Ever since humans discovered how to make and use fire along with stone and wood tools it has been a race to the bottom and extinction by 'merging' technology and science over thousands of years. Right?
Nonsense.
Every scientific and technological advance has human individual and societal costs and benefits.
1
Capitalism is the worst matryoshka doll ever crafted.
3
Yes . And then they divide again into a multitude of fake fiduciaries in Ireland where theses huge American corporations are all fiscally domiciliated.
That is how then can cheat and pay no taxes in Europe.
They ahve an Army of American lawyers working in Europe from the US to organize the theft.
3
An example for people that don’t think this is a problem: Boeing bought McDonnell Douglas who was a direct competitor. Instead of three competing aircraft designs to choose from there are only two. Douglas built airplanes that were as good and as problematic as every one else. Boeing bought another competitor for the single aisle market last year, Embrarer. The Brazilians were creeping into 737 territory with their newer designs. I assure you that was why Boeing bought them. Bombardier has just sold their airliner division to the Chinese.
Airbus is basically a nationalized consortium, without them there would be only one place to buy a airliner, Boeing.
1
Monopoly creating buys of other companies has happened in aviation, there used to be many more airlines to choose from, now there are basically four. In military aerospace there were numerous players, now you have Boeing, Northrup and little by comparison Lockheed.
No company should be allowed to buy a company to shut down the competition.
1
As one can easily see that one of the major impacts on the destruction of good paying, dependable jobs has been the boom in mergers, and that this boom has occurred since Bill Clinton took office. Great for Corporate America, Wall St. and the investor class; not great for most workers. This is one of the few "bi-partisan" efforts we've had in the past 30 years, but not cause for celebration.
But Americans need to know who has been behind their backward economic side, despite the several "recoveries" that occurred during this period. If you vote for Republicans, or "moderate" Democrats, and you're not in the upper 10%, you're giving them the knife to cut your throat. Support Sanders, or Warren who have the right prescription for returning the middle and working class to their former prosperity enjoyed from FDR up until Reagan.
Lack of competition leads to lack of decent jobs.
4
In the context of current politics, much of the longing on the left for some sort of socialism is a direct result of the failure of the federal government to effectively police corporate monopoly behavior. If the champions of capitalism want to halt this trend, at a minimum a revival of effective antitrust oversight will be required.
So why are we in this position? Political stalemate is one obvious reason, abetted by the traditional alliance between big corporations and the Republican Party. The political environment has not supported antitrust enforcement.
A second reason is that the archaic legal framework seems inadequate to meet the antitrust regulatory challenges of the internet age. This deficiency seems to exist across the board -- intellectual property protection and commercialization of personal data being other areas needing new regulatory approaches. It is time for a complete system overhaul. Are we capable of forming the political consensus required to address these difficult issues?
A third cause is the end of the Cold War. American capitalism saw itself as competing with Soviet communism for the hearts and minds of the Third World. This challenge created a psychological barrier for corporations against indulging in egregiously hostile and manipulative public behavior that could be cited by communists as evidence of capitalism's inherent flaws. In the 30 years since the Soviet collapse we have experienced the raw greed unleashed by that restraint's removal.
2
Americans are ignorant about how their economy is working.
All these major corporations are fiscally registered in Europe and cheat to pay zero taxes there while invading the markets and destroying the European initiatives and economies.
Americans are blind . And also accomplices of the abuse onto European workers and tax payers.
3
Your comment is full of contradictions .
The cold war was a catastrophe for the third world.
Just to point one historical error of analysis .
Data for regulatory ineptitude.
Fascism.
Anti-trust laws have always been followed or ignored according to the whims of the current government. When Ticketron and Ticketmaster were the only two electronic ticket selling services there was no anti-trust issue when Ticketmaster bought Ticketron leaving only one company. But, by the time the government wastes the next 20 years investigating Google and Amazon, as they did in the past with IBM and Microsoft, other companies will come along to challenge them and it will be a non-issue but a huge waste of money.
1
I'd say it's misleading to call these "mergers". Merging implies approximate equals combining to produce a new company, as in the RJR-Nabisco or Morgan-Chase mergers. These are scooping up of innovative small companies by a giant that remains the same company. It's a very different phenomenon, although the same laws apply.
