Right after deregulation, there are new entrants. Twenty years later, there are a very few giant companies. See telecom, airlines, etc.
That's been fixed. Amazon, Google, WalMart, Alibaba, etc. have worldwide operations without major scaling problems. Those companies can adapt and change reasonably rapidly. The knowledge of how to do this is widespread. This is new. An inherent limit on bigness has been eliminated.
We’ve been here before though, in the era of Standard Oil. They can be broken up, but it won’t just happen on its own. The government needs to take action.
If interested, Standard Oil was drawn as an octopus in Puck magazine (1904). The Library of Congress notes: "Illustration shows a "Standard Oil" storage tank as an octopus with many tentacles wrapped around the steel, copper, and shipping industries, as well as a state house, the U.S. Capitol, and one tentacle reaching for the White House." 
The government is taking action. The government is in on this consolidation via investments, contracts, preferential legal & tax treatment, etc. Think about this from the government's perspective. The government would rather govern a small number of large entities instead of a large number of small entities, thus the government is incentivized to favor monopolies/oliogopolies. The government itself is a monopoly of power in many domains.
Sure, the government may intervene with a company getting too big, but the intervention is so the government can gain a foothold with that company. e.g. any telecommunications platform will need to have back doors for the law enforcement agencies or said telecommunications platform will not be allowed to operate.
Congress sure is, as it was with Standard Oil. It was the Supreme Court that saved us that time, I'm not sure what our hope is now.
According to what incentives? The government’s responsibility is to the country at large.
As a UK resident, i'm astonished how the almost prophetic wisdom of the Founding Fathers can go ignored for so long by their spiritual heirs.
> Without looking forward to an extremity of this kind (which nevertheless ought not to be entirely out of sight) the common
> & continual mischiefs of the spirit of Party are sufficient to make it the interest and the duty of a wise People to discourage and restrain it.
> It serves always to distract the Public Councils and enfeeble the Public Administration. It agitates the Community with
> ill founded jealousies and false alarms, kindles the animosity of one part against another, foments occasionally riot & insurrection.
> It opens the door to foreign influence & corruption, which find a facilitated access to the government itself through the channels of party passions.
as for lobbying, America has been through this before. The Gilded Age saw lobbying to an even more extreme degree, with companies like US Steel and Standard Oil able to basically pay off senators. The same thing happened with slave plantations in the 1850s. After the great depression (and even before to some small extent; see the breakup of Standard Oil), laws were put into place heavily curbing lobbying, insider trading, among other things (like stock buybacks). Really, we're in another Gilded Age, and one day the balance of power between the individual, the state, and the industry will shift again.
Companies don't need to compete with state power because they can have state power. They can essentially become states within the state. A large enough landowner can be a de facto legal jurisdiction with its own law enforcement arm. Large-scale landlords and employers can simply make and enforce any rule that isn't explicitly illegal. And in addition to eviction and firing (both of which can be catastrophic to many people) they can simply hire "off-duty" police officers to do their law enforcement. Those cops can use more or less all of their police tools and methods, and they can find a reason to arrest and charge more or less anyone in service of their masters.
And in some US states, it is legal for companies to simply have their own private police force, paid by the company and with all the powers of a state police force.
Every year we look at firms above some size, and if they fail the saving throw, we liquidate them. Everyone who works there gets 6 months severance, all supplier contracts are terminated, everything they supply likewise. Get a bankruptcy administrator to sell the chairs and real estate, give the shareholders whatever is left.
If it's truly valuable what they do someone will find a way to do it again. If it's just a power position they were exploiting, we'll be free from their tyranny.
I also agree, that we lose real and valuable economic agility, when we fail to let big companies die and be picked apart / liquidated.
We effectively eliminate the bottom half of the food chain (decomposers, etc), to keep formerly apex predators alive with processed food pellets, in a zombie like state. But one day we’ll run out of food pellets, what will happen then?
We don’t allow whales to fall anymore . And it hurts the ecosystem.
It is better than that. If it is truly valuable we'll already have someone else doing it just because of the risk of it failing its saving throw.
Consumer prices fall, and US consumers' brains just turn off when you show them slaves in the supply chain.
Consumer prices rise, and then people hit the street - everywhere, globally.
It doesn't really matter if their dollar is going to Amazon or 1,000,000 small main street shops. Indeed, both are sourcing the bulk of their goods from places with slave labor. Your gripe is about low prices, not "society," and like, what's your solution?
tl;dr: it doesn't cost a million dollars to effect political change with money.
I think politically engaged (and frustrated!) people overestimate the exclusivity of lobbying and the power of donations. My understanding (I can't find figures right now) is that you can get a lot of access for probably less than you think. Sick of potholes? Donate $1000 to your mayor and you might find yourself face to face complaining about how many tires you lose per year.
I think someone wrote an article about how much it costs a single person with a single issue to get attention from a politician ('s team), or how little it costs, as the case may be. Yes, hiring a lobbying agency is more expensive, but that's more of a wide-spectrum approach.
There is enough money in these HN threads for people to donate $1000 to each of several politicians in the pursuit of tightening antitrust enforcement, but there's probably just as many who support the current policies. I didn't say it would be easy, but with some money and organization it's not impossible. Of course that's how every special interest started...
Is it not obvious why this approach doesn't scale to confronting monopoly power?
I believe it was Al Franken I heard talking about this, and he said that often times politicians end up voting with the lobbyist desires because no one ever lobbied the other side of the issue. For instance an energy lobbyist asking for the inclusion of exemptions for it's potentially overweight trucks on local roads to support the new gas well jobs created, that "will easily make up the potential and definitely trivial road repair costs".
Nobody shows up to lobby the other side of the story. The energy company painted it perfectly as a 100% good thing, while someone could have donated $200 and after bit a research shown it was actually a sham and the official would have agreed. But no one did.
Good Atlantic article on the subject: https://www.theatlantic.com/business/archive/2016/04/how-ame...
Fundamentally, capitalism is about handling economic planning in an efficient way by free-market autoregulation and policy makers who nurture competition to ensure that process continues to happen efficiently.
If competition and free markets are a necessary components of capitalism, then you would conclude - for instance - that the US stopped being a capitalistic country in the late XIXth century with so many prominent trusts. Or perhaps it never was capitalistic before WWII, since policy makers did not nurture competition but rather attempted to shield local industries from foreign competitions.
 Wikipedia definition: Ordoliberalism is the German variant of economic liberalism that emphasizes the need for the state to ensure that the free market produces results close to its theoretical potential
Then I found myself in significant agreement with the following paragraph from the Wikipedia article:
>Ordoliberal theory holds that the state must create a proper legal environment for the economy and maintain a healthy level of competition through measures that adhere to market principles. This is the foundation of its legitimacy. The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.
