[HN Gopher] How Big Tech Got So Damn Big
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How Big Tech Got So Damn Big
Author : gslin
Score : 54 points
Date : 2023-09-10 17:05 UTC (5 hours ago)
(HTM) web link (www.wired.com)
(TXT) w3m dump (www.wired.com)
| tomohelix wrote:
| In addition to software and computer tech in general are so easy
| to scale and automate, there is also the matter of responsibility
| and legal regulation.
|
| Take the biotech industry for example. There are also plenty of
| acquisition and consolidation, but even the biggest top 5 biotech
| companies combined cannot match the size of one Apple or
| Microsoft. This is mostly because biotech is so much riskier and
| a failed product is extremely punishing. At any stage a drug can
| fail. Even after commercialization and release, a drug can be
| removed for plenty of reasons. One drug can cost hundreds of
| millions of dollars to get to market and years and years of R&D
| by hundreds of scientists going from discovery to production,
| validation, scaling up, and QC, and marketing. None of the steps
| can be skipped because the FDA breathes down their neck in every
| step. People will also sue the company to death if some fuckup
| happens.
|
| Meanwhile, Microsoft can churn out a new software or product in a
| year from a team of 20 engineers. And if a fatal error happen, no
| biggies. Patch incoming and that is that. Lawsuits from bad codes
| aren't as severe as lawsuits from bad drugs. Leaks and exploits
| and all the "huge" issues get solved and the product continue to
| stay on market. A drug fuckup and it is very likely to be
| scrapped along with all the investments that went into it.
|
| And so big tech continue to grow unchecked because they are just
| that: unchecked.
| [deleted]
| mongol wrote:
| I think it is quite simple. They have been able to reap the
| benefits of scaling, but have not had to pay the costs of it. An
| illustrative example is customer service. Good customer service
| does not scale well, because it requires human-to-human
| interaction. So better get rid of it by automation. Another
| example is moderation or lack of it.
| Supermancho wrote:
| > They have been able to reap the benefits of scaling, but have
| not had to pay the costs of it
|
| Indeed. The internet hasn't been regulated in the same way as
| other mediums. Expanding into it had a low bar of entry and
| these "heroes" were the best executions. This was mostly luck,
| as if google didn't exist, we might well all be saying Yahoo
| founders were geniuses for getting the same engineers and
| product people pushing the same goals instead.
| pixl97 wrote:
| Why are you getting downvoted?
|
| People forget that in the 1700s-1800s that industry was
| typically very small. Once the engine was created and we moved
| 'power' from animals and humans to machines, companies began to
| grow huge.
|
| Tech companies are doing this with information. Where in the
| past information was hard to transmit and computers were
| expensive, tech has capitalized on the lowered costs of
| processing and transmitting information.
| ghaff wrote:
| Look at a graph over time with just about any metric of
| "progress" on the Y axis. https://www.vox.com/future-
| perfect/2018/11/8/18052076/human-...
|
| Basically, on a linear scale, "nothing" happened in all of
| human history until the industrial revolution.
| hn_throwaway_99 wrote:
| I thought this article was kind of all over the place. I thought
| it touched on some good points, but didn't do a good job tying it
| all together. Why did tech get so big?
|
| 1. They all came about when the Internet _vastly_ increased the
| size of markets. The article makes good points about how many
| industries only have a few big players - that 's kind of a
| natural consequence where when there is a low barrier to entry,
| the best only have to be a little bit better than everyone else
| to win out. Before the tech giants there were very few companies
| like Google and Facebook that were dominant in so many countries
| around the globe.
|
| 2. The discussion of changes to antitrust law was a good one, but
| I think what also happened was that tech giants were able to take
| advantage of entirely new business models to "confuse" how
| antitrust rules were targeted. E.g. even if you go by the "must
| improve consumer welfare" rule of antitrust law, many of the tech
| giants won because regulators were (at least originally) confused
| about who "the consumers" were. E.g. for Google and Facebook, as
| is often widely pointed out, "the consumers", i.e the people that
| are buying a product, are the advertisers, not the end users.
