The term Big Tech
The term Big Tech has been used in journalism to refer to the largest and most dominant companies in the information technology industry.
By the end of the 2010s, five American technology companies – Apple, Microsoft, Amazon, Alphabet (holding company for Google), and Facebook – were, besides Saudi Aramco, the most valuable public companies globally. At different points, the maximum market capitalization of each of these five technology companies has ranged from around $500 billion to around $1.4 trillion USD. There were also two Chinese technology companies in the top ten most valuable publicly traded companies globally at the end of the 2010s, which were Alibaba and Tencent.
The biggest American technology companies have replaced the energy giants such as Exxon Mobil, BP, Gazprom, PetroChina and Royal Dutch Shell (so-called "Big Oil") from the first decade of the 21st century at the top of the NASDAQ stock index. They have also outpaced the traditional big media companies such as Disney, AT&T, Comcast and 21st Century Fox (the so-called "Big Media") by a factor of 10. In 2017, the five biggest American IT companies had a combined valuation of over $3.3 trillion, and made up more than 40 percent of the value of the Nasdaq 100. There has been speculation that it may not be possible to live day-to-day in the digital world outside of the ecosystem created by the five biggest tech companies (by market capitalisation). Some have also raised the issue of regulating their influence in the areas of privacy, market power, free speech and censorship (including inappropriate content), and national security and law enforcement. On the other hand, by providing cheap or even free services to consumers, they remain popular.
Contents
1Membership and definitions
2Causes
3Opposition
4BATX and other tech companies
5Gallery
6See also
7References
8External links
Membership and definitions
There have been different definitions and names for the groups of largest companies by different authors. The terms "Big Four" and "Big Five" are frequently used. One grouping includes Google, Apple, Facebook, and Amazon, which has been called "GAFA", the "Gang of Four" (after the Gang of Four political faction in China), and the "Four Horsemen" (after the Four Horsemen of the Apocalypse). A more inclusive grouping, GAFAM, defines Google, Amazon, Facebook, Apple, and Microsoft as "Big Tech" due to their success in the stock market. Besides Saudi Aramco, which has the highest market cap globally, the GAFAM companies are the next five most valuable public corporations in the world (measured by market capitalisation), as of January 2020. Nikos Smyrnaios justified the GAFAM grouping as an oligopoly that appears to take control of the Internet by concentrating market power, financial power and using patent rights and copyright within a context of capitalism. Another grouping, FAANG, replaces Microsoft with Netflix.
Among the big tech companies, Amazon is a leader in e-commerce; it is also the leader in providing cloud services, with nearly 50% market share. Amazon with 69% market share and Google with 25% market share lead the charge in the area of Artificial Intelligence-based personal digital assistants or smart speakers (Amazon Echo and Google Home). Apple sells high-margin smartphones and other computing devices. Facebook and Google share a digital advertising duopoly. In addition to social networking, Facebook also dominates the functions of online image sharing (Instagram) and online messaging (WhatsApp). Google has monopolized the web-based functions of online search (Google search), online video sharing (YouTube) and online mapping-based navigation (Google Maps). Microsoft continues to dominate in desktop operating system market share (Windows) and in office productivity software (Microsoft Office). Microsoft is also the second biggest company in the cloud computing industry (Microsoft Azure), after Amazon, and is also one of the biggest players in the video game industry (Xbox).
Former Google CEO Eric Schmidt, author Phil Simon, and professor Scott Galloway have each grouped the GAFA companies together (Google, Amazon, Facebook, Apple), on the basis that those companies have driven major societal change via their dominance and role in online activities. This is unlike other large tech companies such as Microsoft and IBM, according to Simon and Galloway.[10][23] In 2011, Eric Schmidt argued that "Microsoft is not driving the consumer revolution in the minds of the consumers."
Causes
Smyrnaios argued in 2016 that four characteristics were key in the emergence of GAFA: the theory of media and information technology convergence, financialization, economic deregulation and globalization. He argued that the promotion of technology convergence by people such as Nicholas Negroponte made it appear credible and desirable for the Internet to evolve into an oligopoly. Autoregulation and the difficulty of politicians to understand software issues made governmental intervention against monopolies ineffective. Financial deregulation led to GAFA's big profit margins (all four except for Amazon had about 20–25 percent profit margins in 2014 according to Smyrnaios).
Globalization
According to Smyrnaios, globalization has allowed GAFAM to minimize its global taxation load and pay international workers much lower wages than would be required in the United States.
Oligopoly maintenance
Smyrnaios argued in 2016 that GAFA combines six vertical levels of power, data centers, internet connectivity, computer hardware including smartphones, operating systems, Web browsers and other user-level software, and online services. He also discussed horizontal concentration of power, in which diverse services such as email, instant messaging, online searching, downloading and streaming are combined internally within any of the GAFA members.
Opposition
Scott Galloway has criticized the companies for "avoid[ing] taxes, invad[ing] privacy, and destroy[ing] jobs", while Smyrnaios has described the group as an oligopoly, coming to dominate the online market through anti-competitive practices, ever-increasing financial power, and intellectual property law. He has argued that the current situation is the result of economic deregulation, globalization, and the failure of politicians to understand and respond to developments in technology.
Smyrnaios recommended developing academic analysis of the political economy of the Internet in order to understand the methods of domination and to criticize these methods in order to encourage opposition to that domination.
Use of externally-generated content
On 9 May 2019, the Parliament of France passed a law intended to force GAFA to pay for related rights (the reuse of substantial amounts of text, photos or videos), to the publishers and news agencies of the original materials. The law is aimed at implementing Article 15 of the Directive on Copyright in the Digital Single Market of the European Union.
BATX and other tech companies
See also: BATX
Smyrnaios argued in 2016 that the Asian giant corporations Samsung, Alibaba, Baidu and Tencent could or should be included in the definition. Together, this has been referred to as "G-MAFIA + BAT", also including IBM. Samsung is primarily an industrial conglomerate. While a dominant presence in the mobile telephony marketplace, Samsung is presently dependent on the Android ecosystem, which Google controls, hence Samsung is not included in the BAT formulation.
"BATX" is also used to refer specifically to the large internet companies in China. "BATX" stands for Baidu, Alibaba, Tencent, Xiaomi, the acronym for the four biggest tech firms in China. The term BATX is used to refer to the biggest tech giants in China, counter-standing by GAFAM (Google, Apple, Facebook, Amazon, Microsoft ) in United States. BATX are few of first tech companies started in the 2000s in the rise of Chinese tech revelution and became widely used among Chinese netizens. Notably, in the recently years after 2015, some other tech companies like Huawei, DIDI, JD and ByteDance have also became some of the up-and-coming biggest tech giants in the industry.
Gallery
Aerial view of Apple Park, the corporate headquarters of Apple Inc., Cupertino, California
Microsoft headquarters (western side), Redmond, Washington
Amazon headquarters, Seattle, Washington
Alphabet (Google) headquarters, Mountain View, California
Facebook headquarters, Menlo Park, California
See also
References
^ "The Economics of Big Tech". Financial Times. 2018-03-29. Retrieved 2019-06-06.