However, I still hold some skepticism about this concept, since it often seems like, at least in the US, that government interventions are what serve to dissuade competition.
Either way, thank you for your input. I find it very interesting, especially because I've often admired the Germans' modern economic management which seems largely based on ordoliberalism.
Don't forget media companies. Everybody forgets media companies because media companies that have no qualms writing articles condemning mergers by Bank of America have a different incentive when it comes time to look in the mirror.
This has all been financed by more than a decade of low interest rates which fuelled the M&A.
The "new conservatives" and religious fundamentalists found they had a president they could control who was slowly forgetting everything he knew, and they used that to the fullest advantage.
Much of where we are today is due to the processes that began then, from (lack of) fairness in news reporting to the permissive corporate laws that allowed private equity and corporate raiding to relaxation of banking and securities laws that allowed 2008 to happen.
There have been some ups and downs between the 80s and today, and a few Democratic years, but in general the slide has continued because once money gets into politics, it won't leave quietly... it has to be forced out.
Look how the US lags in Chip & Pin.
Having a lot of local monopolies is worse than larger regulated ones in my opinion.
Can you clarify what you mean? The National Bank Act was originally written in 1863.
And then in 1999, even more deregulation.
I can't think of a worse example of regulation. People obviously want to be able to access their money when they travel 30 minutes away. Your example undermines your point.
Look, I understand most hacker news readers do banking online, but the notion that banks are limited to a single state requires either that people rarely go out of state or never need to go to a physical branch. Neither is true in 2021. The former (not traveling) is more common than the later (not needing to go to a physical branch).
You seem to be proposing purely online banking. I take it you don't own a home or a car or a business? Most loans still require an in person meeting.
That's not quite right. 
The idea of building something neat is a lot more attractive than running a business that sells the neat thing to customers. The people who want to run businesses are in the lovely position (for them) of having more fresh, good ideas offered to them than they can review, much less use.
Especially if your goal is to land a nice FAANG job anyway. It's gotten to the point where interviewing is so competitive, exhausting, opaque, and ultimately random, that it might actually be easier to do a bootstrapped start-up for a year and get bought by Facebook than it is to grind leetcode and interview-prep for a year and roll the dice on the interview circuit. I wish I were joking.
EDIT: Wow, no disrespect to founders, I did not intend to trivialize the work you do. Instead of "easier" I should have said something like "more controllable" or "less random".
If you are not joking you are delusinal, this is not even remotly true.
Personally, I would much rather be running a moderately successful business than studying esoteric programming questions full time. At the least, the relative "easiness" of starting a business vs the normal FAANG interview process is personally subjective.
What tech startup is this? Profitability is a long road & for a good chunk of the time you're relying on funding to get you through to profitability. You might get paid but how much you withdraw impacts your runway.
In hindsight, if I accepted my first acqui-hire request, I would've eventually got hired into Google because the startup that wanted to hire us was eventually folded into google, but honestly it's hard to tell from a distance which companies are going to be acquired by a FAANG.
Helps that building a company gives you real experience as well while prepping for interview just gives you that, preparation for the interview, while the real job is different than the interview.
Even if it was only an order of magnitude difference, the expected value of starting that startup would be so much higher.
They aren’t even in the same ballpark
The same is true of networking and friends and family financing. I might look at scraping together a ~200k seed round as trivial, but that’s not true for everyone. On the other hand if 5 of your collage friends are working a FANG companies that’s also a huge leg up.
All of these are much more difficult to pull off, often requiring years, than simply hitting the books for a few months
Might get you hired at a higher level though, but yeah delusional to think it would be easier.
Or go to a serious CS/Engineering school and just take the Algorithm class.
You're going to learn novel things in an Algorithms class that you can't learn online - but the way it's taught is easier for most people to digest the material. Motivated/driven/talented individuals can absolutely learn the material themselves.
Even now that I work at one of the Big 5 tech companies, I clearly state that my role is not officially development, I still have recruiters reach out to me from FB for development positions.
No I couldn’t pass any DS&A tech screen without a lot of preparation.
The hard part is passing the interviews, but referrals don't help with that, from what I know.
Either way you still have to go through the same loop.
Yes, I “work for a FAANG” like many others do here.
FAANG interviews are not even close.
Source: founder of a company which was acquired by a non-FAANG company, but talked to a few FAANGs as part of the process.
I wouldn't just say getting acquired by a FAANG company. I work for one of the biggest health care companies in the world. Last year they acquired over 200 companies with the goal of exceeding that this year.
They literally are buying companies whose technology they would rather buy then build themselves. If you knew what my company was looking for (machine learning, AI and automation) you literally could start a company with less than ten people, focus your work on one of the three areas and have a better than decent shot of being acquired by the company I work for in a span of less than 5 years.
Not sure about founders but sometimes you have to interview with the Big Tech Co. as well to keep the job after acquisition.
So it is probably more work than simply studying and rolling the dice over and over.
There are some people who are very well networked and can repeatedly start and sell companies by leveraging those connections as a business model in itself, but this is extremely rare.
Building a business to even be attractive enough for an acquisition is magnitudes harder than any round of interviews will ever be, but I do agree that those interview processes are a joke now compared to the talent they're designed to find.
Thus, it entirely makes sense for a founder want to build great tech and a great product, but NOT want to be in the business of complying with a dizzying array of local and international regulations, in a world where they effectively have to expand globally to "win".
Big companies aren't typically nimble enough to respond to the whims of consumer tastes or catch the latest fads.
So, it's a great symbiotic relationship between "big tech" and startups.
Acquisition, cash out, bolt on regulatory and legal framework, wash, rinse, repeat.
Founders are interested in control and eventual (financial) freedom, and tend to like building an organization in general. An acquisition provides that freedom while allowing them to build something else in the future with even better circumstances.
People make choices. Nothing is deterministic. That said, the number of companies founded, run or exited with a buyout win condition mentality is governed by price economics. FB, Google, etc offered a very high price for Android, Instagram, etc. because those M&As were worth a lot to them. Given this, a lot of M&As are going to happen.
The interesting question, to me, is "why is the price so high?" It's silly to get all huffy about M&As and ignore the consequences of M&As.
As optimism about the pandemic rises, it seems like the innovation that you would expect from this kind of volatility never panned out. I suppose capital was pumped into the public market instead?
Doesnt Amazon bully small players to accept their offer or risk going bankrupt? I think that is what they did to diapers.com
It would be a lot more insightful to discuss the aquisitions that have a known positive impact. The truth is probably that each company had just a few very important acquisitions (that should be more closely scrutinized).
