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A century ago, the economy was being stifled by dominant companies in energy, transportation, and finance.
A half century ago, the problems were in the sectors of telecommunications, computers, film, and, eventually, software.
Today, as you’ve probably read a few times, our concerns are with e-commerce, smartphones and mobile apps, plus digital advertising.
Reading the tea leaves in Washington, it seems digital advertising will be first on the docket, with the Justice Department keen to file an antitrust case against Google.
The law on antitrust has evolved further and further away from strong enforcement over the decades, and Google may well avoid a break up or other serious sanctions. Regardless, the history of these kind of cases offers a hopeful track record that points to how merely the pursuit of anticompetitive business practices helps restore competition.
After all, the government dropped its case against IBM in the 1980s completely. But Big Blue was sufficiently chastised and fearful of further cases that it decided to license operating system software for its then-new personal computer on a non-exclusive basis. That opened the door for massive change and innovation.
Likewise, the beneficiary of IBM’s opening, Microsoft, won an appeal overturning an order to break up the company, but still backed down enough to allow the open Internet to flourish and new players to emerge, like Google.
Google’s antitrust case may be, if anything, even more complicated than those older battles. The troubling issue is Google’s huge share of all online ad revenue, starving all kinds of other publishers and site owners and crushing the news business. Coincidentally, it’s the same reason all of those “Peak Google” predictions back in 2014 and 2015 turned out to be so wrong—and explains why AT&T is looking to sell Xandr, as Adam discussed yesterday.
The key to it all: Google’s dominance of the infrastructure of the digital ad business, built through acquisitions like DoubleClick, AdMob, and Invite Media.
Google is the largest broker of ad sales on all other sites, serving most buyers and most sellers. As critic and researcher Dina Srinivasan explains in a draft of her upcoming law journal article, behind the scenes, Google sets the terms of bidding for ad spots, awards winning bids, sets prices, takes an unknown cut, excludes some bidders, and generally runs the show from end to end with very little oversight. It’s as if the New York Stock Exchange also controlled the brokerage industry and was itself the largest investor in stocks. The conflicts of interest we forbid in financial markets are rife in the advertising market, Srinivasan argues.
Whether lawmakers and regulators seek to break up Google and undo some of those acquisitions, adopt restrictions to prohibit the conflicts of interest, or go some other route, history’s lessons are pretty clear. The end result will be a renewed opportunity for innovation and the rise of new giants that will need scrutiny, say, in another 50 years.
Aaron Pressman
NEWSWORTHY
Person, woman, man, camera, stock market crash. Did somebody mention the New York Stock Exchange? Maybe you should avert your eyes, because stocks, and particularly tech stocks, got killed on Thursday–and not really for any discernible reason. Apple was down 8%, losing $180 billion in market value, the biggest single-day loss ever. Don't worry too much. Tim Cook's enterprise is still worth almost $2.1 trillion. Other big losers included Zoom down 10%; Tesla, Nvidia, and AMD each down 9%; and Microsoft and Square down 6%. Ahead of Friday's open, futures markets are signaling that the sell-off may continue today.
Oh sinner man where you going to run to. I hope you liked today's Google essay, because I also could have written a whole piece on Apple's new human rights policy. The iPhone maker has gotten plenty of criticism for bending to the demands of repressive governments and faced a shareholder proposal forcing it to do better. Instead, the company adopted a policy that tries to have it both ways: "Where national law and international human rights standards differ, we follow the higher standard. Where they are in conflict, we respect national law while seeking to respect the principles of internationally recognized human rights."
Spicy antitrust roll. Speaking of Apple, Japan is the latest country worried about the company's mobile app store dominance. Japan's antitrust authorities say they are looking into complaints from game publishers and others about Apple's behavior. Apple also said on Thursday it is delaying a privacy protection feature in its upcoming iOS 14 that could hurt advertisers while enhancing the power of Google and Facebook. Huh, is anyone worried about that? And finally on this overly Apple news morning, an appeals court in California says Apple, after all, may have to pay its store employees overtime while they wait in line to be searched at the end of their of shifts.
Three web monte. After Adam or I get to that Apple essay, Facebook will be up next. What in the world is going on over in Zuck World? Turns out that the social network did not take down event planning pages for the vigilante group Kenosha Guard, even though it said it did.
What if he wasn't crazy, what if he was right. Good news, at least, arriving from the heavens. SpaceX says its satellite Internet service, Starlink, is already reaching download speeds over 100 megabits per second with minimal latency. That could be good enough to make the service competitive with ground-based Internet service providers. SpaceX hasn't said how much Starlink will cost or precisely when it will open for business, hinting only that it will focus initially on parts of North America later this year.
Read through. Chinese consumer tech maker TCL says it has a breakthrough in display technology that combines elements of e-ink and high-resolution video screens. Dubbed NXTPAPER, the invention should be coming to tablets and TV sets “in the near future.” That sounds RLYGREAT.
FOOD FOR THOUGHT
Why can't tech secure online voting? Ars Technica reporter Timothy B. Lee reviews some of the issues that have bedeviled online voting platforms and explains why it's such a tough challenge.
A conventional voting system with paper ballots is remarkably good on this score. Ordinary voters have an intuitive understanding of the security properties of paper ballots and ballot boxes. Voters can see their ballots go into the ballot box. Anyone can observe an election and verify that nobody is opening the ballot box and tampering with its contents. Recounts can be monitored by representatives of rival candidates to make sure no funny business occurs.
Verifying the security of an online voting system is vastly more difficult. Partly that's because the system has many more moving parts. Voatz's system makes use of smartphones and mobile operating systems, servers and server software, cellular towers, encryption algorithms, a blockchain, and so forth. Most voters have only a vague idea of how some of these technologies work. Most citizens are not remotely qualified to judge whether that system is secure or not.
FOR YOUR WEEKEND READING PLEASURE
A few great long reads I came across this week:
One IT Guy’s Spreadsheet-Fueled Race to Restore Voting Rights (Wired)
This fall, thousands will show up to vote only to find out they’ve been purged. Lots of activists—and one Ohio man with lots of cats—are on a quest to fix that.
Patti Smith Isn’t Worried About New York City’s Future (WSJ Magazine)
“I don’t know what will happen to our city. I don’t know what will happen anywhere. I’ll always love New York City.”
Respair: A Personal Tragedy Followed by Pandemic (Vanity Fair)
The acclaimed novelist lost her beloved husband—the father of her children—as COVID-19 swept across the country. She writes through their story, and her grief.
We Quit Our Jobs to Build a Cabin—Everything Went Wrong (Outside)
And it was awesome.
IN CASE YOU MISSED IT
Book recommendations from Fortune’s 40 under 40 in tech By Rachel King
Match’s CEO explains how dating has changed during the COVID pandemic By Danielle Abril
Why American Express is trying technology that makes deepfake videos look real By Jonathan Vanian
T-Mobile expands promise to connect students for free amid COVID-19 By Aaron Pressman
A SPAC courts Airbnb By Lucinda Shen
Cloud gaming gets a lift from COVID-19 and 5G. Here’s how much By Jonathan Vanian
Mulan’s Disney+ release is reigniting a boycott movement By Naomi Xu Elegant
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
If you are among the millions of sports fans happy that professional basketball is back, I hope you didn't miss last night's game between the Celtics and Raptors that went down to the very end. As my colleague Michal Lev-Ram put it on Twitter, "I have newfound respect for .5 seconds." Here's the video clip. There will be plenty more NBA action over this long weekend, if that's your thing. See you back here on Tuesday.
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