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Meta argued that the regulator was “sending a chilling message to start-up entrepreneurs: do not build new companies because you will not be able to sell them.”
This overlooks the traditional and perhaps now unpopular reason to start a company: making money by selling something useful. No need to sell the company. By the way, Facebook buys, does not sell.
Ironically, that statement is the strongest argument in favour of blocking the acquisition I've heard.
Any company so arrogant about its market dominance it assumes that the only way for an entrepreneur to succeed in building a company in its market is to sell _to them_ deserves to be broken up.
Not to sound too obvious, but that is precisely the current state that is also ever increasing. As with seemingly most things, we are witnessing a reemergence of a system similar to what existed before the American Revolution, the feudalistic, aristocratic, monarchical system where you must show fealty to your vassal lord corporation.
Even the subject supposed effort to prevent monopolization is not understanding the underlying issue, that competition (a form of freedom) has for all intents and purposes been totally subverted because rather than monopolizing an industry or sector, today's monopolists/cartels realized they should just totally supplant the whole market so people have no choice but to kiss their royal ring. That is something that has effectively been accomplished and society may just have not understood yet what's going on, or likely those who would be expected to ward this off were also totally compromised and corrupted ($$).
What we need is reinstatement of conditions that lead to are allow competition. That may take on several different forms, e.g., (not to pick on Apple, but to use a recent example) that Apple must provide the same access to core integration (based on reasonable technical specifications anyone can meet) that AirTags utilize to competitors like Tile, including the whole apple device network (AirTags are real reason that SARS-CoV-2 "contact tracing" was snuck in to save us all, btw). Another example; Apple and Google, may not block or ban any user or any app that meets its general and public technical specifications and are not a violation of law and human rights like free expression, whether out vassal lord corporations like what users have to say or if an app is a competitor or does something they don't like or not. The alternative should simply be that Apple and Google can just build their own internet if they wish to violate people's rights on the public internet and communications … at the very least.
> As with seemingly most things, we are witnessing a reemergence of a system similar to what existed before the American Revolution, the feudalistic, aristocratic, monarchical system where you must show fealty to your vassal lord corporation.
This is not something new, but has always been the case. Capitalism is the 2nd iteration of feudalism. When the French revolution threw feudalism into jeopardy, the feudal lords - conservatives who sat in the right wing of the French parliament- hoped capitalism would rescue feudalism and help maintain social hierarchies. Democracy is seen as anti feudal and anti capitalist in its genesis, by giving everyone one vote independent of wealth. Earliest proposals for elections were only for Male land owners.
The founding fathers were capitalists for the most part.
Most of them owned rather than rented their labor, but yes they did start the US with the idea of suppressing mass universal democracy, calling it mob rule.
What kind of ahistorical criticism is this?
The US was the first modern democracy. Were they supposed to go from dictatorial monarchy to universal suffrage in one day or be condemned forever?
If you want to criticize something, criticize the fact that we _still_ don't have universal suffrage. In many states, felons can't vote. Which is cynically claimed as denying them something as punishment for their crimes, but in reality is done to prevent the victims of mass incarceration from becoming a large voting bloc to end it.
This isn’t really true. Before the declaration of independence the people of the American colonies couldn’t vote in British general elections, yet the Parliament of the United Kingdom of Great Britain (as it was known then) had full legal rights to legislate for the colonies. This is due to the way the British constitution works, where Parliament has supreme power over everything, including the the Monarch, the Monarch’s government and any territories outside of the United Kingdom. This remains the same for all existing British overseas territories such as Bermuda and the Cayman Islands where there is no representation in Parliament.
The individual American colonies had legislatures for their own territory, with limited powers as defined in their charters. One example is the legislature of Virginia which has had elected members since its inception 150 years before American Independence and still continues to hold elections to this day.
This is kind of my point. Should we condemn the Magna Carta as well?
We should spend less time whinging about the people who did better than their fathers and more time doing better than ours.
The people allowing themselves to be consumed by "hate your neighbor" propaganda and mistaking that for a protest movement are getting played. Fight who's above you, not who's beside you.
I take issue only with the characterisation of colonial America as authoritarian. It was democratic and the King and his Governors had limited power. The issues leading to revolution arose mostly from the lack of representation in Parliament and a series of unforunate blunders in handling greivences on the part of HM Government.
Even now, things do eventually change:
"the Parliament of the United Kingdom of Great Britain [...] had full legal rights to legislate for the colonies. [...] This remains the same for all existing British overseas territories such as Bermuda and the Cayman Islands [...]"
You may wish to read this:
https://en.wikipedia.org/wiki/British_Overseas_Territories#G...
specifically "Following the Lords' decision in Ex parte Quark, 2005, [...] To comply with the court's decision, the territorial governors now act on the advice of each territory's executive and the UK government can no longer disallow legislation passed by territorial legislatures."
and the sections sketching the legislatures in Bermuda and Gibraltar.
e.g. "Individual overseas territories have legislative independence over immigration"
The US was the first of the series of republican revolutions of that era and the most conservative of all of them (compare with the radicalism of 1789 France for example). There are things to admire about it, but I think it is better to call it a war of independence than a proper social revolution.
The reason to be critical today is we are _still_ living in that framework! We have to do better.
It is true that the French Revolution and subsequent counter-revolution were not as successful as the American Revolution was, and that the non-democratic features of the American system are a major reason for that.
> _that the non-democratic features of the American system are a major reason for that_
It's unfortunately unpopular to point out that we have ample evidence, from history and contemporaneously, that democracy _per se_ doesn't work. It devolves into a populist, majoritarian and often authoritarian mess as reliably as (non-monarchical) dictators fall into chaos.
The men who founded our Republic understood this, which is why they explicitly created a system that balances the strengths and weaknesses of monarchy, oligarchy and democracy. (Hint: they're our three branches of government.) At some point, we wrote that balance out of our cultural history, and we're partly paying the price now.
There are many liberal republics and socialist republics doing fine all over the world. This is just trendy neo-feudalist rhetoric. The US is dissolving due to inadequate democracy where people feel they have no control over their government or life's destiny.
Are there any democratic 'socialist republics' not social democratic (or social market economy) ones but actually socialist? Scandinavian countries are definitely not socialist they have strong social safety nets and high taxes which results in a relatively high government spending to GDP ratio (44% in the US vs 58%, 54%, 53% in Norway, Denmark and Sweden) but that's about it. And if we're talking about "neo-feudalism" Sweden for instance has one the highest wealth inequality coefficients in Europe, it's even slightly higher than in the US, so from a purely cynical perspective they are just giving their 'peasants' enough to keep them quiet while a huge proportion of all private wealth in the country is held by a few families.
The US and European social democracies are not that different.
Sure, the US government and the insurance/university lobbies screwed up education and healthcare prices - but all western countries steal an inordinate amount of money to profit creating citizens and waste them around giving little back to the country.
They're parasitic institutions
According to
https://en.m.wikipedia.org/wiki/List_of_countries_by_income_...
, the US is higher than Sweden now, before taxes and transfers, and that gap only widens if taxes and transfers, the primary mechanism governments have to reduce inequality, are taken into account.
I meant wealth inequality rather than income inequality.
> _liberal republics and socialist republics doing fine all over the world_
These are policy preferences. One can have a liberal, conservative, socialist and/or capitalist monarchy, oligarchy or democracy. The latter talk to how power is divided. The former to how it used.
Naturally, some power divisions tend to lead to certain policy preferences. But that is a correlation
> _just trendy neo-feudalist rhetoric_
This is the cultural amnesia I'm talking about. These ideas aren't new. From Federalist No. 10:
"From this view of the subject it may be concluded that a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.
A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking. Let us examine the points in which it varies from pure democracy, and we shall comprehend both the nature of the cure and the efficacy which it must derive from the Union.
The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.
The effect of the first difference is, on the one hand, to refine and enlarge the public views, by passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country, and whose patriotism and love of justice will be least likely to sacrifice it to temporary or partial considerations. Under such a regulation, it may well happen that the public voice, pronounced by the representatives of the people, will be more consonant to the public good than if pronounced by the people themselves, convened for the purpose. On the other hand, the effect may be inverted. Men of factious tempers, of local prejudices, or of sinister designs, may, by intrigue, by corruption, or by other means, first obtain the suffrages, and then betray the interests, of the people."
[1]
https://guides.loc.gov/federalist-papers/text-1-10#s-lg-box-...
> One can have a liberal, conservative, socialist and/or capitalist monarchy, oligarchy or democracy. The latter talk to how power is divided. The former to how it used.
I don't think you can make such a separation so easily. Legislative power is almost dwarfed by the power of capital. When you have a “liberal democracy”, the two parts are in constant conflict. (I don't mean to say socialist democracy wouldn't have similar problems, just that the structure of power is deeper than just elections.)
this is patently not true. It would do to remember that we are currently in version 2.x of the US, the US was _started_, mostly by the same framers, not with that idea of suppressing universal democracy (articles of confederation), and _then_ they rolled back a tad bit on democracy (constituion).
Articles of confederation vs. constitution related to compact between the states vs the strength of the federal government. Most of the people who signed the decl. of independence owned slaves or were lawyers for people who do. I'll grant maybe a few more people in the constitutional convention might not have been slave holders.
