Another reminder, alongside the apparent Microsoft GitHub acquision, that regulators need to step up and prevent large tech firms from acting anti competitively.
> Two broad changes of thinking would go a long way towards sensibly taming the titans. The first is to make better use of existing competition law. Trustbusters should scrutinise mergers to gauge whether a deal is likely to neutralise a potential long-term threat, even if the target is small at the time. Such scrutiny might have prevented Facebook’s acquisition of Instagram and Google’s of Waze, which makes navigation software. To ensure that the platforms do not favour their own products, oversight groups could be set up to deliberate on complaints from rivals—a bit like the independent “technical committee” created by the antitrust case against Microsoft in 2001. Immunity to content liability must go, too.
> Second, trustbusters need to think afresh about how tech markets work. A central insight, one increasingly discussed among economists and regulators, is that personal data are the currency in which customers actually buy services. Through that prism, the tech titans receive valuable information—on their users’ behaviour, friends and purchasing habits—in return for their products. Just as America drew up sophisticated rules about intellectual property in the 19th century, so it needs a new set of laws to govern the ownership and exchange of data, with the aim of giving solid rights to individuals.
The problem is that regulators rarely have the farsightedness to see which acquisitions are indeed anti-competitive. And I don't think it's always obvious, especially on the bleeding edge of tech. The farsighted ones are probably part of the acquiring company (or at least acting as consultants to the hiring company).
Definitely. Instead of a regulatory body proactively thinking about practices as anti-competitive, there appears to be a very reactionary approach of punishing large incumbents that pursue m&a out of necessity or approaching anti-competitiveness as partisan politics.
Yeah, I think regulators realise we have a monopoly brewing once they see people buying Google branded milk from Googlemarts, having driven there in Googlemobiles, using traffic directions from... Google.
I think it is monopolistic. If one company has so much influence in your life that they can direct you to their own products, so that you habitually start relying on them for almost anything, then they have the ability to develop a wide range of monopolies by influencing your choices. E.g. Google has a monopoly as a trusted source of all information - what's even stranger, is that they are seen as a non-interfering third party by most users - because of this, many other monopolies can emerge, because they have the ability to control "truth" and "popular opinion".
By that logic, Walmart would already be a monopoly in the perception of quite a few people in America, which is clearly not the case to much of the rest of the country.
That's not true, but it's close; at least according to US law. Microsoft was deemed a monopoly in 2000 (which is actually legal) and abused it's monopolistic powers (which is not legal) while other OS's existed in the market: Apple, BeOS, Novell, Linux, OS/2, etc.
As you know, Microsoft had more than 90% of the OS market worldwide. While other OSes did exist, they didn’t provide meaningful competition. The person to which you replied meant that Google Milk is only a problem if Google abuses its search monopoly to push the market away from other milk vendors, not that Google isn’t a monopoly as long as another search engine exists. Their main point was that it isn’t abusing a monopoly to launch a broad array of products if each of those products compete in a fair market.
It’s further complicated by the fact that a lot of this stuff functions more like a public utility than a line of business. It may well be that nationalizing the firm makes more sense than cracking it up.
I think people forget how inconsequential Instagram seemed at the time Facebook bought it. It was popular and growing fast, but the notion that this 12-person startup was worth a billion dollars was laughable. Read contemporaneous accounts and many reporters were incredulous. It was prima facie evidence of a bubble.
I don't know if a regulator would have had the foresight to see Instagram, which was still as much known for its filters as its social network as anything but a compliment? Look at how Instagram was seen as one of many similar products at the time:
Insta has taken on a life of its own over the last 2-3 years, but if they had chose to go their own way, whose to say Facebook wouldn't have clobbered them, in much the way they nuked Foursquare.
I'm not opposed to regulation, per se, but we should also be careful not to indulge in revisionist history.
This is totally NOT correct. When Facebook bought Instagram, Justin Bieber was already posting pictures there. I was already posting pictures there. My friends were already. It's not users, it's growth rate and engagement. And they were through the roofs. Also, thinking that Andreessen, Peter Thiel and Mark Zuckerberg just go and throw away $1B for the sake of it... it's nuts. Also, 30M MAU mostly in EU and US it's an extremely high number. For comparison, it has grown x20 in the last 5 years since the mentioned number has been reached. Approx. it kept its growth rate relative to scale, give or take a multiplier - depending on how you do the math.
On another plan (not really related to the argument- but more as to what really made IG stand out), when almost identical services as you mentioned are similarly growing, the only difference is the endorsement behind closed doors. Instagram was endorsed by Adam D'angelo, Jack dorsey and Sequoia w $50M in its war chest
Yeah this is definitely correct. I was on board believing FB would become bigger and bigger. But the Instagram acquisition seemed crazy. How many users did Instagram have when it was acquired? 30 million? How could anyone think Instagram would get to where it did (Instagram is supposed to do $6-7B in revenue this year).
Also, FB itself wasn’t what it is now at the time either.
The big platform companies see engagement and growth metrics for all startups, not just the numbers they are pitched. The public didn't expect Instagram to be a success - Facebook had more information.
This information asymmetry is a big issue. It means big platforms can detect competitors early and know when to offer generous acquisition deals to neutralise them. The people working in these competitors don't have this comparative basis to tell how well they're doing.
As a small player, it's very hard to see how successful your competitors are. For example, Google and Apple only provide vague statistics about number of downloads in their appstores, rounded very loosely. But they internally can track detailed metrics. Facebook and Twitter are used as distribution mechanisms, for login, and as sources of contact info. They can glean insights from that.