^ Jump up to:a b "Most Valuable Companies in the World - 2020". FXSSI - Forex Sentiment Board. Archived from the original on 27 January 2020. Retrieved 27 January 2020.
^ Jason Paul Whittaker (Feb 11, 2019), "Introduction", Tech Giants, Artificial Intelligence, and the Future of Journalism (Open Access), Routledge
^ Jump up to:a b The 'Big Five' Could Destroy the Tech Ecosystem
^ It’s almost impossible to function without the big five tech giants
^ Privacy, power and censorship: how to regulate big tech
^ Yglesias, Matthew (May 3, 2019), The push to break up Big Tech, explained
^ "What are the Four Big Tech Companies in the US?". WorldAtlas. Retrieved 2020-01-27.
^ "GAFA Approach to Digital Banking Transformation - Accenture". www.accenture.com.
^ Jump up to:a b Simon, Phil (22 October 2011). The Age of the Platform: How Amazon, Apple, Facebook, and Google Have Redefined Business (1 ed.). Motion Publishing. p. 312. ISBN 9780982930250.
^ Schonfeld, Erick (31 May 2011). "Eric Schmidt's Gang Of Four: Google, Apple, Amazon, And Facebook – TechCrunch". techcrunch.com. Archived from the original on 2019-05-25. Retrieved 2019-05-25.
^ ""The Four Horsemen" – An Interview with Scott Galloway".
^ Waters, Richard (27 July 2018). "Move over Faangs, make way for Maga". Financial Times. Retrieved 18 November2018.
^ Stevens, Pippa (26 April 2019). "Four 'MAGA' stocks are worth a combined $4 trillion. Here's the one to own, say two experts". CNBC. Archived from the original on 1 January 2020. Retrieved 27 January 2020.
^ "Move over FAANG, here comes MAGA - The tech giants are still in rude health". The Economist. 4 August 2018. Retrieved 27 January 2020.
^ 김제림 (Kim Je-rim) (29 May 2019). "'FAANG' 지고 'MAGA' 시대 온다 ("FAANG" is losing and "MAGA" is coming)". 매일경제 (in Korean). Retrieved 27 January 2020.
^ Jump up to:a b c d e f g Smyrnaios, Nikos (2016). "L'effet GAFAM : stratégies et logiques de l'oligopole de l'internet" [The GAFAM effect: Strategies and logics of the internet oligopoly]. Communication et langages (in French). NecPlus. 188. doi:10.4074/S0336150016012047. ISSN 0003-5033. Archived from the original on 2019-07-13. Retrieved 2019-07-13.
^ Grant, Kinsey (Sep 26, 2017). "FANG Stocks Are Getting Their Own Index". The Street.
^ Frankel, Matthew (29 September 2017). "What Are the FANG Stocks?". Motley Fool. Retrieved 11 August 2018.
^ How 5 Tech Giants Have Become More Like Governments Than Companies, October 26, 2017
^ "Desktop Operating System Market Share Worldwide, Jan 2020". StatCounter GlobalStats. Archived from the original on 27 January 2020. Retrieved 27 January 2020.
^ Vargas, Cristina (25 October 2019). "Cloud Market Share 2019: AWS vs Azure vs Google – Who's Winning?". Skyhigh Networks (McAfee). Retrieved 27 January 2020.
^ Galloway, Scott (2017). The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google. Random House. ISBN 9781473542105.
^ "Eric Schmidt's "Gang Of Four" Doesn't Have Room for Microsoft". AllThingsD.
^ Pisani, Bob (3 October 2017). "We are letting Amazon and Apple 'avoid taxes, invade privacy, and destroy jobs,' says NYU professor". CNBC.
^ Bougon, François (2019-05-21). "Face aux Gafam, les députés adoptent le droit voisin" [Members of Parliament pass a related rights law against GAFAM] (in French). Le Monde. Archived from the original on 2019-05-25. Retrieved 2019-05-26.
^ Sterling, Bruce (15 March 2019). "The Big Nine G-MAFIA BAT". wired.com. Wired. Retrieved 10 August 2019.
^ Greven, Mark & Wei Wei (17 October 2017). "Meet China's new tech giants: Alibaba, Baidu, Tencent and Xiaomi". The Telegraph. Retrieved 13 October 2019.
^ "Biggest Chinese tech companies: From Alibaba and Huawei to Tencent". NS Business. 2019-02-04. Retrieved 2019-10-15.
^ Chen, James. "BATX Stocks". Investopedia. Retrieved 2019-10-17.
^ Hooker, Lucy; Palumbo, Daniele (2019-05-20). "Why Huawei matters in five charts". Retrieved 2019-10-15.
^ "Top 7 Chinese Tech Companies". www.chinawhisper.com. Retrieved 2019-10-23.
External links
Global Digital Industry 2020
Articles
The Future of Big Tech Media
by Jane Fields Graphic Designer
This is the decade where people are concerned about the existence of growing Tech Brands that invade everyone's life online and off. It is hard to escape and at the same time it is this new technology that is causing innovation in all sectors of business.
The term Big Tech has been used in journalism to refer to the largest and most dominant companies in the information technology industry. The most common grouping of Big Tech companies includes Google, Amazon, Facebook and Apple and is referred to as GAFA, Big Four, or the Four Horsemen.
These companies have been the center of regulatory pressure from the Department of Justice and Federal Trade Commission because of concerns over monopolistic practices. A more inclusive grouping includes Microsoft and is referred to as GAFAM or Big Five.
By the end of the 2010s, five American technology companies: Amazon, Apple, Google, Facebook, and Microsoft were among the most valuable public companies globally (beaten only by Saudi Aramco).At different points, the maximum market capitalization of each of these five technology companies has ranged from around $500 billion to around $1.4 trillion USD. There were also two Chinese technology companies in the top ten most valuable publicly traded companies globally at the end of the 2010s, which were Alibaba and Tencent.
The biggest American technology companies have replaced the energy giants such as Exxon Mobil, BP, Gazprom, PetroChina and Royal Dutch Shell (so-called "Big Oil") from the first decade of the 21st century at the top of the NASDAQ stock index. They have also outpaced the traditional big media companies such as Disney, AT&T, Comcast and 21st Century Fox (the so-called "Big Media") by a factor of 10.
In 2017, these five tech companies had a combined valuation of over $3.3 trillion, and made up more than 40 percent of the value of the Nasdaq 100. There has been speculation that it may not be possible to live day-to-day in the digital world outside of the ecosystem created by the five biggest tech companies (by market capitalisation).
Some have also raised the issue of regulating their influence in the areas of privacy, market power, free speech and censorship (including inappropriate content), and national security and law enforcement. On the other hand, by providing cheap or even free services to consumers, they remain popular.
A media conglomerate, media group, or media institution is a company that owns numerous companies involved in mass media enterprises, such as television, radio, publishing, motion pictures, theme parks, or the Internet. According to the magazine The Nation, "Media conglomerates strive for policies that facilitate their control of the markets around the world."
A conglomerate is a large company composed of a number of smaller companies (subsidiaries) engaged in generally unrelated businesses.
