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Google Facebook & Amazon’s Efficient Vortex Traps

Summary

Why do Google, Facebook, and Amazon apparently so befuddle, overwhelm, and run circles around antitrust authorities to date?

Google, Facebook, and Amazon defy normal narrow, static antitrust market definition analysis and understanding, because what is new and most defines them in an antitrust context is their exceptional, wholistic, centripetal-force dynamic, which is vortex effects and efficiencies, i.e. an effective whirlpool dynamic that in encircles, swirls, and sucks everything near, deeper into an increasing vacuum power trap.

Simply what is different and under-appreciated with these companies is the extraordinary and unprecedented nature, purpose, and effect of the efficiencies their platforms generate and proliferate.

To date antitrust authorities myopic mistake has been to narrow their scope to a market segment and miss the big picture of the enterprise’s combinatorial nature, purpose, and effect -- as a whole, because the purposeful whole can be much different and more powerful than the random sum of its parts.

New antitrust laws are not needed for U.S. antitrust authorities to enforce antitrust laws against these platforms, because the U.S. v. Microsoft antitrust precedent, did not miss the forest-for-the-trees.

It relied on the 1962 Supreme Court antitrust precedent Continental Ore, which requires courts to look at an accused company’s conduct “as a whole,” not in part or in isolation.

And the U.S. v. Microsoft precedent lights the path to how the antitrust consumer welfare standard can be employed to prove that software-enabled behaviors can substantially decrease competitive consumer choice, innovation, and quality.  

In isolation, it is easier for these companies to argue that the positive efficiencies for consumer welfare may outweigh the anticompetitive efficiencies effects.

However, when one considers the combinatorial effect of their purposeful business strategies and models omni-integrated across product and service markets with global reach, the real big picture comes into focus.

The anti-competitive efficiencies increasingly overwhelm the pro-competitive efficiencies and effects, because the anticompetitive effect of virtually omni-integrating all products services online increasingly perfects foreclosure of actual and potential competition and competitive entry online and offline.

Think of the difference of a partial barrier to entry from one direction to an overall centripetal-force dynamic, of vortex efficiencies and effects, i.e. an effective whirlpool dynamic that encircles, swirls, and sucks everything near, deeper into an increasing vacuum power trap.

What’s new in this analysis is a wholistic “vortex effects and efficiencies” conceptual framework to aid antitrust authorities in investigating, evaluating, and understanding how Google, Facebook, and Amazon, are anticompetitive, because of the extraordinary nature, purpose, and effect of the combinatorial efficiencies their platforms generate and proliferate.

Google, Facebook, and Amazon’s exceptional online commercial vortex dynamics create exponentially more powerful barriers to competition and competitive entry than well-known offline network effects, because online vortex effects are very different from traditional network effects.

That’s because they operate in the highly-artificial online world, where they are specially-enabled to be more comprehensive, combinatorial, coordinated, and covert than any offline-based company could ever legally be, which in turn facilitates extraordinary vortex effects and efficiencies that are new and different, and generate orders-of-magnitude more speed, scale, scope, reach, market power, and data-depth, than antitrust authorities are accustomed to investigating in the offline-based world.     

This analysis will spotlight some of the most defining dynamics of an online commercial vortex and why Google, Facebook, and Amazon are vortex vendors with vortex multi-sided business models that leverage winner-take-all vortex effects.

In addition, this analysis will show why the current antitrust presumption that these evident, but under-appreciated vortex centripetal-force dynamics are pro-competitive dynamics, are mistaken, naïve, and extraordinarily destructive to free market competition and to consumer welfare long-term, which depends on the existence of dynamic, at-least-two-way, competitive innovation, choice, and quality for all markets.

These vortex vendors have become antithetical to competition and choice, because their inherent whirlpool essence of exponential vortex effects is ever-increasing winner-take-all entrapment – i.e. centripetal-force: consumer lock-in effects; systemic competitive foreclosure of substitutes and new entrants’ effects; and near-omniscient data-depth that creates extreme information asymmetry effects.   

These extraordinary, artificial, government-policy-facilitated monopolies, that require lax antitrust enforcement, and lax privacy, property, and consumer protection to maintain and extend their market power unfettered in most every direction, increasingly represent an existential threat to antitrust, free-market competition, a level playing field, consumer security/welfare, and governmental sovereignty.

If one takes this evident centripetal-force, dynamic to its apparent logical conclusion, these vortex vendor dynamics, most manifested by Google, Facebook, and Amazon, increasingly and relentlessly can encircle and entrap more and more of the economy, society, and government, over time.

