Should America’s tech giants be broken up? Apple, Amazon, Google, and Facebook may be contributing to the U.S. economy’s most persistent ailments

“As a former tour manager for Bob Dylan and The Band, Jonathan Taplin isn’t your typical academic. Lately, though, he’s been busy writing somber tomes about market shares, monopolies, and online platforms,” Paula Dwyer writes for Bloomberg. “His conclusion: Amazon.com, Facebook, and Google have become too big and too powerful and, if not stopped, may need to be broken up.”

“Crazy? Maybe not. Taplin, 70, author of Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy, knows digital media, having run the Annenberg Innovation Lab at the University of Southern California,” Dwyer writes. “Ten years before YouTube, he founded one of the first video-on-demand streaming services. He also knows media M&A as a former Merrill Lynch investment banker in the 1980s. He says Google is as close to a monopoly as the Bell telephone system was in 1956.”

MacDailyNews Take: Yeah, but why is Apple included in Bloomberg‘s article and subheadline (besides the obvious hit-whoring aspect)? Let’s skip to the Apple portion:

“Market concentration has many parents. One of them is surely the so-called network effect, a key antitrust argument in the Microsoft case. That doctrine says the more people use a platform—say, the iPhone or Facebook—the more useful and dominant it becomes. The iPhone, for example, is popular in large part because of the voluminous offerings in Apple Inc.’s App Store, and the app store is popular because developers want to write programs for popular smartphones. Network effects can create what Warren Buffett calls ‘competitive moats,'” Dwyer writes. “According to data compiled by Bloomberg, Alphabet, Amazon, Apple, Facebook, and Microsoft made 436 acquisitions worth $131 billion over the last decade. ”

Read more in the full article here.

MacDailyNews Take: Okay, so Apple was included in this article and its subheadline in order to draw eyeballs, not for any other reason. Taplin’s book does NOT include Apple in its title. There is absolutely no basis for “breaking up” Apple that any sane person can formulate. Shame on Dwyer and Bloomberg.

Pretty much the same goes for Amazon and Facebook. What’s the legal basis for breaking them up? Where are they abusing their so-called monopolies? Monopolies are legal. Monopoly abuse is not.

Google, on the other hand has long been a different story. As we wrote in July 2016:

Imagine if your livelihood depended on one company that had not only monopolized web search (and, thereby, basically controlled how new customers find you), but also controlled the bulk of online advertising dollars which funded your business and which they could pull, simply threaten to pull, or reduce rates at any time? Now also imagine if you believe this monopolist basically stole the product of another company that is the very subject of your business? How much would you criticize the monopolist thief’s business practices?

You might guess that it would be a tough road to walk. (We’re only imagining, of course!)

That would be a good example of why monopolies are bad for everyone.

The U.S. government has utterly failed to police Google. Because the people with the power to do so currently are corrupt. Follow the money. Hopefully, the European Union will help to correct the situation.

In the meantime, stop using Google search and Google products wherever possible. Monopolies are bad for everyone.

SEE ALSO:
European Union hits Google with record $2.73 billion fine for abusing internet search monopoly – June 27, 2017
Google could face a $9 billion EU fine for rigging search results in its favor – June 2, 2017
Google attempts to defend Android in European Commission antitrust case – November 10, 2016
EU alleges Google skews search results to boost its own products and services – July 14, 2016
EU charges Google rigs global market for Android mobile apps – April 20, 2016
The Android bubble bursts as Europeans flock to Apple’s iPhone – September 2, 2015
Android loss continues in Europe as 27% of smartphone users dump Android for Apple iPhone – September 2, 2015
Android fanboy actually uses an iPhone for 2 months, dumps Android phone – August 11, 2015
Apple iPhone sees highest switching rate from Android ever recorded – August 10, 2015
Nomura ups Apple to ‘Buy’ on strong iPhone growth, increasing Android switchers – July 31, 2015
Significant Android to iPhone switching weakens market for Samsung Galaxy S6 – March 24, 2015
Analyst: Android switchers fueling iPhone growth; Android users even more interested in Apple Watch than iOS users – March 23, 2015
Over 85% of new iPhone sales are switchers, mostly from Android – January 30, 2015
Google’s Android: The Fisher Price of smartphones, training wheels for Apple’s iPhone – May 2, 201