Starting in 2007, it has been questioned if media companies actually are related. Some media conglomerates use their access in multiple areas to share various kinds of content such as: news, video and music, between users. The media sector's tendency to consolidate has caused formerly diversified companies to appear less diverse to prospective investors in comparison with similar companies that are traded publicly and privately. Therefore, the term media group may also be applied, however, it has not yet replaced the more traditional term.
Can these companies merge and come together or will they be broken up into smaller companies to level the playing field.
Trump's Enforcer: Meet the Man Who Holds Hollywood and Silicon Valley's Future in His Hands
As showbiz scales up to battle Big Tech, Makan Delrahim, the nation's top antitrust regulator (and a former movie producer), is becoming as influential as any mogul over Netflix, Megamergers, the Writers Guild and maybe the entire future of the entertainment business.
One day last spring, Makan Delrahim was checking in on the day's news when a story about the Oscars caught his eye. Steven Spielberg was said to be pushing the film Academy to ban from eligibility any movie that premiered on a streaming service rather than in theaters. At the time, Netflix had just won three awards for Alfonso Cuarón's Roma, and the company was forced to defend its Oscars.
That seemed unfair to Delrahim, 50, who in addition to leading the U.S. Department of Justice's powerful Antitrust Division also happens to be a former movie producer. He says nobody associated with the streaming giant pressured him; he simply felt compelled to do something, so he fired off a letter to Academy CEO Dawn Hudson and warned her that the discussed restriction could amount to a violation of Section 1 of the Sherman Act, which prohibits "collusive" agreements aimed at suppressing competition. Delrahim didn't specify how Oscars eligibility would interfere with the marketplace for movies, although it was fairly clear that he saw Spielberg's effort as part of a plot with greater significance.
"I wanted to ensure that a group of the establishment incumbents didn't force changes to those rules to disadvantage potential new distribution models that would harm consumers or filmmakers," says Delrahim, speaking in his office at DOJ headquarters in Washington, adding that he was satisfied with the Academy's response. "Ultimately they kept the existing rules and did not change them to disadvantage Netflix and Amazon or other streaming services. I basically wanted to remind them that the antitrust laws could apply."
As the entertainment industry races to scale itself up to compete with Big Tech, and as Apple, Google and Jeff Bezos' Amazon spend increasingly large sums on premium content, Delrahim has become as potent a business gatekeeper in Washington as anyone not named Donald Trump. He's refereeing mammoth mergers, including the $105 billion tie-up between AT&T and Time Warner, and Walt Disney Co.'s $71 billion acquisition of most of 21st Century Fox. He's reevaluating licensing rules that have governed the movie and music businesses for nearly three-quarters of a century. He's even taken an interest in the Writers Guild's nasty fight with talent agencies. Perhaps more than anyone in the Trump administration, his perspective about what's considered anticompetitive (or not) at a transformational moment will shape the future of the content industry.
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Al Drago/Bloomberg via Getty Images
Delrahim after the June 2018 federal court hearing that cleared AT&T’s takeover of Time Warner.
Any conversation with Delrahim will include a lot about Netflix. Given its meteoric growth, that's no surprise. But the company also represents something more to Delrahim, who for a short time dabbled in film and TV production. He cites Netflix repeatedly when explaining his views on entertainment and the recent flurry of moves by the DOJ's Antitrust Division.
For instance, when Delrahim defends his office's unsuccessful challenge to AT&T-Time Warner, he cites testimony from executives such as Time Warner's Jeff Bewkes, who said that they needed to marry digital distribution with content to glean insights from viewing data and better understand customers in order to stay competitive. "They argued that they needed to be vertically integrated to reach consumers. I don't know if that was correct," says Delrahim. "[Time Warner's] HBO certainly had a [streaming video] product already. Also, Netflix didn't need to own a phone company or satellite company to compete."
Netflix also comes up when Delrahim addresses Disney's recent box office dominance. The company boasted eight of the top 10 performing movies in 2019 and captured 40 percent of domestic market share, yet the DOJ's Antitrust Office swiftly approved its purchase of Fox from Rupert Murdoch. In Delrahim's view, Disney's box office dominance speaks less to the company's aggressive acquisitions (including Marvel, Pixar and Lucasfilm) and more to one studio simply enjoying a winning streak after correctly identifying the pulse of the market.
"They should not be punished for making good movies," says Delrahim. "If I did that, I could see [Disney CEO] Bob Iger sitting there saying, 'Wait a minute, we're too successful, guys. Let's not make this next animated film so good.' That's not what antitrust is for. So they own a lot of property and did some brilliant transactions in acquiring them, but there's no guarantee that next year they will also be great, unless they put the effort into it. Any other content creator [can do it]. Again, Netflix. What did they pay for The Irishman?"
That would be $160 million, but chances are Delrahim already knows that figure. It's rare for an influential government official to follow the minutiae of the entertainment business, but Delrahim is conversant in showbiz news. It's his informed view of the shifting marketplace — a dynamic one where big isn't inherently bad — that also paved the way for the DOJ's huge recent move to seek the end of the Paramount Consent Decrees, the rules that have governed the relationship between studio distributors and theatrical exhibitors for decades. Those standards came about after the government in the 1940s fought for a place for independents amid corporate tie-ups between studios and theaters, as well as restrictive license agreements. After a landmark Supreme Court ruling, studios were forced to divest their theaters and eschew "block booking" (bundling multiple films into one theater license) and "circuit dealing" (licensing a film en masse to all movie theaters under common ownership, as opposed to licensing on a theater-by-theater basis). Now, to the chagrin of many in the exhibition community, the DOJ seeks a judge's approval to sunset those banned practices. Says Delrahim, "There's no reason why antiquated rules from 70 years ago should prevent new business models from existing today."
As Hollywood reckons with potentially sweeping changes at its doorstep, just what kind of regulator is Delrahim? Has the landscape fundamentally shifted as he seems to think? Would the Trump administration, which is already investigating Facebook, Google and other technology companies, ever tolerate a tech giant like Apple or even Netflix swallowing a traditional studio? And how else is the DOJ primed to intervene in Hollywood's affairs? Like many things in Trump World, the answers to these questions get a little messy.
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AP Photo/Cliff Owen
Noel Francisco, Delrahim and Steven Engel were sworn in by the Senate Judiciary Committee for the May 2017 hearings on their DOJ nominations.
Delrahim's journey to his seat of power begins in Iran, where he was born and where, at age 10, his Jewish family escaped as the shah was toppled by Islamic revolutionaries. He says the experience taught him the value of a government respecting independent thought.
Settling in Los Angeles, Delrahim became acquainted with entrepreneurship by pumping fuel for customers at his father's gas station. After attending UCLA and law school at George Washington University, he worked a quick stint at a politically connected white-shoe law firm, Patton Boggs, before joining Sen. Orrin Hatch (R-Utah), who was then the influential chairman of the Judiciary Committee. It was under Hatch's tutelage, and later at the DOJ, where Delrahim found his calling — working on both antitrust issues as well as intellectual property policy. In 2005, he returned to private practice in L.A., where he advocated on behalf of tech companies including Apple, Google and Qualcomm.
