
| originally written in 1863.
| Animats wrote:
| See this 1994 article from the St. Louis Fed, "Going
| Interstate: A New Dawn For U.S. Banking"[1]
|
| And then in 1999, even more deregulation.[2]
|
| [1] https://www.stlouisfed.org/publications/regional-
| economist/j...
|
| [2] https://www.wsws.org/en/articles/1999/11/bank-n01.html
| AnthonyMouse wrote:
| > See telecom, airlines, etc.
|
| Don't forget media companies. Everybody forgets media companies
| because media companies that have no qualms writing articles
| condemning mergers by Bank of America have a different
| incentive when it comes time to look in the mirror.
| codegeek wrote:
| yes it is def. not tech only. telecom, banking, airlines are
| great examples as well. One recent example. My phone company
| Sprint got acquired by T-Mobile. Btw, Sprint used to be Spring
| PCS many years ago which I think was a merger b/w Sprint and
| PCS. Consolidation/mergers are endless.
| fwsgonzo wrote:
| It's my biggest gripe with current society. It's everywhere,
| and it's not going away. Nobody is tackling it, or talking
| about it seriously. At some point I thought that companies
| would become more powerful than states, but I've changed my
| mind on that. Nations do retaliate hard if they feel
| threatened. Maybe I've just turned naive again. But when it
| comes to monopolies I just don't see them ever going away now.
| Too much globalization combined with lobbying power and
| corporate veils. People talk about companies and never about
| the people who make the decisions, and I feel like people have
| trouble with accepting that in the end nobody actually wants to
| be in a society where companies can do whatever they want and
| end up being a negative contributor to society.
| an_opabinia wrote:
| > people have trouble with accepting that in the end nobody
| actually wants to be in a society where companies can do
| whatever they want and end up being a negative contributor to
| society
|
| Consumer prices fall, and US consumers' brains just turn off
| when you show them slaves in the supply chain.
|
| Consumer prices rise, and then people hit the street -
| everywhere, globally.
|
| It doesn't really matter if their dollar is going to Amazon
| or 1,000,000 small main street shops. Indeed, both are
| sourcing the bulk of their goods from places with slave
| labor. Your gripe is about _low prices_ , not "society," and
| like, what's your solution?
| lordnacho wrote:
| Something I've contemplated lately is what I call the chaos
| monkey economy. Since it's hard to politically gather the
| will to fight any given monopoly, we should just roll dice to
| do it.
|
| Every year we look at firms above some size, and if they fail
| the saving throw, we liquidate them. Everyone who works there
| gets 6 months severance, all supplier contracts are
| terminated, everything they supply likewise. Get a bankruptcy
| administrator to sell the chairs and real estate, give the
| shareholders whatever is left.
|
| If it's truly valuable what they do someone will find a way
| to do it again. If it's just a power position they were
| exploiting, we'll be free from their tyranny.
| dd36 wrote:
| Progressive corporate taxation. Want to be large? Pay a
| higher tax rate.
| AnIdiotOnTheNet wrote:
| > If it's truly valuable what they do someone will find a
| way to do it again.
|
| It is better than that. If it is truly valuable we'll
| already have someone else doing it just because of the risk
| of it failing its saving throw.
| thatguy0900 wrote:
| I think an important thing is also using companies as foreign
| tools. The nsa would hate to see Google or Facebook broken up
| and supplanted everywhere by local companies. Or, worse,
| supplanted by a equally large Chinese monopoly.
| 1vuio0pswjnm7 wrote:
| Perhaps if these companies were not such illegally large
| monopolies then they would have less perceived value as
| "foreign tools".
| aerosmile wrote:
| I think we should all hate to see the latter.
| Unfortunately, it's already happening with TikTok, and with
| the rate of innovation in China, we'll see many more.
| FridayoLeary wrote:
| Unfortunately, I don't think that influence from NSA has
| had much to do with the reluctance of legislators to limit
| Big Corporations
| HDMI_Cable wrote:
| That can be simplified even further, the NSA doesn't care
| about Google, Facebook, or any other specific companies,
| just the ability to extract data from them. They would
| truly hate if the Third Party Doctrine were overturned.[1]
|
| ---
|
| [1]: https://en.wikipedia.org/wiki/Third-party_doctrine
| rhizome wrote:
| _But when it comes to monopolies I just don 't see them ever
| going away now. Too much globalization combined with lobbying
| power and corporate veils_
|
| tl;dr: it doesn't cost a million dollars to effect political
| change with money.
|
| I think politically engaged (and frustrated!) people
| overestimate the exclusivity of lobbying and the power of
| donations. My understanding (I can't find figures right now)
| is that you can get a lot of access for probably less than
| you think. Sick of potholes? Donate $1000 to your mayor and
| you might find yourself face to face complaining about how
| many tires you lose per year.
|
| I think someone wrote an article about how much it costs a
| single person with a single issue to get attention from a
| politician ('s team), or how little it costs, as the case may
| be. Yes, hiring a lobbying _agency_ is more expensive, but
| that 's more of a wide-spectrum approach.
|
| There is enough money in these HN threads for people to
| donate $1000 to each of several politicians in the pursuit of
| tightening antitrust enforcement, but there's probably just
| as many who support the current policies. I didn't say it
| would be easy, but with some money and organization it's not
| impossible. Of course that's how every special interest
| started...
| whimsicalism wrote:
| Yeah, because the potholes can't donate $1,000 to the mayor
| to keep them around. Perhaps in a future world with
| sentient potholes, this will become more of a problem.
|
| Is it not obvious why this approach doesn't scale to
| confronting monopoly power?
| Workaccount2 wrote:
| The pot holes play a trivial role in the example. The
| point is that face time is much cheaper than people make
| it out to be, and politicians don't have time to be doing
| deep research on the hundreds of applicable topics they
| vote on.
|
| I believe it was Al Franken I heard talking about this,
| and he said that often times politicians end up voting
| with the lobbyist desires because no one ever lobbied the
| other side of the issue. For instance an energy lobbyist
| asking for the inclusion of exemptions for it's
| potentially overweight trucks on local roads to support
| the new gas well jobs created, that "will easily make up
| the potential and definitely trivial road repair costs".
|
| Nobody shows up to lobby the other side of the story. The
| energy company painted it perfectly as a 100% good thing,
| while someone could have donated $200 and after bit a
| research shown it was actually a sham and the official
| would have agreed. But no one did.
| MomoXenosaga wrote:
| US corporations are extensions of US global power. Google is
| doing for America what Huawei is doing for the Chinese.
| Animats wrote:
| Some of it is lack of antitrust enforcement. Something that
| isn't mentioned much, though, is that business IT technology
| reached the point that planetary-scale companies work well.
| Until the 1980s or so, big companies had scaling problems.
| Big companies developed huge internal paperwork operations,
| huge headquarters staffs, too much middle management, and
| were choking on their own operating problems. There were
| inherent limits on bigness, beyond those imposed by the cost
| of transportation. The classic example was General Motors,
| which had a long history of management problems from sheer
| scale.
|
| That's been fixed. Amazon, Google, WalMart, Alibaba, etc.
| have worldwide operations without major scaling problems.
| Those companies can adapt and change reasonably rapidly. The
| knowledge of how to do this is widespread. This is new. An
| inherent limit on bigness has been eliminated.
| Wowfunhappy wrote:
| > But when it comes to monopolies I just don't see them ever
| going away now. Too much globalization combined with lobbying
| power and corporate veils.
|
| We've been here before though, in the era of Standard Oil.
| They can be broken up, but it won't just happen on its own.
| The government needs to take action.
| hhs wrote:
| > We've been here before though, in the era of Standard
| Oil.
|
| If interested, Standard Oil was drawn as an octopus in Puck
| magazine (1904). The Library of Congress notes:
| "Illustration shows a "Standard Oil" storage tank as an
| octopus with many tentacles wrapped around the steel,
| copper, and shipping industries, as well as a state house,
| the U.S. Capitol, and one tentacle reaching for the White
| House." [0]
|
| [0]: https://www.loc.gov/pictures/item/2001695241/
| briantakita wrote:
| > The government needs to take action.
|
| The government is taking action. The government is in on
| this consolidation via investments, contracts, preferential
| legal & tax treatment, etc. Think about this from the
| government's perspective. The government would rather
| govern a small number of large entities instead of a large
| number of small entities, thus the government is
| incentivized to favor monopolies/oliogopolies. The
| government itself is a monopoly of power in many domains.
|
| Sure, the government may intervene with a company getting
| too big, but the intervention is so the government can gain
| a foothold with that company. e.g. any telecommunications
| platform will need to have back doors for the law
| enforcement agencies or said telecommunications platform
| will not be allowed to operate.