Our current tax laws make vertical integration or even conglomerates more tax efficient. Greater scrutiny of anti-competitive mergers is needed, but we should also make separate companies just as tax efficient (VAT tax, etc) and otherwise closely examine how we can change economic incentives here.
I think this would be very difficult to tease out of the data. Many acquisition are de facto defensive, even if they or not anti-competitive from a legal monopoly perspective.
How could one measure the the loss of brand value if the acquired companies were allowed to mature or be acquired by a competitor?
If you had to guess the 'value' of TurboTax, The Microsoft Office Suite, Macromedia, Instagram, YouTube, NeXT, Pixar, VMware, etc. etc., you'd probably find that the good M&A outweighs bad.
It's just that bad M&A happens a lot can be really bad (AOL Time Warner).
"Biggest companies pay the least tax, leaving society more vulnerable to pandemic – new research (2020)" --
https://theconversation.com/biggest-companies-pay-the-least-... -- (https://news.ycombinator.com/item?id=22786371)
Instagram, Whatsapp, Youtube, Android, Doubleclick, etc.. Those acquisitions are undoubtedly a major part of how Google & FB got to here... and here is a good place for shareholders. IMO, it's hard to argue management destroyed value, but we don't ever know alternate realities.
Either way, I think there's a strong case that "competition for monopoly" is the key dynamic here. A business similar to adwords-google but with only 1% of the market share is worth way less than 1% of adwords-google. Think of Yahoo/MSFT's attempts at adwords' runner ups. How much is reddit worth, relative to FB? There are lots of examples. Even if the market does have multiple contenders, the power curve tends to be mighty in modern, software-centric economics.
For a variety of reasons, strong pressure to consolidate appears to be the case often. Whatever those reasons, this creates/describes a strong incentive to consolidate. We know empirically that consolidation happened, and acquisitions played a role. Consolidation also happened in cases where acquisitions didn't play a major/obvious role.
Tax laws are one of those reasons, but not the only ones. There's low interest rates, the laws of other countries, the business cycles, financial markets, etc. It's financial markets that have the operative say on capital creation vs destruction. They value FB highly, and have usually seem pleased with M&A in terms of demand for the stock.
There are also "natural" reasons for M&A, and consolidation more broadly. Software is cheap to replicate/scale and is often winner-take-most. Media is similar. Ad markets (and marketplaces generally) exhibit network effects. Networks (like social networks) exhibit network effects.
IMO the whole theoretical/legal framework of antitrust is quite bougus, in 2021. Monopoly isn't just about pricing power, and whatever else ancient economists observed in previous centuries.
This understanding of monopoly has only existed since the mid-20th century. Prior to that, the definition of a monopoly was more expansive and included analysis of market & industry structure.
Corporation taxes should be progressive too. Huge corporations are harmful to society, we should incentive many small ones to take their place.
Can you tell me who kept your packets coming during the covid lockdowns?
Huge corporations are important. They possess the capital, logistics and capacity and institutional knowledge, as well as the resources to absorb shocks during crises. They are able to operate society at scale.
On average big business pays higher wages, provides better benefits, is more productive. Monopolistic competition is more dynamic and delivers better outcomes than highly competitive small-business.
Mine? Mostly a government company. But secondly a specialized logistics one that outsources last mile delivery almost everywhere. I'm impressed by how many places decided to concentrate shipping on that one, and how well it works.
Anyway, if size is that important for logistics, it's not some progressive taxation that will change things. On semiconductors, for example, it will certainly not make any difference. And if size is not that important, then not having one or two companies killing every competitor due to concentrated power overwhelms any possible loss you may come out with.
Not necessarily disagreeing but I am curious how you ultimately came to such a general conclusion. I can see both sides: E.g., Walmart may be good for many in society by offering lower prices, while simultaneously being bad by putting smaller, better paying jobs out of business
It'd be interesting to see whether the modern tech industry is an anomaly with regards to this longstanding pattern. In particular, I wonder there's an exception for the typical acquisition of smallish, fast growth startups by a tech giant who can generate synergies by quickly integrating the tech on to their platform. Historically these types of acquisitions wouldn't show up in the M&A literature, because the targets are private companies, and the standard estimation techniques rely on public equity returns.
The FAANG stocks have very high compound annual returns stretching over more than a decade. I don't think there's evidence that those returns would be higher without their many acquisitions or evidence of capital destroyed.
It can be argued that whether M&A on net is capital generative or destructive depends on the management team and their ability to successfully integrate the acquired company's team, products, and technologies. Which translates to bad management destroys capital, which is an obvious truism.
I also agree that returns have been greatly improved by a few key acquisitions for Google (Double Click, Youtube) and FB (Instagram). For Apple and Amazon I don't know where they are benefiting from their M&A (this is likely my ignorance, I would be interested to know).
I just think it makes more sense to focus on a few key (anti-competitive) acquisitions than to complain that big companies do hundreds of M&A deals over a couple decades.
> For Apple and Amazon I don't know where they are benefiting from their M&A (this is likely my ignorance, I would be interested to know).
It's mostly around specific and niche tech in the case of Apple, which is a good example of the above IMO. Unless they involve tons of patents (which is not my impression) they aren't really anti-competitive. Other firms can develop this same technology should they wish to make the investment.
The effect on innovation is the opposite: ppl start up companies knowing they will get bought (I wouldn't call this innovation but others would).
And your point about dividend stocks is wrong. Dividend stocks are usually cash-generative businesses that have high ROI but are capital constrained. For various behavioural reasons, people underpay for these stocks...although you have to factor in that dividend stocks will generate taxable income, so the returns tend to be overstated. Either way, it is neither here nor there...the question is about what you pay and what you get. You pay a certain price for marginal ROIC, the question is whether the price you are paying allows a decent return (generally speaking, I don't like dividend stocks, they are slow-growth, I will have to pay tons of taxes, and I will have to work out how to recycle the capital...I would much rather own a stock that can retain my capital and invest it for me at a high rate).
Btw, the reason why M&A happens and destroys capital is because it is a very easy route to growth, investors aren't sophisticated about value-destroying deals (if they result in growth in EPS), and comp is usually based on growth. It is a pretty toxic combination (you can't push on a string, most businesses can't grow fast, paying execs doesn't change that so the execs walk away with a big sack of your money and you end up with nothing).
My understanding is M&A is how large, stable companies that are focused on maintenance activities ultimately fund R&D. It would be interesting to see how M&A compares with in-house R&D in terms of "destroying capital"
Even if true, it's irrelevant. The vast majority of VC investments also lose money, or as you put it "destroy capital" -- that's just high-risk investment generally. Nobody knows in advance what the future holds, which is why you spread your risk with lots of investments (or acquisitions).