However, it would be good to recall that during the era of good feelings, a huge number of presidents were slave holders from Virginia. That's who held the balance of power in the country. The constitution itself was a compromise over slavery, modeled after English government (house/senate -> commons/lords, pres/vice pres -> king/heir apparent). Voters were landed white male adults, senators were elected indirectly by the states, as was the president (and still is though we have papered over it!). Supreme court judges were given life terms to enable disruption from below to be smoothed out by prior appointments.
The whole idea of the country was to guarantee rights to the upper class and place the country under new management and diffuse lower class energy via grants of land in westward expansion. The "genius" of the constitution became apparent when the entire thing broke down only ~70 years later in a bloodbath over the issue, slavery, they papered over at the convention which was a direct affront to the rhetoric of the revolution.
By modern standards, we view their actions as morally wrong. Owning slaves is morally wrong. Only permitting white males to vote is morally wrong.
Yet, we also forget that the world then was not like the world today. Who received comprehensive education back then, the kind needed to run states and countries? Typically, the rich, and within that, men. The inequalities of the world in those times were immense and could not be mended in even one generation. Liberal countries such as USA fought against the powerful forces of British imperialism, with the promise of a better tomorrow for all citizens, however long that takes.
>The constitution itself was a compromise over slavery
If you've ever tried to make significant change in an organization of any type and size (including government), you MUST take inertia into account. What you claim was willful choice, I claim was inertia. Slavery was not banned in the Constitution because a few Southern states would have refused to sign it, their claim being such action would render economic devastation. The very day it became possible, the importation of slaves was federally prohibited by Jefferson. As slavery became increasingly restricted by the federal, the southern states dug in their heels and refused to change their labor practices. The eventual Civil War was one of economics, with the general population heavily propagandized by those wealthy slaveowners wanting to preserve their livelihood.
>diffuse lower class energy via grants of land in westward expansion
Your analysis is overly simplistic. Those grants of land to lower-class citizens ensured the new Western lands would be worked by citizens. It was great opportunity many lower-class citizens jumped on, especially those who didn't own land before. By relocating to a smaller community, a lower-class citizen became immediately more influential in their local community by numbers alone. Yes, it diffuses that energy, but that's not inherently bad. In different terms, I see that decentralization as an intentional, value-adding feature, not an unintentional bug.
> Yet, we also forget that the world then was not like the world today.
False. Contemporary preachers were regularly commenting that slavers were going to hell. They didn't have a different morality, just different economic incentives (i.e. they thought they could get away with it). Luminaries such as Jefferson even expressed that slavery was wrong, though he didn't actually free his slaves during his lifetime. Show respect for people of the past, they weren't stupid. It wasn't even that far into the future that the slavery abolition movement got going _in other countries such as the UK_.
> Those grants of land to lower-class citizens ensured the new Western lands would be worked by citizens.
The land was Native American land and this was only achieved via genocidal means.
>They didn't have a different morality, just different economic incentives (i.e. they thought they could get away with it).
Exactly, slavery was a significant economic factor in the world back then. It is no longer a significant economic factor in the world today. Also, don't think that preachers speak their message without understanding the nature of their congregation. The preacher chooses a message they feel the congregation should hear. Rare is the sermon which chastises the economic means of that church body's membership.
>The land was Native American land and this was only achieved via genocidal means.
Native American tribes were weakened by disease, defeated by technology, and subdued by law (the title of "Guns, Germs, and Steel" captures this point nicely, though I don't agree with all of Diamond's arguments). Would you judge one Native American tribe similarly should they commit genocide upon another tribe and take their lands? Based on your comments here, I suspect no, and I also suspect such is still considered morally wrong but less morally wrong than Western expansion through kinetic force.
Racist laws are morally wrong and must be eschewed. There is no doubt that Native Americans were eventually subdued by such laws, but it took decades of fighting for Native Americans to reach their low point. So, I submit to you a serious question to ponder: if two warring entities are technological equals, is their fighting "better" in some sense?
> diffuse lower class energy via grants of land in westward expansion
Which would make them property owners, and therefore eventually able to vote via the statehood process. Your premise is self-contradictory.
The Jeffersonian idea was to create a nation of self-sufficient yeoman farmers (they thought slavery would go away over time due to its heavy tobacco emphasis that was depleting the soil). The industrial revolution, the cotton gin, and other world historical factors made this vision (which was a vision of a faction, not the entire elite) implausible.
They wanted to do this to _relieve popular pressure from below_ by creating "responsible" landowners that had a stake in the system. The landowners would continue to be white and male, but with an expansion of who gets to participate. The American system repeatedly does this under stress. A system that was actually liberatoratory would work in the interest of the people, not simply respond to threats.
> The landowners would continue to be white and male, but with an expansion of who gets to participate.
I also don't think this is quite right, either. There were black landowners, specifically in virginia, but other states too like maryland and louisiana, many of whom were yeoman farmers, and even a few who owned slaves, and were successful petitioners to suits heard at the house of burgesses, until the late 18th-century, but eventually it just became too convenient to be lazy and label "black == slave".
You could be a black landowner in connecticut and vote until 1814, well after the constitution was passed. It's kind of a common narrative that the US was born in racism, but I think it was more "the US did not know what to do with the issue of race and grew into racism" which is scarier, if you ask me.
correction: until the early 18th century, which is when the black codes were passed in Virginia. However, several other states allowed free blacks to vote around the time of the constitution.
Hell, some states required land ownership to vote in the USA up to the 1850s.
> "While constitutionally given the right to vote by the Fifteenth Amendment in 1870 and 19th Amendment in 1920, the reality of the country was such that most African Americans and some poor whites could not vote until the passage of the Voting Rights Act of 1965."
https://en.wikipedia.org/wiki/Universal_suffrage#cite_note-V...
Don't forget that many of Japan's large zaibatsu corporations were founded by former samurai clans during the Meiji Restoration.
> Capitalism is the 2nd iteration of feudalism.
The Whigs and Tories opposed each other in the UK parliament for a long time precisely because this is not the case.
There is a divide in the UK Conservative Party between Tories and Liberals.
It's not capitalism, the reason we ended up with massive accumulation of wealth (which changed shape and form across time - Rockefeller is not Zuckerberg) is because of government corruption, intervention and monopoly creation.
New governments don't do anything but waste public money and create regulations which entrench the current lobbyists as the de-facto standard and prevent new competition from popping up.
The Communist Manifesto certainly sees things that way, but I don’t think capitalism has been like that in the USA since roughly Roosevelt’s New Deal. (I don’t want to suggest this happened everywhere at the same time: weirdly, my British history lessons don’t cover anything the British did or experienced between the two World Wars other than “Chamberlain was naïve”).
The iconic images of the downfall of Communism was the economic catastrophe, shops with empty shelves, etc.; Capitalism had a similar experience in the Great Depression, was changed by it, but the name remained.
> Capitalism had a similar experience in the Great Depression, was changed by it, but the name remained.
Unfortunately a lot of those New Deal changes were reverted since then. For one, the minimum wage was supposed to be a living wage one could raise a family on.
It's not ironic at all, nor is it very persuasive.
It's pretty well established truism by now that start-ups are a business model where the founders and angel investors become wealthy once the business sells. It would be interesting to see the breakdown of how many start-ups sellout, continue as an independent entity, or completely fail. Regardless, just because Facebook recognizes the business culture in the SF Bay area is not a persuasive argument for why they should be broken up.
> It's pretty well established truism by now that start-ups are a business model where the founders and angel investors become wealthy once the business sells.
It's a pretty well established truism that startups in most markets would have absolutely no difficulty at all in selling their business via many different exit routes if one particular player wasn't able to go through with an acquisition for any reason. If it was too early to go public the could sell to Instagram Inc or WhatsApp PLC, or a private equity firm that wants to get into a sector where many, many firms have become stable and profitable. Facebook's statement that if _they're_ not allowed to buy, entrepreneurs [in their market] won't be able to sell [to anyone else] is a truism specific to the social media market Facebook dominates, and a direct consequence of it having the sort of monopoly power that gets them scrutinised by the Competition Commission.
Yeah, now that you say it it does seem to be very close to "plata o plomo."
(Translating as literally "silver or lead": take this money or take a bullet)
This is how the entire VC market works either get bought or IPO.
Option 3 is to become very profitable and give big dividends back to those VC's... Few take that route though...
Option 3 is to become very profitable and then have Facebook create its own competitor and integrate it into their own apps, killing your business overnight.
I think you'll find that VCs aren't in it for dividends. If they were content with 10% per annum they'd play the S&P 500...
You can certainly build a long-term profitable business, but you wont find VC funding for that.
But some businesses that take VC funding _could_ pay out 1000% dividends every year, especially businesses that don't take much initial funding and manage to become a monopoly in some small niche market and decide not to expand further.
Because that's not what VCs want.
There isn't any other way to make money from something like a gif hosting platform. Plenty of new companies get started all the same without being acquired.
Too many people are trying to create a startup with short-term success in order to get acquired. Get that $500m acquisition in the bag and then retire. Boom, done.
I think that's the only way for a gif hosting/copyright infringing platform to succeed.
https://medium.com/@pasql/giphy-is-stealing-from-artists-689...
Other companies that exchange money for goods and services might have better luck.
Or ya know, that startups talk about having an _exit_ that's either getting bought by someone or an IPO. Nobody in the startup world seems terribly interested in building a lifestyle business.
Back in my day, businesses that made income by selling goods or services to customers were just called businesses, not lifestyle businesses.
Another crazy old idea:
Businesses that prioritize people over capital.