| Wowfunhappy wrote:
| > Think about this from the government's perspective. The
| government would rather govern a small number of large
| entities instead of a large number of small entities,
| thus the government is incentivized to favor
| monopolies/oliogopolies.
|
| According to what incentives? The government's
| responsibility is to the country at large.
| Mountain_Skies wrote:
| It's very beneficial to them for just a few companies to
| control everything. Then they can deperson you and say
| "It's a private company, not the government, they have to
| freedom to do business with whoever they want". That's
| quite a bit more difficult when there are thousands of
| equally viable competitors.
| Wowfunhappy wrote:
| We live in a democracy. We are the government. Their
| benefit should be ours, or if not, we should elect new
| leaders.
|
| The problem is that in America, a large block of today's
| electorate seems convinced that governments can never do
| anything good, and so shouldn't be allowed to try.
| Perhaps if we actually let the government do its job,
| politicians and civil servants could accomplish things
| like reining in monopolies. It has worked before, and it
| could work again.
| dimitrios1 wrote:
| This is the conspiracy I personally believe the most. The
| founding fathers knew that government always wants more
| power and control. Logically following from that, of
| course they would use any means necessary to subvert the
| checks put on their power.
| dd36 wrote:
| *people always want more power and control... The same
| logic applies to companies.
| FridayoLeary wrote:
| >The founding fathers knew that government always wants
| more power and control
|
| As a UK resident, i'm astonished how the almost prophetic
| wisdom of the Founding Fathers can go ignored for so long
| by their spiritual heirs.
| HDMI_Cable wrote:
| Globalization and Lobbying are not irreversible trends. The
| world is already starting to become less "global", with the
| Chinese belt-and-road initiative, Russian exclusionism, and
| the breakdown of NAFTA (among other things). Many world
| powers, including Russia, China, and the US (to some degree)
| want the world to be less open for trade and large
| corporations.
|
| as for lobbying, America has been through this before. The
| Gilded Age saw lobbying to an even more extreme degree, with
| companies like US Steel and Standard Oil able to basically
| pay off senators. The same thing happened with slave
| plantations in the 1850s. After the great depression (and
| even before to some small extent; see the breakup of Standard
| Oil), laws were put into place heavily curbing lobbying,
| insider trading, among other things (like stock buybacks).
| Really, we're in another Gilded Age, and one day the balance
| of power between the individual, the state, and the industry
| will shift again.
| [deleted]
| will4274 wrote:
| > Until 1995, US banks couldn't operate in more than one state.
|
| I can't think of a worse example of regulation. People
| obviously want to be able to access their money when they
| travel 30 minutes away. Your example undermines your point.
| mulmen wrote:
| Huh? My money stays in my bank. If I want to spend it in
| another state that's what Visa and MasterCard enable, or I
| can carry cash, or directly transfer to another bank account
| in another bank across state lines. My bank can do business
| with any number of companies offering the ability to spend
| money nationally such as Visa, MasterCard, PayPal, Venmo,
| Zelle, Coinbase, etc. Separating these concerns is good for
| consumers because it encourages competition and innovation
| and banks themselves are incentivized to offer access to new
| capabilities instead of preserving the status quo because
| they profit from owning the means of spending money.
| andrewjl wrote:
| > My money stays in my bank.
|
| That's not quite right. [1]
|
| [1] https://www.investopedia.com/terms/f/fractionalreserveb
| ankin...
| [deleted]
| will4274 wrote:
| Yes, and everybody attends college in state.
|
| Look, I understand most hacker news readers do banking
| online, but the notion that banks are limited to a single
| state requires either that people rarely go out of state or
| never need to go to a physical branch. Neither is true in
| 2021. The former (not traveling) is more common than the
| later (not needing to go to a physical branch).
|
| You seem to be proposing purely online banking. I take it
| you don't own a home or a car or a business? Most loans
| still require an in person meeting.
| BlueTemplar wrote:
| And it's not like this hasn't been predicted by the cyberpunk
| genre... in the 1980's ?
| jean_tta wrote:
| See "The Great Reversal: How America Gave Up on Free Markets",
| by Thomas Philippon [0]
|
| [0] https://www.hup.harvard.edu/catalog.php?isbn=9780674237544
| briantakita wrote:
| Many people erroneously equate Capitalism with Free Markets.
| Enginerrrd wrote:
| No, many people incorrectly equate a monopolistic, pay-to-
| play, regulation-captured plutocracy with capitalism.
|
| Fundamentally, capitalism is about handling economic
| planning in an efficient way by free-market autoregulation
| and policy makers who nurture competition to ensure that
| process continues to happen efficiently.
| jean_tta wrote:
| Your definition seems closer to ordoliberalism [0].
|
| If competition and free markets are a necessary
| components of capitalism, then you would conclude - for
| instance - that the US stopped being a capitalistic
| country in the late XIXth century with so many prominent
| trusts. Or perhaps it never was capitalistic before WWII,
| since policy makers did not nurture competition but
| rather attempted to shield local industries from foreign
| competitions.
|
| [0] Wikipedia definition: Ordoliberalism is the German
| variant of economic liberalism that emphasizes the need
| for the state to ensure that the free market produces
| results close to its theoretical potential
| rustybelt wrote:
| This has had a big impact on the economies of regional mid-
| sized metros as jobs consolidated in coastal megacities.
| Arguably, this resulted in a lower quality of life in both
| classes of cities.
|
| Good Atlantic article on the subject:
| https://www.theatlantic.com/business/archive/2016/04/how-ame...
| snarf21 wrote:
| Exactly correct. The FTC and SEC have failed us completely in
| the 21st century. Things have gone bad ever since the focus of
| all companies has been shareholders above all else.
| throw123123123 wrote:
| I would not call banking unregulated.
| avrionov wrote:
| Growing through acquisitions is not limited to Big Tech. Almost
| every big company has an endless list of acquisitions. Berkshire
| Hathaway is a conglomerate of acquired businesses. All big banks
| were results of M&A. Same with the oil companies.
| h2odragon wrote:
| How many companies were started over the last 20 years where the
| expressed goal, the "win condition" in the founders minds, was a
| buyout?
|
| The idea of building something neat is a lot more attractive than
| running a business that sells the neat thing to customers. The
| people who want to run businesses are in the lovely position (for
| them) of having more fresh, good ideas offered to them than they
| can review, much less use.
| rconti wrote:
| Most of this tech has strong network effects. And while the
| marginal cost of shipping an additional unit tends to be close
| to 0 (creating the incentive to grow almost boundlessly), the
| costs of complying with regulation in dozens or a hundred
| countries is quite high.
|
| Thus, it entirely makes sense for a founder want to build great
| tech and a great product, but NOT want to be in the business of
| complying with a dizzying array of local and international
| regulations, in a world where they effectively have to expand
| globally to "win".
|
| Big companies aren't typically nimble enough to respond to the
| whims of consumer tastes or catch the latest fads.
|
| So, it's a great symbiotic relationship between "big tech" and
| startups.
|
| Acquisition, cash out, bolt on regulatory and legal framework,
| wash, rinse, repeat.
| lrem wrote:
| Oh my, after all these years I finally understand in what way
| Google actually is like a startup :D
| spamalot159 wrote:
| Its a no-brainer for most. Put in a couple years of work, cash
| out big, go live the dream. Every incentive aligns with this
| though process so why stop doing it now?
| varispeed wrote:
| Why would you want to cash out out of something you love?
| These kind of businesses struggle. But when you have a rich
| parents, they you come up with some start up idea, hire a
| team of people to make it - then yes cashing out is a win.
| But those people don't look at it as business, as a real
| thing that adds value for other people, but pure selfishly as
| showing themselves they can pull this off. These people also
| often steal ideas from people who care and love what they do.
| Often those people become wage slaves in those rich daddy
| companies.
| manigandham wrote:
| Then don't cash out. But that's usually a fantasy. Nobody
| is really "passionate about enterprise saas" or whatever
| the marketing says.
|
| Founders are interested in control and eventual (financial)
| freedom, and tend to like building an organization in
| general. An acquisition provides that freedom while
| allowing them to build something else in the future with
| even better circumstances.
| throwitaway1235 wrote:
| At some point in his life Larry Ellison was passionate
| about something as mundane as a database.
| burntoutfire wrote:
| Database engines are cooler (and harder) than 95-99% of
| the stuff that people on HN build.
| manigandham wrote:
| Was he? Or was it the opportunity to create a business
| around new tech and the eventual riches it brought? It
| seems his real passion is buying islands and racing
| boats.
| lotsofpulp wrote:
| Because you might love security for your family's future
| more than your work. A bird in the hand is worth two in the
| bush. You can always start another company.
