FAANGs for the memories: Breaking up big tech's biggest isn't a matter of if, but of when Somewhere between Cambridge Analytica and Christchurch, historians of the future will draw a line and say: "This marked the peak of FAANG's influence." FAANG? That's Facebook, Apple, Amazon, Netflix and Google – the current tech heavy-hitters listed on NASDAQ. The competition regulators have suddenly found themselves pipped …
Woah there, the last thing we need right now is a quickening of pace. Cloud is already racing in every direction, each year we get new smartphones that are entirely incompatible with last year's, new mobe makers are appearing on the market and doing their damndest to differentiate, Surface is gaining traction and changing habits and STOP, let me breathe for a minute for Pete's sake.
I have read this article and I still don't know how I feel about it. On the one hand I will applaud anything that cuts Google and especially FaceBook down to a manageable size (ie something that no longer has the luxury of lying to our faces and we not being able to do anything about it). On the other hand, what exactly says that a breakup in the shareholder's best interest ? Where was that rule explained ? Because I don't think shareholders think that at this point in time.
Things like that in this article bewilder me, so, despite the fact that I completely agree with the initial premise of breaking up the FAANGS (and where did that come from ?), I can't say that I entirely agree with everything as it is stated.
Some more citations needed, I guess.
You spoke about hardware improvements, but actually software is going backwards, both in features and especially usability, and "AI" won't save it.
And one reason is exactly the monopoly-like situation some companies imposed - withou having the sinister look Microsoft had, which prompted reactions.
> each year we get new smartphones that are entirely incompatible with last year's, new mobe makers are appearing on the market and doing their damndest to differentiate
Citation needed for this, too.
The market has essentially come down to Android and iOS, and while some apps - especially games - do have to be retired due to OS/hardware changes (e.g. when Apple switched off 32-bit support), in general, there's been at least as much backwards compatibility as within the Windows PC eco-system.
I've been using Android phones since the early days (e.g. HTC Desire HD, 2010), and while there's been a bit of a bristles/broom-handle thing going on, for the most part, i'm still running the same tools and software that I've been building up over the last decade - Jorte for a calendar, Fing for network analysis, GPS Test for satellite monitoring, AI Reader for ebooks, etc.
I wouldn't personally include Netflix in that mix, they are one of the services that could easily become irrelevant in the next few years. They are spending a lot more on content than they are making in revenue and to try and increase subscriber numbers but that can't continue. Netflix are relying purely on subscribers as their only source of income. Other players in the online video subscription services such as Amazon, and the new entrants Apple and Disney all have vast cash piles and are successful in other areas so are able to rely less on the profits from subscribers.
I agree. Netflix has first mover advantage as the first big player in streaming, but as content is increasing siloed (i.e. Disney pulling their stuff off Netflix and other services so you will have to subscribe to Disney's service to get it) people aren't going to subscribe to a dozen different services. Instead you'll see them subscribe to services for a month or two at a time, binge watch what they want, then cancel and move on to the next, the "locust model" for streaming.
Once Netflix has to deal with the reality of customers only subscribing for a couple months a year instead of 12, their share price will crater, they will be unable to keep getting multi billion dollar loans to pay for all that new content they've been developing to make up for the lack of other people's content, and FAANG will become FAAMG (because they can't call it FAAG or the PC police will get them, so they'll decide Microsoft is one of the in-crowd now that they do cloud)
That's why it's important to break up the big players. Disney or AT&T should not be able to undercut NetFlix because they have other revenue. Their video streaming service should have to support itself. It is also important to not allow the broken up companies to outsource call centre, programming, network admin, or other work that can be done remotely. Otherwise, we'll all be out of work. Governments need to force Corporations to bring those jobs back. If Corporations are making the bulk or even a significant portion of their income from a particular country/state then they should have to do the work and pay the workers there. Otherwise they are just stripping wealth.
"Socialism may well be worse but until we've tried it you're just guessing."
Absolutely, you may have heard some socialists or comunists praising some regime in some country over the years, but the moment it is undenyable that it has all gone to hell they immediately start telling you how that had nothing to do with real socialisim.
Nothing at all, of course not, so it has never been tried.
Nowhere and never.
Socialsm has made a documented much BETTER job of fucking up the environment than capitalism. And it still manages to "exploit the poor" too. Examples abound in China, Russia, the former East Germany, where The People mattered much more than the people.