But as long as you have enough runaway successes, then acquisitions are an overall profit-making, not profit-destroying, strategy. Even if the profit only comes from a small minority of them.
And that's only if you're counting the direct future profitability of an acquisition. Many times, the acquisition is also for key expertise or employees that may otherwise be prohibitively difficult to get, patents, the only way to compete in time, or is even strategically defensive -- to prevent your main competitor from acquiring the same critical technology/team.
If a company is able to print unlimited cash, they can use the revenue on unlimited ill-advised acquisitions, and do unbounded damage to the economy.
Citation needed. This is a common claim, but it flies in the face of common sense and financial incentives.
Corporate boards simply do not approve acquisitions because they've got no better ideas of what to do with cash, that's a fantasy. Boards are held accountable to investors, and investors want to make money, not fritter away cash. Investors want rising stocks or dividends at the end of the day, period.
Like I said, acquisitions are investments and investments can be risky, and so it's super easy to say in hindsight that an acquistion was dumb and that the board must be irresponsibly frittering away money instead of returning it to investors. But hindsight is always 20/20, right? As a general rule, companies simply are not "subsidizing" M&A's. It's just not how businesses or boards work at all.
At some point, they're still bound by what lenders will give them or how much investors will buy their stock for.
But apply the same to a government that can print unlimited cash..
(We may quibble over "unlimited" but it has been US Fed policy for decades and appears to be accelerating now.)
“The next big thing” is super hard work.
That said, I like the story about someone observing Gates at, I think, a graduation ceremony where Gates had brought along a biography of Rockefeller (John D.). Did Gates know before or after the fact that MS had in fact used a competitive strategy comparable to Standard Oil?
Meaning, unlike increasing returns to scale that was something for which there was an historical precedent. The basic idea being: when my competitors revenues go up, my revenues also go up. A fatal long-term proposition for those competitors.
What he talks about is new. And I believe he is wrong, it's just a negative value very close to zero, not positive.
That often never happens with software because network effects allow each unit of raw material (servers, data, etc.) to produce more value as part of the whole. It would be as if a widget factory could make 2 pounds of widgets out of 1 pound of raw material when it double its sales.
facebook buying Instagram was probably more significant than all the other acquisitions combined.
This comment sounds like the nirvana fallacy striking again.
There is no perfect metric for measuring something like overall market dominance.
Thanks to a series of supreme court rulings, the traditional approach has been to look at consumer harms. But that metric alone fails to account for the way modern large conglomerates make money: not by gouging the consumer, but by dominating entire industries.
So how else can you look at it?
Acquisition are just another lens. Is it an imperfect lens? Yes, of course. I challenge you to find an analysis that isn't.
But is it still meaningful? Yes, I absolutely think so! It is undeniably the case that these tech giants have used acquisitions as a way to protect their market position. So it absolutely makes sense to analyze their behaviour from that perspective.
Furthermore, this is a news article not a whitepaper. Yes, there is an enormous amount of nuance in this kind of argument, and if you were prosecuting these guys for antitrust violations in a court of law, you'd probably do a deeper dive.
> facebook buying Instagram was probably more significant than all the other acquisitions combined.
How do you know that? There's simply no way to know how some of these companies would've fared because these anti-competitive practices have ensured that promising startups are smothered before they become a threat.
Exactly, and adding to that: what about the tons of smaller companies/startups bought for a unique technology that was implemented under the hood across major products of the tech giants? We don't know about them except if some former employee leaked it, most projects will be private/secret and the public at large will never heard about the impact.
Think lots of small "Doubleclick"-ish companies that were bought for a small set of features that were then transferred to major products.
Number of acquisitions is interesting, though, because you can also phrase it as "number of potentially viable independent companies that no longer exist". We are better off with more independent companies.
For the big Tech companies now, small acquisitions are win win wins, they get the people, they get whatever was developed and they permanently avoid Microsofts Netscape situation.
That being said, I'm guessing no small number of these startups were setup with the express purpose of being bought out like this.
I have a theory that this is why MS treats its research division staff and interns so well. It reduces the amount of competitive pressure MS would face if they were all working elsewhere/on their own startups.
Focusing on real world metrics will give a very incomplete picture of the impact acquisitions might have had on the market.
Deja News was probably the biggest tech acquisition by a FAANG company. The average white collar worker spends ~6 hours a day in their Gmail, and about 5 min a day using search.
E.g. the email parsing code in Thunderbird dates back to at least the late 80s, and even after decades of working on it at a cost of hundreds of millions of dollars, it's still a work in progress.
The thesis of the articles seems to be: Big tech will stay dominant because they will keep buying lots of companies and they will likely continue to win with some. To stop this, blah blah law changes or something (I only skimmed the article).
Apple won out over Microsoft in consumer electronics because they were able to make decisions up and down the stack as a unit whereas Microsoft had to deal with layers of device makers and consortia.
All the talk of breakups and “big is bad” ignores the fact that vertical works better.
I don’t think it has to be this way. I think it’s entirely possible that a network of companies can outperform a monolith with the right kind of coordination.
This would be a new, evolutionary strategy, and would be good for everyone.
It won’t however, emerge if we roll the clock back to the late 90’s by force.
That's not even close to being universally true, and good/bad are in the eye of the beholder. Is it better or more efficient for the people who assemble the phones? Is it better or more efficient for the retail employees making minimum wage? Is it better or more efficient for app developers who lose 30% of their revenue to private taxation, or the businesses that never reached their potential because a BigTechCo launched a competing product at a loss?
> It won’t however, emerge if we roll the clock back to the late 90’s by force.
It might, but I can absolutely, guarantee, beyond a shadow of a doubt that we don't get a more democratic solution if we leave the current stakeholders in their current positions of immense power.
yes. Factory work is better than subsistence farming. And big tech has done 100x more than anyone else in the consumer electronics supply chain to push for better working conditions in those factories.
>Is it better or more efficient for the retail employees making minimum wage?
Yes. Improved margins are what allow wages to rise. Inefficient businesses don’t have the money to pay employees more. Apple retail stores pay on average 18$/hr vs the 10.50 a mom and pop might be able to afford to pay someone.
>Is it better or more efficient for app developers who lose 30% of their revenue to private taxation, or the businesses that never reached their potential because a BigTechCo launched a competing product at a loss?
Yes. Software distributors used to pay 50% to retailers.
Working in a 1900's Chicago meatpacking plant may have been better than subsistence farming too, but the alternative to working in bad conditions isn't going back to farming, it's improving the working conditions. Big tech has NOT done 100x more than anyone to push for better working conditions. If they really wanted to provide good, first-world working conditions in their factory, they could do so. Yes, their costs would go up, that's what happens when you stop subsidizing consumer products with labor abuse.
