Thread by @doctorow

My latest @locusmag column is "Vertically Challenged," an analysis of why and how to break up #BigTech, and the changing narratives of tech leaders that make these breakups likely.

locusmag.com/2022/03/cory-d… 1/

Sf has always trafficked in tales of supergenius tycoons - sometimes as heroes whose singular vision shines through our collective foolishness, and sometimes as supervillains whose great intellect allows them to subordinate whole nations to their self-interested plans. 2/

These narratives have been of enormous use to the tech leaders who conquered the tech landscape. At first, they styled themselves as Tony Stark-style superbeings whose wisdom was so beyond our ken that they could not be challenged. 3/

Then, as that narrative grew stale, they pivoted to styling themselves as evil supergeniuses whose empires emerged from their transhuman mental powers, who cannot be removed without risking the very firmament of our digital society. 4/

That's where the debate over tech has arrived at: the idea that we must preserve giants like Facebook and Google and Apple and Amazon to continue to derive the benefits they deliver, and that only the great geniuses at their helms are qualified to lead them. 5/

In this narrative, the best we can hope for is to create constitutional monarchies, in which we acknowledge the permanent divine right to rule of King Zuck, but drape him in golden chains anchored by regulatory aristocrats who keep him from getting too frisky. 6/

Or, to switch metaphors, these tech tycoons are styled as superpowerful extraterrestrials, irreplaceable, who must be tamed and directed by governments to serve as "national champions" who will represent our domestic interests by projecting power over the globe on our behalf. 7/

But science fiction is (as usual) way ahead of the tech narrative-generation machine. In sf, we've generally fallen out of love with the tycoon . 8/

Where these business titans appear, they are revealed to be bumbling sociopaths whose unique talent is in ignoring their consciences as they cheat, crush and loot their way to power. 9/

It's time to start thinking about the tech giants this way. It's time to recognize that the reason that the tech giants of yesteryear - DEC, Sun, Commodore, Silicon Graphics, etc - rose and fell is that we banned them from buying their way to eternal rule. 10/

The muscular antitrust that began its slow decline with Ronald Reagan (accelerating with every administration thereafter) prevented dominant firms from merging, acquiring, or spending their way to the top of the heap. 11/

Antitrust once blocked companies' below-cost predatory pricing to fend off rivals, horizontal mergers that increased industry concentration, and, importantly, *vertical* mergers that gobbled up the supply chain. 12/

Today, vertical mergers and vertical monopolies are the backbone of platform capitalism. Apple, Google, Amazon, Microsoft and others have created "two-sided marketplaces" that connect buyers and sellers, in which they *also participate as buyers and sellers*. 13/

That means that Microsoft can control the lion's share of the sale of games - and also compete with the games studios whose wares it sells. Apple can do the same for apps, and Google and Facebook can do it for ads (FB also wants to do it for VR). 14/

These companies argue that they can be fair referees in a contest where they own one of the teams, because they are so fair-minded that they would never call one for their own side unless they deserved it. 15/

It's an outrageous argument, like saying that a judge is so fair-minded that is doesn't matter if they preside over a case in which their mother is the plaintiff. 16/

To the extent that regulators recognize the fundamental unfairness of this arrangement, they have no idea what to do about it. The leading proposal is to ban "self-preferencing," forcing companies to serve the "best" results at the top of a search or in an ad slot. 17/

This is an un-administrable nightmare of a proposal. If Google serves a house link to a search for today's weather, how do you prove that another weather service is "better?" 18/

If Apple pushes Apple Music over rival music apps, how can you tell which music app is "best?" This is a policy that can only be successfully managed from deep inside Plato's Cave, where the objective truth of all things is revealed without ambiguity. 19/

There is another way, one with a track-record of success: #StructuralSeparation. That's a rule that bans platform operators and gatekeepers from owning companies that compete with the businesses they serve. 20/

For example, structural separation banned railroads from owning freight companies that competed with the freighters they relied upon; and it banned banks from owning businesses that competed with their own borrowers. 21/

In other words, just as we ban judges from hearing cases involving family members and lawyers from representing both sides and referees from judging games involving teams they own, we banned companies from structuring markets they participated in. 22/

You can be a platform, or a vendor on that platform, but not both.

