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After more than a year of investigations, House Dems have produced a 450-page report on market concentration in the tech industry, with a slate of findings that are obvious and long overdue, and a slate of recommendations that are simultaneously traditional and radical.
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Start with the findings: the market is concentrated and the companies preserve their monopolistic standing with anitcompetitive tactics:
* Apple's App Store stranglehold raises prices and transfers money from creators to the company
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* Apple's App Store stranglehold raises prices and transfers money from creators to the company
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* Google preferences its own services in search results
* Facebook buys companies for predatory reasons, to snuff out potential future competition threats
* Amazon rips off its sellers and engages in predatory pricing
https://www.wired.com/story/congress-unveils-plan-curb-big-tech-power/
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* Facebook buys companies for predatory reasons, to snuff out potential future competition threats
* Amazon rips off its sellers and engages in predatory pricing
https://www.wired.com/story/congress-unveils-plan-curb-big-tech-power/
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All obvious, but it's nice to have it in the record.
Then there's the traditional AND radical remedies: blocking mergers, prohibiting the creation of vertical monopolies by entering "adjacent lines of business."
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Then there's the traditional AND radical remedies: blocking mergers, prohibiting the creation of vertical monopolies by entering "adjacent lines of business."
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And then there's "structural separation" - the rule that banned rail companies from owning freight companies that competed with their customers and banks from owning businesses that competed with the businesses that borrowed money from them.
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There's a shifting of the default in mergers: the DoJ should presume ALL mergers and acquisitions by large firms are anticompetitive and require the companies to prove otherwise.
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A kind of neutrality in platforms, requiring them not to preference their own products over others. I predict this one will be the source of endless misery because it supposes that there is a "right" way to organize search results.
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Weirdly, this was Google's position for a long time. If you were an early web writer and you cornered a Google exec at a party to complain about your pagerank, they'd just shrug and say, "Make the page better then."
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The implication being that they were measuring objective quality of your page, like they'd invented a machine for taking pictures of the forms casting shadows on the wall of Plato's cave. It was an algorithm and algorithms are math and math is objective.
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This excited the world's governments, who started to say, "Oh, hey, if this is MATH, then it's not censorship to order you to change the math.
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"If we order you to keep certain things above the fold, or to downrank or banish others, that's like specifying the equations for structural steel, not like ordering the editor of the New York Times to put certain articles on the front page."
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Hoist on their own petard, Google started working with eminent First Amendment scholars to advance the (correct) position that the math was in service to expression: the programmers and QA teams that wrote and tuned the algorithms were making editorial judgments.
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These were indirect - in the way that, say, a newspaper proprietor might say, "We need more coverage of inflation" or "Let's call Qanon a 'cult' and not a 'conspiracy theory'" - but they were acts of human expression.
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I mean, they HAD to be. Google doesn't have a webcam in Plato's cave. There is no objective, universal quality metric. And they're not choosing sites at random, either. So it has to be judgment, and judgment is expression.
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All to say: "Good luck with search neutrality, Congress."
But there's more! The report calls for increased budgets for antitrust enforcement and killing forced arbitration and its bans on class action suits.
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But there's more! The report calls for increased budgets for antitrust enforcement and killing forced arbitration and its bans on class action suits.
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And finally, the report calls for overturning 40 years' worth of antitrust case-law, the decisions that depended on the doctrine of the Nixonite criminal Robert Bork, who became a court sorcerer to Ronald Reagan.
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Bork's doctrine was that antitrust law needed objective standards and objective standards were impossible to come by in markets - you could never hope to objectively define when a company had too much marketshare or was abusing its power.
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This may sound like my argument about "search neutrality" - but there's a big difference. Bork had a counsel of despair: "Because we can't identify shenanigans, we shouldn't try to prevent them."
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But the pre-Borkian enforcement strategy wasn't grounded only in objective correlates of shenanigans: it was also designed to make it harder for shenanigans to occur. Pre-Bork, we fought monopolies because they were bad - they had the power to distort markets and policies.
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Pre-Bork, we fought monopolies because they were monopolies. Post-Bork, we only fought monopolies if we caught them in the act, and even then, we could only win if we could prove shenanigans - and monopolists got really good at making it hard to prove them.
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For example, they perfected the idea of the "market definition" defense. You hear this with Amazon, when Bezos tells Congress that Amazon isn't a monopoly because people buy stuff at Walmart.
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By including "Walmart" (or every time in which goods change hands for money) in the definition of Amazon's market, Amazon can make itself out to be a bit-player.
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Here's an example of a Borkean giving this line just last year: "Facebook doesn't have a monopoly because I can still make phone calls."
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Returning to a pre-Borkean vision of antitrust enforcement is profound and would have far-reaching implications for telecoms, entertainment, pharma, accounting, logistics, energy, transport, aviation, etc.
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But while all these industries got concentrated through the same methods - predatory acquisitions, mergers to monopoly, vertical monopolies - they aren't all the same. What kind of industry they are MATTERS.
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Tech has two unique characteristics:
First, it is foundational. Our ability to demand better policy and to collaborate to hold policymakers to account depends on tech. We're not going to organize a global movement by wheatpasting posters on telephone poles.
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First, it is foundational. Our ability to demand better policy and to collaborate to hold policymakers to account depends on tech. We're not going to organize a global movement by wheatpasting posters on telephone poles.
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And second, tech means computers, and computers are "universal" in a way other industries' products are not. Computers can interoperate with each other in ways that, say, cars or can-openers or beers cannot.
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That interoperability has been the source of enormous dynamism and a check against concentration in the history of tech: what companies thought of as walled gardens that exploited "network effects" became feeding pens for new market entrants.
https://www.eff.org/deeplinks/2019/10/adversarial-interoperability
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https://www.eff.org/deeplinks/2019/10/adversarial-interoperability
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Whether that's Static Controls - a tiny Taiwanese company that refilled IBM Lexmark's toner cartridges and got to piggyback on the vast market IBM had developed, growing so large that they ACQUIRED Lexmark or...
https://www.eff.org/deeplinks/2019/06/felony-contempt-business-model-lexmarks-anti-competitive-legacy
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https://www.eff.org/deeplinks/2019/06/felony-contempt-business-model-lexmarks-anti-competitive-legacy
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Apple, which defeated Microsoft's office dominance by creating Iwork, reverse-engineering the Office file-formats so that Mac users didn't need to convince their colleagues to switch OSes, they could just share documents with them.
https://www.eff.org/deeplinks/2019/06/adversarial-interoperability-reviving-elegant-weapon-more-civilized-age-slay
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https://www.eff.org/deeplinks/2019/06/adversarial-interoperability-reviving-elegant-weapon-more-civilized-age-slay
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The same tech companies that rose to dominance through this #CompetitiveCompatibility are now its worst enemies, lobbying against #RightToRepair, building products around #DRM, and claiming their terms of service have the force of law under #CFAA.
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Restoring the right of new market entrants to make stuff that plugs into the existing dominant products and services would go a LONG way to restoring dynamism to tech, to making companies' survival reliant on pleasing users, rather then dominating markets.
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And while the Congressional report doesn't give interop the centrality it deserves, it DOES mention it and discuss its importance.
https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf
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https://fm.cnbc.com/applications/cnbc.com/resources/editorialfiles/2020/10/06/investigation_of_competition_in_digital_markets_majority_staff_report_and_recommendations.pdf
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