Today’s feature is on the Bay Area and Seattle behemoths — Google, Facebook, Apple, Amazon, and Microsoft — and whether they should be broken up, regulated by government, or left to face competition (see below). But we precede the feature with a Breaking News section.
Breaking News
The Resistance can’t wait to take to the streets
The Democratic Party’s anti-Trump Resistance movement is hoping that reports of malfeasance in the FBI leadership and conflicts of interest within the Special Counsel Mueller investigation will provoke President Trump to fire Mueller. The Democrats will then be able to take to the streets in protest and drown out further embarrassing revelations about their Russian collusion investigation that is backfiring. Their preparations are described here.
Political supervision of FBI and CIA?
Former FBI Director Comey presided over the corruption in the top leaders of the FBI
In an op ed in The Hill, James Durso argues that the FBI and CIA need to be returned to professionalism and that paradoxically the best way to achieve this may be by legislating that several layers of top posts in both agencies are led by political appointees, appointed by the President and subject to Senate confirmation.
Obama interference with Hezbollah investigation
Durso’s proposal above sounds excellent for cleaning up, or at least supervising, agencies that have been corrupted by previous administrations. But what if a corrupt President is in charge of the Oval Office? President Obama seems to have been just that. During his administration there were numerous scandals: gunrunning, protected by Attorney General Holder; IRS suppression of tea party groups; lying to the public about what happened at Benghazi; and coordinated protection of Hillary Clinton from prosecution. Now a new Obama scandal emerges: suppression of Hezbollah’s drug-running in Latin America in order not to rouse opposition to Obama’s treaty with Iran: reported here first, but with the Israeli reaction here and the Congressional reaction here.
EU threatening Poland with unprecedented punishment
Polish prime minister Beata Szydlo
The EU wants to terrorize the new right-wing governments in Eastern and Central Europe as to what will be done to them if they resist the EU’s order that they accept thousands of unwanted Muslim immigrants. Poland has been picked to be the scapegoat. It is trying to purge its legacy judges from the Communist era. The EU, which could care less about the quality of Polish judges and the rule of law inside Poland, is threatening it with a never-before-used “nuclear option” — loss of voting power in the EU.
Feature
Should too-powerful Google, Facebook, Apple, Amazon, and Microsoft be broken up or regulated?
Alphabet and its subsidiary Google dominate internet searches, browsers (Chrome), and mobile phone operating systems (Android), and would like to dominate non-Chinese artificial intelligence. Facebook dominates social media and splits most of online advertising revenue with Google, forming a duopoly. Apple dominates the smartphone industry (iPhone, iPad), with 93% of industry profits. Amazon dominates online retail sales and web services. Microsoft dominates desktop operating systems (Windows 10) and office software (Office 365). The Google – Facebook dominate the majority of online advertising revenues.
All of these behemoths have one political focus: to promote and fund Progressive policies and politicians. Their collection of data on the preferences of their users — often without clearly notifying users that they are doing so — is used to help in the marketing of their advertised products and to support the politicians of whom they approve.
They were also the backbone, along with Netflix, of the companies that lobbied President Obama to call for government regulation of the Internet and to enforce a policy of so-called net neutrality, which might better have been called Freeloaders’ Access Rights. Net neutrality is the idea that the Internet providers who spent billions on laying the cable and other hardware that make the Internet possible should give the Silicon Valley and Seattle companies unrestricted access to the expensive pipelines the providers made possible. This policy has just begun to be overthrown by Trump’s Federal Communication Commission (FCC). Al Franken’s hyperbolic denunciation is typical of the reception the FCC move has received from Democrats.
A majority of the US population now gets only the news curated by Google’s search engine or Facebook. How this works out in practice can be tested by anyone curious to do a search on a topic that he or she knows is well covered in conservative or nationalist-oriented sources. Most of the links that turn up in the Google search will be articles in Progressive publications.
Amazon
All five behemoth companies maintain huge lobbying organizations in Washington. One might call it the Silicon Seattle Swamp. In Amazon’s case, the lobby is buttressed by ownership of the Washington Post. The lobbying hasn’t been in vain. Amazon has sweetheart contracts for government procurement, and taxpayers are subsidizing the low rates the Post Office gives it to send packages to Amazon subscribers. Amizon is e also gunning for grocers through the Whole Foods purchase and even coming after cable companies, to replace them with Amazon Prime.
Apple
Apple FaceID, not secure but certainly privacy compromising
Apple’s CEO Tim Cook betrayed the interests of citizens of China and Western countries alike when he praised China’s vision of the Internet as “a vision we at Apple share.” China’s vision of the Internet is notoriously to submit all information to the censorship of the Chinese Communist Party (CCP). Business Insider reports that “Uber’s iPhone app has a secret back door to powerful Apple features, allowing the ride-hailing service to potentially record a user’s screen and access other personal information without their knowledge.” And “Apple’s New “FaceID” Could Be A Powerful Mass Spying Tool,” ZeroHedge claims. It would mimic CCP spying on the Chinese population, reinforcing CEO Cook’s admiration for the “vision we at Apple share.”
