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My favorite line in Elizabeth Warren’s manifesto to slice Google, Facebook, and Amazon down to size was her discourse on the Internet search business and the debt of gratitude consumers owe to antitrust regulators.
“Aren’t we all glad that we now have the option of using Google instead of being stuck with Bing?” she asserted.
I had to chew on this. Google is the dominant search tool in most of the non-China world and a monopoly in certain rich countries. Bing, Microsoft’s search engine, launched after Google already was dominant. It has been a relatively also-ran. I’m not certain that consumers ever feared being stuck with Bing; they probably don’t give Bing much thought at all.
Warren’s point is that Google arose because Microsoft was slowed in the 1990s by antitrust regulators. (She is theorizing that Microsoft, in the normal course of things, would have offered Bing and that it would have been lame.) Now Google must get the same treatment so the next Google has a chance, which it won’t unless Warren becomes president.
I’d argue that changes in antitrust enforcement are far more likely than a Warren presidency. She has two broad ideas, and the second feels like more and more of a sure thing: Antitrust regulators should do their jobs better. It’s hard to argue that Google, Facebook, and Amazon should be able to snuff out and otherwise use their market power to harass competitors. All sorts of candidates, Democratic and Trumpist, will be interested in addressing this.
Warren’s other idea is to prohibit “platform” companies with more than $25 billion in revenues from also selling their own goods and services on their platforms. This is arbitrary and unfair, but that hasn’t stopped Congress from disallowing big banks from charging fees that are fine for small banks.
Like the Green New Deal, Warren’s proposal isn’t a bill, which is telling because legislation is something a senator has in her power to offer. Instead, it is a conversation starter. And it’s a conversation worth having.
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A few of you objected to my referring last week to the use of net operating loss carryforwards, or NOLs, as a “gimmick.” I concede that that was a bit hyperbolic and therefore a poor choice of words.
Incidentally, the context of this comment was my observation from Lyft’s IPO filing that it may be years before it could use its NOLs, meaning it might not be profitable for years. One financially savvy reader told me this about that: “Investors, and particularly potential prospective corporate buyers of Lyft, will attribute a positive net present value to to Lyft’s $3 billion worth of NOLs. As a rule of thumb , if utilized by an acquirer next year, the concomitant value for the buyer would be $3 billion times the marginal tax rate (about 35%), or $1.05 billion in net profit.” Translation: NOLs are only of use to companies with profits, which Lyft doesn’t have. But if a profitable company bought Lyft, a real possibility, this asset would be worth a cool billion dollars in profits to the acquirer. Now that’s interesting.