ISTM that there are advantages and disadvantages to scale, disadvantages including an arthritic decision making process that can't cope with the everyday small stuff and increased external scrutiny, both from the public interest and from a stock-market that demands growth. There ought to be an optimum where they balance but in practice the disadvantages lag so businesses grow beyond the optimum. Perhaps it's time for governments to wield the public interest arguments, start to break up the bigger monopolies and look far more critically at mergers.
You're thinking about IBM and other "old style companies" - but actually companies like Facebook and Google are very quick to set up new ways to slurp data and take advantage of them.
The reason is they don't need to design, build and deliver whole new products - they just need to tweak what they have, or buy any startup they think could be used - even just to gobble products and never let them available outside.
"old style companies"
Old style companies are that way because they've been around for more of the lagging disadvantages to have caught up with them. Newer companies have yet to get there.
"or buy any startup they think could be used - even just to gobble products and never let them available outside."
Apart from the killing competition aspect don't you think this is a sign of not being able to develop new stuff themselves? It's easier to make a few big decisions like this than it is to review every small item of expenditure that's involved in micro-managing day-to-day stuff with a big development team.
Sure, but they are quick to buy then before they can pose a danger. The problem today is that there are several ways to make a lot of money without any need to develop innovative stuff.
For them, it's a win-win situation, small investments, huge returns. Still, they are not "arthritic" - usually they're quick enough - just their "decision making process" seldom involves innovative products - mostly is a repackaging of existing ones through a site/app and a subscription, whenever possible.
You posit that as the reason for breaking up the companies but then you don't explan why breaking them up would help solve that problem.
You only really argue about how it would be great for the companies themselves, which maybe nice if your are a stockholder, but no real reason for the goverments to do anything.
Exactly. Instead of Facebook there would be gab, closed, encrypted Signal groups or services outside their jurisdiction.
The problem isn't Facebook per se, but the self selected filter bubbles enabled by the Internet.
China in particular is producing a great deal of big-tech software and hardware, and their government is applying explicit and deliberate political manipulation of their technologies. Where does that factor into this kind of debate - how will a bunch of legally restricted baby-bells compete against external government-backed monopolies?
(e.g. the online-store battle between Epic and Steam at present; Epic is 40% owned by Tencent, a Chinese company worth over $500 billion. That's where all the money to buy exclusives to starve out Steam is coming from; what happens if they start to offer social-media features and the Chinese government decides to get involved?)
From my personal perspective, I can see a lot of benefits to breaking up companies and silo'ing their access to personal data. But at the same time, the USA is no longer the only 800lb gorilla in the arena!
Their reach is basically limited outside China, or at least outside Asia. Wechat is never going to become a thing in Europe or North America, we aren't going to start searching via Baidu, etc. Similar to how FAANG will never have much of an impact in China, because they aren't Chinese companies.
Globalization was a bad idea from start. Really it appears to have been a way to strip wealth from the developed economies. Bring back much of the manufacturing. Don't allow mergers without real, careful, considered scrutiny. To do those things we probably have to remove all private money from political campaigns and greatly limit lobbying. Easy Peasy ;)
MAANU = Microsoft Amazon Apple Netflix Uber should replace FAANG
F and G are about to face the full wait of worldwide privacy laws, with GDPR leading and other nations/blocks following, their entire business models are being ripped apart.
Uber is in pole position to borg other "gig Economy" players and work its way up the charts (it starts with careem and rumours about Deliveroo,Bird and Lime)
What happens when Uber has to start making money? Their strategy seems to be to drive taxis out of existence so they can raise prices, but there's no network effect advantage to ride sharing.
Someone just needs to organize the drivers in a given city to create their own app where they keep everything except minimal operating costs for themselves. Grubhub, Uber Eats, Deliveroo etc. are basically non-existent where I live because the several dozen restaurant owners got together to create their own delivery service that takes half the margin the competition does. Even those who aren't direct investors in it are using it for that reason. I've heard rumors they're going to expand that to ride sharing, and knock Uber and Lyft out of the area market as well.
Might not work in big cities that have a lot of tourism (tourists don't know to download the local ride sharing app) but then you just need someone to organize all the local players into a single nation wide and then worldwide app. The only advantage Uber has is that it is willing to lose several billion dollars a year - will that continue post IPO and investors except to see a return? The ease with which competition can spring up limits the possible profit from "gig economy" players - they can never justify valuations of tens let alone hundreds of billions of dollars for that reason.