At the same time, Delrahim began dabbling in entertainment. In 2016, he executive produced a horror-comedy film starring Adrian Grenier called Trash Fire, which premiered at Sundance. Working with reality TV powerhouse Pilgrim Films (American Chopper, Ghost Hunter), Delrahim created a pilot for a series about wrongfully convicted individuals. No network picked it up. Delrahim also became a board member for World Poker Tour.
He dates his interest in showbiz to his time working for Hatch. After gaining exposure to DNA legislation and problems in the criminal justice system, he thought it would make for a good documentary. In fact, he credits himself — probably jokingly, though it's hard to tell when Delrahim is attempting humor — with developing the concept for Making a Murderer before that doc miniseries (on Netflix, of course) came along. "It's rare to work with a true Renaissance man,” says Pilgrim CEO Craig Piligian. “He brought a lot to the table. We pursued the idea even after he divested himself [after taking a job in the Trump Administration.]"
Those who practice law in antitrust circles say Delrahim is highly intelligent, charismatic and knows everyone who matters. "I disagree 100 percent on what he is doing on patents, and I believe many consent decrees on the books still make sense," says Rutgers law professor Michael Carrier. "But personally, I like him." Adds Richard Hamilton, a partner at Ulmer & Berne who spent two decades in the DOJ's Antitrust Division, "He's a smart guy, a shrewd guy. He's responsive to public discourse and he's practical."
He's also proved to be quite opportunistic. On March 9, 2016, when it was still not clear that Donald Trump would win the Republican nomination for president, Delrahim endorsed Trump in a New York Post column. “Key Republicans say they won’t back Donald Trump if he’s the GOP nominee,” began Delrahim’s column. “That may make them feel good — and seem principled. But from a practical standpoint, it makes no sense. Not when the next president will choose one or possibly more justices for the Supreme Court.”
The move ended up being rewarded. After Trump took office, Delrahim moved his wife and three kids to D.C. to work in the White House counsel's office, where he helped shepherd Neil Gorsuch's successful Supreme Court nomination. In March 2017, Trump nominated him as the nation's top antitrust enforcer; the Senate approved his appointment six months later.
These days, there are two schools of thought on what antitrust regulators should be doing. The first is a conservative approach where "consumer welfare" is the paramount consideration. Heavily indebted to the work of Richard Posner, Robert Bork and the so-called Chicago School, this approach emphasizes high output, low prices and, in general, efficiencies in the marketplace. It's less concerned with ensuring the wide distribution of wealth. It also tends to tolerate consolidation but not naked price fixing.
The second school is a liberal regulatory approach more concerned with the harm incurred when corporations amass too much power. Under this view, markets are fragile, and smaller businesses deserve greater protection from well-protected oligopolies. In the view of Lina Khan and other scholars in the "New Brandeis School" (named for Supreme Court Justice Louis Brandeis, who once took on industrial magnates like John D. Rockefeller), monopoly laws have been diminished, and what society needs is old-fashioned trust-busting, plus greater attention to predatory pricing, open access to critical infrastructure and healthy labor markets.
Although Delrahim is closer in ideology to the first school than the second, the truth is that he fits neither rubric neatly. On one hand, he supports the consumer welfare standard. In a June 2018 speech, he connected his parents' emigration from Iran to the dangers of allowing antitrust enforcement to deliberate on what is good and bad for democracy and society at large, adding that "by giving us focus, the consumer welfare standard reduces the risk of what Brandeis called 'dangers to liberty' from well-meaning enforcers." On the other hand, this November at Harvard, where he signaled his office would take a hard look at Big Tech, he said regulators should look beyond what people are paying for products when weighing what companies are doing in the marketplace. Consumer welfare, he noted, could also incorporate "consumer choice, quality and innovation."
This flexibility invites attacks from both conservative and liberal thinkers and makes it difficult to determine how Delrahim would approach any proposed deal. Take, for example, the DOJ's challenge to AT&T-Time Warner, the first time in decades that the government had sought to block a so-called "vertical" merger of companies with complementary, rather than similar, businesses.
The right criticized him for wandering from the free market dogma once outlined by Bork. In a National Review column, George Mason University Antonin Scalia Law School professor Joshua Wright wrote, “The merging parties do not compete with one another by selling substitute products to consumers, but rather offer complements within the same chain of distribution. Time Warner creates television content, while AT&T distributes such content through its various services. The DOJ’s complaint articulates a dubious theory of harm and fails to articulate points fundamental to economically grounded theories of harm.”
And on the left, observers were also unimpressed by the DOJ’s theory on why the merger deserved to be blocked. Except in their view, the DOJ was too reliant on economic models and was forfeiting an opportunity for a stronger swipe. “The case could have centered on what Congress really cared about: competition, concentration and the direction of the industry,” wrote Tim Wu in a New York Times column. “Was the likely effect of the merger to diminish the level of competition in the media industries?... In vain pursuit of numerical certainty about the monthly cost of pay TV service, the ruling never really came to address this broader question.”
Delrahim becomes defensive when questioned about the DOJ’s approach in the case.
“If there was evidence to show the lessening of innovation, we’d have presented that,” he says testily. “But because case law is not as plentiful with respect to those areas, it would have been an even greater challenge to bring a case relying on merger theories that we didn’t have the evidence developed to support.”
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The AT&T-Time Warner case also provided fodder for Delrahim critics who say he lets political calculation and personal ambition guide his decision-making. The Justice Department is supposed to operate independently from the president, yet nearly everyone traced his decision to challenge the merger to Trump's displeasure with Time Warner unit CNN and its leader Jeff Zucker. Even after Delrahim denied the claims in a sworn declaration, the suspicion among many in the legal community remains that Delrahim earned his promotion by committing to challenge AT&T's acquisition in his job interview.
In addition, the Antitrust Division has in recent months raised eyebrows about politicization of competition law. During the trial of a multistate challenge to the proposed T-Mobile/Sprint merger, which federal regulators approved, text messages emerged that showed Delrahim laboring behind the scenes during the government's review last summer to save a deal that would shrink competitors in the wireless arena, helping to arrange the sale of the two companies' mobile spectrum to a third party, Dish Network, and offering its chairman, Charlie Ergen, advice on how to lobby the FCC and lawmakers. "Why Is the Justice Department Treating T-Mobile Like a Client?" asked a New York Times editorial in December. (On Tuesday, a judge rejected the states' antitrust challenge and approved T-Mobile's Sprint acquisition.)
One observer, suggesting that Delrahim has been using his office to advance personal ambitions, brings up the T-Mobile case and points to how the Antitrust Division has been filing amicus briefs in cases involving Delrahim's former corporate clients. In an important appeal over whether Qualcomm must grant patent licenses to rival chip suppliers, for instance, the DOJ took the side of Delrahim's former top client over the FTC, the other primary antitrust regulator. The Antitrust Division also expressed views favorable to Comcast, another former Delrahim client, about the limited circumstances where a refusal to deal is actionable, in Viamedia's $75 million antitrust lawsuit against the cable giant over advertising spot sales.
