Does America Have a Technology Platform Monopoly Problem?

Last week, I wrote a post titled, What Can an Overhyped Silicon Valley Juice Company Tell Us About the U.S. Economy. Here’s how I ended the piece:

Finally, and perhaps most concerning, look at a couple of the entities that helped fund Juciero to the tune of $120 million: Kleiner Perkins Caufield & Byers and Alphabet Inc. (the parent company of Google). These are large, sophisticated players and they bought into this thing. From what I can tell, they were mesmerized by the fact the machine looked like and iPhone, connects to the internet, and was headquartered in San Francisco. Either that, or they knew the whole thing was a marketing scheme designed to trick morons into spending an enormous sum of money for the right to buy expensive juice packets that could probably be emptied just fine using a $20 machine.

Neither of the above conclusions is comforting. Either high-profile VCs were tricked by this ridiculous product, or they willingly went along with a what appears to be a sleazy scheme. Unfortunately, the bottom-line here seems to be that Silicon Valley is rapidly running out of ideas. That, or perhaps something far more perverse and systemic might be going on.

Tomorrow’s post will attempt to address the above question, but for now it’s safe to say that this Juicero episode bodes very poorly for the one area of the U.S. that had heretofore been one of the last remaining hubs of innovation.

If this is the state of Silicon Valley, the American economy is in even worse shape than I thought.

Today’s post should be seen as the promised followup to the piece above, and will focus on the related question increasingly pondered by a wide variety of people as relates to America’s modern day technology platform monopolies, specifically: Google, Facebook and Amazon.

Matt Stoller is a policy thinker currently focused on the concepts of monopoly and competition, something which he believes is an under appreciated factor in the current sluggish, rent-seeking orientated U.S. economy. I share many of his concerns and find his work extremely useful and timely.

In that regard, I want to highlight some excerpts from a recent post he wrote on the topic, titled, The Evidence is Piling Up — Silicon Valley is Being Destroyed.

From Business Insider:

$120 million in venture funding from Google Ventures and Kleiner Perkins, for a juicer? And the founder, Doug Evans, calling himself himself Steve Jobs “in his pursuit of juicing perfection?” And how is Theranos’s Elizabeth Holmes walking around freely?

These stories are embarrassing, yes. But there’s something deeper going on here. Silicon Valley, an international treasure that birthed the technology of our age, is being destroyed.

Monopolies are now so powerful that they dictate the roll-out of new technology, and the only things left to invest in are the scraps that fall off the table.

It’s not that Juicero and Theranos that are the problem. Mistakes — even really big, stupid ones — happen.

It’s that there is increasingly less good stuff to offset the bad. Pets.com was embarrassing in 2000, but that was also when Google was getting going. Today it’s all scraps.

When platform monopolies dictate the roll-out of technology, there is less and less innovation, fewer places to invest, less to invent. Eventually, the rhetoric of innovation turns into DISRUPT, a quickly canceled show on MSNBC, and Juicero, a Google-backed punchline.

This moment of stagnating innovation and productivity is happening because Silicon Valley has turned its back on its most important political friend: antitrust. Instead, it’s embraced what it should understand as the enemy of innovation: monopoly…

There hasn’t been a Sherman Act Section 2 anti-monopolization case for 15 years. And the anti-merger Clayton Act is not being enforced. Neither Bush, nor Obama, nor Trump (so far), has seen fit to stop the monopolists from buying their way into dominance and blocking innovation. 

Take Google.

Yes, the company created an amazing search engine over fifteen years ago. Since then, the company bought YouTube, Doubleclick, Maps, and Admob; it buys a company a week at this point. And it often shuts down products that don’t reach 100M+ users, while investing in luxury juicing machines. Surely Google is creating cool technology. But is that technology really being deployed? Or is it locked away, as patents were in AT&T’s 1956 vault before the government stepped in?

What once were upstarts and innovators are now enthroned. For instance, the iPhone is ten years old. Innovation means waiting to see if Apple will offer a bigger screen.

Its scientists and engineers change the world. We have such amazing technology, and such big problems. But our liberty to address those problems in the commercial world must be protected by a democracy in the form of antitrust rules and suits, or Silicon Valley will die. 

Is that what Silicon Valley scientists and business leaders really want? To invest in and produce subpar juicers while everything cool waits on Jeff Bezos’s whim? Is that what they dreamed when they were young? Is that why they admired astronauts and entrepreneurs? Was their goal really to create “anti-competitive juice packet lock-in”?

That is where a lack of democracy has brought us, and Silicon Valley.

It is time for leaders in Silicon Valley to start demanding from our government the birthright of every American, which is an open market for commerce, innovation, and personal liberty.