1
Until and unless Congress passes meaningful campaign finance laws and restrictions on post government service lobbying, this kind of monopolistic behavior will continue to percolate. It is doubtful that regulators will do anything significant to rein it in since members of congress and most presidential candidates largely are beneficiaries of this continuous flow of campaign $$$. The tech masters of the universe like their wall street brethren will continue to flourish while the rest of us face the costs and consequences of their actions and government inaction.
1
Since our Antitrust laws and the regulators allowed these huge acquisitions to go through for such a long time, one would question the effectiveness of those regulations and the competence, honesty or conflict of interest on the part of the regulating machinery.
Now, since those companies have grown into huge behemoths with more and more power, influence and control on our lives, may be it is time to look at them in a different light and see whether it is in our best interest to break them up so that they do not stifle future competition.
Don't screw with GOOGLE! It makes my life so much easier. No more lookinig up addresses, calling ahead for directions and then remembering all of it. It won't be long till I can say "Okay Google beam me up".
2
Isn't this the Silicon Valley dream, to come up with a, not very revolutionary app that presents a potential nuisance to the giants, get bought out for hundreds of millions, and then retire at age thirty with the misconception you're a super genius?
1
Hope my post includes paragraphs this time.
Was once accepted/centrist, that "federal agencies are supposed to block any merger whose effect will "lessen competition, or ... create a monopoly.”
Also consider the far-reaching effects of the Telecommunications Act of 1996, by Clinton and GOP. It repealed the anti-monopoly laws for media, that had long blocked any 1 media company from owning too many news outlets in a given area.
Wikipedia:
“The 1996 Telecommunications Act was designed to allow fewer, but larger corporations, to operate more media enterprises in a sector (such as Clear Channel's dominance in radio), and to expand across media sectors (through relaxation of cross-ownership rules), thus enabling massive and historic consolidation of media.
These changes amounted to a near-total rollback of New Deal market regulation.”
We need discussion of how this allowed the expansion of the FOX News monopoly to nation -wide influence, shaping voter views, and creating the Trump voter base. Historic is the word.
The FOX monopoly now blocks efforts to rebalance our democracy, operating as the state media of the GOP and Trump. It affects the 2020 election, the impeachment debate, and government regulations of social media.
Bill Clinton followed GOP Reagan by announcing that 'the era of big government is over'. Our protections have been progressively weakened. And attempts to restore tham are labeled big government interference in our 'Freedoms'. Quite a coup.
1
As an economist and former employee of the FTC, Tim Wu should be ashamed of himself for some of his writings that might casually be called scholarship.
For example, in trying to stir up fear of conglomerate mergers, he should be honest with his readers that prior agency efforts to establish the effects of conglomerate mergers as a violation cognizable under US antitrust laws were laughed out of the courts, along with efforts block mergers among "potential competitors."
He should also mention that years of efforts to find some generalizable standard for evaluating vertical mergers under the antitrust laws have repeatedly failed. There has been no official vertical merger guidance since 1992. Moreover, virtually every effort to litigate a vertical merger challenge, the most recent being the AT&T case, has resulted in humiliating defeat for the federal enforcement agencies.
And, as he points out, the few horizontal mergers undertaken by big tech, have been thoroughly reviewed and approved, mostly because the economic markets in which they occur are broader than the offerings of the merging parties and subject to dynamic competition.
Before we destroy successful and profitable American companies under the popular but ridiculous notion that big is bad, let's remember what people are actually mad about. People signed away their rights to data privacy in the quest to get access to free services these companies offered. That is not an antitrust problem.
7
It’s a bait-and-switch problems, enabled by monopoly, that gets people mad.
1
AR Clayboy
"As a non-economist and non-former employee of the FTC", I suggest this entire posting is shameful.
In my lifetime as a member of the human race and native American for over 70 years, it has never been proven to me that a bigger company is a better one. Their product might be sold more cheaply, but from ANY other viewpoint, much has been lost.
Further, in my opinion as a sentient being, the profits generated from such "big" corporations is completely outrageous and insentient - no exceptions.
The 'fact' that government has been unable to litigate against these mergers and acquisitions does not mean that big companies are OK, or that more mergers a company acquires are better. It merely represents a failure on the part of our elected representatives to pass laws that could stop this rape and pillage. Why so? We all know: the corporations have been paying the 'politicians' to write the laws which they know will fail miserably when litigation is required. The process is called campaign financing, bolstered recently by such outrages as the supreme court judgement in Citizen's United.