| dalbasal wrote:
| At any given time, there are founders in the "sprint-to-buyout"
| camp and those in a "build to own" camp. In any given year,
| there are many founders who hold to their principle and those
| who change their minds.
|
| People make choices. Nothing is deterministic. That said, the
| number of companies founded, run or exited with a buyout win
| condition mentality is governed by price economics. FB, Google,
| etc offered a very high price for Android, Instagram, etc.
| because those M&As were worth a lot to them. Given this, a lot
| of M&As are going to happen.
|
| The interesting question, to me, is "why is the price so high?"
| It's silly to get all huffy about M&As and ignore the
| consequences of M&As.
| whimsicalism wrote:
| Your comment assumes that the people buying the business and
| the people running the business are the same. In the 21st
| century, this is less & less the case, as people with capital
| are uninterested in hands-on management.
| formercoder wrote:
| That's what happens when there's a flood of venture capital
| money whose intention with its investment is to see a specific
| return on capital on a specific investment horizon.
| schnevets wrote:
| I am much further removed from the "startup frenzy" of the
| early 2010s, but does it seem like this model has trended
| downward since the start of lockdown?
|
| As optimism about the pandemic rises, it seems like the
| innovation that you would expect from this kind of volatility
| never panned out. I suppose capital was pumped into the
| public market instead?
| ryandrake wrote:
| History repeats! 20 years ago, some business exit plans
| basically boiled down to "...and then we'll get bought by
| Microsoft!" Not too bad, at least for the founders.
|
| Especially if your goal is to land a nice FAANG job anyway.
| It's gotten to the point where interviewing is so competitive,
| exhausting, opaque, and ultimately random, that it might
| _actually_ be easier to do a bootstrapped start-up for a year
| and get bought by Facebook than it is to grind leetcode and
| interview-prep for a year and roll the dice on the interview
| circuit. I wish I were joking.
|
| EDIT: Wow, no disrespect to founders, I did not intend to
| trivialize the work you do. Instead of "easier" I should have
| said something like "more controllable" or "less random".
| kurbin wrote:
| This is not anywhere close to true. Have you built a
| bootstrapped startup from scratch and negotiated an
| acquisition? It's far, far harder than practicing a few
| leetcode Facebook problems and getting a referral.
| oblio wrote:
| You don't even need the referral. Unless your CV only has
| farming experience or something :-)
| scarface74 wrote:
| I concur. My sparse LinkedIn profile shows decades of
| doing CRUD work for no name companies and I have had
| recruiters from most of the major tech companies reach
| out to me. No I couldn't pass any DS&A tech screen
| without a lot of preparation.
|
| Even now that I work at one of the Big 5 tech companies,
| I clearly state that my role is not officially
| development, I still have recruiters reach out to me from
| FB for development positions.
| thayne wrote:
| There is a big difference between getting recruited and
| actually getting a job offer.
| oblio wrote:
| Yeah, but the discussion was about referrals. Referrals
| are for getting your foot in the door. You don't
| generally need them for FAANG. You just need a half
| decent CV.
|
| The hard part is passing the interviews, but referrals
| don't help with that, from what I know.
| tolbish wrote:
| An actual referral for an "industry rockstar" would
| catapult them past the first few rounds of interviewing.
| oblio wrote:
| And referrals for top management do the same. Why are we
| talking about something applicable to maybe 0.00001% of
| candidates out there?
| [deleted]
| tolbish wrote:
| Because far up the comment tree, referrals were confused
| with "some recruiter said I should interview for a job".
| fatnoah wrote:
| Agree 100%. I've bootstrapped, I've been acquired, and I've
| gone through the FB/G/etc. interview processes. Going
| through those interviews took a few weeks of light prep,
| whereas bootstrapping to acquisition was a multi-year slog.
| Just the due diligence portion of the acquisition too many,
| many, many times the effort of job interviewing.
| N1H1L wrote:
| Yep. Bootstrapping a startup is _hard_.
|
| FAANG interviews are not even close.
| whymauri wrote:
| Even just the diligence behind a potential acquisition
| (stated 'win' condition) is orders of magnitude more
| stressful than reviewing DFS, lol.
| wskinner wrote:
| If the acquisition is mainly about talent, and in many cases,
| even if it's not, FAANG will expect you to interview like
| everyone else.
|
| Source: founder of a company which was acquired by a non-
| FAANG company, but talked to a few FAANGs as part of the
| process.
| Voloskaya wrote:
| > that it might actually be easier to do a bootstrapped
| start-up for a year and get bought by Facebook than it is to
| grind leetcode and interview-prep for a year and roll the
| dice on the interview circuit. I wish I were joking.
|
| If you are not joking you are delusinal, this is not even
| remotly true.
| 908B64B197 wrote:
| > grind leetcode and interview-prep for a year and roll the
| dice on the interview circuit.
|
| Or go to a serious CS/Engineering school and just take the
| Algorithm class.
| SilurianWenlock wrote:
| What are peoples opinions on whether just taking the
| algorithms class helps a lot? People can do it online
| almost as easily
| heymijo wrote:
| OP is exaggerating, but Yahoo under Marissa Mayer wasn't
| far off. Nicholas Carson's 2015 book about their M&A during
| this era has lots of details.
| jbn wrote:
| what's the actual title of this book? I couldn't find it
| (my google-fu probably isn't very good, but "Nicholas
| Carson" is not a very unique patronym...)
| hooande wrote:
| You may not agree with OP, but I don't think this view is
| delusional. Starting a company is a lot of day to day work
| in terms of hours, but it's more rewarding than doing
| interview prep. If you spend weeks or months studying for
| interviews and don't land a job, you get nothing. If you
| start a business you generally get paid or make profit the
| whole time, you build relationships and end up with
| something tangible to show for the experience.
|
| Personally, I would much rather be running a moderately
| successful business than studying esoteric programming
| questions full time. At the least, the relative "easiness"
| of starting a business vs the normal FAANG interview
| process is personally subjective.
| vlovich123 wrote:
| > If you start a business you generally get paid or make
| profit the whole time
|
| What tech startup is this? Profitability is a long road &
| for a good chunk of the time you're relying on funding to
| get you through to profitability. You might get paid but
| how much you withdraw impacts your runway.
| Voloskaya wrote:
| I agree with you that it's a way more interesting
| journey, but it is by no mean "easier". Especially since
| OP was talking about getting acquired at the end. Just
| keeping your business alive is hard enough, let alone
| being acquired by one of the FANGs.
| veemjeem wrote:
| It's not easy to get acquired by a FANG, but if you're
| okay with acqui-hire terms of most companies, you'll
| eventually get acquisition requests if the startup gets a
| little bit of press or has some traction. I've personally
| gone through this process several times already, turned
| down a few acqui-hire requests, and eventually accepted
| one. One of my startups only lived for 4 months before it
| was acqui-hired, which was still more enjoyable than
| doing 4 months of interview prep.
|
| In hindsight, if I accepted my first acqui-hire request,
| I would've eventually got hired into Google because the
| startup that wanted to hire us was eventually folded into
| google, but honestly it's hard to tell from a distance
| which companies are going to be acquired by a FAANG.
| rhizome wrote:
| I was part of an aquihire and got screwed every which
| way. As the acquired's only person in my position and
| required (almost! I'm not delusional) in order to
| transition the company, I should have driven a harder
| bargain when deciding to go along with it. In the future
| I would not go along without a _significant_ retention
| bonus, like, say, a percentage of the purchase price that
| reflected my contribution.
| capableweb wrote:
| I guess it depends on your previous experience. If you're
| familiar with actually building a software company, know
| good people to employ and know a problem that needs
| solving, it probably is easier to go that route than having
| to learn the whole interviewing-scam thing that is
| happening today, in order to just be employed.
|
| Helps that building a company gives you real experience as
| well while prepping for interview just gives you that,
| preparation for the interview, while the real job is
| different than the interview.
| joshuamorton wrote:
| The companies that FAANG acquire are usually mid sized,
| 50+ employees. Getting to that size, in a particular
| industry that will be of acquisition interested is not
| going to be easier than getting hired.
|
| Might get you hired at a higher level though, but yeah
| delusional to think it would be easier.
| tjs8rj wrote:
| If leetcoding and going from 0 to acquired by Facebook in
| a year were just as hard, we'd all be rich.
|
| Even if it was only an order of magnitude difference, the
| expected value of starting that startup would be so much
| higher.
|
| They aren't even in the same ballpark
| Retric wrote:
| I think it really depends on your background. For people
| with a questionable job history, poor credentials, modest
| intelligence, a speech impediment, and a criminal
| background self funding to Raman increases in difficulty
| less than working directly for Facebook. However, ridding
| the VC train has a lot of the same dependencies as
| working for Facebook, but is vastly more difficult.