Facebook is competing with Apple in the Chinese facial-identity coercion racket. The present editor has been unable to log on to an existing Facebook account because he refuses to submit a true photograph of his face. Facebook has no phone number available for customer complaint calls, and an email form supposedly for customer support has gone unanswered. The editor continues to receive Facebook spam, but there is no way he can kill the account unless he posts a valid photo.
Facebook’s Progressive employees also seem to be given to censoring or suppressing conservative posts: see here and here. But even liberals are concerned, witness this article titled “What Facebook Did to American Democracy” in The Atlantic. Amusingly, however, Facebook had to scrap a Fake News tag it was affixing to some news articles it disapproved of — because the tag was making the articles so highlighted of special interest to readers. Perhaps the readers were tired of the curated pablum Facebook had not so labeled.
Alphabet’s just-retired-today chairman, Eric Schmidt. Alphabet is Google’s parent company.
Google’s CEO Eric Schmidt played a major role in both Obama elections as well as Hillary Clinton’s election campaign, possibly with data collected by Google from its users. Google reportedly relies on the help of “an organization largely funded by billionaire George Soros to ‘fact-check’ news stories.” This would be a bizarre response to criticism of Google for the fake news it featured on YouTube after the Las Vegas shootings. Google also suppresses dissenting thought in its own midst. It misrepresented an engineer’s internal memo calling for more diversity within Google and then fired him. It has been accused of racketeering for “stealing trade secrets from people it first invites to collaborate.” It intervened to suppress a Democratic think tank group that was critical of it. It suppresses political content it doesn’t like. Not surprisingly, Google is beginning to accumulate enemies; Peter Thiel seems to be one of them.
Microsoft
Last but perhaps least is Microsoft, which once dominated the computer industry with its Windows operating system that run on so many different hardware systems and whose office software (Word, Excel, Powerpoint) and Internet browser (Internet Explorer) were adopted by almost every Fortune 500 company. Microsoft had succeeded IBM as the dominant computer company. Like IBM, it was dragged through a long anti-trust organization which the government gave up but not before sapping the vital spirits out of the company and its founder Bill Gates. It offends now mainly by trying to supplant software competing with its own, be it a browser or a pdf reader.
What to do?
After all the preceding exposés the reader will no doubt be expecting a call here for anti-trust action, possibly followed by a forced breakup of the offending organizations, or at least government regulation. But just as earlier monopolies IBM and Microsoft had their wings clipped by competition, not government, we think the same fate awaits Alphabet/Google, Facebook, Amazon, and Apple, just as it did to Microsoft.
Google has several search engine competitors — they just need to get better, more friendly to conservative news sources, and let the public know they’re much better. An investor would help. Peter Thiel, are you listening? Switching browsers is quite easy, and with increased numbers using a competitor’s search engine, advertising revenue will begin migrating to the challenger. News organizations could consider banding together and funding a better search engine than Google’s . They could to recoup the advertising revenues they lost to Google, which also pirates their content.
Facebook already has a conservative-friendly rival, Codias.com, which doesn’t pester one with emails about friends to contact who aren’t friends. There’s reason to think that Facebook is going to alienate increasing numbers of users by either not censoring horrific stuff or going to the other extreme of censoring political content it doesn’t like. And Facebook’s campaign for mandatory photos may backfire — as may Apple’s — even if served up with the sugar coating of some perk offered.
We think Apple already has formidable competitors in the Chinese and Samsung.
Amazon’s dominance of online sales is being nibbled at by Walmark and big chomps out of its market are likely to follow. There’s a synergy begging to be exploited, of having both online and on-the-ground retail presence. That will give Walmart a leg up if it can improve its software and keep pouring money and products into its excellent subsidiary, Jet.com. People don’t realize yet that many of the products on Amazon Prime are priced higher to cover shipping costs, despite the membership fee intended for that purpose. People, especially those who hate what the Washington Post is doing to bring down the Trump presidency, should first look elsewhere to buy products they’re seeking and only buy from Amazon when there’s an advantage to be had. This editor’s experience has been that the better price and product is often, although not always, elsewhere. No Amazon Prime membership is needed for this consumer entrepreneurship.
Microsoft still dominates desktop operating systems and software but not so much as formerly, now that the action has shifted to mobile. It seems likely to adapt and survive but not dominate again, just as IBM has.
Summary
The government has to create a proverbial level playing field. This means it needs to reverse the rent-seeking benefits it has already granted, e.g., the two concessions mentioned above to Amazon. Monopolies can usually only be maintained through successful government rent-seeking and stagnant, low-growth economies, such as the one that persisted under Obama. High-growth economies encourage entrepreneurs to jump in with new products and consumers to gravitate to them. We now have a chance to see if that approach will work. If not, it will be time for the anti-trust boys to step in, but not before.
Click here to go to yesterday’s Founders Broadsheet (“Republican Congress wins trifecta in one bill: tax reform, oil drilling in Alaska, no more Obamacare individual mandate”)
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