> Yes. Improved margins are what allow wages to rise. Inefficient businesses don’t have the money to pay employees more. Apple retail stores pay on average 18$/hr vs the 10.50 a mom and pop might be able to afford to pay someone.
Is the Apple store representative of all retail? And further, with Apple's massive stack of cash in the bank, shouldn't they be paying their workers even better? Are they not a big part of getting that premium margin for apple?
Further, that doesn't seem like a better or more efficient deal for entrepreneurs. Should we be happy that most independent electronics stores have been replaced by branded stores and Best Buy?
> Yes. Software distributors used to pay 50% to retailers.
More bad faith arguments huh? I guess you mean before the internet, when they actually had to ship physical medium and deal with retailers? Keystone pricing is pretty standard in that setup, and at least you had a broad choice of distributors to pick from. There is no justification for the high fees or the lack of distribution options in 2021. It's almost pure profit for the landlords.
Yes. It works better for making technology.
Nothing you have said contradicts that.
Every single one of the indicators you mentioned is better now than it was in the 90s.
What you are calling for is more opportunity for all these people to build wealth.
Making existing industries work less well is not going to achieve that.
Things that might: universal health care, student loan easing, increased investment in impoverished communities.
Blaming things that work well and breaking them is silly.
Making new things that work better is not.
You haven't proven that at all. You took one instance of Apple disrupting Microsoft's PC dominance and seem to have extended it to an entire worldview (which clearly ignores the entire MS antitrust saga that took place a couple years before Jobs reinvented the company).
> Making existing industries work less well is not going to achieve that.
You haven't proven that. When AT&T was broken up, it unlocked a host of new technologies (answering machines, modems) that Ma Bell was blocking to protect their existing revenue model.
That’s not a reflection of my views.
AT&T is not like Apple. They had a literal monopoly due to access rights.
Apple can’t be compared to AT&T usefully. There is nothing they do that doesn’t have vigorous competition and there is nothing that Apple has that others cannot buy.
> There is nothing that Apple has that others cannot buy.
How can you state this as a fact? Even a relatively high-level Apple executive wouldn't know that with any level of certainty.
I don't really take issue with Apple compared to some of the others, but their vertically integrated position means that they don't have vigorous competition. There are only a handful of empire-scale companies that can compete with them at all. Smaller businesses are not vigorous competition, since Apple (or similar) could crush them at any time they want with their scale, as they recently did with Tile.
Oddly, later in this same comment you become interested in facts and evidence.
>> There is nothing that Apple has that others cannot buy.
> How can you state this as a fact? Even a relatively high-level Apple executive wouldn't know that with any level of certainty.
If you had evidence to the contrary, you’d have presented it.
You can say "Apple's machines are easier to work with because better integration". But I'd say that's only a small convenience which doesn't stack up against the huge downsides of this non-modular approach as seen from the societal/economy perspective. My mom and dad can work with a Windows laptop just fine.
Mine can’t. All I know is I spend many fewer hours, near zero, doing tech support for my parents on macOS/iOS than when they used Windows.
Yes - many things are harder, but on balance the Apple ecosystem delivers better end user results.
But your point is important - there is huge opportunity for something better.
Apple isn’t standing in the way of that.
The belief that Microsoft or Linux as they stand are somehow better is. (I think Linux is fundamental to what comes next, but only if we people stop pretending it is currently better for end users and stop trying to make it more like an Apple product)
I can’t believe Microsoft even opened a whole bunch of stores. They just keep quitting after a couple years. If they were willing to plow some money into it for a decade and keep supporting windows phone and clean Windows laptops, maybe we’d have some competition.
A modular system could be better, but Microsoft’s is not it.
Microsoft’s approach failed against Apple’s when it came to product innovation. That’s why Apple is now dominant.
The downsides from a societal perspective are imaginary. Things simply weren’t better in any way when Microsoft was dominant.
Having said that, I agree with you - modular could make things better.
This is what I mean by a network of companies.
We need a new model of modularity - not microsoft’s variety.
I do think a modular ecosystem might be better in the long run but that’s not windows.
None of Apple's "stack" is available to other companies because they have no incentive to sell components. The reverse happens, they buy up independent companies (like the touch id folks) and prevent anyone else from using a given piece of tech.
Same problem with Amazon and shipping. Regular schmoes are limited to USPS/Fedex/UPS for shipping in the US. Amazon opting out of the "market" for shipping limits the quality of the shipping services I have access to.
We need to role back to something closer to the 1970s, really. The 90s were ok in tech company terms (at least when the DoJ slowed Microsoft's monopoly) but that was already a full decade into the big-ification of companies.
There's no real alternative but force. You can't evolve from big monopolies into smaller companies, the smaller companies can't even exist in most cases.
As Apple's sales success allows them to invest even more in R&D, their tech stack become an even bigger moat. Competitors are going to find it increasingly difficult to create products that can compete with Apple's tech stack on a technological basis.
Forget competitors, you can't buy the touch ID tech to create things like door locks. Big companies locking up access to markets means big companies are the sole arbiters of what even gets sold.
Doesn’t that mean there is a business opportunity for someone to make touch technology for door locks? Apple isn’t the only company that uses touch sensors.
Apple also acquired patents when they bought AuthenTec. So it might be tough even with unlimited money.
Consolidation problems are never an outright ban like a law would be. But raising the cost of entry is just as effective.
That just indicates that the value of a modular component isn’t high enough to make it worth building for now.
Touch ID is not a modular component. It’s part of a system and it’s not designed to be used in door locks. It took a huge amount of R&D overall which was worth it to build into hundreds of millions of dollars worth of phones. Touch ID isn’t just a sensor.
It isn’t a technology that can be used in a door lock.
At some point it will be cost effective for a door lock component to be built, but there is little connection between this and touch id.
This is the dilemma. The value is low _now_ because Apple bought the vendor, rather than purchasing from a vendor. In a healthy marketplace, Apple's scale would fund development of technology that other people could buy and run with. Instead, the market "developed" touch ID and Apple got to keep everyone else from using it for the low, low price of $365mm.
Touch ID doesn’t do anything for door locks. It’s the fact that it’s a tailored for their phones that makes it work better.
The market didn’t develop Touch ID. Apple did.
Fingerprint sensors are widely available in the marketplace and they are better than what was available when Apple bought a sensor company.
In a healthy market, someone else would look at what Apple did, and work out how to apply any relevant concepts to use outside of phones.
This is work that hasn’t been done yet, and is open for someone to do. It’s normal for a general solution to follow a specific one. The idea that Apple should have developed a door lock solution makes no sense.