|
| The same is true of networking and friends and family
| financing. I might look at scraping together a ~200k seed
| round as trivial, but that's not true for everyone. On
| the other hand if 5 of your collage friends are working a
| FANG companies that's also a huge leg up.
| tjs8rj wrote:
| We're not talking about bootstrapping for a year, op said
| selling to Facebook in a year. To pull that off means
| awesome traction or clubhouse level hype or deep serial
| founder connections, or corruption at high levels.
|
| All of these are much more difficult to pull off, often
| requiring years, than simply hitting the books for a few
| months
| manigandham wrote:
| I get what you're saying but none of those words work.
|
| There are some people who are very well networked and can
| repeatedly start and sell companies by leveraging those
| connections as a business model in itself, but this is
| extremely rare.
|
| Building a business to even be attractive enough for an
| acquisition is magnitudes harder than any round of interviews
| will ever be, but I do agree that those interview processes
| are a joke now compared to the talent they're designed to
| find.
| at-fates-hands wrote:
| > Especially if your goal is to land a nice FAANG job anyway.
|
| I wouldn't just say getting acquired by a FAANG company. I
| work for one of the biggest health care companies in the
| world. Last year they acquired over 200 companies with the
| goal of exceeding that this year.
|
| They literally are buying companies whose technology they
| would rather buy then build themselves. If you knew what my
| company was looking for (machine learning, AI and automation)
| you literally could start a company with less than ten
| people, focus your work on one of the three areas and have a
| better than decent shot of being acquired by the company I
| work for in a span of less than 5 years.
|
| What would take longer? Building that company with a singular
| focus on a singular product my company needs or achieving a
| senior level knowledge of Javascript for a full stack
| developer role? I would say at that point its a toss up.
| jcadam wrote:
| Eh, both have proven impenetrably difficult for me. I just
| kind of float through life and stumble into jobs these days.
| mattgreenrocks wrote:
| AFAIK, you're still subject to some sort of vetting process
| when getting acqui-hired, so you'd still be studying for that
| anyway.
|
| So it is probably _more_ work than simply studying and
| rolling the dice over and over.
| anonymousab wrote:
| > It's gotten to the point where interviewing is so
| competitive, exhausting, opaque, and ultimately random, that
| it might actually be easier to do a bootstrapped start-up for
| a year and get bought by Facebook than it is to grind
| leetcode and interview-prep for a year and roll the dice on
| the interview circuit.
|
| Not sure about founders but sometimes you have to interview
| with the Big Tech Co. as well to keep the job after
| acquisition.
| EGreg wrote:
| This is the free laissez faire market at work. What's the
| problem? There is no problem with capitalism BUT....
| coliveira wrote:
| This a point that is missed by the people who still say the the
| big tech companies got there "by merit and by the choice of
| consumers". Most big tech had a single idea, and then used the
| money to buy others who could pose a threat. So in effect the
| consumer has little choice. For example, consumers didn't have a
| choice in selecting Google to watch video, they had to accept the
| fact that Google bought Youtube.
| chillacy wrote:
| Hmm, but by the time Google could afford to buy YouTube, they
| were already very popular and had a well liked search product.
| Ask Jeeves didn't buy YouTube.
| conductr wrote:
| This is along my initial-not-fully-formulated thought
| process. Majority of business doing the acquiring are still
| primarily in the business of what allowed them to do the
| acquiring. There's only a few I can think of where the
| acquisition is a meaningful/noteworthy part of their current
| business. I don't necessarily feel like valid competition was
| squashed in most cases. Following tech M&A headlines has led
| me to feel mostly it's acquihiring and the underlying product
| has no value to the acquirer.
| dangus wrote:
| This is the inevitability of capitalism. It has no built-in
| control for a company that becomes too big to the point of being
| a detriment to society.
|
| In my mind there are only three kinds or tech companies:
|
| 1. Growing fast enough to eventually become huge and
| irreplaceable, losing money all along the way. When they are too
| big to fail, they flip the switches and de-invest and cost-cut to
| profit indefinitely (Uber and Lyft)
|
| 2. Attempting to just run a sustainable business, which
| translates to languishing and eventually being replaced or
| acquired by companies in category #3 or #1 (Tile, Pebble)
|
| 3. Giants that deserve antitrust attention but never seem to get
| any because they buy out the government (Google, Apple, Facebook)
|
| That's why there's no room for companies that won't surrender to
| venture capital. Just making a profitable product isn't enough,
| they have to surrender their autonomy to people who have no
| expertise or innovative tendencies besides having a bigger bank
| account.
| EarthIsHome wrote:
| Yes, capital has a tendency to concentrate and centralize.
|
| A 19th century philosopher summed [0] this phenomenon of the
| concentration and centralization of capital:
|
| Capital grows in one place to a huge mass in a single hand,
| because it has in another place been lost by many.... The
| battle of competition is fought by cheapening of commodities.
| The cheapness of commodities demands, caeteris paribus, on the
| productiveness of labour, and this again on the scale of
| production. Therefore, the larger capitals beat the smaller. It
| will further be remembered that, with the development of the
| capitalist mode of production, there is an increase in the
| minimum amount of individual capital necessary to carry on a
| business under its normal conditions. The smaller capitals,
| therefore, crowd into spheres of production which Modern
| Industry has only sporadically or incompletely got hold of.
| Here competition rages.... It always ends in the ruin of many
| small capitalists, whose capitals partly pass into the hands of
| their conquerors, partly vanish.
|
| [0]:
| https://en.wikipedia.org/wiki/Capital_accumulation#Marxist_c...
| bhupy wrote:
| > It has no built-in control for a company that becomes too big
| to the point of being a detriment to society.
|
| That's verifiably untrue. One of the key traits of capitalism
| is that businesses are allowed to fail, and we see that they
| _do_ fail. 30 years ago, the retail and supply chain behemoth
| was Sears; today that 's Amazon; 30 years from now, it might be
| someone else.
|
| Berkshire Hathaway recently remarked on the dynamism as seen in
| the top 20 companies in the world in 1990 vs today.
|
| https://twitter.com/brettberson/status/1388555627698429953
|
| It's almost entirely a different set of companies.
| mLuby wrote:
| > Berkshire Hathaway recently remarked on the dynamism as
| seen in the top 20 companies in the world in 1990 vs today.
|
| 180-year-old 360,000-person company worth half a _trillion_
| dollars says what?
|
| (They might not be wrong, but they certainly aren't
| impartial.)
| drivebycomment wrote:
| The linked twit simply shows top 20 largest companies by
| market cap in 1990 vs today. That's a fact. If you want to
| argue that the particular fact is somehow misleading or
| misrepresenting, please put an argument with an evidence -
| without that, this falls into the "attacking the motive"
| fallacy.
| yrgulation wrote:
| To me it feels like this is the opposite of capitalism. The
| free flow of capital is impeded by monopolies amassing huge
| fortunes. Just like a clogged pipe, the free flow is then
| blocked and regulated by such forces. Not ideal for the overall
| market.
| lotsofpulp wrote:
| How is it being blocked? The share buybacks are record
| breaking, but investors just plow the money right back into
| them by buying more.
|
| The big tech companies are objectively delivering products
| that people around the world derive a lot of utility from.
| [deleted]
| zxcb1 wrote:
| "Software" is eating the world
| zepto wrote:
| The thing that's missed is that vertical Integratron is far more
| efficient for core products than relying on third parties.
|
| Apple won out over Microsoft in consumer electronics because they
| were able to make decisions up and down the stack as a unit
| whereas Microsoft had to deal with layers of device makers and
| consortia.
|
| All the talk of breakups and "big is bad" ignores the fact that
| vertical _works better_.
|
| I don't think it has to be this way. I think it's entirely
| possible that a network of companies can outperform a monolith
| with the right kind of coordination.
|
| This would be a _new_ , evolutionary strategy, and would be good
| for everyone.
|
| It won't however, emerge if we roll the clock back to the late
| 90's by force.
| amelius wrote:
| I like Microsoft's approach more though. It makes the market
| more modular, since other companies have access to the same
| resources.
|
| You can say "Apple's machines are easier to work with because
| better integration". But I'd say that's only a small
| convenience which doesn't stack up against the huge downsides
| of this non-modular approach as seen from the societal/economy
| perspective. My mom and dad can work with a Windows laptop just
| fine.
| zepto wrote:
| > I like Microsoft's approach more though. It makes the
| market more modular, since other companies have access to the
| same resources.
