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American tech giants are making life tough for startups

economist.com

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Re: American tech giants are making life tough for startups

#41

Post by conanbatt »

aitrean wrote: post #31

I'll admit I'm sitting on the fence, and perhaps ignorant about anti-competitive behaviour in tech. These companies are winning over marketplaces by providing the highest quality, and lowest price services to consumers? Hypothetically, where they slip up in providing the best services, startups could thrive? Or are there elements I'm neglecting as to how large company domination negatively impacts innovation?

Big companies do have access to a kind of data that is not quite public, and gives them an edge Im not sure is fair. For example, a Reddit's founder says he picks which company to invest based on reddit activity by companies in their site.

Im not comfortable with the edge places like facebook, google and reddit have over other companies, knowing what they know about with loosely named propietary data.

Im not too concerned with them buying companies: microsoft used to do that and didnt stop any of these.

Re: American tech giants are making life tough for startups

#42

Post by radley »

aitrean wrote: post #31

I'll admit I'm sitting on the fence, and perhaps ignorant about anti-competitive behaviour in tech. These companies are winning over marketplaces by providing the highest quality, and lowest price services to consumers? Hypothetically, where they slip up in providing the best services, startups could thrive? Or are there elements I'm neglecting as to how large company domination negatively impacts innovation?

In-app payment policies are a major restriction. Apple and Google have unlimited access in offering digital goods and payment methods. Third-party apps are limited in scope and taxed 30%.

If two songs are sold on an iPhone for $1 each, one by Apple and another by [insert music sales app], the small app makes 0.70, while Apple makes 1.30. Lets say each has to pay 0.50 to the label for the sale. The small app profits 0.20 while Apple profits 0.80. That's a 4x advantage for essentially the same purchase.

Re: American tech giants are making life tough for startups

#43

Post by reificator »

exabrial wrote: post #38

Google: we're so righteous we won't take Pentagon contacts. Also Google: let's make the click through EULA as uninteligible as possible when we record our user's locations.

> we're so righteous we won't take Pentagon contacts.

I think you mean "won't renew". They already took them.

Re: American tech giants are making life tough for startups

#44

Post by craftyguy »

reificator wrote: post #43
exabrial wrote: post #38

Google: we're so righteous we won't take Pentagon contacts. Also Google: let's make the click through EULA as uninteligible as possible when we record our user's locations.

> we're so righteous we won't take Pentagon contacts. I think you mean "won't renew". They already took them.

Yea, joke is on us, because they'll still develop the thing they told the pentagon they would develop, all while appearing to be 'good guys' to people (which is apparently quite a few people) who don't understand how contracts work.

Re: American tech giants are making life tough for startups

#45

Post by vii »

skinnymuch wrote: post #40
replicatorblog wrote: post #35

Earlier quoted context omitted.

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 kno…

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.

Facebook has even better insights through the Onavo VPN, which as it tunnels traffic from other apps, can even show which features are doing well https://techcrunch.com/2018/02/12/facebook-starts-pushing-it...

Re: American tech giants are making life tough for startups

#46

Post by naravara »

weliketocode wrote: post #12
osrec wrote: post #10

Earlier quoted context omitted.

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.

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.

Re: American tech giants are making life tough for startups

#47

Post by aitrean »

radley wrote: post #42
aitrean wrote: post #31

I'll admit I'm sitting on the fence, and perhaps ignorant about anti-competitive behaviour in tech. These companies are winning over marketplaces by providing the highest quality, and lowest price services to consumers? Hypothetically, where they slip up in providing the best services, startups could thrive? Or are there elements I'm neglecting as to how large company domination negatively impacts innovation?

In-app payment policies are a major restriction. Apple and Google have unlimited access in offering digital goods and payment methods. Third-party apps are limited in scope and taxed 30%. If two songs are sold on an iPhone for $1 each, one by Apple and another by [insert music sales app], the small app makes 0.70, while Apple makes 1.30. Lets say each has to pay 0.50 to the label for the sale. The small app profits 0…

Although it doesn't relate to the acquisitions, I'd definitely agree, that's anti-competitive behaviour. Was not aware of that policy.

Re: American tech giants are making life tough for startups

#48

Post by Clubber »

whatshisface wrote: post #30
osrec wrote: post #13

Earlier quoted context omitted.

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.

That's not a monopoly - a monopoly would be if for at minimum one of those things, you could only find a Google-controlled version.

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.

https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....

Re: American tech giants are making life tough for startups

#49

Post by aitrean »

Spooky23 wrote: post #39
aitrean wrote: post #34

Earlier quoted context omitted.

I understand their strategy of neutralizing threats through acquisition. However, for this strategy to be effective, the companies have to consistently turn a profit on their acquisitions. Although it seems absurd for Facebook to spend 19 billion to acquire a 14-person company (Instagram), failing to keep Instagram popular amongst consumers will turn it into a 19 billion dollar writeoff as some Instragram clone captu…

It’s about control, not size. IBM controlled powerful segments of the market, and would defend or compete by buying technology. This scales down to small things like parking lots. Real estate guys will buy and operate little surface lots at a loss for years to deny competitors the ability to develop properties that compete with them.

>IBM controlled powerful segments of the market, and would defend or compete by buying technology.

Right, but IBM used to comprise almost the entire hardware and software market. Over time, they failed to consistently deliver the best experiences to consumers and clients, so they definitely declined from their glory days. I understand your comparison about real estate developers, but I don't think it applies here. IBM can buy competitors, but if they can't make sure their acquisitions remain the best in the market, then the acquisition loses profitability, or even becomes a writeoff.

As an anecdote, I used to work on one of their analytics products, which they acquired in one of their biggest acquisitions ever. Nevertheless, we were competing for clients with smaller, leaner, and sometimes better teams in the same field. We had no inherent advantage in development over our competitors either. Sure, IBM could always buy them, but then they'd have another x billion dollar investment to turn around, and still no way to stop new competitors from taking the clients, other than creating the best product - which would be net beneficial for society anyway. In many cases though, IBM's attempts to exert control by acquiring other companies backfired because they failed to provide client value, and the company has had to write off a lot of losses by trying.

Re: American tech giants are making life tough for startups

#50

Post by z0r »

dmode wrote: post #28
adventured wrote: post #27

Earlier quoted context omitted.

And housing is even more expensive in San Francisco than in Seattle, general cost of living is a bit higher, and CA has income taxes, adjust the figures accordingly. The $1.3m house in Seattle will cost you $2m in SF. Now you need $500,000 for a down payment. Your mortgage + taxes will cost you $110,000 per year, out of your $158,000 take home on a $250,000 income. You'll burn $3.8 million over 30 years on the equiva…

That's not how the math works at all. 25-30 yr olds making 250k don't live in 2m homes. They usually share an apartment in SF and pay ~$2000-2500 on rent. Then when it is time to get married or move in with a gf, you get a starter home for 500-600K, putting 10% down. Now in a couple of years, your starter home has gained $200k in value. Sell that and use the proceeds for a larger single family home around 1-1.5mn. Me…

That path is as rarified among software engineers at bigco as software engineering at bigco is among software engineering at large as that is to the general population.
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