Big Tech antitrust thread

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jonblatho

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As has been well covered on MacRumors and elsewhere, antitrust cases against the big tech companies including Apple are heating up. This isn’t really meant to be specifically about Apple and Epic Games or any other specific situation, but I thought I’d post a thread for discussion of these issues as they relate to the tech industry more broadly.

This is an issue I care a lot about, and I’d love to see a more levelheaded discussion than one can find on MacRumors. Of course, I get that most of us are probably coming at this from the angle of Apple product users, if not Apple fans, but I’d like to think that most of us can set aside those feelings for an honest discussion on where things stand here. There are a lot of complex questions here, some of which might delve more into politics. I wasn’t sure which forum to put this in between Tech Talk and General Politics, so feel free to move it if necessary.

Some of those broader questions to start:
  • Are our antitrust laws equipped to deal with the tech conglomerates we have today, or are revised laws necessary?
  • Do the big tech companies need to be reined in at all?
  • Is it the government’s place to rein in the big tech companies, or are consumers powerful enough to vote with their wallets? Is there really anyone else for them to “vote” for? Can there be at this point?
  • Should platform providers be able to compete on their own platforms? (Think Apple competing in the App Store against Spotify et al.)
  • If action is necessary, which approach is better and where: Restrict or break up the big tech companies?
 
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Alli

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Some of the antitrust laws need to be updated. I think today’s massive conglomerates were as far from the minds of the men who wrote those laws as rocket launchers from the minds of those who penned the 2nd amendment.
 

jonblatho

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Some of the antitrust laws need to be updated. I think today’s massive conglomerates were as far from the minds of the men who wrote those laws as rocket launchers from the minds of those who penned the 2nd amendment.
That’s about where I’m at. I don’t think laws written a century ago could have seen monstrous companies absolutely dominating a purportedly competitive industry like Apple and Alphabet coming, and they probably have legal teams dedicated to carefully reviewing every move to ensure that they’re technically legal under our existing antitrust laws…while knowingly violating their spirit.
 

lizkat

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I'm also not sure the original laws could have foreseen the rise of forms of capitalism that would come to favor acquisitions (along with outsourcing of research in some cases) rather than investment in R&D as preferred ways of "innovating" within any industry, certainly including tech but also applicable to segments of industry like pharmaceuticals, food science, etc.
 

lizkat

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Not exactly anti-trust material, big maybe, but close enough to good: AT&T now figures since the second tier outfits like Windstream and Frontier are like going bust over having bitten off too much broadband deployment options obligations in taking up government contracts to finish rolling out connectivity, well reliable ol' AT&T itself is ready to step up to the challenge, if they can just talk the feds into finalizing another round of big dough for gettin' the job done.


Oh yeah, but before I forget, here's what Ars Technica had to say about that opinion piece up there that was written by AT&T's CEO.


Basically AT&T just hope no one notices a certain level of hypocrisy in their current pitch to get accurate maps of who still needs access to the net.... since they themselves have spent maybe 30 years being content to peg census blocks as "connected" if a single house was hooked up in a given block... but hey, bygones should be bygones, yah?

Yah. So given some dough and some promises not to overregulate what happens later on, AT&T is ready to roll fiber to the door of anyone needing it, right?

Sure! And they'll throw in a scale model of a bridge to Brooklyn for each guy in the first set of Congressmen who round up enough co-sponsors to get that dough appropriated in a manner that will let AT&T in on the ground floor, don't you worry.
 

jonblatho

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Well, today we got the long-awaited House antitrust subcommittee report with its findings and recommendations. There are two reports — one’s a watered-down version because the Republicans didn’t want to sign on to the Democrats’ version — but since the Democrats are in the majority and will likely remain so into the next Congress, I’ll focus on their report.