> more persuasive case put by the guarantors of national security, who have weighed these engines of amplification, toxification, division and disunity and found them wanting. States wanting to remain coherent have no choice: break up the internet giants – or fragment into a Hobbesian war of all-against-all.
So instead of a single social network that is at least willing to follow the law, they might be confronted by end-to-end encrypted closed groups (Signal) or networks completely out of their control (gab). They will fondly remember the good, old days when there was at least somebody who would pick up the phone or whom they could pressure to remove content.
Ah, yes, "national security", that bastion of nationalism. Which some consider evil all by itself.
But not me so much - I like that there is competition for control, that if this nation becomes too repressive, you could bolt to another.
This is perhaps something new under the sun, in that FB and some others, may as well be "nations" with no place to bolt to from there - that's bad.
That all these services and their recommendations strongly tend to create echo chambers and promote angry division is certainly bad, however, and I will in no way defend them.
I will, however, point out that the "national security" services have their bread buttered in a particular way themselves, and even acknowledge that they lie for a living! So while they are indeed "persuasive" in their ability to bring force - legal or otherwise - to the table, I don't see that as an improvment.
I see it as yet another grab for power - they are just as evil wanting to shut down competitors in control of the narrative as the outfits they want to shut down.
In other words, why limit this idea of "too much power in one place" to a few big companies? They are bad - we can all agree on that. Are they the worst? Would the suggested replacement, even less transparent or bound by law (it's all a secret) - be better?
Why not rein them all in? The more recent hoaxes perpetuated on us have had involvement by ALL of the big companies, but were backed by these same unaccountable government entities that now want control over the companies...Doesn't anyone else see the problem here?
National security has long since been redefined as that which promotes the status quo - things that hurt the various gov bureaucracies "hurt the national security" even when it's damned obvious that those gov entities needed a spanking by having their own crimes revealed. Yet the whistleblowers revealing their crimes "hurt national security". They didn't hurt mine, and I'm part of my nation. They hurt some of the bad actors who claim THEY ARE the nation. Nope, they're just supposed to be servants of it.
It's exactly the other way round. Had that directive been made years ago, Google/Youtube and Facebook would have never reached such dimensions. At least now they can't keep on growing using someone else's contents upload by "user" on the "platform".
And to save the Internet we really need to break up those who occupied it and are trying to set rules that would advantage them only.
People who are selling themselves in exchange for some pirated stuff are just "useful idiots".
Acronyms like FAANG are nice, but these companies have little in common apart from their success.
How would you break up Netflix? It's pretty much a single business of distribution. Ok, it also produces shows, but then please break up Disney before Netflix comes up for the chop. Disney, which just merged with Fox. Ahem.
Apple? You could try to break up the hardware and software parts, but they're pretty much joined at the hip. The software part pretty much only exists because of, and for, the hardware part.
Facebook would be slightly easier, if only keeping WhatsApp and Instagram separate. But after that, breaking up Facebook itself would be hard; it is after all a single website, almost a single web page.
Google would be interesting to break up. It's difficult to know how much the services depend on each other; like Maps knows which hotel you booked a room for, and knows about traffic jams from Android data, etc. Or the assistant probably knows everything about you from all the different services. Oh, and Ads, which is everywhere, and gets data from everywhere. Just knowing which parts of the business are viable on their own would be interesting to know.
In comparison, Amazon would be downright easy. Supposedly, each internal service already treats the other ones like external consumers. In fact, that is sometimes considered one of the big reasons of its current success in the cloud business...
It's not like this is anything new. I'm more surprised that certain mergers/buyouts were allowed, such as FB acquiring Instagram and WhatsApp.
Part of the problem is that once certain companies enjoy a monopoly (or duopoly) on a market, the best way to maximise profits is to milk the customer while buying out any new entrants. You can also make the entry harder, but that takes active collusion from the regulators. Buying all the competition is perceived as being better. Hence FB's dominance in social media.
Google has already restructured, so there are obviously some benefits.
Amazon needs reigning in much the same way as Walmart does. I'd argue they provide quite a good service, in terms of running a mail order business, since they do a cracking job of warehousing and inventory management. AWS is pretty solid, YMMV and all that, but for cloud it's pretty good value. Damning with faint praise and all that. Again, the parts of Amazon could work separately.
Not sure any streaming service needs much in the way of regulation at the moment.
We've seen some big mergers in the last few years, so I'm not sure the appetite is really for killing off the monoliths. More regulation, sure, but probably not breaking up companies.