Then there's the DOJ's recent intervention in civil litigation between Hollywood's top talent agencies and the Writers Guild of America. In December, the Antitrust Division not only filed a statement of interest in the case, expressing its view that labor exemptions to antitrust laws should be narrowly applied, but the government also took the rare step of asking for time during a hearing in Los Angeles to argue against the WGA's motion to dismiss. One thing not discussed at the time: One of Delrahim's former clients was Zuffa, former parent company of MMA outfit UFC, which sold a majority stake to Endeavor, the parent of the WME agency, for $4 billion in 2016. (Delrahim says the DOJ monitors all private antitrust lawsuits. He did, however, recuse himself in early February from an investigation into Google after criticism about a conflict with his former client.)
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Wesley Mann/A Serious Mann Inc.
Of course, it's not surprising that a Republican-led DOJ would seize an opportunity to thumb its nose at unions. And Delrahim's office has taken on many causes of late with a political tenor — including opening an inquiry into California's deal with automakers to reduce emissions in the wake of the Trump administration's rollback of climate change regulations. (That probe was dropped this past week.)
Regardless of what all of this says about Delrahim's ideology or motivations, it certainly speaks volumes about his assertiveness. "If you say that I'm more active in some enforcement initiatives than some other past antitrust enforcers, it may well be the case," he acknowledges.
Indeed, the days of sleepy antitrust law where dueling economists slug over the price effects of transactions in the marketplace appear to be finished. The DOJ has just asked for a 71 percent increase in funding for the Antitrust Division at a time when the Trump Administration is proposing budgetary slashes across government. Although regulators haven't made a splashy move like attempting to break up Facebook, they have been investigating tech companies since July, and Delrahim has in recent weeks been privately telling interested observers to expect a criminal antitrust case in Silicon Valley sometime in the next few months. On the other side of the aisle, anyone who has listened to Sen. Elizabeth Warren's speeches knows that competition regulation figures to be a key focus in a more liberal administration. But, of course, the color of that regulation certainly could shift swiftly.
Hollywood is watching closely because more mergers likely are coming. As new streamers like Disney+, AT&T's HBO Max, AppleTV+ and, soon, Comcast's Peacock seek to scale swiftly to compete with Netflix and Amazon Prime, speculation is rife that mid-major studios like Lionsgate, MGM or even Sony Pictures or ViacomCBS will soon be acquired by larger players. This has sparked concerns in the talent community because fewer studios could translate into suppressed wages. A possible WGA strike this summer could hinge in part on these issues. For years, Hollywood labor unions have voiced concerns that antitrust regulators have put consumer welfare above a more comprehensive look at marketplace structure. At the dawn of the streaming wars, some creatives might even be searching for something akin to the old "fin-syn" regime, the pre-Reagan administration rules that forbade networks from retaining financial interests in programs they aired. Many recent Hollywood accounting lawsuits — and even the WGA's ongoing battle with talent agencies over their ownership stakes in content — speak to discomfort with the close alignment of the industry's power brokers.
SAUL LOEB/AFP via Getty Images
Apple’s Tim Cook attended a White House meeting in March 2019; Facebook’s Mark Zuckerberg met with senators in September 2019.
Zach Gibson/Getty Images
Facebook’s Mark Zuckerberg met with senators in September 2019.
So what would the DOJ do in the face of another huge proposed merger in the entertainment space? Delrahim is careful about hypotheticals given his office's future role in the review, but Laura Blum-Smith, director of research and public policy at the WGA, worries that regulators aren't prepared to put their foot down. She points to the swift approval of the Disney-Fox merger and an important Jan. 10 document issued by the DOJ. "Given the opportunity to revise its guidance on vertical mergers, they are giving deference to the notion that vertical mergers can be pro-competitive," she says. "We've amassed so much evidence of the negative impacts from mergers … I think it's disappointing."
But other observers say not so fast. Hamilton, for one, believes that a merger like Apple-Disney would have "sailed through five or 10 years ago," but after watching the DOJ stand up to AT&T-Time Warner and hearing Delrahim's recent speeches, he's not sure anymore. "With the new kind of comprehensive view on the consumer welfare model — not just price, but also innovation and quality of services — that's a harder thing to put your thumb on," he says.
Beyond M&A, the entertainment market could be in for more jolts to the status quo thanks to the deregulatory agenda of Delrahim's office. The National Association of Theatre Owners, which represents owners of 33,000 movie screens in the U.S., is sounding the alarm at the move to terminate the Paramount Consent Decrees. In particular, NATO is concerned about block booking and the prospect that studios will use their leverage to force theaters to accept packages of films, including undesirable ones. "If exhibitors were forced to book out the vast majority of their screens on major studio films for most of the year, this would leave little to no room for important films from smaller studios," NATO told the DOJ.
Delrahim, though, would prefer to see the free market sort this out, and he leans into the possible benefits of fewer rules. For instance, he imagines that Disney could bundle its animation library and work with theaters to screen classics 24/7 with consumers able to purchase a MoviePass-type subscription to family-friendly fare. As to how consumers might be able to enjoy critically acclaimed content if Disney controls most theaters, Delrahim says: "You could give consumers a tentpole movie to watch — let's say Avatar — but also have a less advertised independent, such as The Hurt Locker, and say if you watch this [Avatar], you'll also get a free ticket to go watch Hurt Locker on Wednesday night. That practice would be arguably prohibited by the Consent Decrees."
If there's one other big thing to know about Delrahim's approach to competition, it's that he's a strong believer in the rights of intellectual property owners to exploit it how they wish. Some like Carrier even consider him to be a “radical” when it comes to the subject. Given that copyrights, trademarks and patents are essentially government-sanctioned monopolies, the interplay between IP and antitrust has long been a topic of debate.
That will come into acute focus in the next few months as Delrahim's group wraps up a review of the ASCAP and BMI Consent Decrees. Under these decades-old music licensing rules, the two largest organizations that administer the performance rights of many songwriters and music publishers must offer a blanket license to their repertory of works upon request. If terms can't be agreed upon, music users immediately get access, and a federal court later decides a fair price.
Ending these rules — or even modifying them — would kick up a litigation and lobbying firestorm. Changes would impact mom-and-pop bars, restaurants, sports stadiums and funeral homes — basically anyone who airs music over loudspeakers. The broadcast industry also cares greatly about this subject; TV and radio owners say they don't have practical control over which music airs on their stations. Programs are often licensed from third parties; broadcasters have limited say about the content of advertisements; and anything can happen during the telecast of a live event. Modifying the ASCAP and BMI Consent Decrees could raise costs and uncertainties.
Delrahim cautions that the move to end the Paramount Consent Decrees signals nothing about the future of ASCAP and BMI, but there's a host of reasons to think he's at least ideologically predisposed to reining in the old music licensing rules, too. "Are those consent decrees actually serving in an anticompetitive manner to prevent new innovation or new licensing?" he asked rhetorically at a Senate Judiciary Hearing in September.
Should the DOJ move to stir up music licensing, might broadcasters challenge the government in court or sue ASCAP and BMI with fresh antitrust claims? Coordinating efforts (at least blatantly) to stand up to licensing demands is probably out of the question. In December, Delrahim's Antitrust Division expressed its view on the subject in a statement of interest filed in federal court in an antitrust fight between Irving Azoff's Global Music Rights (a new competitor to ASCAP and BMI) and the Radio Music License Committee, which represents some 10,000 radio stations. Supporting GMR, the government said that price fixing by a cartel of buyers in any market is as "pernicious" as when sellers do it.