As for the last comment on data privacy: that issue was not the focus of this article. However, the gathering of customer information using the tools of digital technology with the primary goal of selling this information for profit to other for-profit companies for any reason should be illegal and unethical in any concept of a civil society.
4
PH...thanks. Our media needs to trace the causation. CitizensUnited---campaign finance-- monopolies---feed back from the resulting increased profits to increased donations to cooperative politicians---to the rationalizations for the whole process.
Much of the donation money pays for costly campaign ads on the media which profits from the system. Is that why we rarely read about effort to reverse Citizens United? Even though most voters and many politicians favor it? You'd think that'd be a big media topic.
1
The comparison to a referee is fallacious - world class companies assess the proby of a merger/acquisition being denied prior to starting the actual process of acquisition. They don't start unless they are pretty sure of the results.
Part deux - much sturm und drang but little substance - identify one acquisition that met the hurdle of competitive concerns - numbers of acquisitions [esp for one of the largest cap companies in the world] does not equal suppression of competition.
Part tres - specific examples? Local maps - Google is dominant? I would love to see the source for that - I simply don't believe it and the data I have seen from numerous markets studies don't support that claim - where is the reference?
Regardless - the core thesis is faulty - many acquisitions independent of size - do not automatically equal competitive concerns.
1
Just figuring this out now? During my three decades of living on the SF Peninsula (San Carlos), the game was either to create something (aka software) that Google or Oracle might be interested in or create something that wanted to buy out and table.
2
Mergers are usually oligopolies that, by sheer size, corral the market with such a power that it won't
allow healthy competition to occur, hence, increase the inequalities, and making it difficult to keep innovation and reasonable costs for us consumers. This ought to be of concern to all of us. As to how this situation is applicable to "Big Tech", and what to do about it, may be easier said than done, but sensible regulation is of the essence, along with a healthy public supervision. Is this too much to ask?
1
This problem extends everywhere in our economy. For the last 20 years, Thermo Scientific has been on a consolidation binge which has had devastating consequences for small technology companies (especially biotech companies). It used to be that these small companies, lacking resources themselves, could utilize a network of small, innovative suppliers of research instruments, reagents, and supplies. Often, important creative leaps resulted from the assistance of these small vendors, and their innovative development of new products. Once Thermo bought them up, however, this innovation and support stopped, and half of the vendor's product line was typically eliminated. So companies that relied on this support for their own innovation now get the back of the hand, and actual threats if they object to their needs not being met. Thermo has been a malevolent force in R&D.
1
Facebook's acquisition of Instagram is the best example of "innovation" in tech over the last 10 years or so. The purchase was an obvious ploy to stop the growth of Instagram into an-all purpose social media platform that was becoming a clear threat to Facebook's dominance.
And so, what does Facebook do? It innovates, of course! It buys Instagram and folds it into Zuckerberg's pocket.
Fabulous innovation, don't you think? But it's OK, because it's all for the good of society, right?
1
For 32 years I worked for an Aluminum Company that had major anti-trust action way back in the 1920. It was broken up by the Justice Dept and it was required to sell off its foreign division which became ALCAN (Aluminium Co. of Canada). Even in the 1990 we were still worried about "new anti-trust action" and very careful about dealing with other aluminum companies lest we be charged with any form of price fixing. We were always on good behavior.
We need the fear of god like this in Big Tech, god being the Justice Dept.
11
These tech companies are vehicles for the exchange of information. Nobody understood how much value could be captured from the rest of the economy by this, but it's proved to be huge. There is no inherent value to society by allowing any of them to remain monopolies. Breaking them up requires only one step, a standard set of technical standards so that competitors products can replace other competitors products as consumers choose. Once those standards are in place, break them all up.
2
Without significant antitrust action from the septuagenarian technology experts that fill congress, we're doomed to a world of successful American companies leading the global tech industry. If we don't take action soon to stop Google and Facebook (and Amazon), how will upstarts like Alibaba, Tencent, TikTok, and WeChat grow into tomorrow's dominant players?
1
Mergers make the resultant companies more desirable to own. They take two or more successful players in any market and combine their relative share of sales while reducing redundant people, facilities, and operations. They also create zero new wealth and improve everyone's overall economic situation not at all. Mergers and acquisitions improve earnings and owner equity without growth.
With tech companies they lead to monopolies and the monopolies tend to function like trusts in driving away competitors and turning consumers into cash cows, renters, which destroys free market effects in businesses.
The good news is that by crushing competition and dominating markets, they offer great value for stock market traders.
