Forty years ago, we shot antitrust law in the guts, and we let companies led by mediocre idiots no better than their forebears establish monopolies. These donkeys were able to parlay their monopoly winnings into policies that prevented new technologies from supplanting their own. They got to decide who was allowed to compete with them, and how.
Today’s tech giants have not invented an interop-proof computer. They’ve invented laws that make interoperability illegal unless they give permission for it. A new, complex thicket of copyright, patent, trade secret, noncompete and other IP rights has conjured up a new offense we can think of as “felony contempt of business model”—the right of large firms to dictate how their customers, competitors and even their critics must use their products. Why do they fear interop so much? Simple: switching costs.
But network effects are merely how Big Tech gets big. Switching costs are how Big Tech stays big. Switching costs are all the things you have to give up when you stop using a product or service. Quit Facebook and you lose the family photos you’ve uploaded and access to the friends, family, community and customers you go there to hang out with.
Much like Amazons Prime membershuo fiasco; ref thebignewsletter.com
if companies can raise their switching costs, they can also treat their customers worse—and still keep their business.
Forty years ago, countries all over the world altered the basis on which they enforced their competition laws—often called “antitrust” laws—to be more tolerant of monopolies. Forty years later, we have a lot of monopolies. These facts are related.
Any company that didn’t sell to the trust was quickly driven to its knees. For example, if you owned a freight company and wouldn’t sell out to the trust, all the railroads you depended on to carry your freight would charge you more than they’d charge your competitors for carrying the same freight—or they’d refuse to carry your freight at all.
“If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.”
Monopoly is a powerful and seductive idea. Starting a business often involves believing that you know something other people don’t, that you can see something others can’t see. Building that business up into a success only bolsters that view, proving that you possess the intellect, creativity and drive to create something others can’t even conceive of. In this light, competition seems wasteful: why must you expend resources fighting off copycats and pretenders when you could be using that same time delighting your customers and enriching your shareholders? As Peter Thiel puts it, “Competition is for losers.”
if a company that buys up its suppliers or merges with its rivals can attain “economies of scale” and new efficiencies from putting all those businesses under one roof, then we, the consumers, might find ourselves enjoying lower prices and better products. Who wouldn’t want that? But “consumer” is only one of our aspects in society. We are also “workers,” “parents,” “residents” and, not least, “citizens.” If our cheaper products come at the expense of our living wage, or the viability of our neighborhoods, or the democratically accountable authority of our elected representatives, have we really come out ahead?
If you ran a big business and wanted to merge with your main competitor, you could pay a Chicago School economist to build a model that would prove to the regulators at the DoJ and FTC that this would result in a good monopoly.
Isnt this exactly Shaw + Rogers?
The oil crisis of the 1970s was the movement’s opportunity. Energy shortages and inflation opened a space for a new radical politics, and around the world, a new kind of far-right leader took office; Ronald Reagan in the USA, Margaret Thatcher in the UK, Brian Mulroney in Canada.
This global revolution marked the beginning of the neoliberal era, and with it, generations of policy that celebrated the ultra-rich as the ordained leaders of our civilization.
The Chicago School’s financial backers had invested wisely: the rise and rise of Chicago economics has shifted trillions in wealth to the already wealthy, while workers’ wages stagnated, the middle class dwindled and millions of residents of the world’s wealthiest countries slipped into poverty.
after more than forty years of Borkism, any judge, hearing any antitrust case, is briefed with decades’ worth of precedent based on the consumer welfare theory.
But all of this comes at a price: the rise of “autocrats of trade”: unelected princelings whose unaccountable whims dictate how we live, work, learn and play. Apple’s moderators decide which apps you can use, and if they decline to list an educational game about sweatshop labor or an app that notifies you when a US drone kills a civilian overseas, well, that’s that.
If Google doesn’t prioritize a local business, it might fail—while Google’s decision to feature a rival will make it a huge success. The same goes for newspapers, blogs and other sites—if Google downranks your newspaper, it effectively ceases to exist.
There’s a scrappy independent bookselling trade, small stores run by committed booksellers who effectively take a vow of poverty to serve their communities—but they have to buy all their books from a single distributor, Ingram, who bought out their largest competitor, Baker & Taylor, in 2019. The power of two chain buyers to make or break a writer’s career has been replaced by the power of one distributor to do
The company’s market power—captured by selling products at a loss for years, burning investor capital to force others out of business—is reinforced by its Prime program, which holds its best customers hostage to the $150/year sunk cost.
