Techocalypse | Learning by Proxy

Large technology companies had it quite easy for quite long. Those days are over.

Learning by Proxy is a weekly newsletter that covers things happening around the world, along with some context that helps you understand it better.
This is the 65th edition of the newsletter.

Technology regulation is becoming a minefield of complications. While the internet started out in America but its regulation started in Europe. Finally, the American legislation is catching up and how?

They are going for the jugular! While it might be hard to bell the cat; they have created the bell.

Techocalypse

In 1997, Apple was hanging on to dear life. When Michael Dell was asked what his one advice to Steve Jobs would be, he said, "Take the cash and return it to the shareholders and shut down the company".

Both Jeff Bezos and Elon Musk were balding. Jeff went one way (shave) and Elon another(implants).

Mark Zuckerberg was probably being a prick to someone in High School. Bill Gates was the worst human to walk the planet, a title he is proud to hold on to even today!

Lina Khan was in primary school.

As the years passed, all of the companies mentioned above grew and as they grew, they made it their business to dominate their respective field. Often this involved buying out any of the up and coming competitors OR intimidating them and their investors to drop the gauntlet. They grew so much that today each of the companies is valued at figures that are comparable to the GDP of various nations. Not small ones - Apple is 70% of the GDP of India.

Between the incredible management of COVID over the past few months and the misreporting of numbers, it might as well be 100%.

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Lina Khan grew up and went to Yale. Don't get impressed yet, George Bush also went there. But then she wrote an article while at Yale.

Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm’s structure and conduct pose anticompetitive concerns—yet it has escaped antitrust scrutiny.

Source: Yale Law Journal

The Federal Trade Commission (FTC) is a body that adjudicates 'fair play awards' for businesses. But instead of using carrots, they like to use sticks. They enforce Anti-Trust laws and are responsible for consumer protection. Under the Trump administration, all of the agencies were skewed towards the businesses. Their staffing reduced by half in many cases and headed by complete jokers. He even dismantled the Consumer Financial Protection Bureau which was Elizabeth Warren's brainchild under Obama - to rein in banks, you know, who caused 2008.

Biden is making amends and he appointed Lina Khan the head of the FTC.

Four years ago, Lina Khan was a month out of law school, where she had published a groundbreaking article arguing that the prevailing legal doctrine was allowing Amazon to get away with anticompetitive behavior. Antitrust law was not yet a high-profile issue, and Khan’s suggestion that it might apply to tech companies whose core consumer offerings were free or famously cheap was considered bizarre by much of the legal establishment. This week, Khan, at all of 32 years old, was appointed chair of the Federal Trade Commission, one of the two agencies with the most power to enforce competition law.

[...]

The introduction of the five House antitrust bills and the elevation of Khan to FTC chair, for example, look like two separate stories. But they’re really two parts of the same story: Khan was herself the key investigator behind the House antitrust subcommittee’s investigation of Apple, Amazon, Facebook, and Google, begun in 2019. The bills introduced last week are the fruits of that investigation.

Source: Wired

Lobbyist in Washington DC and lawyers in San Francisco had a busy week and signed several retainers!

Now there are 5 laws that are being pushed through Congress to rein in the Tech Companies. I had written about this piece-meal in my previous editions. Here, here, and here.

The 5 bills that are currently on the floor are -

  1. Merger Filing Fee Modernization Act of 2021 - Essentially supposed to make it a little more costly to acquire.

  2. Access Act - Meant to protect and ensure support for senior citizens - trains its guns on data portability. No more platform lock-in.

  3. American Choice and Innovation Online Act - Self-preferencing of services.

  4. Ending Platform Monopolies Act - Platform companies competing with services on their platform. Apple Music Vs Spotify or Amazon selling the same products that sellers sell on Amazon.

  5. Platform Competition and Opportunity Act of 2021 - Banning M&A, especially for the Big 4.

Barring the first law, which is a mandatory fee meant to make M&A more expensive, it would certainly not act as a deterrent. A few million dollars are not going to stop Billion dollar deals.

The next four are meant to be applied to companies that are considered "Covered Platforms"

This is defined as:

(i) at the time of the Commission’s or the Department of Justice’s designation under section 2(d), or any of the twelve months preceding that time, or in any of the 12 months preceding the filing of a complaint for an alleged violation of this Act -

(I) Has at least 50,000,000 United States-based monthly active users on the online platform; or

(II) has at least 100,000 United States-based monthly active business users on the platform;

(ii) is owned or controlled by a person with net annual sales, or a market capitalization greater than $600,000,000,000, adjusted for inflation on the basis of the Consumer Price Index, at the time of the Commission’s or the Department of Justice’s designation under section 2(d) or anyof the two years preceding that time, or at any time in the 2 years preceding the filing of a complaint for an alleged violation of this Act; and

(iii) is a critical trading partner for the sale or provision of any product or service offered on or directly related to the online platform.

Source: US Congress

The hope is that with the teeth that these laws provide, the FTC will be able to go after very specific companies. How many companies have a valuation greater than USD 600 billion?

In its current form, the bill would not even be pass because it is too tightly defined. This becomes a problem because...

A bill of attainder (also known as an act of attainder or writ of attainder or bill of penalties) is an act of a legislature declaring a person, or a group of persons, guilty of some crime, and punishing them, often without a trial. As with attainder resulting from the normal judicial process, the effect of such a bill is to nullify the targeted person's civil rights, most notably the right to own property (and thus pass it on to heirs), the right to a title of nobility, and, in at least the original usage, the right to life itself. Bills of attainder passed in Parliament by Henry VIII on 29 January 1542 resulted in the executions of a number of notable historical figures.