Or governments take care of people, businesses focus on selling products and services.
Or, maybe.... just maybe... both businesses _and_ governments consider and prioritize the humans in the equation.
Businesses that don't prioritize winning in the market will be outperformed by businesses that do.
Let the government do the job of setting the boundaries on the market so they can do what's best for humans, and let businesses do the job of optimizing for victory within the market.
That's where their respective incentives lie, so that's what they do best at.
tl:dr; don't hate the player, hate the game.
Ok. That's what your economics textbook thinks. What do _you_ think?
Competition is _not_ the only way to get things done. Humans are definitely _capable_ of collective action. You may recall a few weeks ago where hundreds of millions of
Americans just said "fuck 2 AM, it's now 1 AM" early one Sunday. How would you harness that?
Those millions of Americans followed rules set by the government. That the game.
Make the rules do useful things. If you want business with social conscience, legislate it; don't whine for the uncaring hand of the free market to deign to suddenly show empathy.
You should read Atlas Shrugged
> _businesses that made income by selling goods or services to customers were just called businesses, not lifestyle businesses_
No, they were called shops. Where the business stops working without the owner-manager’s labor. “Business” referred to industrial-scale activity. (Before the industrial revolution, “commerce” was the broad term including trade merchants and shopkeepers.)
Similar to the industrial revolution’s change in nomenclature, the advent of modern computing has delineated small businesses, which include shops and shop-like tech firms, from enterprises, which are industry-like ones. Mom-and-pops thinking of themselves as businesses is a modern phenomenon.
If the owner-manager of Delphi goes home for the night, automotive parts do not stop being made. If the owner-manager of JBS goes home, McDonald’s still gets their hamburger patties. Semiconductors. Raw ore. Train wheels. All of those things were enterprise _businesses_, not shops, long before computers were heard of
Your response is through the same exact lens being critiqued. Even today there’s a vast economy of businesses, not shops, that fulfill key parts of the world economy and aren’t building for an exit. The idea that that’s weird/lifestyle is a modern, SV VC phenomenon and has nothing to do with computing nor the industrial revolution at all
This is obvious enough to most people that we sometimes wonder why we call startups businesses. Really they’re a new model of offshore R&D which often amounts to a hole into which to pour capital speculatively in hopes it will grow a tree
How do you think startups make money? We're talking about two different things -- one is the value the business provides to their customers which is selling goods and services, and the other is the value the business provides to the founders and investors which is profit.
Whether or not something is a lifestyle business is a shuffling around of who owns the business and gets the profit, not at all about how the business operates except as second order effects.
_> How do you think startups make money?_
Do you think most modern startups actually _do_ make money?
A great many don't, they lose it hand over fist. Especially those that intend to grow fast and get bought (or IPO) fast. It worked for a number of current big names, and many smaller names that those big names since bought.
You're just describing a growth strategy. The whole time they're burning cash they're still providing value to their customers. Nonprofits don't make money either and still provide value.
Are the providing value or reallocating it from VCs temporarily in order to obtain enough market share to then extort consumers for higher prices (less value per dollar) later on?
> _obtain enough market share to then extort consumers for higher prices (less value per dollar) later on?_
Are there many examples of this extortion?
Casper and Blue Apron plummeted after adjusting pricing because they weren’t providing sufficient value. Uber became profitable. It probably lost some customers. But nobody I know felt extorted by it—those who didn’t like the new prices stopped using it.
>Are there many examples of this extortion?
Uber is definitely such an example - a lot of taxi companies disappeared because they couldn't compete with the scale of Uber with its subsidised prices.
Now Uber have significantly increased their prices there are a lot fewer alternatives to turn to.
> _Now Uber have significantly increased their prices there are a lot fewer alternatives to turn to_
Can you give an example of a city where Uber has a meaningful monopoly? Hell, I’ll even give you Uber _and_ Lyft. Where the alternative modes of transport—be it private cars, public transport or taxis—are non-existent to someone who would have otherwise made use of them?
It's not that the alternatives are non-existent, it's that their cost (in dollars or some other parameter) have gone up a lot. For example, if you don't use Uber or Lyft in San Francisco, it takes a LOT longer to hail a taxi on the road than it used to.
https://news.ycombinator.com/item?id=23216852
Or undermining other similar businesses that actually have to make more money than they spend. After said businesses are gone, and the investor cash dries up, what benefit is actually left?
How does that work with other kinds of investments like loans? You don't "save up" to open a restaurant, you put together a business plan and go to a bank. VCs are just doing that but willing to take on riskier businesses in exchange for equity instead of interest payments.
I suspect you'll find few restaurants opening up with the intention of opening as many locations as possible as quickly as they can be built, all providing food at under cost for years on end until the local restaurant scene is sufficiently disrupted that McDonalds buys them to make them go away.
I mean you're essentially describing DoorDash + competitors and HelloFresh + competitors. But in the restaurant industry proper it's the same thing except your exit isn't to get bought by McDonalds but to secretly dominate the mid-high tier dining scene in a given area and collect all the profits. So they won't build a bunch of the same restaurants but will take on massive debt to buy everything in a trendy area. I didn't really expect that in 2018ish that there would be a pivot from these companies to a real-estate play so they don't even have to own the restaurants anymore but can force them to use the company payment system and suppliers but it makes total sense in a boring dystopia way.
"Support Local Restaurants! (being puppeted by a massive hybrid restaurant/real-estate conglomerate)"
> Nonprofits don't make money either and still provide value.
They can make a surplus? And then reinvest it to further their cause?
Which is also what growth companies do? They reinvest their own earnings along with outside investment, which is the same as nonprofits (via donations).
There are markets where one potential acquirer being unable to do so doesn't completely scupper your chances of any exit though.
If the antitrust regulators came down on Microsoft again, I don't think we'd see their lawyers argue that there's no other route for B2B software vendors to cash out except to sell to them.
The media only talk about companies with investors. Investors want exits. Investors influence the media to talk about companies they’re invested in.
Or the intermediary making money out of the investors want exits, and only get paid when a deal moves through. For many investors they need neither exits, dividends or anything other than capital growth.
Yeah, that's one thing that's always bugged me about startups and VC.
There seems to be general agreement that two big problems we're facing in the economy are 1) a slow consolidation of businesses into a handful of mega-corps which span across many markets and 2) an obsession with short-term gains to appease investors and shareholders. Yet the startup world seems to be fixated on "exit strategies" which perpetuate those two problems.
Because founders and early stock-holding employees want to get paid out, move on to something else, and let someone else handle the long-tail maintenance of the business. This is valuable work in the economy because you want people who are good at starting businesses, proving markets, getting investors, yada yada to be doing that and people who are good at running businesses to do that once it has roots.
The intractable problem is that corporations with loads of capital are the ones equipped to run businesses long-term. I would love a world where an exit is turning the business over to the employees and a newly hired CEO in exchange for a payout from the business itself but massive corporations will pay more, have cash on hand, and won't default.
"This is valuable work in the economy because you want [...trimmed...] people who are good at running businesses to do that once it has roots."
In my experience, things tend to get dramatically worse for users when a business is acquired or sold, not better. Long-term sustainability also seems to be significantly _decreased_ by acquisitions, not increased- even when the business isn't closed outright (e.g. Pebble). And, from your second paragraph, it seems like you recognize this too. So, yeah, you might want people who are good at running businesses to do that - but selling a business does not seem to put people who are good at running businesses in charge of it. If anything, it's the opposite.
Isn't there a selection bias going on here? The only entrepreneurs allowed in the club who don't fit the go-for-broke mold are those who make it there by being celebrities in other ways (thinking Fried/DHH or someone like Maciej Cegłowski).
What does Giphy sell. They certainly do not sell GIFs. Looks like they sometimes buy (license) them.
Giphy does not produce the GIFs. It is someone else's work.
Thus the only thing Giphy could sell is its "service" of running a server on the internet that serves GIFs.
How much is that service worth.
But they are not selling that either.
They are collecting (meta)data about users.
Maybe they inject ads.
What an incredible business model. Produce nothing, use other people's work as "bait", collect data, get an inflated valuation and sell the "business". This is almost as good as patent trolling.
Now, with this amazing model, how much revenue does Giphy produce, how much profit. Not even enough to pay for the server costs. It is funded by investors.
This is a game. And regulators can spoil it.
Indeed, you have to wonder if the world might be a better place if mergers were just not allowed. There's a famous Adam Smith quote about people in the same business coming together to screw the consumer. Mergers are perhaps the ultimate collusion.
For instance, what if the default position was that mergers were banned, except where you could convincingly show that everyone is better off? For instance in dying industries where scale is necessary.
It's an interesting point, and ultimately kind of boils down to "Is a more profitable company good for consumers?"
To which the answer seems inarguably "Sometimes." Scale that reduces production costs (and therefore prices), yes. Or prices could be maintained and the increased profits given to shareholders, in which case no.
I think the broader question is "What systemic features exist that make giant companies more efficient than a network of smaller, independent companies?"
And to _that_, I'd argue that in the 21st century, not many. The market and communication B2B inefficiencies that drove conglomeration in the 20th century have most been reduced to zero.
The only reason to have a hyperscale company these days is to deploy capital at scale in loss-making enterprises in hopes of capturing market share... and I'm not sure that's something that's been healthy in aggregate?
> And to that, I'd argue that in the 21st century, not many. The market and communication B2B inefficiencies that drove conglomeration in the 20th century have most been reduced to zero.