Authentec didn’t make Touch ID, and wouldn’t have been able to make it as a standalone company and Touch ID isn’t a general solution that others can use.
That means there is still room for someone else to do what Authentec was doing.
No one is stopping anyone (outside of US economic sanctions) from getting an ARM architectural license and designing their own CPUs to compete with Apple. There are countless vendors to choose from if you don't have the experience to do yourself, there are IP cores for everything from battery management over memory to AI available on the market.
The problem is that, rather than go the expensive Apple route, most seem to be content to pay top dollar to Qualcomm (or for lower classes, Mediatek) and get buggy hardware and BSPs in return, instead of pushing Qualcomm to deliver better quality.
And for what it's worth, there are serious competitors to every Apple product. There have been Windows laptops with 32 and 64 GB of RAM years before Apple finally updated their line. Samsung puts up a diverse lineup of phones and tablets that definitely compete with iDevices. Sony has AirPod clones (admittedly they're bulkier, but have more selection in earbuds). There are a number of Apple TV competitors - Roku, Amazon's TV stick, Chromecast to name the most popular ones.
The problem with vertical consolidation is _not_ that they prevent other large companies from competing. There's always a scale where you can replicate work and release a competitive product.
ARM is inaccessible to most companies, including companies that don't compete with Apple. In a world where we prevent vertical monopolization, those very nice ARM CPUs Apple and Amazon have on lockdown become commodities and spur all kinds of innovation in other areas.
Who do you think pushes Qualcomm to deliver better quality when the two primary consumers of those CPUs aren't buying from third parties?
The idea that we have to somehow overthrow Apple in order to build better things is the problem.
Ironically Apple itself had this problem when Steve jobs returned. Microsoft was seen as the ‘problem’ to be overcome and thinking that way prevented Apple from seeing what else was possible.
Jobs explicitly rejected this kind of thinking “We have to stop thinking that in order for Apple to win, Microsoft has to lose.”
The same holds true now - we need to stop thinking that in order for others to win, Apple has to lose.
Apple’s solutions are not the only possible solutions. We don’t have to mimic them.
More competitive phone market is pretty boring. Good ARM CPUs are not boring, there are all kinds of places those would be amazing that Apple isn't going to bother using them.
Apple doesn't have to lose, in a healthy market they'll be able to buy good ARM CPUs just like I will.
The problem is that Apple's solutions are the only solutions that get to use certain technologies because they don't want other people to compete with them.
This just misunderstands what vertical integration is about.
Apple’s solutions aren’t general solutions. They are narrow solutions that work in Apple’s ecosystem.
Apple hasn’t developed general solutions that other people could use. This is the whole point. It’s why they can move faster than a modular ecosystem can.
This has nothing to do with not letting other people use their technologies. They don’t actually have technologies that anyone other than Apple can use.
What are you talking about? ARM is literally the dominant CPU architecture for years now, with a lot of CPU/SoC vendors for everyone's choosing. An architecture license is expensive, yes, but you only need it if you want to roll your own cores (and there is at least a dozen AL holders). Everyone who's fine with stock cores can use ARM Flexible Access where you only have to pay per-product fees at tapeout.
That's the reason why all other competitors (Hitachi's SuperH and MIPS being the biggest ones) have all but vanished.
>In a world where we prevent vertical monopolization, those very nice ARM CPUs Apple and Amazon have on lockdown become commodities and spur all kinds of innovation in other areas.
I agree it would be better if everyone were able to buy Apple's CPUs, yes, but the real secret behind Apple's performance is that they own the OS stack and can ruthlessly optimize it for performance. Technically, everyone can take the Android AOSP code and do the same for a given hardware stack, it's just a lot of work that is not much in demand.
> Who do you think pushes Qualcomm to deliver better quality when the two primary consumers of those CPUs aren't buying from third parties?
Uh, Samsung also buys from Mediatek, not just Qualcomm's Snapdragon and their own Exynos line... anyway there are lots of smartphone vendors who could go ahead and differentiate their products by focusing on quality, if they wanted and the consumers would want it. Samsung and Apple together only have 39% of market share (per https://www.counterpointresearch.com/global-smartphone-share...), there's a lot of room for competition.
Inefficient decision making creates environmental pollution.
Regulating to make companies less good at decision making under the belief that this will increase opportunity is literally making society stupider. It is the path to idiocracy.
I’m not against government intervention.
Let’s invest in alternatives, and let’s invest in making people’s lives less precarious.
That sounds nice but can't be true. Remember when Apple almost went out of business? It was the exact same situation then.
I'll offer an alternative hypothesis: Apple won out because they executed well year over year over year. They made that vertical integration work for them by slowly making things better faster than the competition.
Apple also never paid a strategy tax. They cannibalized their existing business ruthlessly. This is also unrelated to vertical integration.
The DoJ case had Microsoft back off that lever a bit, just as Apple executed beautifully (and with some Microsoft concessions in part devolving from the DoJ suit ... yes, a simplification, my 4th-fav pedants), and then hit it out of the park with the iPod and iPhone (subscriptions, apps, hardware sales, fashion accessories, ...).
Google cracked Microsoft's revenue model with advertising (though that may be starting to give a bit), as has Faceboook. Amazon got where both Microsoft and Google wanted to be: between the buyer and the lion's share of online retail.
Work, comms, adverts, shopping, fashion, and entertainment. There's hot competition for transport (automobiles, whether smart, electric, for-hire, or self-driving). There's not a whole lot of consumer spend left to grab that I can see. (Housing. Utilities. Insurance. Finance.)
By the late 1990s, though I thought Apple were dead. My pet name for "Rapsody" was "Requium". "Hit out of the park" is in that context --- the company had been on death's door. It is no longer.
Then you are someone else’s potential customer, as am I.
You say this is an alternative hypothesis, but it is in complete agreement with me.
Without vertical integration they would have been held back by the rest of the industry. Vertical integration is how they were able to move faster.
Without supporting evidence, this is nothing more than a post hoc fallacy.
Not really - it could also mean you don’t have industry experience to know what I mean. I’m guessing you weren’t around at the time.
The evidence is widely available for you to check out.
Just read accounts of how industry committees work and look at how industry alternatives have failed to keep pace with Apple’s proprietary alternatives.
At that time the company was being run by an executive whose backround was as a flavored soda salesman who tried to adopt Microsoft’s strategy of licensing the OS. That’s why they nearly went out of business.
When they returned to the integrated model and stopped trying to compete head to head, their success returned.
