Balaji Srinivasan and others debate whether breaking up Amazon, Facebook, and Google would help or hurt innovation. They cite Facebook's $5 billion FTC fine and Elizabeth Warren's breakup proposal, and discuss how startups are exploring blockchain to avoid centralized control.
Questions this video answers
$5 billion
What the Europeans are looking to us to subsidize their, their government operating costs.
I think they're looking for other governments around the world to take a similar stance to make sure that this is the use of personal data is, is appropriately governed and managed in these really large companies. And it's not just Amazon, it just happens to be that Amazon is the flavor of the day in this situation.
Balaji, is there reason for regulators to think that Amazon is implementing anti competitive practices in its different businesses?
Well, the thing is actually organically competitors like Shopify are actually now are rising that are starting to quietly compete with Amazon. So I think, you know, there's an organic kind of market practice here. But you know, what's happening with the EU is sort of a, it's symbol of broader things. You know, you have the Google antitrust thing in the US you have the huge Facebook FTC fine recently $5 billion. And you know, people are saying, oh that should be trillions of dollars, which would basically put the company out of business. I think that regulation is often a measure of societal animus towards the regulated industry rather than being a surgical targeted affair.
All right, so if you were to rate on a spectrum the names of big tech companies with liability.
Right.
Who's on top?
Well, I think they're the folks that you're seeing at the hearings today on the Hill. Right? It is Amazon, it is Facebook, it is Google. Right. It's the, it's the folks who have an enormous amount of power as at least in part as a result of the tremendous amount of consumer data that they have and the requirement that is going to come along that they manage that consumer data in an intelligent fashion. So again, Amazon's got, and a number of other of these companies do have anti competitive questions. That's part of what's being asked of them today. But they also have the question of what are you doing with this consumer data and how can you ensure that it's going to be appropriately protected? I think that's as much or a bigger issue that they're going to have to wrestle with.
How she is sure that it's appropriately. Go ahead, go ahead.
Well, so some companies like Apple for example, are less in the crosshairs because you know, they, they have devices that are private. But Elizabeth Warren recently remarked that she wanted to break them up too. So I'm not, I'm not sure that there is something that these companies can necessarily do. We're going to have to see how that plays out.
Balaji, does any of this come up now in pitch meetings, slide decks, the way in which entrepreneurs are trying to present or position their upcoming startup companies.
Yeah, so something we think about actually of italic material. Ethereum remarked on this recently. Control is potentially a liability. So more and more folks are thinking about, you know, going decentralized, you know, going to actually, you know, blockchain kind of platforms because then there's no single party to fine, no single point of control. You know, all the proceeds are split between all the participants of the network. So that's, that's kind of a different animal.
TED There seems to be something of a growing chorus among Wall street analysts that maybe if some of these companies did break themselves apart, whether it was, you know, pushed by regulators or not, that more value could be realized with some of these different businesses. Amazon for example, versus versus E Commerce. That more value could be realized with these businesses standalone. What do you think?
I disagree with that. I've certainly heard that argument. We've seen that in the past with the Bell system going back 25 plus years. We saw antitrust concerns around Microsoft where the Justice Department did get a win, but didn't necessarily get a different company out of it. I think the fact of the matter is we have to hold these companies to an appropriate account for the way they manage their operations and as I said before, manage the data that they've been entrusted with. But breaking them up does not create more of a, I don't think that creates more value. The value they create is in the ecosystems that surround them. The many thousands of other companies that are part of the, their strategic partnership groups, their various ways of working with them, the sellers on Amazon, the other companies that play on their platforms, they provide a tremendous amount of value by virtue of being large and attracting all these other companies to those ecosystems. That's the power they have and they should continue to have in order to create real value.
But if you look at a long term chart of Microsoft's growth, things changed once they got the litigation done right. Growth rates flattened out over time.
They did, and then they, and then they reasserted themselves as Microsoft was part of that next innovative wave. Right. And they will continue to assert themselves in these large companies if they're able to innovate and grow. The biggest concern I have about breaking them up is that you're going to dampen the innovation engine. That's the most important thing they bring to the table to create economic growth is that innovation. Don't take that away.