There's still the efficiencies of mass production for physical goods. For digital services that include any element of social network, there's the network effect. I think these are still a significant factor in most markets today. For match-making services in particular, brand recognition is important; otherwise users have difficulty in _finding_ quality from a directory of smaller, independent companies. And arranging effective federation, while possible, is expensive and development of such systems is slow.
True. But I imagine what would evolve would be a few B2C "face" brands, backed by a web of unmentioned B2B companies that customers never directly interact with.
Which is essentially the dynamic now, except the B2C last mile companies can parlay their relationship and just buy everything high value upstream of them.
Which... I'm not sure is great for competition.
Anything that moved the market away from one in which all customers are "an Apple customer" or "a Google customer" or "a Facebook customer", with those companies unconstrained in their ability to leverage that, seems better.
A major reason to group companies together in a "hyperscale" company is to influence government regulation, which is where you can access _real_ money and power.
The EU had a study that indicated that you need at least four competitors before price competition appears. Two or three act like a monopoly, almost automatically. The free market thing requires multiple players to work. So mergers that bring the number of competitors below four should be prohibited.
The US is down to three big banks, three mobile phone companies, and three drugstore chains, and they don't compete on price much. If an industry gets below four, maybe the companies should be given the choice of breaking up or converting to a common carrier or regulated public utility.
I think a world without mergers would cause a lot of trouble for companies nearing bankruptcy and especially their workforce. When a company is about to fall over because if cashflow issues, another can come in with its reserves and save hundreds or thousands of jobs. That's good for everyone.
I'd argue for a world with only limited possibilities for mergers, where mergers are a last resort rather than the goal of a startup. So many companies these days produce absolutely nothing of value in the hopes of being bought out by a big conglomerate.
What does this even mean? No business is allowed to buy another business? This would force economic activity to be centered around wealthy individuals (even more than it already is).
People feel that wealthy individuals having majority control over big businesses is a bad thing (Bezos, Zuckerberg, etc), but your proposal would enshrine this in law.
For example think about the case of Steel, inc. vs John Smith. Steel, inc. is a corporation with a broad set of owners (hell, let's make it employee owned). It makes steel. John Smith is a rich guy who has bought controlling interests in a number of privately held businesses which are all in the steel industry.
John Smith will easily be able to outcompete Steel, inc. Steel, inc. is encumbered by your law, while John Smith is not. If John Smith's empire needs an ore mine, he can just buy it. If Steel, inc. needs an ore mine, the only thing they can do is find a new ore deposit, and buy all the machinery needed on the open market.
Your law mandates that all business be controlled by rich individuals instead of groups of shareholders.
It doesn't seem like much of a stretch to also stop allowing an individual to buy up multiple businesses like that. Starting lots of businesses is one thing, buying them up like Pokemon provides very little value to the world.
John Smith could still buy up controlling shares in various companies, but it's also not a big stretch to regulate that sort of thing too. I don't really buy the idea that we need huge corporations to protect us from the rich.
A lot of money (including taxpayer money) would be spent on lawyers and courts figuring out how to "convincingly show that everyone is better off".
A lot of money is spent on useless things. This would be completely worth doing and may be the change in corporate law that we need.
Probably less in aggregate than is currently spent on lawyers figuring out how to structure these deals.
Cartels would still exist.
This is kind of a dumb take.. mergers are often done to enable efficiency. A jet engine company might suck at marketing.
That's why ad agencies exist.
This feels like a wilful misunderstanding.
FB doesn't claim selling the company is the _only_ reason to start one.
But it _is_ a top 3 "exit strategy" for startups, so limiting it would have a chilling effect on startup formation. How _big_ that effect would be is probably a better avenue for counter arguments.
Where is the limit though? There are literally 1000s of other places to sell the company. It's only blocking one HUGE company from this one deal.
Do you have a few examples of those other places?
I'd imagine that anyone interested in buying Giphy would fall into one of two categories:
1. Large tech companies for which the same antitrust arguments would apply.
2. Companies that can't afford to pay anywhere near $400M for a GIF sharing service.
> Companies that can't afford to pay anywhere near $400M for a GIF sharing service
What makes a free GIF sharing service worth $400M dollars - apart from the data harvesting Facebook can do to better target users with ads.
We don't need to outlaw these sales, just outlaw the integration of data from purchased services, and then you'll see what the true value of the company is.
Imgur? Reddit?
> Imgur? Reddit?
Both of which fall under arguments 1 and 2
Of course it is a blatant lie just like almost everything they say now.
Giphy is free to sell itself to almost any other company on Earth except FB. This has no chilling effect whatsoever
Name another company that wants to buy it.
Good point, it's almost as if allowing large monopolists to have their way has a chilling effect on people wanting to compete with them.
It’s not the regulator’s job to find other buyers for Gyphy. There’s a million companies who could buy it, doesn’t mean they will. But the goal here from FB is clearly to monopolise data aggregation, which regulators rightly have to stop.
> limiting it would have a chilling effect on startup formation
I'm okay with that. Startup culture is toxic, and the world would be a much better place if the only legal reason to found a business would be to make a steady profit selling your product. If your company only exists so you can sell it (as in the company as a whole) to someone else, your company shouldn't exist.
Meta argued that the regulator was “sending a chilling message to start-up entrepreneurs: do not build new companies without a viable business model because you will not be able to rely on a competition harming sale to a dominant market player for an exit.”
More realistic interpretation.
You understand that the goal of most VC-funded businesses is to get bought, right?
But do you understand that being in business is not a right and that if your business relies on harming consumers to make a profit then maybe it shouldn't exist?
I think we should consider outlawing "most VC-funded businesses" then. The sole reason anyone should ever start a business should be to make long-term sustainable profit, and anything else should be illegal.
That is great in principle, but sounds very difficult to enforce.
But it would take away any further excuses to the regulator like, 'who else are we going to sell to,' because the regulator could ignore that argument, it being unlawful to start a business just for the purposes of selling
> "a competition harming sale to a dominant market player"
Fine except for those that rely on this.
what constitutes a market? Giphy hadn't generated any revenue it was operating off the $20 million of VC money. Or are you just trying to say big American tech companies shouldn't be allowed to buy companies?
> Or are you just trying to say big American tech companies shouldn't be allowed to buy companies?
Exactly. Not only should futher consolidation be prohibited under anti-trust, big tech should be _forcibly broken up_ into several businesses.
The advertising market. Giphy has plans to make an advertising network which would compete with Facebook and force the latter to be more competitive (which at least _may_ result in better outcomes for end-users of both products).
I’m pretty sure Facebook is more worried about competition from Snapchat than Giphy. Which is to say, not at all.
You can also sell them to the public. The real crux is that Facebook was the highest bidder, so it does lower potential valuations not being able to be purchased. All well in my books. I'm still salty about Red Hat optimizing the short term and becoming an IBM arm
It also screams their weakness: Facebook and its employees are so universally reviled that it’s politically tenable, perhaps even popular, to do things with them that one couldn’t with others.
Ordinarily, a British regulator telling two American firms what they can and can’t do would create backlash from the U.S. In this case, that would be shocking.
> This overlooks the traditional and perhaps now unpopular reason to start a company: making money by selling something useful.
Was Giphy even set up to be a business? It's just a database of gifs converted to video, for use in social media posts or Slack channels. Who would ever pay for that, besides a social media behemoth?
It's been set up to collect personal data and either build an advertising network (unsure how successful it would be) or sell to a highest bidder.
If this failed acquisition discourages future advertising/data collection companies it will be a major win for society.
They had some advertising thing, and getting paid by social media behemoths for integrations is what now gets them into trouble in a way?
something that is missing is a bunch of VC companies these days are built to be sold. they don't have to have sustainable business meant for the long run.
here's PG
Our startup, Viaweb, was built to be sold. We were open with investors about that from the start. And we were careful to create something that could slot easily into a larger company. That is the pattern for the future. -
http://paulgraham.com/bubble.html
and given YC is the arguably the largest and most influential accelerator - hence why most startups are build to sell to FAANG
But sometimes you need to sell your company because simply you do not have enough resources to fulfill your mission and vision.
Traditionally we would call that a failed business.
Instagram and YouTube were failed businesses? They sold to big companies in order to scale to billions of users and millions of SMBs because they didn't have knowledge nor human and financial resources for such task.
Maybe if they hadn't scaled to, oh, I don't know, THE ENTIRE PLANET, maybe some MORE companies could come in and build successful businesses in the space, and, hey, maybe even figure out how to federate and interoperate. I know, I know. Crazy talk.
> _maybe some MORE companies could come in and build successful businesses in the space_
This rejects that these businesses required scale to be successful, strengthening the claim that they were not “failed businesses.”
They only need scale if you accept the premise that they need to be the only provider in that space.
I wonder about youtube - I see people say it still loses money though I don't know if that's true, but if it is, then is it a successful business? It's an amazing feat no doubt, but other than that I don't know what to make of it as a business or a force in the world.
Youtube is printing money right now as traffic/computers are cheap which was not the case 10 years ago. It's a very successful (multi $B profit) business right now. They reinvest some profits into original content but it's probably peanuts compared to overall profits.
There's no way to know whether they would have failed without being acquired. That isn't the point being made though.
They didn't have the knowledge or resources to figure out that they can't indefinitely burn money and needed to sell user data and ads?
Did Google and FB have to sell to stake to billions of users and millions of SMBs? no!