23 Comments

  1. As long as the consumer has a legitimate choice, which in all cases cited in story they do, there is no legal call for anti-trust, in my opinion. Don’t like Google? Use DuckDuckGo. Don’t like Facebook? Use Twitter or MySpace or a jillion other social media outlets. Don’t like Amazon? Then don’t effin’ buy from them, use a jillion other online stores. Don’t like Apple? Then buy a Microsoft product.

    This is horseshit.

    1. I agree with you on this point.

      The problem with monopoly in the online world is with Landline Broadband Access. The overwhelming majority of Americans only have one choice for landline broadband – wireless is not truly a competitor as it is severely limited with small data caps. The large landline ISPs have largely been reluctant to build out their networks in the territory of others unless is is population dense and of fairly high income, leaving countless millions of Americans with poor quality, high cost broadband at home or at work with no good second option.

      The number one priority of government regarding the internet should be to partner with technology companies, utilities and existing ISPs to create to the maximum extent possible a competitive market for broadband to as much of the country as possible and to regulate it in areas that will always be a monopoly to prevent price gouging by the incumbent. Fair access to as much of the country as is possible should be the goal.

  2. Being a monopoly is not, in and of itself, illegal. If the monopolistic company uses its position to put competitors out of business, and thus removes consumer choice, that could be a problem. Google may be evil, but are they using their market dominance to eliminate consumer choice? Same for Facebook. Apple is not a monopoly, so it’s an irrelevant question. If anyone of these companies is behaving in a predatory manner to crush competition, it would be Amazon.

    I can’t believe it. I agree with 75% of what botvinnik said!

  3. Google does not have the market power of the AT&T Bell system monopoly.

    Back in the day, in most of America your choice for telephone services were the local Bell System operating company- there was no competition for service. You could not own your own equipment and had to lease/rent your phone from them. All the equipment was made by Western Electric- a wholly owned subsidiary of AT&T. You had little to no choice as to a plan- one size was supposed to fit all. Commercial businesses like Radio and TV networks had to pay AT&T to distribute their content to local OTA affiliate TV stations. Ma Bell was a vertical and horizontal monopoly.

    That does not align with Google’s place in the market. Nobody makes you use Google’s search engine, their Android or Chrome Operating systems, online apps like a Google Earth or Docs, social media like Google +, or Google Fiber in the areas where they offer ISP service. They are not the only data miner, either.

    If Google was the only ISP, the only OS maker, the only hardware supplier and the only search engine that argument would hold water. We all know that it simply does not.

    The same is true of Amazon. I know plenty of people who have never bought anything from Amazon and they seem to have not suffered as a consequence.

    Facebook is a totally voluntary social media network that is a plague upon the land. It is also a voluntary service.

    Apple is not the dominant force in any market excepting sold- not rental- music. Android outsells the iPhone and iPad, Windows outsells the Macintosh, the other software, hardware and services they provide are not dominant in the market. Apple only dominates in mindshare, media attention and share of the high end phone market.

    We have anti-trust laws on the books for a good reason but they should be exercised with caution. The companies mentioned, in concert with others, have provided a platform for massive economic growth that supports many jobs here and around the world. They have seriously disrupted the previous paradigm and promise to continue that trend for some time. Each of them has adequate competition- excepting Facebook which is the most disposable of the companies mentioned. Each- except Facebook- contribute to our society and economy.

    The last thing we need are for-gooders who think that dictates from a government could organize and coordinate the online computing and communications revolution better than a competitive mandate open market. There are real concerns regarding local monopolies among wired ISPs- that would be AT&T, Comcast, Verizon, Comcast (xFinity), Charter (Spectrum), CenturyLink, Cox and others. Most Americans do not have a competitive ISP market for landline broadband access and those companies are actively seeking to suppress community broadband or the expansion of public utilities into ISPs.

