Big
Isn't Always Bad. In Fact, It's the Whole Idea.
Yes, the FAAMG five can be belligerent and needs to be held accountable. But we also need them more than you think we do.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@TULLMAN
We're just weeks away from the
"formal" start of the 2022 election season -- as if the politicking
ever ends -- and it's always good to have an easy target to flog as this bunch
of do-nothings, proud obstructionists, and performative liars heads home as
Congress goes into recess.
This time around, in addition to the usual
suspects there's another major whipping boy on the agenda: Big Tech.
All of this would be nothing more than the
usual sad circus of clowns lying about the Big Lie except for the fact that the
Big Tech boogeyman provides such an irresistible and wonderfully villainous
distraction from their inaction. Virtually every politician in D.C., on both
sides of the aisle, has agreed to hate on and incessantly attack the FAAMG
five.
The Dems have their traditional grievances,
mainly concerns about monopolistic injuries to competition and small businesses,
and the sale of consumer data. The loudest Republicans are all a dither about
supposed suppression of free speech and the alleged censoring of conservative
online discussions concerning anti-vax information. Unfortunately, to make
matters worse and even more damaging to the country's competitive prospects,
President Biden just piled on the bandwagon with a 72-item bill of particulars
directing more than a dozen federal agencies to do "something" to
change the laws, increase the regulation, improve the scrutiny, and otherwise
stem the awful tide of growth, innovation and prosperity which we've seen over
the last two decades in the tech sector.
The unavoidable implication of Biden's program
is that the Federal Trade Commission and other regulators will now be free
(without clear guidelines or standards) to try to invent restrictions on the
fly. They want to abruptly rescind and interfere with existing and
long-established understandings regarding anti-competitive market behaviors,
mainly because Congress itself hasn't done a thing to address any of these
growing and legitimate concerns for years.
As a serial tech entrepreneur, and even
believing that much of this latest drama and BS will come to nothing, it still
concerns me to repeatedly hear the entire discussion reduced to the same old
tired and simplistic argument that "big is bad." All the major tech
giants began as tiny and insignificant startups and fought for years to
overcome existing competitors, antiquated and anti-competitive laws, and other
impediments, including skeptical and actively hostile regulators and all manner
of local politicians firmly in the pockets of the industry incumbents.
No one thinks that it's likely to be any
easier today to achieve the levels of success of Apple (b.1976), Amazon
(b.1994), Google (b.1998), and Facebook (b.2004), but most of these giants
initially emerged in the massive and imposing shadow of Microsoft (b.1975), the
Evil Empire of Redmond. Somehow, they survived and thrived. Microsoft is now
inexplicably regarded by the media and millions of others as some kind of
harmless and benign force for good, unless you happen to be an anti-vaxxer
concerned about the little chips being inserted into your bloodstream.
This is especially amazing as we watch
Microsoft Teams slowly but inevitably drain the life out of Slack -- even with
Salesforce's ownership-- as a result of the utter entrenchment of Office 365 in
the Fortune 500. Teams' user counts grew from two million in 2017 to 150
million today and its growth and penetration continues to accelerate.
The bottom line has been, and will always be,
the same: building new businesses is risky and tough, change is always
difficult and consistently resisted, and creating new, disruptive and
innovative solutions is challenging, expensive, and not for the faint of heart.
The playing field has never been level and never will be. The guys at the top
of the hill aren't going anywhere voluntarily. They'll invoke every excuse and
impose every possible obstacle - legal and regulatory for sure - with the
cooperation, connivance and unspoken support of every politician they can
enlist.
Size always matters, especially for our major
tech firms today because - and make no mistake - they are fighting off and
defending our country from massive, continual and increasingly effective
attacks from China and Russian in particular. They are using their own
resources and funds to do so because our own government is too hidebound,
ill-equipped, and politically paralyzed to do much of anything other than make
vague and unenforceable threats. If these very same companies don't continue
the battles, or are hobbled and weakened by idiots in D.C., we won't have to
worry much longer about preserving a competitive environment for the little
guys. Instead, we'll be looking at ways to save our entire country from being
overrun.
In addition to the external threats, size is
also absolutely critical to true and substantial innovation that moves the
needle at scale. You can start small and smart, but if you're going to lead the
return of competitive manufacturing capabilities to the U.S. mainland in both
the automotive and space industries, you're going to have to have enormous
resources behind you to effectively and quickly scale. It takes big bucks to
make the big bets that make a difference ultimately in our lives. Putting aside
the phallic implications, there's no doubt that SpaceX (Tesla), Amazon and
Virgin have done more for the expansion and innovative enhancement of the U.S.
space program in the last decade than the government itself, notwithstanding
the annual expenditures of billions of bureaucratic dollars.
There are undoubtedly anti-competitive
practices in the tech universe - it's a winner-take-all world by its very
nature. And being the new little guys on the block in any business is rowing
against the tide. The power of platforms and their dominance
continues to grow, but they are absolutely the most cost-effective tools to
offer, warehouse, and rapidly deliver millions of products created by small
local merchants to a global market.
More importantly, is it really fair or even
effective to abruptly move the goal posts, change the rules, and enlarge the
penalty boxes? Especially when you are looking through a new lens,
restating the long-standing theories regarding benefit to the consumer as the
regulatory bottom line objective and grandly assuming that somehow, at some
future time, for reasons that are unclear and specifically contrary to the
expressed objectives of the biggest players, that consumers will cease to
benefit from the massive choices, immediate access and delivery, and remarkably
lower prices that Amazon in particular has brought to every marketplace it has
entered?
JUL 27, 2021