Amazon CEO Jeff Bezos effectively confirms this insight and reality in recently boasting to Forbes: “For all practical purposes, the market size is unconstrained… There are different businesses where the market is limited, but we just don’t have that issue.

Former Google Chairman and CEO Eric Schmidt presciently boasted in 2012 that: “Almost nothing short of a biological virus , can scale as quickly, efficiently or aggressively as these technology platforms [i.e. Google, Facebook, Amazon…] and this makes the people who build, control and use them powerful too.

Theoretically, these exceptional multiplying vortex effects are so efficiency-enhancing and anti-competitively overwhelming that only one concentrated vortex vendor ultimately would be technologically necessary to centrally-plan, automate, operate, and dictate most outcomes of most of the U.S. economy.

That would be, if the U.S. Government continues to allow Google, Facebook and Amazon to remain unfettered by, and immunized from, Federal and State accountability in the future, like they have been for over two decades.

It is becoming evident that few offline enterprises can compete, thrive, or survive long-term against U.S. Internet industrial policy and law that unwittingly facilitates maintenance and extension of online monopolies, and that incapacitates free market competition by favoring: monopoly efficiencies over competition’s inefficiencies; extreme omni-integration horizontally, vertically, and informationally (data); and exceptional, economy-wide market power without legal civil responsibility to others or society.

The Defining Centripetal-Force Characteristics of Vortex Vendors

1.      Unitary Center Axis:

Vortex vendors can only exist on and via the Internet, because the Internet has a unique raison d’être of complete uniformity to optimize frictionless interconnectivity, interoperability, integration, efficiency, speed, and convenience.

This centralized uniformity can only exist virtually, and that is why the Internet is the only place where most users, sellers, buyers, publishers, advertisers, developers, data, information, products, services, etc. can be most aggregated, integrated, influenced, and ultimately entrapped.

Contrary to the Internet-is-a-de-centralizing-force myth, Internet technology’s default uniformity has proven over the last twenty-five years of real- world experience to be the most relentless, comprehensive, human-made, centripetal-force in the history of the world.

Anyone who doubts this vortex-ian trajectory and potential, need only look at China’s evident Great Firewall and totalitarian centralization of China’s Internet for confirmation.

2.      Dis-intermediary Immunity from Liability Axis:

America’s unique Section 230 exemption from Federal and State regulation and immunity from civil liability for however an Internet platform intermediates or does not intermediate on their platform, is a hugely powerful centripetal force that encourages vortex vendors to not pursue normal head-to-head competition on a level playing field, but to exploit parasitic, can’t-lose, regulatory arbitrage strategies via “disruptive” business models that would be illegal or regulated if offline-based businesses pursued the same business model.

The unintended anticompetitive result of Section 230 has been to create a de facto “cheaters charter,” where Internet platforms can choose to compete on the merits and ethically, or chose to cheat and engage in business practices that it knows would be illegal if pursued offline by an offline-based competitor, because the U.S. Government unwittingly subordinated consumer welfare to the welfare of Internet platforms. 

For those without ethics, Section 230 effectively empowers vortex vendors and others to represent themselves as Internet intermediary platforms that are unbiased honest brokers, when they really are dis-intermediaries that operate unfair and deceptive business models that cloak their biased-brokering of self-dealing, front-running, and predatory pay-for-play schemes, and employ business practices that are generally illegal or an unfair and deceptive practices in done offline.

For all who understand how excessive or special government commercial taxation and/or regulation can have outsized negative effects on competition, a level playing field, growth, consumer welfare, and innovation, they can understand the obverse too, when special excessive government commercial immunization from most regulation, accountability, and civil liability can also have the unintended consequences of outsized effects on competition, a level playing field, growth, consumer welfare, and innovation.

3.      World-Centralizing Missions Centripetal Force:

Google, Facebook, and Amazon are the only companies that have planetary mission statements.

Missions are critical here because they focus and accelerate the centripetal-force of the whole company collective actions in only one direction powering these vendors’ vortex whirlpool effects.  

Google’s mission is “to organize the world’s information and make it universally accessible and useful.”

Facebook’s mission originally was “to make the world more open and connected,” and now is: “give people the power to build community and bring the world closer together.”

Amazon’s mission is: “to be earth's most customer-centric company, to build a place where people can come to find and discover anything they might want to buy online."