Products that can't be profitable as a standalone business but can be as part of a larger company's portfolio isn't really a useful definition of failed unless you redefine the term.
If they can’t be profitable as standalone businesses, by definition they’re failing as businesses.
If the business has a value more than you put into it then you haven’t failed.
That's what the stock market is for.
Or just funding rounds.
Yes, but the stock market would be better as it would allow the public to invest. Funding rounds are just a way to let the rich and privileged get even richer.
No, you're wrong. They're still taking risks.
You see, when you have 1000 million and you invest 500 million in chunks of 1 million into 500 different companies, practically guaranteeing a return of >500 million [1], then you're taking a huge risk! Almost like the Average Joe/Jane investing on the stock market :-)
[1] Since it's supremely unlikely all 500 companies fail, and it's much more likely that at least 1 of them comes up with a decent return on investment.
If the regulator habitually stopped sales, I think Facebook would have a point.
But I think the regulator makes a good case for why there are very specific factors that suggest that this _particular_ takeover is not a hood idea.
Full statement here:
https://www.gov.uk/government/news/cma-directs-facebook-to-s...
Meta and Giphy are nothing like startups, try a better argument.
Agreed. I also think that once you grow beyond one employee (yourself) as a founder, you acquire a deep moral and ethical (although not legal) responsibility to the wellbeing of your employees. The very notion/term "exit" has always made my skin crawl, at least in the context of "serial entrepreneurs".
Treating a company - a thing that often dozens, hundreds, or even thousands of people depend on for their livelihoods - as nothing more than an assert that can be bought and sold at the whims of a founder is fundamentally gross to me. Sure, not every acquisition leads to layoffs, but many (most?) do and I think that's abhorrent.
I know it's how the world works, but I don't think the culture of starting a company to get acquired for a nice "exit" should be celebrated and I think policy measures that can stop or diminish this culture are fundamentally good.
When I've joined startups in the past they've been up front about their exit strategies during interviews.
Everyone knows that they're making a risky bet that might end with the company folding or might result in a big windfall.
Yeah but those employees benefit from exits as well
_Some_ of the employees _may_ benefit from exits _sometimes._
There is no shortage of exits that screwed the employees.
> as a founder, you acquire a deep moral and ethical ... responsibility to the wellbeing of your employees
No, everyone knows what they are getting into this is a horrible concept and should be pushed back against at every turn. If you want someone to be responsible for another adult petition the government to do it.
How is it the UK reg has the power to do this? I thought Giphy was a US company.
Shame they didn’t have the balls to stop ARM getting bought originally too.
> How is it the UK reg has the power to do this? I thought Giphy was a US company.
Because both Facebook and Giphy are active in the UK market.
If they don't want to be subject to UK regulation then they're free to stop doing business in the UK.
As an entrepreneur this gives me absolutely zero pause. I don't care if the fed splits up the thing that acquires me once I get acquired. I just want to get acquired. It's on meta to decide if they are flying too close to the sun.
There are many problems in the world that only a handful of companies have. You could make money joining those companies and helping them solve the problem as an employee. You could potentially make much more money by creating a company that solves that problem and then selling it to one of those bigger companies.
This is a catchy take, but a silly one. The quote didn't say that the only purpose of a new company is to get acquired, it just said that it's chilling to have one option less available, which isn't wrong.
We're deprived from options on a daily basis thanks to these monopolies, so I guess we can live well with one less option.
That viewpoint makes sense, but I don't think really works against what I was saying. It seems like the OP was saying "this cost is fake/gross" and you're saying "this cost is worth paying".
It's not even correct because you'll still be able to sell companies, just not to form monopolies.
Well good. Now get rid of GIF and make it H.264y. There is literally zero reason to use GIF anymore in 2021.
Giphy wasn't even GIF based. They were WEBP(?). The name comes from public perception: a short animated clip is a "gif", not a "two second video file with no audio track".
"Gif" as a word has been redefined to mean more than the file format.
GIF is just a concept here, but if you upload an animated .gif to just about any large image sharing platform, they will convert it to a video format and serve in a <video> element to save on bandwidth. I'm not sure who was the first to do this, perhaps imgur with their invention of ".gifv" url suffix? [1] However right-click -> save image as... on "gifs" ceased to be an option long ago.
[1]
https://blog.imgur.com/2014/10/09/introducing-gifv/
> making money by selling something useful.
This one weird trick venture capitalists hate!
That's a moronic HN type of idea, most people build businesses to help the people around them, this crowd does it, lies, cheats and steals to con people into working with them and then turn around and stab every employee in the back so they can get rich... it's weird to see a comment dissing the very existence of HN at the top, guess the mods haven't gotten here yet.
I thought people built businesses because they had to eat, and selling something useful was an effective and morally acceptable way to obtain food-money. Sure, most people aren't sociopaths, but businesses don't exist primarily out of philanthropy.
I guess I don't get it. This is based on speculative misuse - that FB may in the future deny access to Giphy to competitors. So if you own a tool that your competitors may use then that's anti-competitive? Seems like that could apply to a lot of companies. Why not wait for actual misuse and base a case on that?
Also what's so special about Giphy? Seems it could be duplicated fairly easily by any serious competitor.
And competition being defined as other social media platforms? Pretty broad definition.
Seems FB hatred is making bad law. And that bad law will bite others not just FB.
> Also what's so special about Giphy? Seems it could be duplicated fairly easily by any serious competitor.
You're right, a reasonable regulator following the U.S. anti-trust regulations as they were written in the early 1900s would also require Whatsapp, Instagram, and Facebook to all be cordoned off into separate companies at a minimum.
Great, lets get on it then
I also think if we're being charitable, AWS would be split off from Amazon, and possibly sub-divided further, likewise for the other public clouds -- Google search and Google Cloud shouldn't be owned by the same entity, etc.
How so?
Facebook buying Instagram and WhatsApp is essentially them buying out their competition.
Google running a cloud service is more like renting out excess capacity – which is quite common across industries. Plus there's a lot of competition in the cloud space.
> _Google running a cloud service is more like renting out excess capacity_
If that were actually the case, then sure.
But it's not. Alphabet's Google Cloud services have whole data centers dedicated to renting to the public and Alphabet's Google and other businesses entities are their own customer.
There's a clear conflict of interest when owning the platform and services on top of it.
You'll be <<very>> tempted to do things to the platform to favor your own services.
The incentives are so strong I don't think we've even invented things to prevent this on a long enough time scale.
Yeah, a charitable reading of the old trust-busting laws and the motivations behind them would suggest that something like a search engine company should not have any products other than the search engine itself, lest there be a massive conflict of interest. If you have an interest in receiving incoming web traffic, you have a conflict of interest if you also own a search engine (or online advertising network, for that matter).
That’s a dumb idea.
Try to make arguments and not just insults.
WhatsApp has been a goldmine for Facebook and they've been terrible stewards of the platform, with significant moderation woes cutting both ways. It's meant to be their foray into countries that don't typically use Facebook and serves to force people onto their platform.
I'd be very ok if Facebook was forced to offload it.
> WhatsApp has been a goldmine for Facebook
Come on, FB ran whatsapp for many years with zero revenue. Whatsapp would not be what it is today without FB.
> they've been terrible stewards of the platform
In what sense? When they enabled end-to-end encryption for billions of people? Or launched encrypted backups?
> Come on, FB ran whatsapp for many years with zero revenue.
And Walmart undercut prices to the point of losing revenue to establish their position. Your lack of profitability does not somehow undo your monopolizing.
> When they enabled end-to-end encryption for billions of people?
Whatsapp still does not have global E2E [1].
> Or launched encrypted backups?
Yet the FBI still puts pen registers on the service [2] which makes backups moot.
> Whatsapp would not be what it is today without FB.
I think WhatsApp would be a much better product in someone elses hands. [3] [4]
[1] -
https://nypressnews.com/news/technology/meta-confirms-messen...
[2] -
https://propertyofthepeople.org/document-detail/?doc-id=2111...
[3] -
https://m.dw.com/en/whatsapp-in-india-scourge-of-violence-in...
[4] -
https://techhq.com/2021/11/after-record-gdpr-fine-whatsapp-f...
Not an expert in the law or in this case, but blocking large companies from acquiring other companies which operate in the same space in order to cement monopolies is a pretty fundamental part of what a competition regulator is there for, it's hardly "bad law" or some arbitrary campaign against facebook
How is giphy “the same space”?
Giphy had an advertisement network that was based around gifs. Facebook shut down that advertisement network when they bought Giphy and rolled their own ads instead.
Mate, the whole article is 11 sentences, including the bit that explains what a gif is, and 2 of those 11 sentences answer your question
Giphy is already integrated in lots of juicy places that Facebook could never get an integration with their current reputation and competitors. A gif embed service, from a business perspective, is a tracking pixel generator.
So Facebook is buying the ability to see who you talk to in android keyboards, slack, discord, etc
That isn't how it works. Giphy/Facebook cannot see what is going on in your Slack channel just because you posted one of their GIFs.
They can't see the content of the Slack channel. But they can absolutely correlate the web request that loads the GIF with the other (illicitly-collected) data they have on you and have an even better signal on who you are, which companies/people you talk to, etc.
All they can see is that a user on slack.com is requesting the GIF. If you are using the Slack desktop app there's no other session to correlate it to.