    Once you get to the internet you are largely free to choose in a competitive market. How you get to the internet at home or at your business is mostly a local/regional monopoly, which is a real problem at the root of regulating ISPs like utilities.

    1. “Google does not have the market power of the AT&T Bell system monopoly.”

      That statement should read: “Google does not have the market power {that} the AT&T Bell system monopoly {used to have}.”

      I lived (and profited from) the breakup of ATT’s vertical/horizontal monopoly (which it was abusing). The closest thing we have to an abusive monopoly today is Amazon (which denies potential competitors the oxygen required to compete, with its predatory pricing) and your local cable operator (which, by law, is granted exclusive operating territories), and the health industry that operates without competition through a host of rules, regulations and laws restricting operation to incumbents.

      1. Amazon is not using predatory pricing. Wal-Mart, however was built on predatory pricing as was the Standard Oil Trust.

        Instead of building from cities out, Wal-Mart opened in small towns and sucked the life out of local business, then raised the prices to subsidize the next market. Then they moved into edge cities and then the large cities. They started in Arkansas, expanded into Missouri, Texas and Oklahoma, then the rest of the South. Later they went nationwide.
        One of my College age summer jobs was working at a K-Mart and Wal-Mart was selling stuff below cost. I worked for Melville Corporation despite being in K-Mart and we supplied the same shoes to Wal-Mart, K-Mart and others. The local Wal-Mart was price checking us daily and selling below the supply cost. We knew what the cost was as we supplied them.
        This is not what Amazon has done or is doing. Amazon sells goods at competitive prices, does not fuck around if you have a problem and exchanges or refunds your money without a headache. Why should I pay more at Worst Buy?

    1. Amazon is opening Brick & Mortar Stores because the old Brick And Mortar stores lobbied to impose taxes on Amazon’s sales. They should have been more careful of what they asked for.

      Amazon is preparing to kick Kroger (who does business under many different names), Wal-Mart (who sells 1/4 of the groceries in the US) right in the nuts. The high end (Whole Foods, The Fresh Market, Sprouts, Trader Joe’s, etc) has high margins (15% is not uncommon) while the rest toil along on 1-2% margins. Expect Amazon to lower Whole Foods prices a little to scrape off much of the other companies customers while leaving the mass market and thin margins alone.

      Think Apple Store footprint for Groceries- high income zip codes and high profit margins. For Kroger, Safeway and Wal Mart think Boost Mobile- low income BOGO Android phones.

      Amazon has brought market competition via online to every zip code in America where many in small towns and remote areas paid high prices for very limited selections. They are a benefit to the economy and are facing the others to up their game.

      1. Amazon doesn’t price its goods out of the goodness of its heart. Bezos’ strategy is to grow Amazon’s infrastructure before competing firms can respond in kind, while simultaneously denying competitors required cash flow through predatory pricing that results in little to no profit for Amazon while the infrastructure is built. It is genius because Bezos recognized government regulators are always slow in recognizing new trends, and would completely miss Amazon’s antitrust violations until after Amazon’s dominance was firmly established.

        1. Never said they were altruistic. Amazon is a chunk of my portfolio as is Apple and Tesla.

          Fortunately I bought my shares when all were more reasonably priced. I stopped buying Apple shares shortly after they crossed the $300/share threshold. At about $700 they split and have since increased almost 50% since the 7-1 split.

          Amazon is still in it’s fast growth phase while I see Apple as largely a company transitioning to a mature company. 20 years after Steve Jobs’ second act began, they have barely broadened their base. 20 years ago it was all Mac and today it is almost all iPhone. Tim Cook is putting his chips on services like any of a huge number of companies and that is a business Apple has never been best in class in. Cook is an iterator- not an innovator and that is the biggest danger facing Apple.

          Amazon still has it’s founder and he is as driven as Jobs was. Over time Amazon will be a larger company than Apple.

          1. By your own admission, your perspective is a tad biased, then. You have a personal investment that doesn’t necessarily align with an ethical conversation about any of this (and believe it or not, I think that’s ok, you do what you gotta do). For the record, I don’t own any of these stocks, not even Apple. though I do wish I had gotten in way back when it was less than $40 a share. C’est la vie. This type of monopolization, though, is just not healthy for an economy or a society long term, in my opinion.