|
| Microsoft's approach failed against Apple's when it came to
| product innovation. That's why Apple is now dominant.
|
| The downsides from a societal perspective are imaginary.
| Things simply weren't better in any way when Microsoft was
| dominant.
|
| Having said that, I agree with you - modular could make
| things better.
|
| This is what I mean by a network of companies.
|
| We need a new model of modularity - not microsoft's variety.
| colinmhayes wrote:
| Apple isn't even close to dominant though. Mac market share
| is less than 10%. Microsoft is around 90%.
| zepto wrote:
| Agreed overall but they are dominant over Microsoft in
| terms of the high end.
| username90 wrote:
| But a locked in ecosystem is bad for innovation. Windows
| model is way better in the long run.
| zepto wrote:
| That's obviously not supported by the evidence at the
| current time, and if it's true then we can just wait for
| Apple to fall behind.
|
| I do think a modular ecosystem might be better in the
| long run but that's not windows.
| lotsofpulp wrote:
| > My mom and dad can work with a Windows laptop just fine.
|
| Mine can't. All I know is I spend many fewer hours, near
| zero, doing tech support for my parents on macOS/iOS than
| when they used Windows.
| adambatkin wrote:
| Mine too. But it has nothing to do with the hardware or
| software (I'd argue that for many things the Apple
| ecosystem makes things harder due to its inflexibility) and
| everything to do with the fact that whenever they have a
| problem they can walk to an Apple Store (or call Apple
| Care) and they are able to help without having to work
| around my time constraints (job, family, etc...) I suppose
| that's a type of integration too (the fact that Apple has
| retail stores and a Genius Bar that for "normal" people
| works well to solve "normal" problems) but it has nothing
| to do with pure technological innovation.
| zepto wrote:
| > (I'd argue that for many things the Apple ecosystem
| makes things harder due to its inflexibility)
|
| Yes - many things are harder, but on balance the Apple
| ecosystem delivers better end user results.
|
| But your point is important - there is _huge_ opportunity
| for something better.
|
| Apple isn't standing in the way of that.
|
| The belief that Microsoft or Linux as they stand are
| somehow better _is_. (I think Linux is fundamental to
| what comes next, but only if we people stop pretending it
| is currently better for end users and stop trying to make
| it more like an Apple product)
| lotsofpulp wrote:
| Yes, I don't know why, but Microsoft doesn't want spend
| the money to compete in the face to face customer service
| space. No big company except Apple does. And I like
| rewarding that.
|
| I can't believe Microsoft even opened a whole bunch of
| stores. They just keep quitting after a couple years. If
| they were willing to plow some money into it for a decade
| and keep supporting windows phone and clean Windows
| laptops, maybe we'd have some competition.
| zepto wrote:
| Windows is much harder to support. That's the problem.
|
| A modular system could be better, but Microsoft's is not
| it.
| mrkurt wrote:
| Vertical doesn't unequivocally work better, there's a high
| external cost.
|
| None of Apple's "stack" is available to other companies because
| they have no incentive to sell components. The reverse happens,
| they buy up independent companies (like the touch id folks) and
| prevent anyone else from using a given piece of tech.
|
| Same problem with Amazon and shipping. Regular schmoes are
| limited to USPS/Fedex/UPS for shipping in the US. Amazon opting
| out of the "market" for shipping limits the quality of the
| shipping services I have access to.
|
| We need to role back to something closer to the 1970s, really.
| The 90s were ok in tech company terms (at least when the DoJ
| slowed Microsoft's monopoly) but that was already a full decade
| into the big-ification of companies.
|
| There's no real alternative but force. You can't evolve from
| big monopolies into smaller companies, the smaller companies
| can't even exist in most cases.
| spideymans wrote:
| >None of Apple's "stack" is available to other companies
| because they have no incentive to sell components. The
| reverse happens, they buy up independent companies (like the
| touch id folks) and prevent anyone else from using a given
| piece of tech.
|
| As Apple's sales success allows them to invest even more in
| R&D, their tech stack become an even bigger moat. Competitors
| are going to find it increasingly difficult to create
| products that can compete with Apple's tech stack on a
| technological basis.
| mschuster91 wrote:
| > Competitors are going to find it increasingly difficult
| to create products that can compete with Apple's tech stack
| on a technological basis.
|
| No one is stopping anyone (outside of US economic
| sanctions) from getting an ARM architectural license and
| designing their own CPUs to compete with Apple. There are
| _countless_ vendors to choose from if you don 't have the
| experience to do yourself, there are IP cores for
| everything from battery management over memory to AI
| available on the market.
|
| The problem is that, rather than go the expensive Apple
| route, most seem to be content to pay top dollar to
| Qualcomm (or for lower classes, Mediatek) and get buggy
| hardware and BSPs in return, instead of pushing Qualcomm to
| deliver better quality.
|
| And for what it's worth, there _are_ serious competitors to
| every Apple product. There have been Windows laptops with
| 32 and 64 GB of RAM _years_ before Apple finally updated
| their line. Samsung puts up a diverse lineup of phones and
| tablets that definitely compete with iDevices. Sony has
| AirPod clones (admittedly they 're bulkier, but have more
| selection in earbuds). There are a _number_ of Apple TV
| competitors - Roku, Amazon 's TV stick, Chromecast to name
| the most popular ones.
| mrkurt wrote:
| You literally just said "no one is stopping someone else
| from building a vertical monopoly".
|
| The problem with vertical consolidation is _not_ that
| they prevent other large companies from competing.
| There's always a scale where you can replicate work and
| release a competitive product.
|
| ARM is inaccessible to most companies, including
| companies that don't compete with Apple. In a world where
| we prevent vertical monopolization, those very nice ARM
| CPUs Apple and Amazon have on lockdown become commodities
| and spur all kinds of innovation in other areas.
|
| Who do you think pushes Qualcomm to deliver better
| quality when the two primary consumers of those CPUs
| aren't buying from third parties?
| mschuster91 wrote:
| > ARM is inaccessible to most companies, including
| companies that don't compete with Apple.
|
| What are you talking about? ARM is literally the dominant
| CPU architecture for years now, with a _lot_ of CPU /SoC
| vendors for everyone's choosing. An architecture license
| is expensive, yes, but you only need it if you want to
| roll your own cores (and there is at least a dozen AL
| holders). Everyone who's fine with stock cores can use
| ARM Flexible Access where you only have to pay per-
| product fees at tapeout.
|
| That's the reason why all other competitors (Hitachi's
| SuperH and MIPS being the biggest ones) have all but
| vanished.
|
| >In a world where we prevent vertical monopolization,
| those very nice ARM CPUs Apple and Amazon have on
| lockdown become commodities and spur all kinds of
| innovation in other areas.
|
| I agree it would be better if everyone were able to buy
| Apple's CPUs, yes, but the real secret behind Apple's
| performance is that they own the OS stack and can
| ruthlessly optimize it for performance. _Technically_ ,
| everyone can take the Android AOSP code and do the same
| for a given hardware stack, it's just a lot of work that
| is not much in demand.
|
| > Who do you think pushes Qualcomm to deliver better
| quality when the two primary consumers of those CPUs
| aren't buying from third parties?
|
| Uh, Samsung also buys from Mediatek, not just Qualcomm's
| Snapdragon and their own Exynos line... anyway there are
| _lots_ of smartphone vendors who could go ahead and
| differentiate their products by focusing on quality, if
| they wanted and the consumers would want it. Samsung and
| Apple together only have 39% of market share (per
| https://www.counterpointresearch.com/global-smartphone-
| share...), there's a lot of room for competition.
| zepto wrote:
| The framing here is off. It's fair to say that catching
| up with Apple is next to impossible. This has absolutely
| nothing to do with monopolies, and everything to do with
| their velocity.
|
| The idea that we have to somehow overthrow Apple in order
| to build better things is the problem.
|
| Ironically Apple itself had this problem when Steve jobs
| returned. Microsoft was seen as the 'problem' to be
| overcome and thinking that way prevented Apple from
| seeing what else was possible.
|
| Jobs explicitly rejected this kind of thinking "We have
| to stop thinking that in order for Apple to win,
| Microsoft has to lose."
|
| The same holds true now - we need to stop thinking that
| in order for others to win, Apple has to lose.
|
| Apple's solutions are not the only possible solutions. We
| don't have to mimic them.
| mrkurt wrote:
| I don't understand why you keep talking about Apple's
| direct competition? Vertical consolidation is a very
| different, potentially more harmful problem than "a
| mobile phone monopoly".
|
| More competitive phone market is pretty boring. Good ARM
| CPUs are not boring, there are all kinds of places those
| would be amazing that Apple isn't going to bother using
| them.
