Lots of technology policy stories this weekend

There are lots of technology-policy-related stories this weekend.  The first three concern about excess market power in tech markets, and its effects. The remaining three are miscellaneous subjects at the intersection of technology, policy, and politics.

Suggestion: If a newspaper is refusing to let you read an article, you can often get it by searching for it (on Google – irony alert, see one of the stories below), and visiting from the search result.

And a humble brag: Only the last of these stories directly concerns He Who Must Not Be Named. Nor did I mention Juicero, whose idiocy I tweeted about when it first came to market.

Is It Time to Break Up Google?

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.

They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising, Facebook (and its subsidiaries Instagram, WhatsApp and Messenger) owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. In classic economic terms, all three are monopolies.

(My response on this one: Market concentration is growing in many industries, and yes it’s a problem. The secondary effects are dire: it is both a cause and caused by increasingly unequal distributions of income AND political power. But it will be correspondingly difficult to persuade the US political system to do anything about it. Perhaps other countries will have more luck because they can appeal to anti-Americanism.)

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How Google Cashes In on the Space Right Under the Search Bar

In the 17 years since Google introduced text-based advertising above search results, the company has allocated more space to ads and created new forms of them. The ad creep on Google has pushed “organic” (unpaid) search results farther down the screen, an effect even more pronounced on the smaller displays of smartphones.

The changes are profound for retailers and brands that rely on leads from Google searches to drive online sales. With limited space available near the top of search results, not advertising on search terms associated with your brand or displaying images of your products is tantamount to telling potential customers to spend their money elsewhere.

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AT&T’s Words on Time Warner Deal Say ‘Underdog.’ Its Actions Speak Otherwise.

WASHINGTON — Here in the nation’s capital, AT&T has painted itself as an underdog that needs to merge with Time Warner in a blockbuster $85 billion deal to compete with powerful cable companies. But in several cities and states, AT&T’s actions send a different message. ….

In other words, AT&T has positioned itself as the incumbent telecommunications juggernaut that has acted to hamper competitors locally.

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Uber’s C.E.O. Plays With Fire

Travis Kalanick’s drive to win in life has led to a pattern of risk-taking that has at times put his ride-hailing company on the brink of implosion.

(My comment: Change the company name, and this is an old story. Many startups have founders who are immature on multiple dimensions. It’s up to the Board of Directors to keep them under control, and of course that does not always happen. Apple’s Board fired Steve Jobs. In late 1985, Quirky imploded after running through $185 million of funding. See http://nymag.com/daily/intelligencer/2015/09/they-were-quirky.html)

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Affordable Care Act: A Tale of Two Red States

In Oklahoma, which has raged against the
law, insurance premiums are among the
nation’s highest. New Mexico, which oversees
its marketplace, has some of the lowest.

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Finally, an update on an entirely predictable slow-motion-train-wreck that is coming in Washington, as a result of the unwillingness or inability of our dominant political party to make rational decisions.

Will the Government Be Open in a Week? Here Are the Dividing Lines

Case in point from today’s WSJ online:
Donald Trump’s Push for Border-Wall Funding Muddies Budget Talks
Administration injects volatility into a crucial week as government shutdown looms
“Less than a week before the federal government could run out of money, White House officials said President Donald Trump wants any spending deal to include some funding for a border wall, despite little appetite among congressional Republicans for risking a partial shutdown over the issue.”

Schumpeter: The University of Chicago worries about a lack of competition | The Economist

Its economists used to champion big firms, but the mood has shifted

Source: Schumpeter: The University of Chicago worries about a lack of competition | The Economist

There is an emerging consensus among economists that competition in the economy has weakened significantly. That is bad news: it means that incumbent firms may not need to innovate as much, and that inequality may increase if companies can hoard profits and spend less on investment and wages.

Yes, I certainly see this in tech fields.The double consequences are scary.

Thanks to colleague Prof. Liz Lyons for suggesting this.

Ridiculous: “Why Oxfam is getting it wrong about poverty” – CapX

Bilge from a right-wing pseudo-intellectual. I’ve never heard of this guy before, but he seems to be an expert in deception rather than analysis.

As it’s Davos time, Oxfam has issued its traditional demand for a handout.  Their wealth report this year informs us that a mere eight people have more wealth than the bottom 50 percent of the world’s population. This is entirely true of course. But Oxfam’s solution is that we should take it from the rich and […]Source: Why Oxfam is getting it wrong about poverty – CapX

This is an example of deceptive reasoning. Here’s my quick analysis:

Worstall writes:

>The result is that entrepreneurs get to keep some 3 per cent of the value of their creations. The other 97 per cent of the value flows to us consumers out here.
….
>Poverty exists and obviously we’d prefer that it didn’t. That’s why we need more rich people not fewer: because we need someone to create value for the rest of us to consume.

So he is equating “rich people” to “entrepreneurs” to “creators of value.” If only that were true. Although a small number of tech entrepreneurs get most of the publicity (Steve Jobs, Bill Gates, etc), most of the giant corporate profits are coming from increasing market power/decreasing competition in many markets. For example, few outside the industry think that the “financial services” industry (e.g. investment banking) creates value comparable to the huge profits it makes.

He is also using misdirection to imply that Sam Walton’s heirs were the entrepreneurs who created Walmart’s economic value!

Finally, he keeps using a “3 percent” number to imply that “the masses” get 97 percent of increasing economic value, and the ultra-rich get only 3 percent. In fact median income has not grown for several decades. While the overall GDP has doubled in the last 30 years, the extra income has gone entirely to the upper ten percent. (Median household income rose by 8% in the last 30 years.)
Sources: http://www.multpl.com/us-gdp-inflation-adjusted/table
https://fred.stlouisfed.org/series/MEHOINUSA672N

A slightly different way of measuring. Compare black and red lines.

figure-9-e1455724425470

So the blog post is a dishonest piece of fallacious reasoning. Is this typical of the Adam Smith Institute, where he is apparently based? Is this the average reasoning level of right-wing intellectuals today?

By the way, I’m sure there are problems with Oxfam’s report – just not the ones he claims.

Each new generation needs to learn the lesson of Theranos: appearance ≠ reality

Every 10 years or so, a conspicuous bubble bursts, and in doing so it resets the expectations of the next generation of young adults.

  • Enron
  • 2008 financial collapse
  • Now Theranos

Reading this article, I’m astonished at how little substance the adulation of Elizabeth Holmes was based on. And how much secrecy her investors allowed her. Given that she was claiming that her system would be ~100x better than established technologies, why didn’t they demand evidence? Why was it left to a reporter to figure out that the emperor had no clothes? And, was she nothing more than a successful con-artist with no genuine scientific expertise?

“In a searing investigation into the once lauded biotech start-up Theranos, Nick Bilton discovers that its precocious founder defied medical experts—even her own chief scientist—about the veracity of its now discredited blood-testing technology.”

Source: Exclusive: How Elizabeth Holmes’s House of Cards Came Tumbling Down | Vanity Fair

#firstsevenjobs

#firstsevenjobs is an interesting example of crowdsourcing research

  • Dishwasher (^3) (Exeter, Harvard, and a summer job)
  • Lifeguard (Local swimming hole)
  • Library assistant (^2) (Harvard. One was work and one was a sinecure. I’m still really fast at putting things in alphabetical order.)
  • Sci. programmer (Smithsonian Astrophysical Observatory)
  • IT salesman (IT startup company)
  • Business programmer (Xerox. My first taste of a really big company, and I hated it.)
  • Energy consultant (DC consulting firm)

from Twitter https://twitter.com/RogerBohn

August 10, 2016 at 10:11PM

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