The IP address and user-agent is enough of a session over time (remember that it loads every time you open your client as long as the GIF is in your recent history, so you get multiple data points to refine your search). Cookies or browser-specific state is on its way out anyway as more and more browsers impose restrictions.
Couldn't Giphy uniquely identify a gif when you post it to a channel, and when the reader(s) fetch said gif, fb could reconstruct the graph of channel/chat participants?
Heck, it's worse than that.
We're talking about GIFs. You know, short messages, memes, practically short text messages. They can literally extract context from those conversations, if a decent enough amount of them are used in the same place.
That would actually be quite a cool machine learning exercise.
for a very particular definition of "cool" that IMHO should be retired asap.
Absolutely. Slack channel URL crossed with IPs that pulled the GIF then profile via user agents and other fingerprinting that tied it to known Facebook accounts.
They’ll know exactly who is in every single slack channel together, discord server, subreddit, etc etc.
> Also what's so special about Giphy? Seems it could be duplicated fairly easily by any serious competitor.
Just cause its easily duplicated doesn't mean others can compete. You can easily duplicate Instagram, Twitter, Pinterest, etc. But unless you are as big as Facebook, you will not be about to compete. Its called network effect.
But it's just gifs. Not social network like other examples.
If Telegram shows anything, you can.
Telegram was launched 8 years ago. By a Russian billionaire.
Facebook/WhatsApp/Instagram have ~3 billion users and Telegram only has 500 million, after FB has been under constant attack for about 3 years and Telegram has received a ton of free advertising as a result.
If you call that easy (after all, that what the comment you were replying to was asking), then everything in this life is easy. Heck, getting resurrected is probably "easy".
hehe, yea!
tg value proposition is based around a superior user experience, that's what competition is all about.
The acquisition was announced 18 months ago and the regulators have only just announced that there's a problem. That's about how long it takes to make a decision like this.
If FB wanted to use Giphy to squash an upstart competitor, 18 months is plenty of time to accomplish it. So regulators preemptively forbid some kinds of abusable power, especially when the company has abused its monopoly power in the past.
It would be better if regulators could act fast only when needed, but I'm not holding my breath for that to happen.
> The acquisition was announced 18 months ago and the regulators have only just announced that there's a problem. That's about how long it takes to make a decision like this.
It's about as long as it takes to figure out that Facebook didn't grease enough palms in order to let this pass muster, and won't be shelling out any more, so they're going to make it public, in the hopes it will spur Facebook to reconsider.
This is as predictable as the dance a company does when they have to fire an executive for shameful behavior, and the resulting PR to-do list dealing with the press and investors.
>Also what's so special about Giphy? Seems it could be duplicated fairly easily by any serious competitor.
They're not buying it for the tech, they're buying it for the user base so they can sell their data to advertisers.
Doesn't Giphy also have rights-agreements with major movie studios - thus allowing their users to exchange clips of copyrighted content without fear of litigation (something about Giphy persuading litigious studios that allowing clips is basically free marketing)?
So, even more guaranteed users ?
Don't know what Giphy has, but creating and sharing a gif from a movie would be fair use and not subject to copyright.
You're not going to watch a movie in gif format, and it would be a derivative anyway.
Sure as an individual, but a movie studio would absolutely go after a company that is in the business of indexing, hosting and serving clips from their movies.
I suspect this is why Giphy got that license. And I bet it comes with some terms like allowing studios to remove GIFs they don't like, etc..
> And I bet it comes with some terms like allowing studios to remove GIFs they don't like, etc..
Y'ever noticed how the "send a GIF" panels in apps (often using Giphy behind-the-scenes as whitelabel) often have the top few rows of "trending" (quotes intentional) GIFs are mostly taken from recent major Hollywood releases? Most of the time it's whatever the most recent Marvel MCU film was - or some other mass-market action film - so if not the MCU then it'll be from whatever Disney's latest Star Wars movie or TV show just-so-happens to be.
...so yeah, that's very likely paid product placement right there. Not only is it free advertising for Marvel, but it's advertising that people actually want to share with each other!
Of course, what gives Giphy its credibility with net-savvy users is that they let people upload and cut their own GIFs. If you instead imagine Giphy as just being a free, maybe even banner ad-free, repository of GIFs but was strictly read-only (maybe have a likes system?) and comprised of only rightsholder-approved GIFs (but imagine the selection was still substantial so 75%+ of the time you'd still be able to find the right reaction GIF for your situation: it's just it'd all be the same well-known actors playing the same roles in all the same kinds of films and TV shows; no user-generated-content or really any material that isn't owned by a Fortune 500 media company) - but would people still use it? I think they would - especially if the E2E user-experience quality is there... as opposed to most other kinds of sites that do tolerate their users committing acts of copyright violation, but plaster the site in the worst online ads of all (because most of their users are smart enough to be offended by homogenized and consolidated entertainment media then they're going to be smart enough to run adblock too).
Disney Co is now at the point where they can choose to give Giphy a sweet deal (e.g. a covenant not to sue or even an explicit copyright license, provided Giphy promotes pro-Disney GIFs) and use Giphy not necessarily for their own direct benefit (i.e. GIFs as advertising new films), but to choose to actively support, fund and promote Giphy to ensure Giphy stays the default place for GIF editing and exchange, but because Disney then effectively "owns" Giphy, they can shut-off and shut-out promotion for all other non-Disney franchises just to ensure Disney laps up people's mindshare and imaginations: soon, in a few decades, Disney will own the rights to all new original thoughts.
Yes agreed there is also paid placement for sure.
Fair use is not a global concept.
Fair use isn't that cut and dry, it depends on how much of the work you're using, what you're using it for, how much you transformed it, etc.
It's really not "well it's only a gif, you can't touch me".
And also to prevent it from growing in such a way that it could threaten existing Meta properties. This is the typical behavior in monopolies these days, get big enough to simply buy out any potential competition. Seems like the UK has had enough.
Which is fine, they're an advertising company. At the moment that regulators say that it's okay for Facebook to exist and operate the way they do -- collecting and organizing data to use for ad targeting, you can't really be on a high-horse about them doing that.
>And that bad law will bite others not just FB.
this is anti-trust regulation, not precedent that will be applied to any company.
the context is important. they're looking at the scale and business practices of facebook specifically and making a decision that _facebook_ shouldn't own giphy, not that any company can't own a tool that competitors may use.
Many services and products can be duplicated. I think the major concern is the network effect - it's the users that they are interested in.
> I guess I don't get it. This is based on speculative misuse - that FB may in the future deny access to Giphy to competitors. So if you own a tool that your competitors may use then that's anti-competitive? Seems like that could apply to a lot of companies. Why not wait for actual misuse and base a case on that?
On the face of it this sounds reasonable but doesn't work in practice.
Precisely what service do they have to offer? What quality standards. How much can they charge? Do they have to innovate or can they let it stagnate. How do you police it? If FB want to limit the service they will (and they have a history in this area).
See also Nvidia / Arm.
> Also what's so special about Giphy?
At a guess: a large existing library of GIFs.
This might be the real motivation. Facebook(Meta) is data hungry and data driven company. It cares about existing data and the potential for getting more data.
Known platform has a high chance to provide more data.
https://media0.giphy.com/media/DwrnYsZCXspu8/giphy.gif?cid=7...
> Also what's so special about Giphy? Seems it could be duplicated fairly easily by any serious competitor.
Imgur already exists, and I believe (?) Giphy was created as an answer to it?
Giphy started as the place to upload mp4 "gifs" to post on reddit. There was the giphy bot that would convert any .gif to a giphy. But naturally they had to pay the bills, so the grew.
The current UK government is very corrupt. The issue here is that someone at FB missed their request for a "donation". I'm sure this can all be sorted for a low 6 figure sum...
Facebook literally employ the former deputy Prime Minister.
Yeah, but he was never really "in" with the current lot (not corrupt, different political party, not an old boy) and he hasn't been part of a government for 7 years.
It's time for a new hire/donation/whatever
This is a regulator, not a political appointee or contracted agency.
Im not quite sure what you mean. In the UK system everyone is a political appointee. Just how blatent a PM is about interfering in "independent" agencies depends on the PM. And Boris literally just sacked the head of the standards commission and dissolved it to save a political nobody who isn't even needed to shore up a majority.
There is no separation of powers here, as long as the PM is the PM, he is basically god.
Arguably yes, at least by British standards. And according to the Times’ tapes a few years ago of the former Conservative treasurer and now Baron Cruddas you're right about the 6 figures.
Okay, I'm dumb. But can anyone please explain how the UK has any right to stop an American Company(Meta) from acquiring another American Company(Giphy)? If the UK can, can Germany, India, or even China and Russia do something similar?
Meta is free to entirely pull out of the UK market if it wants to ignore the ruling. Any country is free to say "if you want to operate here, you must do X" but how onerous X can be before the company concerned pulls out, will depend on the market importance of that country. I doubt that Meta would obey an equivalent order by Liechtenstein.
Certainly any country can claim for itself all manner of powers, which sometimes will run up against limits of enforcement capability. The OPs question only makes sense if understood in a normative sense: even if they can, what gives them the right? or, is it a good idea?
We can assume for certain, I think, that UK regulators operate within a set of rules, and in many cases they will not have the power to interfere with an acquisition between two foreign businesses - for good reason. Regulators in other countries may not have the power to stop this particular deal in the first place.
Maybe the powers of UK regulators need to be further restricted.