| Antitrust enforcement made the major mistake of only considering
| welfare of the end user.
|
| 3. Related to the first two, it is nearly always the case that
| when there is a big, transformative new technology that comes
| out, a few players are able to win, partially by moving faster
| than they can be effectively regulated by government, and which
| point the government is wary of doing too much harm to them
| because so many people and businesses depend on them (they become
| "too big to fail"). Just look at the early years of the auto
| business - there were a plethora of auto companies in the early
| 20th century, and after the dust settled we were basically left
| with 3 in the US: GM, Ford and Chrysler. And even then GM and
| Chrysler both eventually only survived through government
| bailouts (at least 2 government bailouts in Chrysler's case).
| captn3m0 wrote:
| This is an excerpt from an upcoming book, as noted at the
| bottom of the article.
|
| > Excerpt adapted from The Internet Con: How to Seize the Means
| of Computation, by Cory Doctorow.
|
| I also felt like the adaption wasn't perfect, but this excerpt
| had me hooked enough to convince me to buy the book when it
| comes out.
| polyomino wrote:
| > the people that are buying a product, are the advertisers,
| not the end users. Antitrust enforcement made the major mistake
| of only considering welfare of the end user.
|
| Google and Facebook substantially decreased the price of
| advertising and greatly improved its effectiveness. Antitrust
| law seems to be moving towards a more competition-focused
| approach, at least in Europe, so maybe the legal system will
| push them towards higher prices and more competitors.
| akira2501 wrote:
| I don't agree that they are geniuses. I simply believe that they
| were able to afford the appropriate legal representation in order
| to get mergers that technically should have been stopped by the
| government rammed through the courts anyways.
| fallingknife wrote:
| Which mergers technically should have been stopped by the
| government? Two of the most successful acquisitions that come
| to mind are Google purchasing Android for $50 million in 2005,
| and FB purchasing Instagram for $1 billion in 2012. The
| government didn't even try to stop them, and shouldn't have,
| because they can't predict the future.
|
| As for the Android purchase, the feds aren't going to look at
| $50 million deals because $50 million deals are so tiny they
| just don't have monopoly concerns. And this was pre Iphone by a
| couple of years. Smartphones were barely a market at the time.
|
| FB acquiring Instagram was the same. Social media was a new
| market and this was a smallish acquisition with no monopoly
| concerns. All the growth came after FB acquired them. Also, FB
| isn't a monopoly even today. The emergence of Tiktok proves
| that.
| paulryanrogers wrote:
| Double Click, Android, Instagram, Oculus
|
| All reduced competition and juiced markets with predatory
| pricing
| [deleted]
| ethbr1 wrote:
| The article doesn't argue that they're geniuses: it's just
| _really_ poorly written. So much so that I 'd consider it might
| be AI-generated, from a blog-post-length prompt that's fleshed
| out with 10 pages of context...
|
| When it finally gets around to its core thesis, it says this:
|
| >> _Not only do those explanations [like exceptionalism and
| genius] stretch the imagination, but they also ignore a
| simpler, far more tangible explanation for the incredible die-
| off of businesses in every industry. Forty years ago, countries
| all over the world altered the basis on which they enforced
| their competition laws--often called "antitrust" laws-- to be
| more tolerant of monopolies. Forty years later, we have a lot
| of monopolies._
|
| >> _These facts are related._
| randomdata wrote:
| The Oxford Languages dictionary defines genius as: a person
| regarded as exerting a powerful influence over another for good
| or evil.
|
| The article even speaks to the divide between those who believe
| their genius is good and evil. But, be it good or evil, is not
| fair to say that they are a powerful influence?
| codingdave wrote:
| No, it doesn't. That is listed as an idiom, not a definition.
| akira2501 wrote:
| I'm being asked to judge them solely on their _apparent_
| business acumen, which is to be demonstrated by the size of
| the thing they've assembled.