          2. “20 years after Steve Jobs’ second act began, they have barely broadened their base.”

            During FY1998 Apple sold 3,996,000 Mac computers, accounting for 90+% of its revenue. Assuming a 5 year life expectancy for Mac computers, Apple’s base of users in 1997, at best, was approximately 19 Million.

            Today, Apple’s user base is about 700,000,000 (assuming product overlaps).

            The rest of your argument is just as flawed.

  4. Good, take, I agree: Apple shouldn’t be on the list. They don’t compete in all of the same areas, and aren’t even close to being a monopoly in those that they do.

    As for the rest? Yes, I do think they should be broken up and regulated. Antitrust law seemed to disappear into thin air around the dawn of web 2.0. It isn’t necessarily that others have struggled to keep up with them that’s the issue, it’s more that the level of total control they are achieving would make competition very nearly impossible. This wouldn’t be the first or even second or third time we have gone through a cycle like this in our history. I suspect regulation of some kind, to some extent, is inevitable.

    I’m not surprised there isn’t more familiarity with the concept of antitrust due to the fact that it hasn’t been very publicly enforced or discussed in America since the Microsoft debacle. Other countries are setting a precedent that will be difficult to ignore forever, though.

    1. Anti-trust law didn’t disappear. By the very nature of the accessibility provided by the Internet, the law as written is made less applicable as a ‘true’ monopoly of having no competition available for the consumer is not easily created.

  5. Claiming that Google is a monopoly is ridiculous. Are we still forgetting about MICROSOFT with Bing? Bing has a 20+% market share that is growing. People like this editor just want to hammer Google because they created Android. Folks like this conveniently forget that before Android, Google and Apple were best friends, with Microsoft their common enemy. Which is why Google created Android in the first place … to keep Microsoft from using mobile to run them out of business.

    You have a slightly better case against Amazon, but even there alternatives such as Wal-Mart and eBay exists. Wal-Mart has both an online AND a physical presence. Meanwhile eBay is entirely online.

    Facebook is nowhere near a monopoly as there are tons of social networking sites, especially if you include video sharing sites like YouTube as social sites. (By the way, for the folks who claim that the anti-trust regulators never touch Google … it was them who prevented Google from buying Twitch to add to YouTube. Google wanted to buy, Twitch wanted to sell, the regulators blocked them.)

    It is amazing. Wanting the government to hammer Google and Amazon is just conceding that your own favorite company Apple can’t compete with them in the marketplace. Which is dumb because Apple doesn’t compete directly with Google or Amazon anyway, unless you want to count the few smartphones, TV boxes and tablets that those companies actually sell, and a tad bit of overlap in areas like e-books, movie sales/rentals, music etc.

  6. A) COMPETITION is the father of innovation. As long as there is competition in the marketplace: NO! You don’t break up creative companies, you blithering idiot. You encourage FURTHER creative companies.

    B) This guy is clearly oblivious of exactly why the 2007 worldwide ‘Great Recession’ happened.

    HINT: Banks and insurance companies Too Big To Exist. Break-Them-Up.

    C) Having your head stuck in the antiquated, delusional, crooked and self-destructive music biznizz provides NO insight into how healthy, progressive, seriously capitalist companies work. Go back and figure out how the technology industry works. And…

    D) Corporatocracy in any form is destructive to democracy. So talk about how certain corporations and wealthy interests lobby, manipulate and mandate the actions of our US government, as well as other world governments. I dare you to open your eyes and figure this out.

    Google, Facebook, Amazon and Apple are the problem? NO they’re not. But they DO require competition. Return to A above…

  7. FB and Google need to be broken up under the anti-trust laws as monopolies. They are far larger and more powerful than AT&T was when it was broken up.
    get yah head OUT UR ASS.

    1. Unlike AT&T before being broke up, Google and FB have tons of competitors easily accessible to consumers. It will be difficult if not impossible to break up either under the claim of ‘monopoly’.

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