All four of the companies their investigation focused on — Amazon, Apple, Google/Alphabet, and Facebook — were found to be engaging in some form of anticompetitive conduct. Some of the key findings for each of the four companies:
  • Amazon: Amazon functions as a “gatekeeper for e-commerce” and “has monopoly power over most third-party sellers and many of its suppliers.” While companies are free in theory to cease doing business with Amazon, market factors make doing so “pretty futile.” The COVID-19 pandemic has increased Amazon’s market power over sellers and suppliers. Its mergers and acquisitions were driven by an urge to neutralize competition and obtain more customers’ data. Amazon obtained a dominant position in the market and then increases seller fees, forces sellers into arbitration clauses, and abuses its access to seller data. Concerns were also raised along similar lines for Alexa and Amazon’s Internet-of-Things offerings, as well as Amazon Web Services.
  • Apple: Apple’s control over iOS provides it with a monopoly over software distribution on iOS devices, and it “actively undermines the open web” to that end, kneecapping web apps from becoming viable. This monopoly power also allows Apple to generate “supra-normal” profits from the App Store and its Services business. There is “little likelihood for new market entry in the mobile operating system or mobile app store markets to compel Apple to lower its rates.” Also regarding its 30% fees, while Apple initially set out to make little on the App Store, Apple’s financial reports “indicate that the App Store is faring far better than the modest business Apple originally contemplated.” The subcommittee points out that Apple is dishonest in acting as if the App Store revolutionized software distribution by allowing developers to sell directly to consumers — that was already possible on developers’ own websites. Apple benefits from high barriers to entry and high switching costs that give it little or no incentive to lower its fees or loosen its grip on iOS software distribution, harming consumers and competitors.
  • Google/Alphabet: “Google has a monopoly in the markets for general online search and search advertising.” It now uses that monopoly position to prefer its own content and offerings, even if they’re inferior, and blur the lines between organic results and paid advertising. Given its ubiquity, Google enjoys “near-perfect market intelligence,” allowing it to snuff out competition — including through mergers — before it really even begins.
  • Facebook: Facebook engages in mergers and acquisitions to shore up its position in the market and neutralize competition and as a result is now more worried about its own products and services cannibalizing each other than competition from external sources. Facebook “used its data advantage to create superior market intelligence to identify nascent competitive threats and then acquire, copy, or kill these firms.” Also, “[in] the absence of competition, Facebook’s quality has deteriorated over time, resulting in worse privacy protections for its users and a dramatic rise in misinformation on its platform.”
 

Renzatic

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I can't disagree with any of those findings. In regards to Apple, I've never had a problem with them taking a 30% cut off of apps sold from their app store, but taking a continual cut of 30% off subscriptions and in-app purchases, and forbidding said apps from selling elsewhere has always been 10 steps too far to me.

Take Netflix for example. If it cost, say, $5 to purchase the Netflix app, Apple is entitle to a cut of that. They host the program, they provide the bandwidth for its download, they market it on the app store. It's perfectly reasonable to expect something in return for the investment they've made.

But to charge a 30% of Netflix's subscription fee? No. They don't do anything beyond host the app files. They don't invest in Netflix's infrastructure, don't pony up money for their programming, and don't advertise for them beyond the app store. Why should they get a cut? As is, all Apple is doing is leeching off their primary revenue stream simply because it's being used on their hardware.

So if Apple were to relax their IAP stranglehold, the situation would resolve itself. They'd still make money, and could offer payment services for smaller apps to leverage.

As for the rest, Amazon needs to be split to be fair for the market as a whole, Google deserves a good slap in the face or 10 for prioritizing their own services over their competitors, and Facebook can burn in eternal hellfire.
 

lizkat

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Amazon has also been raising some prices lately by more than inflation would suggest necessary, even given pressures on supply chains due to covid. These are recent and some are in the neighborhood of 7 or 8%. Meanwhile there's video circulating of Bezos checking out progress on a robot with a much better ability to grab stuff off warehouse shelves with dexterity than whatever's currently in production. So they're still meaning to chip away big time at human labor costs even if have been shamed into raising wages of those working for them now.
 

thekev

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But to charge a 30% of Netflix's subscription fee? No. They don't do anything beyond host the app files. They don't invest in Netflix's infrastructure, don't pony up money for their programming, and don't advertise for them beyond the app store. Why should they get a cut? As is, all Apple is doing is leeching off their primary revenue stream simply because it's being used on their hardware.

I would expect the government's argument to also include the fact that Apple both charges a percentage of subscriptions and directly competes with those same companies via their own services. My own issue with Apple (and Walmart and Amazon) is that they try to compete with their own vendors. Bringing in a product from a vendor or developer doesn't cost these companies much. If it turns out to be profitable, they can either extract 30% on all subscriptions as Apple does, or begin treating that company as a direct competitor (Amazon, Apple, and Walmart). That kind of shit deserves scrutiny, because it isn't competition that naturally arises between vendors in a particular marketplace. It's a method these larger companies use to outsource risk to companies they do business with, then attempting to drive the same companies out of business.
 
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