|
| They _may_ very well be geniuses by your measure, but I have
| no way of accurately assessing that from here, and I'm
| uncomfortable with using sheer scale as a proxy.
| randomdata wrote:
| The article states that their genius is a given. You are
| not being asked to judge on that basis at all.
|
| What is in question in this thread is whether or not the
| assertion that they are geniuses is true. With that, what
| reason is there to think that they are not a powerful
| influence?
| t0suj4 wrote:
| Isn't there a tax policy where investors have to pay a tax when
| they sell shares? Therefore incentivizing them to keep investing
| in companies promising long-term stable growth (aka Amazon) over
| other companies with various growth strategies?
| xyzelement wrote:
| Can you elaborate the connection - what do you mean by
| "therefore incentivizing?"
| edgyquant wrote:
| I think they described the incentive perfectly. We tax short
| term investments higher than longer term ones to incentivize
| the holding of them longer.
| greatpostman wrote:
| Big tech actually pays engineers well. Many businesses have not
| caught on to the returns of hsving 10k top engineers building
| products.
| ifyoubuildit wrote:
| How do you define these "top engineers" without using the fact
| that they work in big tech (or passed a big tech interview)? It
| seems kind of circular otherwise.
| greatpostman wrote:
| I've worked at two faangs and seen it with my own eyes. The
| engineers are way better than at other companies. Especially
| the highly tenured ones
| tester756 wrote:
| Highly skilled - expert understanding of their stack and very
| strong understanding of whole cs / whole stack(hw, fw, sw) /
| how computers work, etc
|
| Significant experience - e.g >15 years across various
| projects/companies/teams
|
| Mature
|
| Responsible
|
| Curious
|
| Reasonable - uses pros and cons when evaluating solutions,
| not the latest stuff on his favourite software evangelist's
| blog
| tmpz22 wrote:
| Big Tech seemed like a smart place to put money so that's what
| the market did with ridiculous P/E ratios. Inevitably everyone
| realizes they're not full of geniuses who do everything right -
| see the Metaverse and the slow demise of Googles Ad monopoly for
| examples.
| piva00 wrote:
| The genius part was capitalising the companies well enough with
| their first breakthrough of revenues + investments and buy out
| competition to profit off their products or just to stamp them
| out.
|
| Coupled with the genius of some regulatory capture with their
| acquisitions not being challenged for decades until recently
| and... We got these behemoths that swallowed most of the
| innovation produced to become ad-infested bullshit.
|
| Yes, I'm jaded by this fucking industry after 20+ years working
| in it, it's all becoming bullshit with different flavours.
| ethbr1 wrote:
| Low interest rates + lax monopoly regulation + aggressive
| acquisitions of competitors = what we have today
|
| The monopoly standard of current harm, in the age of
| internet-speed growth, is laughable.
|
| The standard _should_ be "Is this merger likely to create
| concentration that will lead to less competition in 5 years?"
| fallingknife wrote:
| Those things were true for all industries so that can't be
| used to explain the unique success of the tech industry.
|
| Also the standard you propose is ridiculous because you
| can't predict the future even close to 5 years out. Do you
| think that the owners of Instagram would have sold for $1
| billion if they knew what the next 5 years of growth would
| look like? Would the owners of Android have been willing to
| sell for $50 million?
| ethbr1 wrote:
| Other industries had growth rates like tech, circa
| ~1990-2010?
|
| Do you think regulators could have predicted that
| Facebook buying Instagram would lead to less competition
| in 5 years?
|
| Do you think regulators could have predicted that Google
| buying Android would have led to less competition in 5
| years?
|
| In both cases, yes.
|
| But they had to prove a higher standard under the law.
| fullshark wrote:
| Me too. So what do we do? As far as I can tell the only
| option is to turn down the money and well...it's hard to do
| that.