I'd love if such companies would say this up front. "This startup aims for an exit." "This is a product demo for facilitating acquihires." It would make it easier to avoid those.
I would argue that's also a problem. Startups who's eventual exit plan is acquisition are more willing to burn VC money giving stuff away for free, rather than coming up with a plan for profitability. If more companies had the idea that they had to survive more and more on their own revenues, I think we'd see stronger companies.
"Seeing that Github is reportedly unprofitable, if they aren't acquired by a profitable company, what's the alternative?"
Lay off employees until they're profitable.
Tech companies tend to invest ahead of growth, because tech markets tend to be winner-take-all and if the market grows when you don't, somebody else will take the market. They're effectively using their employees as insurance to make sure nobody else can catch them in the market.
As a result, they often have orders of magnitude more employees than is necessary to keep the lights on, the product operational, and the money flowing in (at least in the short term). Google, for example, really just needs datacenter ops technicians and SREs to keep the product up, which is maybe 2% of their current headcount. If they laid everyone else off, they'd eventually become vulnerable to a competitor or lawsuit or public opinion or unhappy/indifferent customers. But until that happened, they could maintain quite hefty profits.
I doubt thier investors were looking for a no growth botique business that never went public and never got acquired. The investors were looking for an exit strategy.
Well, for an investor, there's another option: put more money in. They only have to think about laying people off if there's no profitability and no further investment and the acquisition falls through.
If I had a stake in Github, I would be delighted to sell it to Microsoft.
I don't have a stake in Github. I am a user with 2 distinct roles. In one role, I work for a company that pays for Github's services. Github has done a very good job hiring people who have maintained the service as it scaled to very high levels. I am concerned that Microsoft will be unable or even unwilling to keep those teams intact. They may wish to restructure the organisation. They may wish to change middle management in an attempt to make it profitable, etc, etc. Github has had a good track record with us. Organisationally we have no experience with Microsoft, so it's a risk.
Personally, I spent a chunk of my career working in the MS world (working with gold/platinum level partners). This is ancient history by now (10 years ago), but my experience with MS support was abysmal. Essentially "support" amounted to having a telephone number where I could report issues. No follow up allowed. No notification if the issue was ever resolved. Upgrade to the next version when it comes out and check for yourself to see if it has been fixed. Hey, that's why we pay for those MSDN subscriptions! Though, if you have about 1000 seats in your license, you can get real support (if you are lucky). Maybe that's all changed and they are fantastic, but once bitten twice shy as they say.
In my other role as a consumer with Github, I have my personal repositories there. I still vividly remember MS's push to create a division between "hobbyists" and "professional developers". The idea was to provide different levels of access based on the idea that "professional developers" work for large companies that will pay for high licensing fees and extensive support contracts (which only really seem to count if you have at least 1000 seats... see above). "Hobbyists" are intentionally crippled by giving them just enough access to seem like they can do something, but denying them crucial things.
With the release of VSCode, etc, I can see that the company has changed, but old ideas die hard. 10 or 15 years is not enough time for me to feel like I can trust the company. Will they slowly screw me over by using their dominant position to "boil the frog" -- slowly crippling their "hobbyists" without ever doing anything overt enough to cause them to jump out of the pot? Only time will tell, but yes I'm quite concerned. To be fair, MS is not the only potential purchaser who would concern me. At least it isn't Oracle!
Well they could change the terms of service and essentially drive certain types of projects away. They could limit access to older builds and versions to non-paying customers. They could limit access to verified/signed builds. They could reserve certain rights to your software such as they did with npmjs.com. They could run ads, offer IT staff skill matching and promotions, FizzBuzz-like services, or other LinkedIn integrations. They could come up with clever schemes for offering commercial licensing for open source. They could go after the enterprise package mirrors and policy checkers market Artifactory et al are serving. Not saying they'll be doing that (MS isn't stupid), but given MS is selling mainly to enterprises, there are many creative ways they could make money of it.
What do you mean deploy to "GVFS"? VSTS -Microsoft's existing host solution supports the standard git web hooks today to support integration with third party CI/CD tools and supports Azure and AWS deployments.
These would be horrible. You make it harder to sell your startup with random oversight of small acquisitions, you’re going to scare away small and medium sized investors.
From another Economist article ("How to Tame the Tech Titans", https://www.economist.com/leaders/2018/01/18/how-to-tame-the...):
> Two broad changes of thinking would go a long way towards sensibly taming the titans. The first is to make better use of existing competition law. Trustbusters should scrutinise mergers to gauge whether a deal is likely to neutralise a potential long-term threat, even if the target is small at the time. Such scrutiny might have prevented Facebook’s acquisition of Instagram and Google’s of Waze, which makes navigation software. To ensure that the platforms do not favour their own products, oversight groups could be set up to deliberate on complaints from rivals—a bit like the independent “technical committee” created by the antitrust case against Microsoft in 2001. Immunity to content liability must go, too.
> Second, trustbusters need to think afresh about how tech markets work. A central insight, one increasingly discussed among economists and regulators, is that personal data are the currency in which customers actually buy services. Through that prism, the tech titans receive valuable information—on their users’ behaviour, friends and purchasing habits—in return for their products. Just as America drew up sophisticated rules about intellectual property in the 19th century, so it needs a new set of laws to govern the ownership and exchange of data, with the aim of giving solid rights to individuals.