It works better until it doesn't. A company with high market share and positive cash flow can invest in vertical integration. They gain economies of scale. It gets harder to adapt to the market and stay efficient and innovative at larger companies. Or they slowly kill off the competition and no longer find the need to innovate, and settle into money printing mode and monopolistic behaviors.
There is plenty of money around to invest in alternatives.
And that consumer standard is also often based on price: Windows platforms are almost always cheaper than the Apple equivalent. So that efficiency doesn't benefit consumers.
And as for cost— I don't think that's necessarily strictly worse either. I have a Dell XPS now, and it's.... fine. But relative to my old MBP, the screen is worse, the build quality is worse, the trackpad is worse, the keyboard is worse, the power management is way, way worse. So although there might be slightly more compute here in terms of the raw numbers, a lot of corners had to be cut to make this machine work out, and all things considered, I'm not sure that the market is in a better place when even "premium" non-Apple computers don't have the profit headroom to invest in the little stuff.
The idea that I needed an Apple keyboard to do something trivial on an Apple machine was... hilarious to me.
There are 3rd party options with a command key - you just don’t happen to own one.
You don’t need an Apple certified keyboard. You just need one with the command key mapped correctly.
As for ‘explicitly catered’ - the command key was on Apple keyboards before Microsoft added the Windows key, and before Linux even existed.
It seems a bit weird to complain about monopolies while at the same time saying every product should work the same way.
If you're talking about things where Microsoft just makes the software, aren't they still winning over the Mac?
Consoles - Apple doesn't compete here. Microsoft is competitive.
Smartphones / tables - Microsoft lost here, Apple competes against Google and various hardware makers instead. They probably win in US market share and net profits, but not global share.
Computers / operating systems - Microsoft still dominates in market share over Apple. Opinions vary (strongly) between which is best, but more people buy computers with Windows than computers made by Apple.
Watches, air tags, etc. - Microsoft doesn't compete here.
Accessories - no clue about market share, but I do think Microsoft makes some pretty good keyboards and mice.
In 2002, Microsoft was the dominant force in consumer electronics because everyone assumed they needed ‘PC compatibility’ or even to integrate Windows CE.
If you worked in the industry then, Microsoft was discussed in every meeting and was a major player in standards bodies.
That started to change with the introduction of the iPod.
Also - Apple does in fact make most of the important accessories for their own products, and they leverage vertical integration when doing so.
AirPods for example. Bluetooth - the consortium solution wasn’t good enough, not were Bluetooth chipsets. Apple didn’t need to wait for standards changes or persuade a vendor to make anything for them.
I think this is all just a big bag of hindsight bias. If the "winner" does something different then people attribute winning to that thing. Reality tends to be more complex.
In the end, probably yes.
They did do this for a while but this wasn’t competitive with having the work done in China.
Apple exerts a lot of control over how that work is done.
They don’t just send out a design and get boards back - they embed engineers and management in places like Foxconn and in fact control the process.
> How do you draw the line? Where does your theoretical "stack" start and stop?
See above. Basically whenever something is not literally a commodity, Apple steadily builds expertise and control.
Look at how they have done this with screen technology for example. Their partner companies build parts dedicated to Apple.
Even if there is another corporate partner involved for geopolitical reasons, there is still vertical integration.
It’s a silly comparison.
In truth, greater efficiencies don't decentralise, they centralise. The market area expands. Suppliers or vendors, rather than competing locally, compete regionally or globally. In winner-take-all markets, there is only one winner, worldwide.
There are some twists on this, having to do with regional customs, language, and law, mostly. There's also the time element, where tech monopolies tend to be ascendent, then (often but not always) replaced. Still, a technological advantage can last a very long time, as with IBM and AT&T. Two of today's FAANG date from the 1970s, another two from the 1990s. Dominance can be long-lived.
There were some who saw this coming. Andrew Shapiro's The Control Revolution (1999) kinda-mostly saw this coming, and certainly called out the major aspects. Shoshana Zuboff recognised at least some of the potential in the 1970s and 1980s.
The crowd still believes the lie, for the most part.
Global highly efficient markets are like a polished flat globe with a uniform climate everywhere. Evolution would produce only one or two species in permanent equilibrium.
In a way, the market is biology flipped on its side, like a transposed matrix - where in nature, life forms mostly cooperate within their species (or at least ignore each other) and prey on other species, on the market, companies of the same type fight it out, while ignoring or cooperating with companies of different types.
But I think the main difference is scale. The area of influence of a life form - where they live, hunt, reproduce - is very limited. Same is true with companies serving local markets. A local glass factory. A corner market. You say:
> Global highly efficient markets are like a polished flat globe with a uniform climate everywhere.
But it's not just a flat globe. It's a globe with a surface of couple dozen square kilometers! It's literally a single niche. Not even that - it's a cage. Imagine a zoo that decided to put all its animals in a single, large cage. You won't have to wait much before there's only one big animal standing (and a bunch of insects scattering about).
On a more general note: biology is a good example that you can make a complex and robust system by giving imperfectly-self-reproducing agents a lot of space to play in, and then throwing calamities at them to keep things interesting. But I honestly don't like using it as a recipe for designing systems, because of all the waste that's involved. Waste of effort, waste of resources, waste of life. I feel we should avoid this kind of hard self-regulation whenever we can.
This is blatantly not true. There are condiserable levels of intra-species competition in many species. Even in "cooperative" species, those animals cooperate in groups, but then those groups compete against each other. Most predators prey on a very limited subset of the ecology. You seemly cannot reliably predict inter vs intra species like you seem to think.
Also "preying on" is pretty different that "competeing with" and at the ecological scale, predation looks much more like interactions between industries than competition within an industry.
Thus the correct mapping of the analogy in this case is between ecological niches and industries.
Regarding your more general note: I think there is a trade off between efficiency and robustness. Top down heirachical structures (most companies, militaries, etc) are generally more efficient in terms of resources used but are vulnerable to broken/inefficient/disengenous nodes, especially for the higher nodes. Bottom up solutions (markets, grassroots movements, etc) tend to use more total resources but do better at dealing with bad nodes and are thus less failure prone.
I would argue that the best systems tend to layer combinations of these two types of systems.
Edit: In the US for example, we (simplistically) have a bottom up democracy that governs a top down government that regulates bottom up markets that are participated in by top down companies that increasingly rely on outsourcing core functionality to other bottom up markets that that top down particpants.
Firms, at least to a certain size, are about increased specialisation. That is, they focus on doing one thing. Rather than predator/prey relationships, firms have exchange relationships, arbitraging off of distinct specialisations and differential capabilities, with much of that being supply-chain related.
(A recent discussion of semiconductor fabrication noted that an end-product device might comprise of 1,000 or more individual steps, and 70 or more logistical (that is, shipping) links before reaching the final purchaser.)