|
| Apple doesn't have to lose, in a healthy market they'll
| be able to buy good ARM CPUs just like I will.
|
| The problem is that Apple's solutions are the only
| solutions that get to use certain technologies because
| they don't want other people to compete with them.
| zepto wrote:
| > The problem is that Apple's solutions are the only
| solutions that get to use certain technologies because
| they don't want other people to compete with them.
|
| This just misunderstands what vertical integration is
| about.
|
| Apple's solutions aren't _general solutions_. They are
| narrow solutions that work in Apple's ecosystem.
|
| Apple hasn't developed general solutions that other
| people could use. This is the whole point. It's why they
| can move faster than a modular ecosystem can.
|
| This has nothing to do with not letting other people use
| their technologies. They don't actually _have_
| technologies that anyone other than Apple _can_ use.
| mrkurt wrote:
| I'm less worried about moats (although we should be wary of
| anticompetitive moats) and more worried about an ecosystem
| where the already successful companies monopolize access to
| innovations.
|
| Forget competitors, you can't buy the touch ID tech to
| create things like door locks. Big companies locking up
| access to markets means big companies are the sole arbiters
| of what even gets sold.
| zepto wrote:
| > Forget competitors, you can't buy the touch ID tech to
| create things like door locks.
|
| Doesn't that mean there is a business opportunity for
| someone to make touch technology for door locks? Apple
| isn't the only company that uses touch sensors.
| mrkurt wrote:
| Maybe. The two biggest consumers (apple and google) of
| touch id like components won't buy from someone else. So
| the opportunity is quite small. And it's too expensive
| for a small company that might just want to build a
| consumer door lock.
|
| Apple also acquired patents when they bought AuthenTec.
| So it might be tough even with unlimited money.
|
| Consolidation problems are never an outright ban like a
| law would be. But raising the cost of entry is just as
| effective.
| zepto wrote:
| > So the opportunity is quite small. And it's too
| expensive for a small company that might just want to
| build a consumer door lock.
|
| That just indicates that the value of a modular component
| isn't high enough to make it worth building for now.
|
| Touch ID is not a modular component. It's part of a
| system and it's not designed to be used in door locks. It
| took a huge amount of R&D overall which was worth it to
| build into hundreds of millions of dollars worth of
| phones. Touch ID isn't just a sensor.
|
| It isn't a technology that can be used in a door lock.
|
| At some point it will be cost effective for a door lock
| component to be built, but there is little connection
| between this and touch id.
| mrkurt wrote:
| > That just indicates that the value of a modular
| component isn't high enough to make it worth building for
| now.
|
| This is the dilemma. The value is low _now_ because Apple
| bought the vendor, rather than purchasing from a vendor.
| In a healthy marketplace, Apple's scale would fund
| development of technology that other people could buy and
| run with. Instead, the market "developed" touch ID and
| Apple got to keep everyone else from using it for the
| low, low price of $365mm.
| zepto wrote:
| That's completely wrong. Touch ID is not a sensor. Touch
| ID is an integrated system that was developed by Apple
| for phones.
|
| Touch ID doesn't do anything for door locks. It's the
| fact that it's a tailored for their phones that makes it
| work better.
|
| The market didn't develop Touch ID. Apple did.
|
| Fingerprint sensors are widely available in the
| marketplace and they are better than what was available
| when Apple bought a sensor company.
|
| In a healthy market, someone else would look at what
| Apple did, and work out how to apply any relevant
| concepts to use outside of phones.
|
| This is work that hasn't been done yet, and is open for
| someone to do. It's normal for a general solution to
| follow a specific one. The idea that Apple should have
| developed a door lock solution makes no sense.
| kasey_junk wrote:
| Presumably he's talking about the acquisition of
| authentec.
| zepto wrote:
| Sure - but that doesn't negate anything I said.
| jayd16 wrote:
| I don't follow you. Microsoft only dabbles in specific
| hardware. Where they do, they're fully integrated like the
| surface or the xbox.
|
| If you're talking about things where Microsoft just makes the
| software, aren't they still winning over the Mac?
| neogodless wrote:
| Since I agree with you and don't have a new point to make, I
| just want to expand on yours.
|
| Consoles - Apple doesn't compete here. Microsoft is
| competitive.
|
| Smartphones / tables - Microsoft lost here, Apple competes
| against Google and various hardware makers instead. They
| probably win in US market share and net profits, but not
| global share.
|
| Computers / operating systems - Microsoft still dominates in
| market share over Apple. Opinions vary (strongly) between
| which is best, but more people buy computers with Windows
| than computers made by Apple.
|
| Watches, air tags, etc. - Microsoft doesn't compete here.
|
| Accessories - no clue about market share, but I do think
| Microsoft makes some pretty good keyboards and mice.
| zepto wrote:
| You are looking at today - this is about the history.
|
| In 2002, Microsoft was the dominant force in consumer
| electronics because everyone assumed they needed 'PC
| compatibility' or even to integrate Windows CE.
|
| If you worked in the industry then, Microsoft was discussed
| in every meeting and was a major player in standards bodies.
|
| That started to change with the introduction of the iPod.
| jayd16 wrote:
| But those accessories aren't fully integrated Apple
| products so I don't really understand the point at all.
| zepto wrote:
| I'm not talking about accessories.
|
| Also - Apple does in fact make most of the important
| accessories for their own products, and they leverage
| vertical integration when doing so.
|
| AirPods for example. Bluetooth - the consortium solution
| wasn't good enough, not were Bluetooth chipsets. Apple
| didn't need to wait for standards changes or persuade a
| vendor to make anything for them.
| bcrosby95 wrote:
| Yet Apple doesn't make the boards themselves. Would them doing
| that be more efficient vs what they do now? How do you draw the
| line? Where does your theoretical "stack" start and stop?
|
| I think this is all just a big bag of hindsight bias. If the
| "winner" does something different then people attribute winning
| to that thing. Reality tends to be more complex.
| scarface74 wrote:
| Hypothetically, say Microsoft and Apple both announced that
| they planned to move from x86 to ARM on the same day, knowing
| nothing else, who would you have bet would be more
| successful?
| zepto wrote:
| > Would them doing that be more efficient vs what they do
| now?
|
| In the end, probably yes.
|
| They did do this for a while but this wasn't competitive with
| having the work done in China.
|
| Apple exerts a lot of control over how that work is done.
|
| They don't just send out a design and get boards back - they
| embed engineers and management in places like Foxconn and in
| fact control the process.
|
| > How do you draw the line? Where does your theoretical
| "stack" start and stop?
|
| See above. Basically whenever something is not literally a
| commodity, Apple steadily builds expertise and control.
|
| Look at how they have done this with screen technology for
| example. Their partner companies build parts dedicated to
| Apple.
|
| Even if there is another corporate partner involved for
| geopolitical reasons, there is still vertical integration.
| hctaw wrote:
| Environmental pollution also "works better" for companies and
| yet we regulate it. I don't think this is a false dichotomy,
| the role of government in business regulation is to modify
| business practices that are contrary to the best outcomes for
| society. Not what is more efficient for businesses.
| zepto wrote:
| It is a false dichtotomy.
|
| Inefficient decision making _creates_ environmental
| pollution.
|
| Regulating to make companies less good at decision making
| under the belief that this will increase opportunity is
| literally making society stupider. It is the path to
| idiocracy.
|
| I'm not against government intervention.
|
| Let's invest in alternatives, and let's invest in making
| people's lives less precarious.
| toomuchredbull wrote:
| It's interesting because there was a post yesterday about how
| companies hollow themselves out by outsourcing all the pieces,
| (the example he used was a toaster) until the entire toaster is
| built by outsiders and the toaster company is just a sales and
| marketing unit, unable to innovate, whereas apple is the
| opposite it is basically the only company that is a real
| outlier to this trend.
| FridayoLeary wrote:
| vertical always works better. until it doesn't. dictatorships,
| autocracies and none other then the failed Soviet Republics are
| testament to this. the job of our lawmakers is to judge when
| top- down decision making stops being beneficial to society in
| general and our economy in particular.
| zepto wrote:
| Apple is nothing whatsoever like a dictatorship, autocracy,
| or failed soviet republic.
|
| It's a silly comparison.
| stadium wrote:
| > the fact that vertical works better
|
| It works better until it doesn't. A company with high market
| share and positive cash flow can invest in vertical
| integration. They gain economies of scale. It gets harder to
| adapt to the market and stay efficient and innovative at larger
| companies. Or they slowly kill off the competition and no
| longer find the need to innovate, and settle into money
| printing mode and monopolistic behaviors.
| zepto wrote:
| If larger companies are not innovative they will fail. The
| giants of today haven't been giant for very long.