| Barrin92 wrote:
| On the narrative of 'tech geniuses' I remember an off the record
| comment from a Palantir exec who said he loves every article that
| presents the company as an evil bond villain, because at least it
| makes them seem too powerful too regulate. It's much better than
| being looked at as a banal industry giant.
|
| That kind of strategy seems to be prevalent in the industry now,
| and it also explains the seemingly contradictory attitude of AI
| company execs to drone on about the world ending. Acting like a
| larger than life genius conjuring up an existential crisis
| disempowers the public and gets attention away from talking about
| labor or IP rights or stuff that actually matters.
|
| Doctorow hits an important point here. Rather than creating panic
| about tech the first thing that needs to go away is this
| historically false exceptionalism. It also reminds me of Yuval
| Noah Harari, who expressed surprise that tech companies still
| invite him, despite his criticism. But given that he elevates
| tech companies to demigod status and strokes their egos, it just
| makes sense. Whether they're evil or not, they don't care.
| kkfx wrote:
| Honestly? Big tech got big because they use as a weapon the power
| of previous public-funded research like Xerox PARC one, only when
| they found ways to keep the users not really in control/in power,
| and with many government/intelligence help. Just remember the
| casual information on Oracle or Google history.
|
| The rest is psychology, ignorance and money.
| shrubble wrote:
| Bezos/Amazon: changes in the laws concerning mail order and
| paying taxes for items shipped from one state but being delivered
| in the other (there are 7000+ taxing jurisdictions in the USA),
| which made it impossible for smaller businesses to remain
| compliant; thus forcing many to use Amazon as fulfillment; and
| Amazon gets a cut of all those sales.
|
| Probably close to $50 billion or more in tax abatements and other
| tax incentives over the years went to Amazon.
|
| The "OpEx vs CapEx" difference in tax laws, between running your
| own on-prem datacenter vs. putting the same services on AWS.
|
| And don't get me started on the difference between what Amazon
| pays the USPS vs. what other businesses have to pay...
|
| Google: should never have been allowed to acquire DoubleClick;
| clearly this consolidation of online ads resulted in a near-
| monopoly for Google.
|
| Google also "gave away" their Gmail service for a long time,
| destroying the many mail services that ISPs and others were doing
| as part of their offered services.
|
| This is akin to "dumping", since of course, there never was a way
| that a free service could make Google money. Google now reserves
| the right to build more information in their profiling of you, by
| scanning your emails.
|
| And they did a similar thing with Chrome, while paying Mozilla
| enough money to serve as a foil for Google to say that they were
| not monopolizing browsers. Now, they are pushing the
| "attestation" WEI stuff, since they have captured enough of the
| market.
| discard_000001 wrote:
| > Bezos/Amazon: changes in the laws concerning mail order and
| paying taxes for items shipped from one state but being
| delivered in the other (there are 7000+ taxing jurisdictions in
| the USA), which made it impossible for smaller businesses to
| remain compliant;
|
| While it is more of a nuisance to be compliant it is definitely
| not impossible or even very hard. For our small company's home
| rolled e-commerce system (long story) I researched and then
| implemented tax estimation, collection and reporting to
| accounting down to the zip+4 level in a week or two.
|
| It does involve buying a subscription to jurisdiction level tax
| data and ingesting it regularly, but I don't recall it being
| expensive.
|
| In addition, many states are part of a uniform system which
| makes the estimation easier.
| u801e wrote:
| > Google also "gave away" their Gmail service for a long time,
| destroying the many mail services that ISPs and others were
| doing as part of their offered services.
|
| Back in 2000, I signed up for several web based email services
| including excite, yahoo, hotmail, and a few others I can't
| remember. This was well before gmail and none of them required
| me to have an invite to even sign up like gmail did. Other than
| hotmail, and yahoo, none of them are still around today despite
| the fact that they were giving away email services like gmail
| did a few years later.