[...]

The United States Constitution forbids legislative bills of attainder: in federal law under Article I, Section 9, Clause 3 ("No Bill of Attainder or ex post facto Law shall be passed"), and in state law under Article I, Section 10. The fact that they were banned even under state law reflects the importance that the Framers attached to this issue.

Source: Wikipedia

A law that targets a very small number of companies only will be treated the same way, a law only meant for the blacks would be treated. It is discriminative. The legal experts who get paid tens of millions by the top tech companies would know this. So this language would have to be tweaked. It remains to be seen if it has any teeth left when they are done with it.

The one thing that is clear, is that the anti-trust case against tech companies has bi-partisan support in the US, for vastly different reasons, but they support it nevertheless. With an FTC that is helmed by someone with strong opinions and with lawmakers who are willing to make the required laws, it won't be too long before the axe starts swinging.

Now you can see why Jeff Bezos could not wait a day longer to quit his role as CEO of Amazon and start dumping Amazon shares. By the time this investigation start delivering blows, the newly retired Jeff Bezos would have formed a “foundation” and "Donated" all of his shares to it which would then have sold it to engage in "Philanthropy".

Facebook bought Instagram for USD 1 billion and WhatsApp for USD 19 billion. Do you want to know what happens if the company is not allowed to buy another on the cheap like that?

and then,

The United Nations Special Rapporteurs have written to the Government of India expressing concerns about the newly notified IT Rules, 2021, and asked it carry out a detailed review, and consult with all relevant stakeholders.

Source: Inc42

Instead, if these guys could just get the world leaders around a table just like for the climate summit and debate and agree to a single law for the Internet globally, there would not be an IT Rules, 2021.

If we can agree on protocols such as Bluetooth and IEEE 802.11 (WiFi for short); why on earth can’t we agree on a set of protocols for how the internet functions and how things work within it globally?

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The leg that kicked the axe

The leg of course belongs to Britain. And the result - Brexit.

Britain left the EU in the midst of the Covid lockdown and went into stricter lockdown in Jan 2021. As a result of it, consumption declined and the hits that the county has been taking have generally been macro-economic. The fund movement by large banks to the mainland, and such.

Now as Britain emerges from the lockdown (sort of), the real effects are being left.

Agnieszka Bleka has had to work hard in past years to find companies that need workers, spending much of her day reaching out to local businesses in the northern English city of Preston where she is based.

But now, Ms. Bleka, who owns Workforce Consultants, a company that finds jobs in Britain for mostly Eastern and Central Europeans, said that she was fielding several calls a day from companies looking for temporary staff, and that she can’t keep up with the demand.

“The fish pond is getting smaller,” she said. “And people are picking and choosing the jobs, or leaving as well, going to their home countries.”

Source: New York Times

Brexit was supported in Britain because there was a perception that the migrants were stealing local jobs and causing unemployment amongst the British. To say the least, Brexit has been immensely successful. It has chased all those migrants who were doing the hard work, away.

Jack Kennedy, an economist at Indeed, a job search site, said the demand for hospitality workers was outpacing the number of available workers across the sector.

“The job postings have been rising so fast and the supply of candidates just really hasn’t been able to keep up with that,” he said, adding that a reliance by some industries on foreign-born workers who may have left during the pandemic had probably been part of the problem.

But the dearth of employees is also driving up pay, he said, with hourly wages advertised for hospitality roles across the country increasing. That raises the question of whether other industries struggling to fill roles will follow suit, and how big of an impact on the economy the shortages will have.

Source: New York Times

It seems like there is a solution to this problem - Immigrants!

Rebellion

In the show Mosquito Coast, Allie a character played by Justin Theroux walks into a poor neighbourhood. There are several homeless people who are making good with any shelter they can find. He says - you know what their crime is, they don't consume.

Capitalism stands on the bedrock of consumption and if people don't consume; capitalism fails. This is also the reason we will never successfully fight climate change till we hang around in this capitalistic paradigm.

China is an authoritarian state but it operates in a capitalistic paradigm. If the Chinese Communist Party is going to clamp down on free speech, the millennials have found a novel way to protest.

During its seven decades of ruling in China, the Chinese Communist Party has become increasingly skilled at crushing street protests such as the 1989 Tiananmen Square student demonstrations. But the government is now facing a new form of resistance that may be a little harder to put down—“Tang Ping” (躺平) or lying flat, a passive approach to life that subtly thwarts the government’s desire to foster a hardworking and productive populace.

The concept advocates an almost monastic outlook, including not getting married, not having children, not having a job, not owning property, and consuming as little as possible. For many, this is almost the only way in an authoritarian country to fight against the growing pressures from long work hours, skyrocketing housing prices, and the ever higher cost of raising children. Lifestyle philosophies based on rejecting ambition, and being a cog in China’s capitalist machine have been spreading in recent years, and “lying flat” is the latest culmination of such trends, explained Wu Qiang, an independent political analyst in Beijing.

Source: Quartz

The Chinese government has treated people like machines. They restricted reproduction to one child when they wanted and now want to turn that knob to 2 since it suits them. They seem to have found the extent to which humans - living in how much ever ignorance - would allow the government to push them around.

What can you do when the rebellion involves doing nothing? Can you really punish them?

“You can’t stand up, but you don’t want to kneel down. Then you can only lie flat,” one Weibo user recently put it.

Source: Quartz

Also

Last week Zoom was a sponsor at the F1 race at Paul Ricard.


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Originally published on https://blog.viveksrinivasan.com