If music is murky, Delrahim is willing to speak bluntly about a different licensing situation — 2019's decision by the major theater chains to shut out Martin Scorsese's The Irishman after Netflix refused to agree to anything beyond a short theatrical run. Could the subject of Netflix and movie theater windows trigger a new antitrust review?
"That's an independent decision by the theaters, I assume," Delrahim says. "Look, if the theaters agreed amongst themselves to keep a movie out, that would be a violation of antitrust law. But if they independently, which is what I suspect, decided not to do that because they didn't want to later create the precedent to shorten the window, that is purely a business decision by them. It's not my job to pick winners and losers."
A version of this story first appeared in the Feb. 12 issue of The Hollywood Reporter magazine. Click here to subscribe.
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Meet the Billionaires Who Run Trump's Government
Mr. Monopoly, that mustachioed fat cat with the Taftian profile, was about as close as most Americans got to a New York City billionaire until candidate Donald Trump started flying his jet to their cities and villages last year. Now they are practically an everyday sight, because President Donald Trump has coaxed a pack of them out of their penthouse triplexes, yachts and private jets to either join his Cabinet or sit on his councils and advisory boards. Trump voters know they've had a government for billionaires—that's one reason they're so mad—but to have one by billionaires means the Mighty Oz is now setting the nation's agenda, and there is no curtain.
Anybody with $1 billion in net worth possesses a tranche of wealth greater than the gross domestic product of 60 nations. So what can a president give to these men who have everything? And what can they do for him and to the rest of America? The answer may be found in the most famous line from the Italian classic novel The Leopard, about the decaying Sicilian aristocracy: "Everything must change so that everything can remain the same." The best gift Trump can give his rich friends from Manhattan is to appear to be shaking up the system while leaving their myriad tactics for manipulating and amassing capital unaffected by federal regulation and higher taxes. Less than three months into his presidency, Trump is well into that agenda—quietly deregulating the financial industry, stripping Barack Obama's climate change rules from fossil fuel producers and promising to lower taxes on the very rich.
A billionaires' takeover of the U.S. government was not one of Trump's signature campaign promises, but in retrospect it was obvious he wasn't going to bring in the sustainability MBAs—he doesn't know any. Instead, he set up a government of, by and for his peers (or men the famously insecure Trump wishes to call his peers). His Cabinet of millionaires and billionaires is the richest in American history. The New York billionaires, though, have more in common with Russian oligarchs and Nigerian petro-magnates than with almost any other Americans—whether they are flipping burgers at McDonald's or performing heart surgery at the Mayo Clinic. They have been sold to the public as men who will help Trump run the country "like a business," in which the public is the consumer. After careers in which they put growing their colossal bank accounts ahead of the interests of small towns, working stiffs and the common weal, there is no reason to believe they will worry about how predatory lending or letting Obamacare "explode" affects real people. Trump's billionaires are not government-hating ideologues like the Koch brothers or mega-donor Robert Mercer. They are more like what Trump used to be—unaffiliated centrists. And their agenda—and now the country's agenda—is defined by those matters that affect their wallets.
Trump holds a meeting with members of his cabinet including Secretary of the Interior Ryan Zinke, Secretary of State Rex Tillerson, Secretary of Defense James Mattis, and Secretary of Commerce Wilbur Ross in the Cabinet Room of the White House on March 13 in Washington, D.C.—the first official meeting of Trump's cabinet.MICHAEL REYNOLDS/GETTYPity the Poor, Misunderstood Billionaire
"The rich aren't rich anymore," says society writer David Patrick Columbia. "My friend inherited hundreds of millions. She said to me, 'I'm not rich anymore.' They didn't lose their money, but these other people make billions—some of them make a billion dollars a year. And that's all they really care about. All those guys love talking about how much money they have. It's what they like to do."
Most of the billionaires Trump has lured to D.C. are, like him, members of the 1980s generation of leveraged-buyout tacticians, junk bond kings, corporate raiders and vulture capitalists. They got rich off of emerging financial tactics crafted to take advantage of Ronald Reagan's great gift to Wall Street—ripping up the regulations put in place after the Great Depression. Trump adviser and corporate raider Carl Icahn (net worth $16.6 billion) is said to have been a model for Michael Douglas's "Greed is good" character in Wall Street. Commerce Secretary Wilbur Ross ($2.5 billion), policy adviser Stephen Schwarzman ($11.8 billion) and unofficial intel adviser Stephen Feinberg ($1.2 billion) all made their fortunes in the kind of investment banking that came into vogue after Wall Street decreed that social responsibility and business—the Jimmy Stewart banker model—were antithetical.
The New York real estate developers now advising the president—Steven Roth (net worth $1.1 billion) and Richard LeFrak ($6.5 billion)—spent their professional lives (as did Trump) in a mosh pit with politicians, city regulators, 50-story crane operators, cement mobsters and the motley crew of characters, unsavory and otherwise, responsible for the New York skyline and the surrounding area's malls, golf courses and housing developments.
Whether they earned their money in investment banking or New Jersey strip malls and high rises, Trump's billionaires have much in common with the rest of the New York's 1 percent. They don't pay much in taxes, and most don't think they should pay much more. They loathe government regulations, and they are ferociously competitive. "They all know each other. They finance each other. And they all compete with one another," says Holly Peterson, journalist, author of It Happens in the Hamptons and daughter of Peter Peterson, one of the New York billionaires who is not in Trump's camp. "They sniff each other like dogs."
But none of them are—again, like the president—burrowed into New York high society. In 1983, when Paul Fussell wrote his book Class: A Guide Through the American Status System, examining class in the U.S. from top to bottom, he described how one sign of top status was inherited wealth, and another the discreet display of that wealth. Those rules don't apply anymore, at least not in New York society. Trump and his billionaires are elaborately and publicly rich, and while some of their dads were wealthy, they didn't all start out that way. Schwarzman, the chairman of Trump's Strategy and Policy Forum, is the son of a Pennsylvania dry goods store owner, and he now divides his time between a 37-room Park Avenue triplex, a Hamptons estate and villas in Palm Beach, Florida, and Jamaica. He is famous for blowing millions on his birthday bashes. Icahn went to a public high school in Far Rockaway, long before he bought himself a 177-foot yacht.
With the exception of Ross and his $250 million art collection, they aren't aesthetes—even if their names are sometimes chiseled into the granite of gracious old public properties like main building of the New York Public Library (Schwarzman) or embossed in brass on the soaring buildings that house their companies. Trump famously smashed precious historic Bonwit Teller building's architectural elements—coveted by the Metropolitan Museum of Art—to bits because to preserve them would have delayed work on Trump Tower by two weeks. Roth once left a massive eyesore of a hole in midtown Manhattan for nearly 10 years at the site of a department store he'd bought and demolished, in part to gain more city incentives to develop it.