I think you aren't understanding this at all. UK regulators aren't stopping anything, the merger already happened. UK regulators are simply saying that if Facebook wants to continue its operations within the borders of UK they need to sell Giphy. They were given this right by the democratically elected government of UK. Regulators in every other country have the same power, dictate conditions on which one participates in their markets.
I am merely saying that the UK electorate has the responsibility to limit the power of its regulators (unless you are of the believe that their power should be unlimited).
The interesting discussion to be had here is about what good policy is, not to say "A country can make whatever laws it likes". Well duh.
We all have an interest in a functional global system. To that end, it is beneficial of countries at times defer to the laws of other nations (
https://en.wikipedia.org/wiki/Comity
). Maybe this is such a case. Possibly we would prefer not to have other countries try to interfere with mergers happening without our own jurisdiction too often.
When the US government finds its responsibility to limit the power of its companies (unless you are of the belief that their power should be unlimited), come back to me on that.
Companies are a tool that should serve the public, if they cease to serve the public, they should be bought in line, destroyed, or (as is threatened in this case) exiled. A democracy is meant to be for the people, not for profit. Profit is just a motive to try and incentivise things that are valuable for society, when that isn't achieved, regulators should step in to fix it.
Companies that are too large have too much money, and too much power. They are inherently anti-consumer and cause harm to the very fabric of democracy. In any sane world, we would be breaking up a huge number of these large corporations into _much_ smaller pieces.
The electorate has a responsibility to protect democracy and not let companies break the law of the land, they have no responsibility at all to companies.
The assertion that other countries should simply abandon their sovereign regulators' powers is baseless hubris. The fact that the US seems happy to allow corporate titans to reach ever new sizes does not mean anyone else is on board.
If the US wants their regulators' decisions to carry weight in another country, they can pay for the privilege via trade agreements, same as it ever was.
It seems like a perfectly reasonable power to me, i certainly would not vote against regulators being able to do so if I were a UK citizen.
As an American citizen, would you want to restrict regulators from being able to block the business of a company that merged with a CCP controlled company in China?
> As an American citizen, would you want to restrict regulators from being able to block the business of a company that merged with a CCP controlled company in China?
On what grounds would that business be blocked?
On grounds having being state controlled? I'm not sure US regulators do have that power. On some pretend grounds, to be able to wield it as a geopolitical weapon? Probably not.
On some narrow national security reasons? Maybe.
> On grounds having being state controlled? I'm not sure US regulators do have that power. On some pretend grounds, to be able to wield it as a geopolitical weapon? Probably not.
overall, the Commerce Clause in article I of the US constitution grants the federal government power to regulate commerce with foreign nations, which includes import / export restrictions. For example you can't really buy things from Iran or Cuba without major restrictions if at all.
if a trade embargo doesn't fall under the realm of "geopolitical weapon" I don't know what does.
Are you for real? Do you know that Cuba's being embargoed because Cuban Americans in Florida are an important political group?
How much more geopolitical do you have to get? You've been trying to starve an entire country for more than half a century because a bunch of your citizens are pissed off they got kicked out of there 30+ years ago and your politicians need them to win vital nation-wide elections.
Yes, I know about all the Cuban abuses and all that other garbage, but that doesn't make it right because the US is allied to <<soooo>> many other human rights violating countries and it doesn't even bat an eye.
> _On what grounds would that business be blocked?_
Any grounds pertinent to American interests, frankly.
Have US regulators not blocked multiple such businesses already?
Although I agree with you, about 5 years ago the British electorate decided they wanted their own government to set all regulations within the country without having to listen to what foreign courts — specifically the courts of a friendly region with a much larger GDP than itself — had to say, so I doubt the UK electorate would act in a way you consider responsible.
Two countries having different laws says nothing inherent about the need to "limit" the power of one to enforce a specific set of laws within their borders, unless We assume the U.S. is inherently Exceptional compared to other countries, and so if another country has some weird hang-up that threatens Our Economy, it is quite concerning and really the citizens need to rise up against their leaders' tyranny and ensure U.S. Law is truly global before one of Our Corporations loses some Money.
>what gives them the right?
The sovereignty of the United Kingdom over its own territory and incorporated businesses, through laws created by the British parliament which derives its power from the British people, very straightforward.
And if you think the British people are more sympathetic to Facebook than the British regulators you have another surprise coming
Whether a business is foreign or not is irrelevant as far as its operations in the UK is concerned. Do you think Chinese owned businesses in the US don't have to comply with American law on American soil?
You can basically ask that same question of everything that government does.
Both Meta and Giphy operate in the UK market, and the UK can set conditions for operating in that market. The EU, India, China and Russia can do the same.
What would happen if they just disabled Giphy in the UK?
It still removes Giphy as a "competitor". Let's say that Facebook bought all competing messenger programs, but then disabled them in the UK because it was anti-competitive. Well, then the only option left is to use Facebook Messenger.
Giphy isn't necessarily a direct competitor (and we might disagree with the UK regulators on their assessment of the merger), but just shutting off Giphy in the UK probably wouldn't do what they want. They might want Giphy willing to sell their data to other parties that are competitors to Facebook. If that's the business value of Giphy, merely disabling it in the UK still gives Facebook the worldwide power of Giphy and it would be hard for a NewGiphy to compete with the only advantage being "we have UK data."
It's also up to the UK to determine if such a remedy would satisfy them. Facebook can't disable Giphy and then say "you don't have jurisdiction anymore." That's not how it works. Facebook could pull out of the UK by closing its offices there, but pulling out might involve also not selling ads to UK-based businesses (before Brexit, there's the possibility that Facebook could lean on the common market to continue selling ads).
Basically, disabling Giphy in the UK (or even worldwide) doesn't really solve the issue.
They'd probably start being fined by the UK regulators.
Any company has to follow the law where they operate. Being an American-headquartered company doesn't really mean anything in this context.
They could probably get the American government to flex if needed. 'Drop these demands or no Aston Martin will be sold in the US'. The problem with both companies being American is that the American government can retaliate with popular support, the ads write themselves
It depends on how far either side is willing to go. The UK is one of the few countries with which the US has an annual trade surplus ($21.8bn),[1] which is worth a lot more each year than Giphy's purchase price or even Facebook's UK revenue, so there is a lot of room for retaliation.
Traditional British media will drum up support for anti-Facebook actions, and the current UK government was elected on a mandate of defending perceived British sovereignty, with economic considerations being less important.[2] The UK government has already engaged in actions that harm its economic interests to safeguard its sovereignty.[3]
1.
https://ustr.gov/countries-regions/europe-middle-east/europe...
2.
https://ukandeu.ac.uk/new-polling-reveals-shift-from-immigra...
3.
https://www.cer.eu/insights/ten-reflections-sovereignty-firs...
They can remove their access to the country. The EU has been doing the same for quite a while.
Also, Facebook UK is a thing.
The UK could arbitrarily block Facebooks IPs, I guess. I imagine this would end up like the carriage fee battles between networks and cable operators, with Facebook and the UK running ad campaigns about who is in the right here. I think UK citizens would bed more annoyed at the government than at FB.
More likely is that they would ban British companies (or companies operating in Britain) from publishing ads on Facebook and doing business with them (including local data center operators and ISPs, Google and Apple as app store operators).
It's all about economic power. The UK has to think about potential retaliation by the US.
In the end,Trade wars are often bad for everyone. Usually it's beneficial to find a compromise if possible.
Reminds me of the history of Pirate Radio in the UK
Maybe they could just ban Giphy while it's still Meta-owned?
You don't have economic power when you're breaking the law. (Generally)
I don’t follow this. All kinds of economic power exists outside of legal boundaries, on large and small scales. Everything from street prices for drugs to bribery demands at government levels.
Even laws designed curb market abuse through fines can be considered a cost of doing business rather than a disincentive, making it an economic tool for the perpetrators.
I refer to this specific situation.
> _UK could arbitrarily block Facebooks IPs, I guess_
If Facebook defied a British order like that, the U.K. could enforce quite a lot through American courts.
They have a legal presence in the UK (a subsidiary of the Facebook HQ) and probably want to merge those two UK companies as well.
It's just open season on Meta and big tech in general. Giphy isn't exactly an ad powerhouse nor a real competitor to Meta, but any acquisitions are now opportunities for political theater.
You don't understand how valuable data is to companies like Meta etc.
Things like Giphy are amazing data builders. Think of all the cookies that get placed around the web for FB to use, when a giphy is embeded on a website.
Even the types of Giphy's people use, are useful data points.
curl -v https://media.giphy.com/media/bKgCINrtZWQ39wZCxU/giphy-downsized-large.gif 2>&1 | grep set-cookie | wc -l
0
I opened this URL in my browser, and I was offered a `didomi_token` cookie that assigned me a user_id of 17d72dbe-d667-610e-ba58-323f0a33f7b1.
When viewed in a browser as opposed to cURL it's actually a HTML page containing, among other things, the actual gif image hosted at
https://i.giphy.com/media/bKgCINrtZWQ39wZCxU/giphy-downsized...
(this one comes without cookies).
curl -s https://cookies.giphy.com/global-cookies.f54c0b98fd75c8afe8abb8e12bf0d8a9297f480a.html |less
sure, but this does not prove anything.
besides who would want to give a cookie to curl UA?
Now try loading it in a browser like everyone else. You will find cookies for giphy.com and cookies.giphy.com. Please stop spreading misinformation.