What the legislatures are gearing up for is finding a way to regulate and hold accountable social media, in the same way traditional media is. I'll grant you that the traditional media is perfectly capable of drumming up bullshit that people believe because it feels right, but they at least side step around the facts rather than outright falsify them. "In a recently published hit piece disguised as a memoir, some bloke* claims that he heard from a friend that David Cameron...." as compared to "David Cameron shagged a dead pigs head". But many of us wanted to believe the worst about him, so it's an accepted truth. Even if you show it's false, you still kind of want it to be true.
We've been here before with regulation of newspapers, it's why journalists have different protections in different countries, and there are different libel and personal damage laws. Exactly what is free speech, what are allowed to publish etc. So it's (generally) illegal to report a falsehood as true, but it's generally legal to present selected facts (and deliberately omit others) in order to create a narrative. What's the control on social media? Is it public or private speech, or does it not matter? Is there allowance for context and hyperbole** or should your posts be held fully accountable? Who decides what is and isn't acceptable, the Department of Unity?
It'll be interesting to see how this all pans out. At least some congress critters are young enough to know the difference between instagram and facebook :D
*who when asked, claimed he couldn't remember who told him the story
** saying "I'm going to fucking kill you" in person when angry can be judged to mean very different things based on tone of voice and situation. Those words written down are more threatening than most situations that we encounter them in verbal communication.
I'm not sure about this. The whole reason people uses Service X is because the people they want to aggregate with also use Service X. It seems to suggest that Facebook is "Birmingham Telephone Company" whereas really Facebook is more "the telephone". This could well go back to the pre-Strowger days of having to have a BTC telephone and a BBT telephone and a ETCL telephone and a PTC telephone and a UTC telephone so that you can reach anybody.
The writer gets the network effect wrong, and just goes downhill from there. The real power of Google is most definitely NOT the network effect. It's vertical integration of data services. Each bit of data that is held by Amazon, Google or Facebook enhances the value of a significant subset of the existing data. That value can be converted into profit, to people outside the company, or used for pet projects. Of course, they all are going for profit. But the point remains--the bigger the dataset, the more valuable each datum in the dataset, and not by a little bit. Breaking up the dataset will entail real loss of social good.
That's the rub.
The major social harm from Google and Twitter is coming from the pet projects. They are meddling with elections, as reported in these pages, because they know what is best for the rest of us. Facebook is also doing this, but their primary harm is coming from the fact that they drive engagement by driving outrage. Also known as the echo chamber. The effect is nearly apolitical, but it makes us far more ready to take action against each other than we would be without it.
And there is the raw threat of monopolism. My wife noted years ago that Amazon's prices were not always that much better than what she could find elsewhere. Monopolists regularly create social harm because they are not motivated to innovate towards customer value.
There is also a secondary social harm with all that data. Even if these companies were completely ethical regarding their use of the data, the threat of data ending up in the hands of a less ethical actor (that is, almost any government / organized criminal operator) is extremely high.
It's nightmare enough if Google or Facebook decides you are guilty of a thought crime. If your local nation state comes to the same conclusion, it is much, much worse.
But the idea of breaking up Google is almost silly. Is search profitable? Is maps? How much would the profitability of YouTube suffer if it was cut off from all of the other data associated with the user? Yes, they have reorganized in preparation to being forced to split up, but it's going to be a heck of a ride trying to figure out how to make it work.
No, I'm not very optimistic about the next 10-20 years in this regard.
Yeah, internet search doesn't have network effects, that's "directory enquiries", it's irrelevent which DQ service you use, they're all serving the same data. Google is the opposite of Facebook, Facebook *is* network effects. If you want to communicate with your community who commune on Facebook you don't go looking for them on MySpace. Facebook is "the telephone" not "Midland Telephone Company" (ask your great-grandad).
The current incentives for large corporations are largely driven by tax structures. If governments said OK; Dividends are taxed at say 5%-10%, then the current stupid charge for "growth" would abate, that would in turn mean that the drive to grow ever larger & dominate ever more sections of a market space would in theory abate.
If the broken-up company isn't barred from just merging back together, then it's a waste of time.
The article mentions AT&T... look at https://money.cnn.com/infographic/technology/att-merger-history/ to see how it all merged back together, and anyone can tell you that it's just as dickish as ever.
As long as there's private money, lobbying, and favours paid to politicians we'll run into this problem. Once AT&T was broken up it should not have been allowed to re-merge. I see that as more a problem of corrupt politicians in the pockets of the corrupt boards of those corporations.
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