We could do that again!

Now, the tech giants clearly saw this one coming. 23/

Take Google, which maintains the fiction that it actually a company called "Alphabet" that runs all of its business-units as standalone companies, practically inviting regulators to cut along the dotted lines Google drew for it. 24/

But a close look at Alphabet's structure shows that the *profitable* divisions are all grouped together under the "Google" banner, while the rest of the A-Z is just a bunch of weird money-losing skunkworks projects. 25/

This is such a transparent ruse - it's like a naughty kid saying, "OK, I did it, now punish me by taking away my delicious boiled liver and nutritious Brussels sprouts." Sorry kid, we're taking away your ice-cream. 26/

Some of these calls are easy to make: ban anyone who runs an app- or game-store from making apps or games that are sold in the store and ban Amazon from competing with the businesses that sell in its marketplace. 27/

But as the economist Ramsi Woodcock has argued to me, *some* vertical integration is part of every business. A company *could* outsource its receptionist, or sales-force, or customer service (many do). 28/

Does that mean that any company that *doesn't* contract for these services is guilty of maintaining a vertical monopoly? 29/

It's a very good argument, but I don't think the tech companies have the guts to make it. To do so would be to invite scrutiny into the contradiction of their own outsource/insource divisions. 30/

Apple apparently absolutely *must* maintain its own app store to maintain its high standards of safety and ethics, but for some mysterious reason it absolutely *can't* run its own factories, which would let it end forced labor and other sweatshop conditions. 31/

Facebook *must* own its own VR platform, but it *can't* run its own moderation shops, and instead must traumatize thousands of low-waged workers in the Pacific Rim by forcing them to confront child sexual abuse material, beheading videos and other horrors. 32/

Or Amazon, which has vertically integrated a publisher, warehouses audiobooks, house brands, cloud, and videos, but can't *possibly* deliver its parcels and must rely on layers of sub-contractors to do work that is dangerous, precarious, and pays less than minimum wage. 33/

The case of Amazon delivery is particularly illustrative here: as @LaurenKGurley writes in a brilliant @motherboard piece today, Amazon used the pandemic to create a vast subcontractor empire of delivery drivers:

vice.com/en/article/wxd… 34/

These "entrepreneurs" bore all the risk and expense of delivering our parcels within its ever-shrinking promised delivery windows: Then Amazon rugpulled these "independent companies," terminating its contracts with no notice or explanation. 35/

It demanded nondisclosure agreements that would prevent company owners from telling their drivers that their jobs would disappear in a matter of weeks. 36/

These companies took on all of Amazon's delivery risk - "accidents, injuries, van damage and upkeep" - and then cut "owners" loose, sending them into bankruptcy due to long-term leases on vans and parking, workplace injury liabilities, and bills for vans they had to buy. 37/

Despite the fact that businesses from time immemorial have maintained their own fleets and drivers, Amazon argues that it's literally impossible to operate these crucial business operations on its own. 38/

It is - but only because Amazon predates upon small business owners and drivers, suckering them into arrangements where they pick up the tab for Amazon's critical infrastructure while Amazon skims off the profits. 39/

Perhaps we need a doctrine of structural *integration*. If you repeatedly ruin lives and the environment by outsourcing a function and then acting all confused and sad maybe we should force you to insource that function. 40/

If you can't make an iPhone, deliver a parcel or serve an ad without cheating, polluting, exploiting or losing money, then maybe you don't really have a profitable business. Maybe you're not a supergenius. 41/

Maybe you're just another mediocre sociopath who's only talent is figuring out how to stick innocents with the bill for your toxic behavior. 42/

Image:
Anthony Quintano (modified)
commons.wikimedia.org/wiki/File:Mark…

CC BY 2.0:
creativecommons.org/licenses/by/2.…

Star Trek/Paramount (modified):
paramountplus.com/shows/star_tre… 43/

ETA - If you'd like an unrolled version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2022/03/08/thr…