|
| There is plenty of money around to invest in alternatives.
| arrosenberg wrote:
| > All the talk of breakups and "big is bad" ignores the fact
| that vertical works better.
|
| That's not even close to being universally true, and good/bad
| are in the eye of the beholder. Is it better or more efficient
| for the people who assemble the phones? Is it better or more
| efficient for the retail employees making minimum wage? Is it
| better or more efficient for app developers who lose 30% of
| their revenue to private taxation, or the businesses that never
| reached their potential because a BigTechCo launched a
| competing product at a loss?
|
| > It won't however, emerge if we roll the clock back to the
| late 90's by force.
|
| It might, but I can absolutely, guarantee, beyond a shadow of a
| doubt that we don't get a more democratic solution if we leave
| the current stakeholders in their current positions of immense
| power.
| anonuser123456 wrote:
| > Is it better or more efficient for the people who assemble
| the phones?
|
| yes. Factory work is better than subsistence farming. And big
| tech has done 100x more than anyone else in the consumer
| electronics supply chain to push for better working
| conditions in those factories.
|
| >Is it better or more efficient for the retail employees
| making minimum wage?
|
| Yes. Improved margins are what allow wages to rise.
| Inefficient businesses don't have the money to pay employees
| more. Apple retail stores pay on average 18$/hr vs the 10.50
| a mom and pop might be able to afford to pay someone.
|
| >Is it better or more efficient for app developers who lose
| 30% of their revenue to private taxation, or the businesses
| that never reached their potential because a BigTechCo
| launched a competing product at a loss?
|
| Yes. Software distributors used to pay 50% to retailers.
| arrosenberg wrote:
| > Factory work is better than subsistence farming.
|
| Working in a 1900's Chicago meatpacking plant may have been
| better than subsistence farming too, but the alternative to
| working in bad conditions isn't going back to farming, it's
| improving the working conditions. Big tech has _NOT_ done
| 100x more than anyone to push for better working
| conditions. If they really wanted to provide good, first-
| world working conditions in their factory, they could do
| so. Yes, their costs would go up, that 's what happens when
| you stop subsidizing consumer products with labor abuse.
|
| > Yes. Improved margins are what allow wages to rise.
| Inefficient businesses don't have the money to pay
| employees more. Apple retail stores pay on average 18$/hr
| vs the 10.50 a mom and pop might be able to afford to pay
| someone.
|
| Is the Apple store representative of all retail? And
| further, with Apple's massive stack of cash in the bank,
| shouldn't they be paying their workers even better? Are
| they not a big part of getting that premium margin for
| apple?
|
| Further, that doesn't seem like a better or more efficient
| deal for entrepreneurs. Should we be happy that most
| independent electronics stores have been replaced by
| branded stores and Best Buy?
|
| > Yes. Software distributors used to pay 50% to retailers.
|
| More bad faith arguments huh? I guess you mean before the
| internet, when they actually had to ship physical medium
| and deal with retailers? Keystone pricing is pretty
| standard in that setup, and at least you had a broad choice
| of distributors to pick from. There is no justification for
| the high fees or the lack of distribution options in 2021.
| It's almost pure profit for the landlords.
| zepto wrote:
| > That's not even close to being universally true, and
| good/bad are in the eye of the beholder. Is it better or more
| efficient for the people who assemble the phones? Is it
| better or more efficient for the retail employees making
| minimum wage? Is it better or more efficient for app
| developers who lose 30% of their revenue to private taxation,
| or the businesses that never reached their potential because
| a BigTechCo launched a competing product at a loss?
|
| Yes. It works better for _making technology_.
|
| Nothing you have said contradicts that.
|
| Every single one of the indicators you mentioned is better
| now than it was in the 90s.
|
| What you are calling for is more opportunity for all these
| people to build wealth.
|
| Making existing industries work less well is not going to
| achieve that.
|
| Things that might: universal health care, student loan
| easing, increased investment in impoverished communities.
|
| Blaming things that work well and breaking them is silly.
|
| Making new things that work better is not.
| arrosenberg wrote:
| > Yes. It works better for making technology.
|
| You haven't proven that at all. You took one instance of
| Apple disrupting Microsoft's PC dominance and seem to have
| extended it to an entire worldview (which clearly ignores
| the entire MS antitrust saga that took place a couple years
| before Jobs reinvented the company).
|
| > Making existing industries work less well is not going to
| achieve that.
|
| You haven't proven that. When AT&T was broken up, it
| unlocked a host of new technologies (answering machines,
| modems) that Ma Bell was blocking to protect their existing
| revenue model.
| zepto wrote:
| > You took one instance of Apple disrupting Microsoft's
| PC dominance and seem to have extended it to an entire
| worldview
|
| That's not a reflection of my views.
|
| AT&T is not like Apple. They had a literal monopoly due
| to access rights.
|
| Apple can't be compared to AT&T usefully. There is
| nothing they do that doesn't have vigorous competition
| and there is nothing that Apple has that others cannot
| buy.
| arrosenberg wrote:
| Power is power, they have more in common than in
| difference. I'll stipulate that they arrived at power and
| maintain it slightly differently.
|
| > There is nothing that Apple has that others cannot buy.
|
| How can you state this as a fact? Even a relatively high-
| level Apple executive wouldn't know that with any level
| of certainty.
|
| I don't really take issue with Apple compared to some of
| the others, but their vertically integrated position
| means that they don't have vigorous competition. There
| are only a handful of empire-scale companies that can
| compete with them at all. Smaller businesses are not
| vigorous competition, since Apple (or similar) could
| crush them at any time they want with their scale, as
| they recently did with Tile.
| [deleted]
| zepto wrote:
| > Power is power, they have more in common than in
| difference.
|
| Oddly, later in this same comment you become interested
| in facts and evidence.
|
| >> There is nothing that Apple has that others cannot
| buy.
|
| > How can you state this as a fact? Even a relatively
| high-level Apple executive wouldn't know that with any
| level of certainty.
|
| If you had evidence to the contrary, you'd have presented
| it.
| [deleted]
| boxed wrote:
| > Apple won out over Microsoft in consumer electronics because
| they were able to make decisions up and down the stack as a
| unit whereas Microsoft had to deal with layers of device makers
| and consortia.
|
| That sounds nice but can't be true. Remember when Apple almost
| went out of business? It was the exact same situation then.
|
| I'll offer an alternative hypothesis: Apple won out because
| they executed well year over year over year. They made that
| vertical integration work for them by slowly making things
| better faster than the competition.
|
| Apple also never paid a strategy tax. They cannibalized their
| existing business ruthlessly. This is also unrelated to
| vertical integration.
| zepto wrote:
| > I'll offer an alternative hypothesis: Apple won out because
| they executed well year over year over year. They made that
| vertical integration work for them by slowly making things
| better faster than the competition.
|
| You say this is an alternative hypothesis, but it is in
| complete agreement with me.
|
| Without vertical integration they would have been held back
| by the rest of the industry. _Vertical integration_ is _how_
| they were able to move faster.
| noptd wrote:
| >Without vertical integration they would have been held
| back by the rest of the industry. Vertical integration is
| how they were able to move faster.
|
| Without supporting evidence, this is nothing more than a
| post hoc fallacy.
| zepto wrote:
| > Without supporting evidence, this is nothing more than
| a post hoc fallacy.
|
| Not really - it could also mean you don't have industry
| experience to know what I mean. I'm guessing you weren't
| around at the time.
|
| The evidence is widely available for you to check out.
|
| Just read accounts of how industry committees work and
| look at how industry alternatives have failed to keep
| pace with Apple's proprietary alternatives.
| dredmorbius wrote:
| Microsoft's key strategy was always market domination by
| monopoly, paid through the vig of per-CPU licence fees
| (whether DOS/Windows was installed or not, still largely the
| case), and extending through "productivity software" (MS
| Office) and later organisational glue (MS Active Directory /
| Exchange) and the Web (MSIE).
|
| The DoJ case had Microsoft back off that lever a bit, just as
| Apple executed beautifully (and with some Microsoft
| concessions in part devolving from the DoJ suit ... yes, a
| simplification, my 4th-fav pedants), and then hit it out of
| the park with the iPod and iPhone (subscriptions, apps,
| hardware sales, fashion accessories, ...).
|
| Google cracked Microsoft's revenue model with advertising
| (though that may be starting to give a bit), as has
| Faceboook. Amazon got where both Microsoft and Google wanted
| to be: between the buyer and the lion's share of online
| retail.
|
| Work, comms, adverts, shopping, fashion, and entertainment.
| There's hot competition for transport (automobiles, whether
| smart, electric, for-hire, or self-driving). There's not a
| whole lot of consumer spend left to grab that I can see.