Remember, there was nothing technical Microsoft could have done to prevent Apple from reverse engineering its files and making iWork. The deep universality of computers meant that Apple would always be able to blow a hole in Microsoft’s walled garden. Which is not to say that Microsoft didn’t try. The old Office file formats were a notoriously gnarly hairball of obfuscation and cruft. Even Microsoft struggled to maintain compatibility with all the different versions of Office it had pushed out over the decades. But here’s the kicker: after Apple successfully launched iWork, Microsoft gave up. It stopped obfuscating Office, and instead, took those Office file formats to a multistakeholder standardization body, and helped create an open, public standard for reading and writing Office files.
But tech is exceptional in that it is intrinsically interoperable, which means that we can use interop to make Big Tech a lot smaller, very quickly—we can attack network effects by reducing switching costs.
If we someday triumph over labor exploitation, gender discrimination and violence, colonialism and racism, and snatch a habitable planet from the jaws of extractive capitalism, it will be thanks to technologically enabled organizing. From street protests to mutual aid funds, from letter-writing to organizing sit-ins, from blockades to strikes, we need digital networks to prosecute our struggle.
Gopher was an open protocol. Any programmer who wanted to help other people interact with a service for which there was no menuing system could write their own, and make it available in “gopherspace.” In this way, hundreds of proprietary interfaces designed for highly technical users, many of them the product of the world’s largest technology companies, were commodified, subsumed into a volunteer-managed, globe-spanning interface that was designed to welcome laypeople to the burgeoning internet.
Walled gardens can only exist when switching costs are high. Tech companies understand that making interoperability-proof computers is a lost cause—like making dry water. Computers work because they are interoperable.
These are the machinations of a company that believes that its most profitable user-retention strategy is to lock its users up. They’re the machinations of a company that is thoroughly uninterested in being better than its competitors—rather, they’re dedicated to ensuring that leaving Facebook behind is so punishing and unpleasant that people stay, even if they hate Facebook.
Facebook isn’t alone in realizing that winning user loyalty by providing an excellent experience is harder work than punishing disloyal users, nor are its user-facing services the only place where this strategy is deployed.
The looser the matching, the more false positives. This is an especial problem for classical musicians: their performances of Bach, Beethoven and Mozart inevitably sound an awful lot like the recordings that Sony Music (the world’s largest classical music label) has claimed in Content ID. As a result, it has become nearly impossible to earn a living off of online classical performance: your videos are either blocked, or the ad revenue they generate is shunted to Sony.
We’ve tried making Big Tech into better tech for decades. That project has been an abject failure. To make tech better, we have to make it smaller—small enough that the bad ideas, carelessness and blind spots of individual tech leaders are their problems, not everyone else’s. We need lots of tech, run by lots of different kinds of people and organizations, and we need to make it as close to costless as possible to switch from one to the other.
Rather than banning the infernal machines, Congress legalized them at the stroke of a pen, creating a “compulsory license” that allowed anyone to re-record a cover of any song that had already been released and release it themselves, without the composer’s permission, provided they paid a set royalty for every record.
It’s one thing to be stuck without the blender attachment that will make your smoothie perfectly smooth. But it’s another thing for your blender to refuse to operate because it can’t connect to its app because severe weather just knocked out your home internet and you’re trying to mix your kid’s medicine into a smoothie to get it down their throat.
Indeed, the point of these locks is not to stand up to outsiders and prevent them from doing things that are adverse to the interests of Big Tech shareholders. Rather, the point of adding a lock to a product is to gain the right to invoke Section 1201 of the DMCA.
Feudal security fails badly. If a company decides to betray your trust and invade your privacy, the security experts won’t defend you from their own employers—instead, they’ll turn on interoperators who step in to defend you.
One thing we know for certain about the Big Tech companies is that they lie all the time: they lie about which data they collect from you; they lie to advertisers about whether you saw an ad; they lie to publishers about whether they collected money for an ad. They lie about their taxes, their labor practices
“Online radicalization” assumes that the rise of monopolies, the looming climate emergency, crushing debt, soaring inequality and grinding austerity are separate questions from “Why are people so angry? Why are they looking for someone to blame? Why are they willing to turn to hatred and violence?” “Online radicalization” insists that flat Eartherism and vaccine denial are phenomena unrelated to corrupt, captured regulatory agencies—that there is no connection to the regulatory malpractice that led to a million dead from the opioid epidemic, nor to the mistrust of pharma companies and the FDA that drives vaccine denial. I
The Magnuson–Moss Warranty Act requires companies to fix their stuff if it’s defective, even if someone else tried to fix it first (companies can only force you to use their official service depots if they’ll fix it “within a reasonable time and without charge”). They can’t void your warranty just because you used someone else’s accessories or replacement parts—HP can’t void your warranty for using third-party ink or third-party paper.