I agree that innovation seems to be getting increasingly bland, and I think Matt makes an interesting case that these technology companies have become near monopolies.

To put some meat on the bone as far as market share is concerned, here are a few figures from a recent New York Times op-ed:

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.

They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising, Facebook (and its subsidiaries Instagram, WhatsApp and Messenger) owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. In classic economic terms, all three are monopolies.

I’m glad this issue is being discussed, because I do think the dominance of these firms in their specific niches presents a threat not just to economic competition, but liberty and freedom generally speaking. After all, the government itself doesn’t need to censor free speech if it can just lean on powerful companies with platform monopolies to do the dirty work for it.

The stifling of innovation around us also perfectly highlights why Bitcoin has captured the hearts and minds of so many people worldwide, particularly the best and brightest from the technology field. Thanks to its open source nature and decentralized structure, Bitcoin allows for permissionless innovation in an area that has always been most prone to excessive regulation and monopoly, value transfer. As such it has already changed the world in incredible ways.

For me, the overall lesson here is that innovation ultimately finds a way, but why do we have to make it so incredibly difficult?

If you enjoyed this post, and want to contribute to genuine, independent media, consider visiting our Support Page.

In Liberty,
Michael Krieger

Like this post?
Donate bitcoins: 35DBUbbAQHTqbDaAc5mAaN6BqwA2AxuE7G


Follow me on Twitter.

9 thoughts on “Does America Have a Technology Platform Monopoly Problem?”

  1. Maybe innovation is slowing because Siliocn Valley is running out of ideas. SciFi has always provide the seeds for technology. So where do we stand?

    The smart phones has been anticipated for over 50 years, and I don’t see it improving much more in the future.

    We don’t have flying cars (or even a real hoverboard), but that will probably not arrive before the fully automonous drivers required to coordinate in 3D space (note that airplanes travel in much mores sparsely spaced environments). The largest contribution in this field will likely be the energy/resource savings as people move away from personally-owned vehicles as their convenience benefits shrink (we are already seeing this as Millenials don’t even bother getting driving licenses while Baby Boomers continue to be the largest new-car-purchasing demographic for 30 years, even as they age and drive less).

    Of course weapons will continue to improve, and we’ll see the transition from kinetic weapons powered by chemical reactions (ie, gun powder) to kinetic weapons powered by electrical energy (ie, rail guns) and then to other forms of pure energy weapons (the military already has deadly acoustic weapons and lasers). We’ll likely see advances in defensive energy counter-measures, too (force fields).

    The new food (ie, a cheap energy rich pill, or perhaps a near-instant energy-to-food device such as Star Trek’s food replicator) does not seem to be going anywhere. This is unfortuante, because it would be a huge benefit to society.

    Medicine is evolving, mainly in the fields of personalized genetic-based medicine (which has soem downsides…) as well as man-machine interfaces. Robotics are enhancing movement, but once chip-power is used to enhance intelligence integrally (as opposed to througha separate smart phone), that will be a new era.

    Now you may reaize that all of these areas have one thing that is pushing them forward: improvements in processing power and the push towards artificial intelligence. Of course, Sci Fi movies have a lot to say about this field as well, but they very rarely end well…

    Think about it: how did humans come to dominate the earth? Why would a 10x more intelligent entiity not upset this status-quo?

    “John Hammond: I don’t think you’re giving us our due credit. Our scientists have done things which nobody’s ever done before…
    Dr. Ian Malcolm: Yeah, yeah, but your scientists were so preoccupied with whether or not they could that they didn’t stop to think if they should. ”
    – from “Jurassic Park”

    Reply
  2. there is some amount of truth in this but I think it will fall on deaf ears in silicon valley.

    plus norcal , stanford berkley and the cadres of mit/harvard/yale engineers there with startups are largely funded and supported by darpa and other military and public investment sources.

    there is no such real thing as ‘private sector’ as an island. noam chomsky bluntly points this out. the reality is that any major agglomoration of human behavior at scale WILL be encompassed on some level with government support.

    the tech industry as a whole , despite its wild west facade, is very much a creature of the state as well as the private sector.

    this cannot be more clearly evidenced by such things as amazon’s outstandingly large contracts with the u.s. government, google and facebooks open integration with dhs and nsa, oracle’s and cisco systems industrial internet contracts with usg.

    at every level of institutional technology advancment , universities, and medium to large size tech companies—–you can find government involved in supporting it in one way or another.

    this is the nature of human behavior at scale.

    i think the juicero investment is an apparently foolish investment, but it’s not really evidence of anything more sinister than the apparent stupidity of supposedly sophisticated investors with lots of money.