I really like how the visualization works. It highlights a particular section when I'm reading it(desktop).
On an important note, this sort of monopoly should not run unchecked. I hope the discerning people of America bring someone who cares about these issues to power.
2
As a former tech journalist, I can say, without reservation. that the high-tech industry has been characterized by monopolies like this almost forever and it takes almost a generation to dislodge bad apps from bad platforms. Competitors with better technology have always been crushed by the likes of Microsoft and Oracle way before there were any social media platforms. Engineers would not go on record, yet they were clear about the fact that mediocre tech often won out. And that's why users have a terrible Word processor, say, instead of a better, "WordPerfect" one. Corporate buyers don't take the risks they need to, and so dinosaurs roam our desktops until there's some kind of asteroid--that is, a major shift occasioned by the users who demand it.
13
I wonder how many regulators go on to work at Google or Facebook. If you want to create a cut throat meritocracy, don't be surprised when the unwashed catch on.
1
Yes, it was once more accepted and centrist, that "federal agencies are supposed to block any merger whose effect “may be substantially to lessen competition, or to tend to create a monopoly.”
Also consider the far-reaching effects of the Telecommunications Act of 1996, by Clinton and GOP. It repealed the anti-monopoly laws for media, that had long blocked any 1 media company from owning too many news outlets in a given area.
Wikipedia:
“The 1996 Telecommunications Act was designed to allow fewer, but larger corporations, to operate more media enterprises in a sector (such as Clear Channel's dominance in radio), and to expand across media sectors (through relaxation of cross-ownership rules), thus enabling massive and historic consolidation of media.
These changes amounted to a near-total rollback of New Deal market regulation.”
We need discussion of how this allowed the expansion of the FOX News monopoly to nation -wide influence, shaping voter views, and creating the Trump voter base. Historic is the word.
The FOX monopoly now blocks efforts to rebalance our democracy, operating as the state media of the GOP and Trump. It affects the 2020 election, the impeachment debate, and government regulations of social media.
Bill Clinton followed GOP Reagan by announcing that 'the era of big government is over'. Our protections have been progressively weakened. And attempts to restore tham are labeled big government interference in our 'Freedoms'. Quite a coup.
1
Do you think the Obama Administration may have been playing the revolving door game with Big Tech? Are you accusing his administration of looking to feather their post-term nest with Big Tech jobs and cash? When it comes to Trump and the Energy sector, it gets called out as cronyism and corruption. So when it comes to Obama, what was it? Naivete, ignorance, or corruption? The Obama Administration let Big tech lobbyists take over the FCC with the net neutrality garbage, addressing a non-existent problem, even as the tech behemoths grew and ran amok on privacy and competition. Obama parachuted into Netflix and Spotify "production" deals, because we all know that's where his expertise lies, right? Even Hillary is trying to get big tech to pay her via a newly formed production company. Obama saw the $$$ in Big Tech and made sure he did right by them, and they are making sure to do right by him now. Sickening, but obvious to anyone paying attention.
So the argument is, essentially, a certain proportion of mergers and acquisitions simply must be monopolistic or illegally anti-competitive. So with 350, Google must have gotten away with something (largely ignoring the fact that all 350 have been reviewed and cleared by regulators). This is a shockingly weak thesis. It is the refuge of someone who cannot identify anti-competitive effects in any one case. I believe Stephen Colbert called it "truthiness." It seems wrong, so it must be wrong. And look! I have a complicated and confusing graph! In a world increasing driven by feeling without facts, I am disheartened that the law professor could not make a more sound legal argument. Anti-trust laws may need to be changed, but casting vague aspersions is beneath the author and this paper.
1
This business model was pioneered by Microsoft. They bought companies they considered threats to their business and killed them. Google at least lets them live.
Can we please include Amazon in this very helpful chart?
3
So we have the Anti-Merger Act of 1950.
Since Congress and the Executive agencies have allowed hundreds of anti-competitive mergers, it would seem that they are--at the least--accessories to crimes.
Someone, somewhere, speak now, or we are surely forever blinded to life in any real human world.
The underlying problem our country is facing is that a significant and growing portion of our working families are not living in dignity. The cause is the increasing price gouging of monopolies which has taken corporate earnings from 5% to 12% of GDP over the past 45 years. According to Joseph Stiglitz, we have now reached the point where 75-90% of all purchases are made from a few behemoth corporations. That 7% growth in corporate margins has come directly out of the pockets of working families who have seen total wages fall from 50% to 43% of GDP over the same period. That 7% represents a loss of purchasing power of a family with two full time workers of $20,000 per year, the difference between dignity and no dignity for tens of millions of workers.