New York billionaires are sometimes known for their noblesse oblige or devotion to civic causes, but not this crew. They are social-circuit philanthropists. Former Mayor Michael Bloomberg (the eighth richest man in the world, net worth $47.8 billion) invested his name and money advocating for gun control and famously pushed for a more environmentally friendly New York City while he was in office. New York billionaire Peter Peterson, Schwarzman's former partner, put $1 billion into an economic think tank. And, along with Bill Gates, Warren Buffett and 40 other billionaires, he signed the Giving Pledge, in which all promised to donate the majority of their wealth to charity. Schwarzman gave the New York Public Library $100 million, but only after being mocked a month before in The New Yorker for stinginess. ("He has given, but not remotely what he could," sniffed one anonymous critic in that article.) Financial writer James B. Stewart has described how Schwarzman had trouble booking a prime table in the Grill Room at the Four Seasons, a high-society lunchtime scene. Schwarzman asked his then-partner, Peterson, about it, who explained, "It takes more than just money."
Trump's billionaires, while the richest men in New York City, are a tier below the cultural-financial establishment, the aristocracy. "I think the nature of all these guys is that they are not a part of a power or moneyed establishment," says one Manhattan private equity investment banker who knows most of them. "You can be very, very rich without being terribly important here. It's not like [Trump] has assembled a cabal of pathbreakers who disrupted the 21st century."
Billionaire activist-investor Carl Icahn gives an interview on FOX Business Network's Neil Cavuto show in New York on February 11, 2014.BRENDAN MCDERMID/REUTERSThey have been disruptors of another sort—as vulture capitalists or, more euphemistically, investors in distressed companies. Icahn was one of the first corporate raiders, and he invented "greenmail," a now-outlawed 1980s practice in which big New York money would swoop in, buy up a block of stock, then force a company's board to buy it back or risk a takeover. Among his many pelts in a career of corporate raiding, Icahn gets credit for killing the airline giant TWA.
Like Icahn, but of a generation younger, Feinberg made his name buying up and reorganizing companies. He founded the ominously named Cerberus Capital (in Greek mythology, Cerberus was the three-headed dog who guarded the gates of hades), which picked apart companies like Anchor Hocking, a glass factory in Ohio, bringing down a small town of Lancaster with it—a community tragedy told in the best-seller Glass House. Feinberg's real passion is weaponry and military contracting; he bought up American gun companies and founded a weapons conglomerate called Freedom Group that, among other offerings, produces automatic weapons favored by the likes of the Sandy Hook school shooter. He also owns a private military training site, and his DynCorp is a leading defense contractor. Feinberg's name is rarely published without the qualifiers "mysterious" or "reclusive." Last year, a corporate spy reported to The New York Observer that Feinberg warned his Cerberus shareholders to stay out of the news. "We try to hide religiously," he said. "If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it." (None of the billionaires in this story responded to requests for comment, but only Feinberg's office called back and verbally declined.)
HORIZONSTECH & SCIENCEMeteors to Order
New Treasury Secretary Steve Mnuchin (net worth $500 million), though not a billionaire, is another profits-over-people legend. He bought a California bank after the 2008 housing crash, and rehabilitated it by evicting tens of thousands of people, including many elderly and veterans. The subsequent protests—the newly homeless set up camp around his Los Angeles mansion—contributed to the demise of his second marriage.
Retired New York Post society columnist Liz Smith has known Trump since his first marriage, to Ivana, in the 1970s, and she watched New York society at first recoil from him, and then simply give in, as the corporate raiders who became Trump's billionaire buddies took over Manhattan. "The current importance of money and big business and no ethics is discouraging," she says. "In the beginning, the upper crust were all looking at the fact that he was a rich man, and they thought they could extract money from him for their charities. They found out fairly quick he was stingier than they were. I think the billionaires are supporting him with trepidation. They are nervous. They depend on the presidency for stability. They are patriots, most of them. They can't help it if they're rich."
What Do You Give to the Man Who Takes Everything?
Trump's billionaires share his two chief goals: a massive tax overhaul and deregulation, allowing them to make even more money, unimpeded by government intervention. The 99 percent have only the dimmest understanding of the strategies by which the 1 percent operate and profit. To most Americans, for example, bankruptcy is a disaster, a catastrophic credit rating hit, a personal failure and embarrassment suggesting sleeping in one's car or moving back home with mom and dad. For Trump's billionaires, bankruptcy—or as Trump put it, "the chapter laws"—is just another tool in the capitalist box, which includes various legal forms of stock manipulation, shorting pensions, crafting commercial building exchanges to avoid taxes and forcing a distressed or targeted company to buy back its own stock to raise its price.
Another magic trick of billionaire-dom is not paying taxes. Warren Buffett has pointed out that he and other billionaires pay lower taxes than a school teacher. Trump's posse doesn't share Buffett's horror. Trump has avoided paying hundreds of millions in taxes over the years—legally—and so have his billionaires. Trump's administration has made it very clear that it will expand tax benefits for billionaires. Mnuchin promised during his confirmation hearing that "there would be no absolute tax cut for the upper class." But lower taxes for the rich was always behind the Republican rush to repeal Obamacare and replace it with their still-born Trumpcare bill. The nonpartisan Congressional Budget Office estimated the proposal would have left 24 million people uninsured, mostly older and poorer Americans, while giving top earners a $158 billion tax savings on investment income. Trump blurted out the truth in a campaign style speech in Louisville, Kentucky, a week before the plan failed. "We've got to get this done before we can do the other," Trump told the crowd. "In other words, we have to know what this is before we can do the big tax cuts."
Trump's tax overhaul plan, touted as the first real reform in 30 years, remains short on details, but one version gives the top 1 percent of Americans a 6.5 percent tax savings, compared with savings of 1.7 percent or less for middle and lower earners. Trump has promised to kill the alternative minimum tax levied on people like him, when their deductions can zero out their tax bill. According to his 2005 tax bill, Trump was taxed at 24 percent, thanks to the AMT.
The top executives of private equity firms—like Schwarzman, Icahn, Feinberg and, until he divested, Ross—all theoretically qualify for the carried interest deduction, which halves their tax rates. When Obama was stalking the carried interest deduction in 2010, Schwarzman nearly wet himself. "It's a war," he said at a July 2010 board meeting. "It's like when Hitler invaded Poland in 1939." He later apologized.
Special tax deals aren't just for Wall Street tycoons. Real estate magnates like Trump can take advantage of a deduction Congress carved out for them in the 1990s. While average joes who lose money on real estate deals can no longer take full deductions, people who qualify as "real estate professionals" (Trump, LeFrak and Roth) can deduct their losses. Congress also allows developers to deduct the supposed depreciation of their property values over the course of 27 to 40 years, depending on the property type, despite the fact that real estate generally increases in value over time. That means, according to Morris Pearl, formerly managing director at the BlackRock Fund and director of the pro-tax Patriotic Millionaires, developers—and their heirs—never have to pay tax on property. "There are certain things the free market cannot do," he says. "If you prefer a safer society over the long term, you want regulations. But the billionaires have a different perspective on things than other people. If you are Steve Schwarzman and your insurance company goes out of business because of shady deals, you don't need the insurance regulator, you just find other insurance. If you are Steve Schwarzman, you pay about half the amount of taxes as other well-paid New Yorkers. Very few people care about carried interest tax deduction, but Schwarzman thinks he deserves it. Maybe he thinks there is a shortage of people willing to be fund managers, so we need to offer them special tax incentives."