    a bad investment , big or small, still relies on sophisticated analysis and independent critical examination by multiple dispassionate investors.

    it certainly seems that large institutions have a higher chance of being filled with low turnover middle level managerial types with less capacity for independent thinking. and even google and other companies are subject to the big company groupthink effect.

    if there is an argument for breaking up big companies from within, it is to keep a cluster of separated lean and agile groups competing with themselves to create the best possible products and thus diversify out the risk of ruin.

    this strategy is vociferfously embraced by the development policies of darpa. they are proud and loud about their quick and done small team focus. and they split their investments and attention across an array of r&d tech sectors.

    as for the likelihood of anti-trust behavior. we all know it is not forthcoming because both big parties operate for the same endgame outcome regardless of their public facing stance.

    Obama himself put a man in charge of the FCC who was a corporate stooge. the appearance of ‘liberal’ policy implementation was maintained for only so long enough to butter up the public until net neutrality could be revoked by his succesor. this was all very much part of the democrat/republican good cop bad cop plan.

    and you are going to see a lot more of the bad cop now under the current corrupt administration. the more things change..

    Reply
  3. My first and probably last comment (and the first and probably last in YEARS), but I just had to this time around…

    I was until quite recently a founder in a technical startup. Said startup has a demonstrably valuable, completed, and sellable high quality product and Intellectual Property (two issued US Patents). Government and enterprise prospects are literally lining up to buy once they convinced themselves with their own eyes that the product in fact does what we claim. Which it does.

    So the company has IP, proven ability to execute, a proven team, high class suppliers, and best-practices prospects and customers. I can send you actual info privately if you want proof.

    Yet.

    Our CEO, who spends virtually all of his time fundraising, has had no success attracting venture funds.

    Why might this be?

    I am sure that the reasons you and other commenters have stated may play a part, but I’d also suggest some are guessing, restating the popular theories and pet peeves, or “talking their book.”

    In MY opinion, having watched this up close and personal for about four years, and a decade or two prior from my own startups is that the whole VC system is a popularity contest – via piling on the latest craze, “investing” in their Stanford University roommates, investing in their country-mates, and/or injecting enough buzz that dumber investors will cash them out before the whole thing collapses

    The ones that do fail, such as the Jobs wannabes, comprehend the “publicity / hindmost” play but are clueless on how to bring it off. The black sweater was not the company.

    To put it all more concisely, we don’t have a technology monopoly problem, we have a surfeit of chiseling and idiocy and calling on the government to change matters will most likely only make matters worse.

    Reply
    • I completely agree with this. I myself am a CEO of a startup and spend my time doing fundraising. Despite having a great product VC are not attracted to it so instead now focused on getting sales directly while self fund the project. It is a popularity contest but I have to make a point the monopoly issue is a disease. It is not just on the platform but also in the affiliated VC. 0 percent to well connected hence only connected people become VC. If we cut off the finance monopoly, that will indeed empower innovation as most people like you and me can access the funds at 0 interest straight from the decentralized banks to get our projects moving much faster. The problem is systemic, unfortunately innovation and entrepreneurship have left the Murika to Asia. Due to the above situation, I found myself ex-patting to Asia hawking our startup products here. If you guys want to succeed you may need to do what I am doing now.

    • “I” told our CEO that if he couldn’t raise funds he should cut expenses and bootstrap via sales and receivables financing. To “put my money where my mouth was” I stopped billing them (thus “I left”).
      But nobody listens to me.

  4. No amount of innovation in electronic geegaws will fix our fundamental problem; we have reached the limits of growth, not just in N. America but on the planet. Do the arithmetic, infinite growth on a finite planet equals the empty set, it’s a mathematical and physical impossibility. Don’t say this out loud anywhere though as our system is based on endless growth, if enough people suddenly get it, the bubble pops. Forever. Also it frightens people and makes them angry.

    The real creative innovation will start as people figure out how to live with less and less rather than more and more.

    Reply
  5. As I read the article I could not help but think it was describing the dinosaurs.
    Huge ambling monstrosities that dominated the earth for a bit. Highly specialized but unable to adapt. When the world changed, maybe only a little, they perished and were replaced with smaller more adaptive critters.
    Sound familiar? Maybe we are watching a cycle play out. Maybe that same cycle plays out over and over. Exxon, Citi, GE. Rome, England, United States?

    Reply
  6. This is all moot as blockchain technologies beyond bitcoin are going to upend all of these monopoloies. IP is soon going to be a thing of the past. Data mining? See ya later. Hell, even government’s are about to crash into a smoking pile of flaming rubbish. Blockchain tech is ripping the world power structure apart at the seams and “we the people” are going to be better off for it.

    Reply

Leave a Reply