4.      Omni-Scale Ambitions Centripetal Force:

Google named itself after the largest named number, Googol, which is a 1 with a hundred zeros and is a number that exceeds the number of atoms in the known universe. Amazon named itself after the largest river in the world. Facebook’s founder boasted his ambition to build and control the world’s “social utility.”

Only Google has already copied and organized the world’s information – most everything.

Only Facebook has already organized the world’s social sharing users – most everyone.

Only Amazon has already organized the world’s available products and services – most anything.   

5.      Omni-Autocratic Centripetal Force:

Contrary to the Internet platform myths that users are in control from the bottom up and competition is a click away, these vortex vendors are effectively fully-integrated, monopsony/monopoly ecosystems of multiple markets, where users and suppliers do not have an effective overall substitute.

These vortex vendors are commercial autocracies because the founder-owners, Larry Page, Mark Zuckerberg, and Jeff Bezos, each practically enjoy much more unfettered, autocratic executive power and control over their respective chosen domain than other CEOs or governmental leaders.

That’s because they arguably are the most automated large-scale integrated entities in the world – by far -- where these leaders then can have outsized influence of how these ecosystems operate by centrally planning and dictating the goals, approaches, and defaults of their vortex vending.     

With users, each of these vortex vendor CEOs are also in practice, a top-down, hyper-focused, autocratic-automater, whose user terms-of-service and privacy-policies, are effectively, take-it-or-leave-it dictates from the founders that largely reflect their personal ambitions, views, goals, values and tradeoffs.  

6.      Omni-Integration Centripetal-Force:

These vortex vendors can optimize their overall efficiencies and data/meta-data collection asymmetric advantages via omni-integration of most of their products, services, algorithms, technologies, models, strategies, and deep data hoards.

This inherent omni-integration, self-reinforcing dynamic, that is not possible in the physical world, gets most everything pulling in the same general direction online via centrally-planned automation, which in turn increases the speed, volume, and power of the vortex vendor’s vortex effects and efficiencies.

7.      Optimized Information Asymmetry Centripetal Force:

Vortex vendors are like the near-perfect information asymmetry of a one-way mirror.

These vendors can see, copy, analyze, store, and exploit whatever, and whoever’s, data and meta-data that passes through its intermediary vortex, when no one else can with or without encryption.

These vortex vendors have huge data/information asymmetric advantage over all their potential competitors and everyone else.

Given their online demand monopsonies and supplier process monopolies, Google, Facebook, and Amazon, have near perfect economy-wide intimate knowledge of actual supply, demand, inventory, price, terms, and intent, down to the customer, product, service, feature, device, app, location, etc.  

This one-way effective information asymmetry, which enables the vortex vendors to intimately know most other businesses most competitively sensitive information, plans and capabilities, while keeping their own secret, is an effective anti-competitive centripetal force that sucks in all potential-competition-relevant data and meta-data to ensure that their potential competitors can never become actual competitive threats to the vortex vendors.

Forewarned is forearmed.

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Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an Internet competition and policy consultancy for Fortune 500 companies, some of which are Internet platform competitors, and he is Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. Cleland has testified before the Senate and House antitrust subcommittees on Google. Eight different Congressional subcommittees have sought Cleland's expert testimony and when he worked as an investment analyst, Institutional Investor twice ranked him the #1 independent analyst in his field.

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LLC Research on Asymmetric Accountability Harms:

Part 1:   The Internet Association Proves Extreme U.S. Internet Market Concentration [6-15-17]

Part 2:   Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms [6-22-17]

Part 3:   Why Aren’t Google Amazon & Facebook’s Winner-Take-All Networks Neutral? [7-11-17]

Part 4:   How the Google-Facebook Ad Cartel Harms Advertisers, Publishers & Consumers [7-20-17]

Part 5:   Why Amazon and Google Are Two Peas from the Same Monopolist Pod [7-25-17]

Part 6:   Google-Facebook Ad Cartel’s Collusion Crushing Competition Comprehensively [8-1-17]

Part 7:   How the Internet Cartel Won the Internet and The Internet Competition Myth [8-9-17]

Part 8:   Debunking Edge Competition Myth Predicate in FCC Title II Broadband Order [8-21-17]

Part 9:   The Power of Facebook, Google & Amazon Is an Issue for Left & Right; BuzzFeed Op-Ed[9-7-17]

Part 10: Google Amazon & Facebook’s Section 230 Immunity Destructive Double Standard [9-18-17]

Part 11: Online-Offline Asymmetric Regulation Is Winner-Take-All Government Policy [9-22-17] 