Individual organisms are, at least to a first approximation, generalists. They must source food or sustenance, provide for circulation, metabolism, health, etc. Plants have structural and photosynthetic requirements. Many animals have sensing, neurological, mobility, and defence functions. The largest individual organisms still occupy only tiny fractions of the Earth's surface individually --- whales, fungi, slime molds, clonal trees. Past a certain point, organisms simply cannot coordinate at large scale within a single entity.
So the reason single firms fight amongst others of similar stripe is because each is attempting to control a highly specialised niche.
(There's another question of just where and how businesses become extensive. The question of organisation of industry by type or sector goes back to Quesnay and in modern variants seems to be seen as 4--5 distinct levels. I'd argue that it's network-based firms which are most likely to be expansive, though that includes a fairly broad notion of just what a network is. See: https://old.reddit.com/r/dredmorbius/comments/74dm5o/seeking...)
The scale question is interesting. Yes, individual human firms are far larger than the alrgest organisms. But the range of scales found in nature remains larger. You can look at length, volume, mass, or metabolism.
The smallest bacteria are about 0.2 nm in length, which (assuming density of water) is about 310^-17kg
The largest blue whale is 30m in length, and 17,000 kg.
(There are larger organisms, giant sequoia trees, slime molds, clonal trees. They shift the calculus by a few more orders of magnitude.)
That's a length difference of about 150 million (10^8), and a mass differential of about 507 billion billion (10^20). On either measure, the range from smallest to largest firm would be smaller, if only because the human population has not yet reached 507 billion billion.
(In looking at metabolism, values are harder to find, especially for bacteria. A blue whale has a basal metabolic rate of about a half-million kilocalories (food calories) per day, with a total* expenditure larger than that. The metabolism of mammals scales as BMR=KM^(2/3), that is, to the 2/3 power of mass. Economic metabolism is at the rate of approximately $1,000/barreloil.)
By absolute magnitude, the largest firms are of course larger than the largest animals or plants. Much of that comes from an ability to both organise and process inputs at a much larger scale. For an organism to operate at global scale, it would need to physically be global scale. A firm virtualises many of its coordination activities through communications --- a sort of "spooky action at a distance", if you will. James Beniger, The Control Revolution (1986) (one of several books by the same title), listed in the Reddit post above, discusses much of the development of this. In a sense, a firm is a financial, legal, commercial, social, technical, and organisational virtual construct.
What firms can do that organisms cannot is incorporate other freestanding entities within themselves. "Mergers and acquisitions" is not a chapter you'll find in a biology text. It's an extraordinarily common business practice. If not always a successful one.
Geoffrey West, Scale looks into the question of magnitudes as well. https://www.worldcat.org/title/scale-the-universal-laws-of-g...
Less biodiversity? Sure. But one or two species? Probably not.
On a mainland (a region with widespread intercommunication within a species), speciation is relatively rare (baring catastrophic events). On an island, any given mutation is proportionately a larger share of the genome already, and has an opportunity to take hold even if there is little or no relative advantage.
(Evolution is a case of natural selection, with the presumption being that that selection is itself beneficial. In truth, "benefit" can be wide-ranging, and genetic drift where a set of equipotent or merely latent advantages occur and are distributed are frequent. There's also the distinction between what I call exogenous and endogenous selectors. The former are imposed by the environment, the latter from within the social behaviour of the species itself (assuming social behaviours). There are also purely random events --- getting hit by an asteroid or consumed by a volcano, say --- though one might argue that vigelance plays a role here.)
But yes, a globally-interconnected world with common trade interests, exchange, languages, etc., is one that's been flattened and made uniform. One suspects that disuniformities may eventually appear and change the economic calculus.
One force that seems highly potent at present, and underappreciated, is the reliance on energy (oil) and strategic minerals, both either only or highly preferentially accessible in specific locations. My view of the post-WWII global dynamic is that it makes far more sense to consider it as an interplay between three major oil-producing regions: the Soviet bloc which was both a largely self-sufficient producer (Baku) and exporter, the Western bloc (NATO, ASEAN, Japan, South Korea) which was a major producer, but relied increasingly on imports, and the swing bloc of the OPEC states (notably Saudi Arabia, though also Iran, Libya, Iraq, smaller Gulf states, and others). The US/NATO posture of protecting and defending global oil production and transport emerges in this context. The Soviet bloc could rely on land-based pipeline transport to a far greater extent.
Strategic minerals, largely derived from Africa, spell out much the rest of this story.
There's more explanation in this to my mind than many of the ideological explanations. My sense is that ideology itself more likely flows from the geopolitical dynamics.
As relates to future geopolitics: the general sense is that oil will diminish in signficance (probably, though not certainly). But an advanced electrified world relies increasingly on exotic elements either not widely available (e.g., coltan), or which, whilst not rare per se, have exceedingly messy extraction processes (the so-called "rare earths", actually reasonably abundant but not ore-forming, meaning that even "rich" deposits are actually low concentrations, requiring much overburden removal, processing, and tailings.
Lithium already appears poised to be the next energy storage medium, and is similarly to oil nonuniformly distributed globally. Seawater extraction seems one possible way around that limitation, though at 1ppm concentrations, that's a challenge. Possibly if integrated with other seawater-based activities (desalination, seawater-based fuel synthesis, etc.).
The complexity of software coupled with its absolute rigidity makes it hard to build systems that talk to each other even when specifications are public. When things are proprietary take the difficulty of making software interoperable and add a total lack of documentation and a possibly adversarial relationship with the vendor where they'll try to deliberately shift things to keep you out. (There could also be legal barriers, but I'm just talking about technical ones.)
Then consider the added difficulty of opening systems to interoperability with other systems while maintaining security. If you allow connections from untrusted systems, now you have to be particularly meticulous in the design of your software to ensure there are no exploitable bugs, undefined behaviors, or holes in your permission system. We still mostly program in language that are "insecure by default" and make this hard.
Then there's the Internet itself which is intrinsically hierarchical. DNS, BGP, and the hierarchy enforced by NATs and firewalls that separate endpoints from the "real" Internet all make the network favor a "feudal" client-server model. We shouldn't be surprised that the Internet produces a lot of monopolies and closed silos; software built around the Internet takes on its shape.
Last but not least there's the use of cryptography to enforce walled gardens: certificates, code signature requirements, closed app stores, etc. This adds an artificial barrier on top of everything I mentioned above.
Compare this with older mechanical and analog systems. Even complex mechanical and analog electronic systems are straightforward to examine, measure, characterize, and understand. Ignoring patents and other legal restrictions it's straightforward to build replacement parts or interoperate with physical systems.