| fallingknife wrote:
| It takes much less capital to scale a company that delivers
| service over the internet than pretty much any other type of
| company because it isn't:
|
| 1. labor intensive 2. capital intensive
|
| Since these challenges don't exist for a company like Google or
| FB, these companies can scale faster. This also means they don't
| need to raise as much capital as other types of company to reach
| massive scale. This leaves the founders (and early investors.
| There's a reason VCs focus on internet companies) with a much
| larger slice of the company than would be the case for an
| industrial company. It's really just simple economics and not in
| any way profound.
|
| Note that "tech" companies like Amazon and Apple, which do face
| those challenges to a degree took much longer to scale than
| Google of FB. And Apple really didn't reach massive trillion
| dollar scale until it was able to effectively outsource all of
| the capital intensive manufacturing and focus on the high value
| add "tech" components.
| wavemode wrote:
| https://archive.ph/3xVOD
| throw0101b wrote:
| For the same reasons why canal companies got so big, or railways
| got so big, or steel companies got so big, or oil companies got
| so big: they had/have in-demand goods and services that solved
| problems people were/are having.
|
| See perhaps _Technological Revolutions and Financial Capital_ by
| Perez:
|
| * https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
|
| * https://www.e-elgar.com/shop/usd/technological-revolutions-a...
|
| * https://www.pwlcapital.com/investing-technological-revolutio...
| (via)
|
| A 2021 summary:
|
| > _What was especially remarkable about Carlota Perez's
| Technological Revolutions and Financial Capital was its timing:
| 2002 was the middle of the cold winter that followed the Dotcom
| Bubble, and here was Perez arguing that the IT revolution and the
| Internet were not in fact dead ideas, but in the middle of a
| natural transition to a new Golden Age._
|
| * https://stratechery.com/2021/the-death-and-birth-of-technolo...
|
| > _Perez' theory describes the path a technological revolution,
| like the Industrial Revolution, takes and the social, economic
| and institutional changes that go along with it. The jury is
| still out on the theory, and there are plenty of reasons to doubt
| it. But if it successfully predicts what happens over the next
| ten years it will have in good part proved its power._
|
| * http://reactionwheel.net/2015/10/the-deployment-age.html
|
| A list of the top ten companies in the S&P 500 going back a few
| decades:
|
| * https://awealthofcommonsense.com/2017/07/the-biggest-stocks/
|
| * https://www.finhacker.cz/top-20-sp-500-companies-by-market-c...
|
| Sector breakdown:
|
| * https://www.qad.com/blog/2019/10/sp-500-companies-over-time
| polygamous_bat wrote:
| What a weird way to say you didn't bother clicking on the link:
|
| > In the 19th century, American robber barons got together and
| formed trusts: For example, a group of railroad owners could
| sell their shares to a "railroad trust" and become
| beneficiaries of the trust. The trustees--the same robber
| barons, or their representatives--would run the trust, deciding
| how to operate all these different, nominally competing
| railroads to maximize the return to the trustees (the
| railroads' former owners).
|
| > A trust was a way of merging all the dominant companies in a
| single industry (or even multiple related industries, like oil
| refineries, railroads, pipelines, and oil wells) into a single
| company, while maintaining the fiction that all of these
| companies were their own businesses.
|
| > Any company that didn't sell to the trust was quickly driven
| to its knees. For example, if you owned a freight company and
| wouldn't sell out to the trust, all the railroads you depended
| on to carry your freight would charge you more than they'd
| charge your competitors for carrying the same freight--or
| they'd refuse to carry your freight at all.
|
| > What's more, any business that supplied a trust would quickly
| find itself stripped of its profit margins and either
| bankrupted and absorbed by the trust, or allowed to eke out
| bare survival. If you supplied coal to the railroad trust, all
| the railroads would refuse to buy your coal unless you knocked
| your prices down until you were making next to nothing--or
| losing money. Hell, if you got too frisky, they might refuse to
| carry your coal from the coal mine to the market, and then
| where'd you be?
| frank_bb wrote:
| [dead]
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