Part 12: CDA Section 230’s Asymmetric Accountability Produces Predictable Problems [10-3-17]

Part 13: Asymmetric Absurdity in Communications Law & Regulation [10-12-17]  

Part 14: Google’s Government Influence Nixed Competition for Winner-Take All Results[10-25-17]

Part 15: Google Amazon & Facebook are Standard Monopoly Distribution Networks [11-10-17]

Part 16: Net Neutrality’s Masters of Misdirection[11-28-17]

Part 17: America’s Antitrust Enforcement Credibility Crisis – White Paper [12-12-17]

Part 18: The U.S. Internet Isn’t a Free Market or Competitive It’s Industrial Policy [1-4-18]

Part 19: Remedy for the Government-Sanctioned Monopolies: Google Facebook & Amazon [1-17-18]

Part 20: America Needs a Consumer-First Internet Policy, Not Tech-First[1-24-18]

Part 21: How U.S. Internet Policy Sabotages America’s National Security [2-9-18]

Part 22: Google’s Chrome Ad Blocker Shows Why the Ungoverned Shouldn’t Govern Others [2-21-18]

Part 23: The Beginning of the End of America’s Bad “No Rules” Internet Policy [3-2-18]

Part 24: Unregulated Google Facebook Amazon Want Their Competitors Utility Regulated [3-7-18]

Part 25: US Internet Policy’s Anticompetitive Asymmetric Accountability - DOJ Filing [3-13-18]

Part 26: Congress Learns Sect 230 Is Linchpin of Internet Platform Unaccountability [3-22-18]

Part 27: Facebook Fiasco Is Exactly What US Internet Law Incents Protects & Produces [3-26-18]

Part 28: How Did Americans Lose Their Right to Privacy? [4-14-18]

Part 29: The Huge Hidden Public Costs (>$1.5T) of U.S. Internet Industrial Policy [4-15-18]

Part 30: Rejecting the Google School of No-Antitrust Fake Consumer WelfareStandard [4-20-18]

Part 31: Why New FTC Will Be a Responsibility Reckoning for Google Facebook Amazon [4-27-18]

Part 32: “How Did Google Get So Big?” Lax Bush & Obama FTC Antitrust Enforcement [5-23-18]

Part 33: Evident Internet Market Failure to Protect Consumer Welfare -- White Paper [5-31-18]

Part 34: What Happened Since FTC Secretly Shut 2012 Google-Android Antitrust Probe? [6-8-18]

Part 35: Buying WhatsApp Tipped Facebook to Monopoly; Why Didn’t FTC Probe Purchase? [6-19-18]

Part 36: The Sea Change Significance of Simons-FTC Privacy and Antitrust Hearings [6-27-18]

Part 37: New U.S. Privacy & Data Protection Law Is Inevitable Like a Pendulum Swing [7-9-18]

Part 38: Why a US v. Google-Android Antitrust Case Is Stronger than US v. Microsoft [7-16-18]

Part 39: Google-Android’s Deceptive Antitrust Defenses Presage a US v. Alphabet Suit [7-20-18]

Part 40: Case Study of Google Serial Over-collection of Private Data for FTC Hearings [7-30-18]

Part 41: The Unfair and Deceptive Online-Offline Playing Field – FTC Hearing Filing [8-7-18]

Part 42: What Most Stunts FTC Antitrust and Consumer Protection Law and Enforcement? [8-21-18]

Part 43: Why New U.S. Privacy Data Protection Law Will Preempt State Privacy Laws [8-27-18]

Part 44: What’s the FTC Hearing before their Hearings on the Unlevel Playing Field? [9-6-18]

Part 45: Google Facebook & Amazon’s Anticompetitive Nontransparent Exchange of Ideas [9-12-18]

Part 46: The Unlevel Playing Field of Asymmetric Competition Expectations [9-17-18]

Part 47: How EU Amazon Antitrust Probe Spotlights Amazon as an Unlevel Playing Field [9-26-18]

Part 48: Google Facebook Amazon’s Non-Neutral, Neutrality Nonsense Harms Competition [10-2-18]

Part 49: FTC-DOJ Signal Privacy Is a New Antitrust Risk for Google Facebook [10-9-18]

Part 50: Google+’s Market Exit Spotlights Google + Facebook Cartel Market Allocation [10-16-18]

Part 51: Google Facebook Amazon’s Civil Liability Immunity = A Culture of Un-Ethics? [10-23-18]

 

Q&A One Pager Debunking Net Neutrality Myths