| (Housing. Utilities. Insurance. Finance.)
| zepto wrote:
| Do you love Apple products? Not a trick question. I think
| they are the best, but I don't feel great about them.
| zepto wrote:
| > That sounds nice but can't be true. Remember when Apple
| almost went out of business? It was the exact same situation
| then.
|
| At that time the company was being run by an executive whose
| backround was as a flavored soda salesman _who tried to adopt
| Microsoft's strategy of licensing the OS_. That's why they
| nearly went out of business.
|
| When they returned to the integrated model and stopped trying
| to compete head to head, their success returned.
| ocdtrekkie wrote:
| It's efficient, sure, but Windows still effective counts as an
| open platform compared to Mac, because so many different
| vendors are welcome and involved. Closed vertical integration
| is worse for consumers.
|
| And that consumer standard is also often based on price:
| Windows platforms are almost always cheaper than the Apple
| equivalent. So that efficiency doesn't benefit consumers.
| mikepurvis wrote:
| I don't think either of those is necessarily a slam dunk. A
| lot of consumers really appreciate the non-openness of
| platforms like iOS when it comes to security, privacy,
| parental controls, and so on. I know your argument is
| specifically about the Mac, but on the "openness" spectrum,
| MacOS sits somewhere between Windows and iOS, so iOS is a
| helpful reference point for where the Mac could end up.
|
| And as for cost-- I don't think that's necessarily strictly
| worse either. I have a Dell XPS now, and it's.... fine. But
| relative to my old MBP, the screen is worse, the build
| quality is worse, the trackpad is worse, the keyboard is
| worse, the power management is way, way worse. So although
| there might be slightly more compute here in terms of the raw
| numbers, a lot of corners had to be cut to make this machine
| work out, and all things considered, I'm not sure that the
| market is in a better place when even "premium" non-Apple
| computers don't have the profit headroom to invest in the
| little stuff.
| ocdtrekkie wrote:
| I'm an iOS convert, so you don't have to sell me on the
| benefits of a closed platform. But I was referring to more
| than just software. When servicing an Apple laptop with a
| broken keyboard last month, I had to find an Apple-brand
| USB keyboard in order to get it into the recovery menu,
| because I needed an Apple command key. (Linux works fine
| with the Windows key for similar types of shortcuts.)
|
| The idea that I needed an Apple keyboard to do something
| trivial on an Apple machine was... hilarious to me.
| zepto wrote:
| There is nothing closed or proprietary about Apple usb
| keyboards.
|
| There are 3rd party options with a command key - you just
| don't happen to own one.
| ocdtrekkie wrote:
| Sure, there are Apple-certified accessories out there,
| but you literally have to buy stuff explicitly catered to
| their hardware for their software to work right. Whereas
| anyone else can use "literally any keyboard out there",
| you need an Apple keyboard to work with an Apple device.
| zepto wrote:
| That just isn't true.
|
| You don't need an Apple certified keyboard. You just need
| one with the command key mapped correctly.
|
| As for 'explicitly catered' - the command key was on
| Apple keyboards _before_ Microsoft added the Windows key,
| and before Linux even existed.
|
| It seems a bit weird to complain about monopolies while
| at the same time saying every product should work the
| same way.
| raspasov wrote:
| Such "analyses" simply appeal to our ape brain centers that
| trigger envy and seek easy explanation for complex phenomena.
| "How did they get big?" Oh, it's just acquisitions and the law!
| Nothing that a savior in the House/Senate can't fix.
|
| I am sure acquisitions played a part. But failing to admit that
| those companies and their leadership did many things the right
| way is a very one sided view of what has actually happened.
| throwawaysea wrote:
| I don't think they got big through acquisitions. They simply got
| big due to first mover advantages, favorable sentiment among
| investors (which gives them lots of capital), network effects
| that prevent competition, massive patent portfolios (which let
| them copy smaller company's innovations without consequence),
| running around regulations (like avoiding sales taxes in US for a
| long time, or avoiding taxes in Europe), and so on.
|
| Yes, there are some acquisitions that added a lot to these
| companies and took away competition (YouTube, Instagram,
| Doubleclick, etc.). But the majority of the market share in these
| companies is not driven by just those pieces. The reality is that
| we do not have sufficiently modern anti-trust laws to capture the
| ways in which these companies hurt customers. It doesn't take a
| 90% market share in some segment or explicit abuse of market
| position to create harm. Their mere existence is enough, soaking
| up talent from the market, creating massive centralization of
| power and influence, and so on. I'm not sure what the best way to
| address this is, but rather than wasting time proving consumer
| harm, I think it's better to just treat giant companies
| differently to limit their size and growth - perhaps graduated
| corporate income taxes, or automatic splitting up above a certain
| market cap, or whatever else.
| yrgulation wrote:
| > They simply got big due to first mover advantages,
|
| Neither facebook nor google were first movers. They actually
| joined the game at a tome when there were established
| competitors.
|
| But they beat them with a much better execution (and other key
| ingredients such as those you mentioned) which markets
| rewarded. Then they started buying off possible threats,
| effectively blocking late starters as they themselves were, to
| the point where they became monopolies and, frankly, a nuisance
| to customers and society.
| peder wrote:
| Big-time survivorship bias in this article and thread. Just
| yesterday we learned that Verizon is dumping Yahoo and the
| related media brands. Those acquisitions were a major failure.
|
| The reason that Big Tech got so big is that they're really really
| good at growing their high-margin core business and have a ton of
| free cash flow. That's really all it is.
| georgeecollins wrote:
| You are right to point out the issue of survivorship bias, but
| that doesn't tell the whole story either.
|
| Google without Doubleclick and YouTube would be a different
| animal. Facebook without WhatsApp and Instagram as well.
|
| You can't deny the impact of those acquisitions.
| baby wrote:
| This goes both way: founders create start ups with the idea that
| being acquired is a valid exit strategy. It's hard to quantify
| but perhaps not that many start ups would have been founded if
| they didn't see as many valid options to exit, and a founder
| wouldn't have created the next big thing if his previous company
| didn't get acquired.
| dragontamer wrote:
| > and a founder wouldn't have created the next big thing if his
| previous company didn't get acquired.
|
| Hershey (of Hershey's Chocolate) failed multiple times and went
| bankrupt each time before finally making his Chocolate company.
| Repeated failures are absolutely an option.
| asdff wrote:
| Anecdotal stories of the survivors from 100 years ago when
| you could work a bottom of the barrel job for 1 week and
| cover a months living don't apply today. In order to insulate
| yourself from failure, you need wealth today to draw upon and
| cover your cost of living. Many americans don't have a spare
| $400 (1), they can't quit their job to tinker with a
| perennially failing side business without ending up risking
| living on the street. Many americans are trapped.
|
| 1. https://www.cnbc.com/2019/05/23/millions-of-americans-are-
| on...
| dragontamer wrote:
| Hershey was pretty well connected. I'm pretty sure his
| family bankrolled a lot of his early ventures. This wasn't
| a "by his own bootstraps" story. But its absolutely a "try
| try again" story.
|
| Today, there are more "by their own bootstraps" stories.
| Steve Jobs was the adopted. His original father was a
| Syrian immigrant, for example. If we go back to the 1800s,
| the "Gilded Age", the oppression of the "robber barons" was
| obvious: they destroyed small companies before the
| invention of antitrust laws.
|
| Maybe we'd like more "by their own bootstrap" stories
| today, and I'd support implementing policies that make it
| more possible. (including a new antitrust review of today's
| companies, to see if they're bad for the economy, like the
| 1800s robber barons were). But lets not pretend that the
| 1800s were easier than they actually were.
| [deleted]
| andyxor wrote:
| WaPo?? not gonna give this garbage source a click
| robbyt wrote:
| Why do you think the Washington Post is garbage?
| andyxor wrote:
| it's a political propaganda machine spewing misinformation
| for years.
| SeanLuke wrote:
| The WP is one of the most highly respected newspapers in
| the world. Extraordinary claims require extraordinary
| evidence. Please provide your extraordinary evidence.
| [deleted]
| andyxor wrote:
| the last 5 years of non-stop propaganda is quite
| extraordinary
| SeanLuke wrote:
| So... no evidence at all then?
| [deleted]
| solutron wrote:
| Gov't is going to try and break the big ones up, and stop M&A's
| as anti-trust sentiment warms up. Startups will become much, much
| harder to benefit from. The cost of capital is going to go up and
| make it harder to fund-raise, and people will get much more
| judicious about what they invest in. If your company isn't tied
| to some other industry or sector of the economy and is a tech
| company, just consider if your business can survive on its own
| for the next 3 - 5 years.
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