Headlines about regulations affecting the business models of Amazon, Apple, Facebook and Google (AAFG) do not really concern me. History is devoid of government intervention truly damaging the fortunes of a successful business enterprise. The fall of a company like IBM was not fundamentally affected by the government's breaking it into smaller components. Rather, it was the company's focus on hardware rather than software. Companies are damaged either by their own arrogance or the innovations of others.
As the radio station owner declares in Brother where art thou, "Competition is bad for business," the challenges for great businesses often lie in competition. As a result, businesses spend great energies maintaining their positioning and thwarting the efforts of others. The laws around anti-trust are designed to prohibit activities that hurt competition and, thus, negatively affect consumers. The result is a set of laws designed with a standard of damage to consumers.
Today's monopolists have no problem with this standards. In fact, scale and aggregation of supply and demand allow for an increase in the quality of the product for consumers. In the past, oil companies like Standard Oil or phone companies like AT&T were broken up because the increased fragmentation led to lower pricing and thus increased benefits for consumers. But in the frictionless world of the internet, this structure is turned upside down as the consumers benefit at the expense of intermediaries and suppliers. If consumers are not hurt, should a restructuring occur?
Twenty years ago, the same issue came up for the explosive retailing force of Walmart. Competitors and labor unions complained about shutting down small towns as well as low wages. However, no real action occurred because the benefit to the consumers was compelling as Walmart increased the purchasing power of low and middle income Americans who were already struggling with the wage impact of globalization. Of course, Walmart was not welcome into major cities, but wealthier consumers were not Walmart's natural target.
Today AAFG face the same issue. The services provided by each company are continuously increasing in quality and or appeal. In the case of Facebook and Google, the services are free. For that reason, antitrust issues will be difficult to apply in any way that does not simply further entrench them. In addition, taxes to supply "neutral" news services can be applied, but again this does not disrupt. So I spend my nights thinking about what could.
Lately I've been reflecting on the dominance that England, France and Germany had in the late nineteenth century. The three together dominated in science, math, industry, travel, leisure and on about any other standard relative to the rest of the world. Yet, they managed to take the next fifty years completely self-destructing from a fear that somehow each would be displaced by the others. Each country, like the AAFG companies, brought unique cultural and structural advantages, but were not content to exploit those. Fear brought them to attempt the destruction of the others, only to destroy themselves.
As I read about the various attempts of each of the AAFG to outcompete the others, I watch closely for signs that might resemble early 1914 when the superpowers of that time thought their conflicts would be brief and insignificant. The current challenges of once almighty Intel are a lesson in the rapidity of a downfall.