In addition to slashing their tax bills, some of the Trump billionaires have very specific requests and are not shy about expressing them. Special regulatory adviser Icahn is a majority investor in a Texas oil refinery that could have saved $205.9 million last year were it not for the Environmental Protection Agency's renewable-fuel standard, which requires refiners to ensure that corn-based ethanol is blended into fuel. Since Trump's election, Icahn has engaged in a lobbying blitz to change that rule, personally vetting EPA Director Scott Pruitt on it, and urging Trump to dump it.
Casino workers and activists protest as they march from Trump Taj Mahal owner Carl Icahn's office on Fifth Avenue to Trump Tower, on July 13, 2016 in New York.DREW ANGERER/GETTY
Trump is also looking to tear up the Dodd-Frank financial reform law with its raft of regulations on the financial industry, and he announced it while sitting beside Schwarzman. Trump referred to discussions with "Steve" about the hated regulatory framework and said he looked forward to Schwarzman's advice on how to improve the economy "for all Americans." He then announced plans to roll back the work of the U.S. Consumer Financial Protection Bureau, which lawmakers passed to protect consumers from predatory lending practices after the '08 crash. He also signed an executive order that set the stage for rescinding the fiduciary rule, ultimately allowing financial advisers to again sell plans to clients that benefit the advisers themselves.
Trump's billionaire boys club is theoretically on board with his anti-globalist stand. Commerce Secretary Ross announced in March that the formal process of renegotiating North American Free Trade Agreement was imminent. He has also announced plans to collect billions of dollars, mainly from China, in fines for breaking U.S. sanctions and other global trade rules. But nationalism is only a billionaire's concern in the limited ways his holdings are affected by international affairs or global trade wars. While Trump's alleged ties to Russians could prove his political downfall, in the world he and his billionaire posse inhabit, national borders are much less important than the relationships between multinational fiefdoms and the banks that back them.
The Trump Organization does deals all over the world, from Dubai to Istanbul to Moscow, but the president's global branding operation is capitalism lite compared with, say, Ross's multinational empire. Before his confirmation hearing, Ross agreed to divest hundreds millions of dollars in assets, including his piece of the Bank of Cyprus, which the Russian mob has reportedly used for money laundering. He is keeping his stake in a transoceanic tanker giant called Diamond S Shipping Group Inc. The Center for Public Integrity looked at that company's operations and found its vessels sail under Chinese flags, and one of its ships has traveled to an Iranian port—which Diamond S has said was legal. Ten percent of its business comes from a Swiss company with stakes in Russian national oil giant Rosneft.
Ross's internationalism is hardly unique. Feinberg's DynCorp has reportedly trained Afghan police and has contracts in Saudi Arabia. Roth is building a New York apartment tower for the über-wealthy, with one of its units reportedly priced at a record $250 million—and the project is financed by nearly a billion dollars in Bank of China loans. It's a good bet that the billionaires will probably see to it that Trump's xenophobia doesn't interfere with business.
If there's one issue that binds almost all New York billionaires—even those who don't support Trump—it's a loathing of federal regulations, especially on the financial industry but also on commercial developments and industry. While not as historically active fighting regulations as, say, the Koch brothers, Icahn can't wait for Trump to deregulate everything. He hailed his friend's inaugural speech as a sign that "our dangerous slide towards socialism is over."
In the chaotic first few months of his presidency, Trump's signature achievement has been rampant deregulation. He has been ripping out, at a record pace, regulations covering everything from the financial industry to pollution to food safety to firearms. His billionaires and their accountants already know how this activity can improve their bottom line. What remains to be seen is whether average Americans will reap any collateral benefits, besides the newly won freedom to drive cars without mileage or emissions standards, take medications for off-label uses, drill for oil in national parks and, if mentally ill, buy a handgun.
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Are Big Tech Companies Growing Too Big To Fail?
Combining the earned revenues of Facebook, Amazon, Apple, Microsoft, and Google equates to 68% of US GDP growth. As the companies continue to capitalize, and purchase subsidiaries, civilians and politicians are calling for immediate change. In March, Elizabeth Warren released a
campaign advertisement
summoning the division of tech big tech companies. Following its release, Facebook removed the advertisement – sparking a bipartisan backlash.Accompanying the Anti-Big Tech campaign is Ted Cruz, having said, “Big Tech has way too much power to silence Free Speech. They shouldn’t be censoring Warren, or anybody else. A serious threat to our democracy.” Interestingly enough, 2 in 3 Americans – regardless of their political party – support the break up of Big Tech. Google, YouTube, and Facebook are the three most visited websites on the Internet across the globe. Since Google owns YouTube, this gives the two aforementioned companies a major power. To put this
further into perspective
, nearly all Americans conduct searches using Google-owned platforms. 89% of all Internet searches are conducted through Google Search, 73% are on YouTube.
The issue lies with not only a violation of free speech, but also with antitrust. Tim Wu, author of The Curse of Bigness: Antitrust in the New Gilded Age and Law Professor at Columbia University, says, “There’s been a profound change in the tech economy, and I think one that’s very dangerous for the United States’ economy.”
In 1890, the Sherman Antitrust Act outlawed monopolies and cartels to promote economic competition in response to consumer outcry against exorbitant prices and competitor anger by being unfairly shut out of production. In 1914, the Clayton Antitrust Act amended the Sherman Antitrust Act to add specific, clear definitions and regulations to the unclear. As a result, anti-competitive mergers were prohibited, as well as predatory pricing. Additionally, the Clayton Antitrust Act allowed the injured party to bring a private antitrust lawsuit. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) was placed in charge of enforcement by the 1914 Antitrust Act, as
well.In
1998, the DOJ filed charges against Microsoft, alleging monopolistic acts following the collapse of Netscape. Netscape was Microsoft’s primary competitor; however, when Microsoft began offering a free browser with its expanded software bundle, Netscape dissolved. In 2000, the DOJ’s ruling ordered Microsoft to be split into two companies: Windows Operating System and Office Software Suite. However, the ruling was softened upon appeal.Today, Big Tech owns its own digital and consumer supply chain. Amazon owns Whole Foods and Zappos, Facebook owns WhatsApp and Instagram, Google owns Waze, DoubleClick, YouTube, Nest, and many more.Although awareness is growing around the potential monopolization by Big Tech brands, courts cannot act until a company owns at least 50% of a specific market. Of course, Big Tech companies haven’t reached 50% market share yet, but are extremely close.For example, Amazon dominates 49% of eCommerce sales, Apple dominates 41% of the smartphone market place and 46% of the smartwatch industry, and FAAMG (Facebook, Amazon, Apple, Microsoft, and Google) and Netflix are hubs of 43% of global Internet traffic. Things get tricky as more than half of Americans use the very platforms in question. Like this: 7 in 10 have a Facebook account. 2 in 3 have purchased something on Amazon, and 9 in 10 use Google Search by default.
The proposed solutions have been to amend antitrust. Additionally, the free market suggests implementing regulations to stop practices that harm consumers and limit competition. The future of Big Tech is complicated, but more information can be found on it in the dialogue below.
Published
2 months agoon
December 10, 2019