Clearly we need to start vigorous enforcement of antitrust laws, restrict Wall Street from disguised leveraged buyouts and break up monopolies wherever feasible. In the mean time, monopolies should be hit with an excess profits tax, and motivated to increase worker pay.
1
Antitrust authorities worldwide, most notably in the US and the EU, should scrutinize future high tech mergers and acquisitions more carefully now that markets have become increasingly concentrated. We'll soon see how Google's acquisition of Looker and Facebook's integration are handled.
The acquisition of smaller companies, especially start ups or what you call nascent competitors is not an "evil" monopolistic business aim of the likes of Facebook and Google. Rather, it's an investment strategy of venture capitalists and angel investors and hedge funds which are looking for exit strategies for risk taking early investments. E.g. venture capitalist takes on debt to equity in WhatsApp early on and then at the right time is instrumental in lining up Facebook in an acquisition. BINGO! Cash out! Venture capitalist gets ROI! Moreover, when WhatsApp's founding team accepted the early investors terms, they knew the future financial rewards were far more than salary and benefits - indeed, what was the exit strategy? You can't just blame Facebook or Google. Or even the regulators or Congress. This is Wall Street In the 90s it was IPOs; But since the 2010s, it's acquisitions.
3
Those are the kinds of rationalizations would-be monopolies have always used.
And the gullible--as well as those who have a vested interest in the results of creating the monopoly--parrot them. Which are you?
Thank you. This should be obvious to anyone who doesn’t have an agenda. The acquired companies were clearly happy to be acquired. And the acquirers took the risk that the acquisition wouldn’t work out. But heaven forbid that pesky facts get in the way of the progressive “you didn’t build that” narrative.
1
Google Cloud dropped another $2.6B this week to acquire the data analytics startup Looker. I was on the conference call announcing the deal. The NYT reporter asked about antitrust issues, which Google Cloud chief Thomas Kurian brushed aside, saying they were buying analytics tools, "not data," and there are plenty of such tools. So, Kurian inferred, the deal was not anti-competitive. Still, the Big Boys mentioned in this article are snapping up data analytics startups left and right. If regulators are serious, and understand tech markets, they must examine this segment closely. No, Google isn't buying data with its Looker acquisition. But it certainly does help them and their customers plumb data and, eventually, further erode privacy.
15
I was about to post basically the same thing! It's clear to me that they and the other tech giants have known this was coming for a long time in the USA and at this point, it's almost as if it's a fire sale for the start ups to be gobbled up before the feds come!
1
What I wonder is how many of these so-called competitors actually built their companies, not to really compete, but as a sort of honey pot -- with an eye toward being acquired? To many, I believe, don't really want to grow and run a business, they want to get bought out and then retire with a massive nest egg.
8
bit of a side note, but the visualisation in not very intuitive. The clustering of roots (vaguely arranged chronologically?) doesn't seem like the best way to present the information.
25
I agree, Emily. It looks like the length should correspond to the number of companies acquired that year, but why use length instead of width here?
Also for the 2015-2016 branch, part of it is obscured by the larger branch going out to 2012-14.
At the end of the day, this is longitudinal data, right? Why use such a non-intuitive projection?
Yeah, they should have hired GOOGLE to do it. There REALLY GOOD visualizations.
Why do you think these acquisitions were approved by the government?
I think your article sticks to the facts and data of acquired companies, and definitely says that there is anti-competitive behavior occurring. But doesn't go so far as to investigate whether or not malevolence or incompetence is the root cause.
I really think moving into the mid-21st century, we need to start having a higher standard for Congressmen and Congresswomen where they *need* to understand technology and its applications. Or at least, I feel like I have very little Congressional representation that does.
I don't intend to be agist or discriminatory, but these are very serious, very important issues that affect every citizen, and they often go unnoticed and ignored for decades after the damage has been done. We need people in political positions that very well understand these issues, not someone who is given a document by a lobbyist and asked to promote it on the House floor.
14
Seems like the old crew running Washington was better suited to dealing with the likes of the "Robber Barons," "Seven Sisters" and "Ma Bell" than the new 'techies" who didn't fit the old template for monopolies.