User agents aren't a thing?
s/cookie/ip data and referrer tracking/.
Giphy is and was always just a metadata aggregator with the side effect of hosting funny little copyright infringing videos.
They are not infringing copyright. They definitely qualify for use under several parts of the copyright law.
You mean fair use, and not necessarily. Also "fair use" is not a law in the U.K.
Works used for satirical work are allowed. Seems like what these are being used for.
_Parody_ is fair use. Satire usually isn't.
And I'd doubt most use of e.g. posting gifs on social media in response to something counts as "satire".
And as the ancestor comment pointed out, there's no such thing as "fair use" in the UK. There is a very distinct concept of "fair dealing".
True, on quick search the UK indeed doesn't make that distinction as obviously, thanks for the correction. So only the second part of my comment applies.
> _open season on Meta and big tech in general_
On Facebook, not big tech in general. Tech is still immensely powerful, popular and politically supported. Facebook is not.
True, but perhaps big tech shouldn't be so big. If Facebook's mergers had been under this much scrutiny in the past, the web would probably be a better place today.
It's too little too late, but it's not exactly a witch hunt.
Remedies proposed by Facebook, such as a promise to keep the service open to rivals, were not sufficient to address the competition concerns, the regulator added.
https://www.telegraph.co.uk/business/2021/11/30/facebook-ord...
They would break a promise - surely not?
> They would break a promise - surely not?
I think the CMA stopped listening to promises from US companies after Kraft completely reneged on their takeover of Cadburys.
>_They would break a promise - surely not? _
What, again?
Strictly speaking, the title is wrong:
Facebook never bought Giphy, it prepared an acquisition whose execution was now blocked.
Incorrect according to the CMA Reports' clause 3 and clause 63:
Clause 3:
Facebook completed the acquisition of GIPHY on 15 May 2020, but has been required to hold the businesses separate since 9 June 2020, when the CMA imposed an Initial Enforcement Order (which was amended by a Variation Order on 29 June 2021).
Clause 63:
As noted above, we have decided that the sale of GIPHY is the only effective remedy to the SLCs that we have found. While divestiture of the acquired business is not an uncommon outcome when the CMA finds an SLC, divestiture of the GIPHY business poses particular challenges arising as a consequence of the completion of the Merger, and Facebook’s related actions, namely the termination of GIPHY’s revenue function and team, the transfer of almost all GIPHY staff on to Facebook employment contracts and the transfer of GIPHY’s back office functions to Facebook. These actions took place prior to the CMA issuing its Initial Enforcement Order holding the Facebook and GIPHY businesses separate and mean that, in several respects, GIPHY is in a significantly weaker position than it was pre-Merger.
https://assets.publishing.service.gov.uk/media/61a4bfa2e90e0...
Looking at the press release from the UK government, the title is correct, they are ordering Meta to sell Giphy.
https://www.gov.uk/government/news/cma-directs-facebook-to-s...
I stand corrected. This was apparently not an approval process but rather seeking remediation after the completed acquisition. Not quite familiar with UK competition law.
In any case, it's very interesting to look at Meta's proposals (which were ultimately rejected) [1]
[1]
https://assets.publishing.service.gov.uk/media/61a4bfa2e90e0...
Phew, I was wondering when they closed the sale. I swear I would have remembered that
Don't swear. Place bets instead. That way, it's more expensive to be wrong which is a much better lesson to learn.
Imagine a government across the world asking you to sell a portion of your business. I’m not a fan of FB but I’d be laughing with Zuck in the board room at this one.
It's not a random government across the world. Facebook does business in the UK market, has an office and personnel in the UK, and has customers in the UK.
How relevant is the UK mow that it has exited the EU? If I am Facebook I pull out of the UK or at least threaten to do so. The general public will scream at their MPs to fix the problem.
> How relevant is the UK mow that it has exited the EU?
Yeah, poor little UK, it's only the 5th biggest economy in the world after all, not like the 1st or 2nd!
You mean that tiny little UK that produces only around 2,5% of the gross world product? ;) Being fifth on a sorted list that is pretty long doesn't say much all by itself. The overall distribution matters, too. Seen that way, a successful company that is operating world wide and highly profitable could give up 2 to 3% of its revenue and continue to thrive.
However, I don't see how companies alone have the power to openly strongarm governments. It would be a pretty foolish move. But withdrawing from a country's market to cut losses can be a correct move.
Facebook's UK revenue in just one year (around ÂŁ1.2b) is 4-5x what it paid to buy Giphy ($300-400m). They could exit the UK market just to spite the UK, but it makes no business sense to do so.
About 67 million potential users. Plus a large office of hundreds of staff members, lots of investment into people and real-estate, and billions of yearly revenue. About that relevant.
Also I do not think the general public will scream at their MP's to fix this problem. Not many people say anything to their MP at all about anything, and hating FB is quite popular.
If the US retaliates with tariffs or sanctions on UK companies, how long can the UK last before public outrage begins?
The UK just left its largest export market (2.5x by annual export value compared to the US), which responded with tariffs. What public outrage there was was ignored. Why would this be any different?
The current antitrust-curious U.S. administration teaming up with the U.K. government to rein in Meta would be a very amusing and cyberpunk thing to happen.
Threating to pull out of the UK would have no effect for this matter. The CMA are basically saying that FB are breaking competition laws, so need to sell.
They wouldn't able to say "Well, you're breaking the law but because you're threating to leave, we will let you get away with it."
But they can say "If you did leave, we could no longer ask you to sell".
Giphy isn't big enough for that, but if for example the CMA requested that of Instagram, then it could be a good business decision to just leave the UK.
The opinion of the UK competition regulator is well respected in the EU, so they'll use the analysis as the basis of any decision they might make in terms of this situation. As for Facebook pulling out of the UK, they're free to do so, you might get some complaints in but it'll be a storm that blows over in a short space of time. The danger for Facebook is shows the world what a country without Facebook would look like.
> _If I am Facebook I pull out of the UK or at least threaten to do so_
That wouldn’t do anything, legally speaking. The acquisition was under British jurisdiction when it happened. This is the U.K., not El Salvador. Its system is heavily integrated with America’s. If Facebook blew off the CMA, it could find relief in U.S. courts. Given how unpopular Facebook is, State would be unlikely to intervene on its behalf.
Given the UK is now more soverign over these matters and others, it is more relevent. No lobbying in EU will save companies now.
Downvoted but I think you're right. If Facebook calls their bluff here it's going to be extremely politically unpopular to actually shut them down.
remember: traditional media hates facebook
there would be wall to wall coverage about facebook deciding the law doesn't apply to them
And plenty of people hate traditional media. THere would be wall to wall ads from facebook about how they're being mistreated by the jealous traditional media and corrupt government.
People who hate the traditional media don't automatically like Facebook. They may be users of Facebook, but oftentimes the right hates them for censorship/moderation and the left hates them for corporate malfeasance.
They don't have to shutdown facebook. All they have to do is put fines on them, until they comply.
Facebook certainly has bank accounts in the UK. Its has offices and people working there. The UK could just take from that money.
Sure, meta can refuse. Not sure what a regulator can do... to the part of facebook that's operating _outside_ the UK. But at least in theory, any business they do _within_ the UK could be shut down. Sure, they could still provide social networking services, those you won't be able to block. But selling ads or such? Only if you're willing to abide by the local regulations as a company. I mean, in theory at least...
If you do business in a country, you have to accept that you're going to be subject to the laws of that country, and that clearly includes laws regarding competition. Facebook can probably appeal the ruling, but at the end of the day, if they want to keep doing business in the UK, they're going to have to comply with the decisions of the regulatory bodies there.
The US has blocked mergers as well, and has retroactively forced acquisitions to be terminated. An example was Grindr selling a 60% stake of the company to the Chinese company Kunlun in 2016, Kunlun purchasing the rest of the company in January 2018, and CFIUS issuing a ruling in March 2019 that a Chinese company owning Grindr posed a national security risk and forcing them to sell the company (although finding a buyer and completing the sale took another year).
> If you do business in a country, you have to accept that you're going to be subject to the laws of that country
Yes, but between actions like this and privacy regulations, being multinational is looking less and less workable. This isn't to say the regulations are bad, just that you can't have 100 jurisdictions with different policies trying to manage your company.
Imagine when doing business in multiple countries, you need to follow the laws of each. MIND BLOWN. IMAGINE. IMMMMMMAAAAGINE.
> Imagine a government across the world asking you to sell a portion of your business.
Imagine getting booted from that market. If it is truly some rando govt, your financial impact will be negligible. If not... now you have to justify getting booted to your shareholders.
That could be a very difficult exercise.
It really doesn't matter where you're based, it matters where your market is and who controls it (or at least access to it). If they don't sell, they could be barred from doing business in the UK.
Press release from the Competition and Markets Authority:
https://www.gov.uk/government/news/cma-directs-facebook-to-s...
Summary of final Report (30th November)
https://www.gov.uk/cma-cases/facebook-inc-giphy-inc-merger-i...
Case documents:
https://www.gov.uk/cma-cases/facebook-inc-giphy-inc-merger-i...
It seems odd for the CMA to order a sell off when Facebook and Giphy are both US companies.
Wouldn’t it make more sense to require Giphy UK to cease trading, and force Facebook UK to compete on its own? UK authorities policing UK companies and all.
(Please don’t respond to this as a hot take on globalisation — my comment is a serious question about how the UK competition authority can be most effective, not a wide eyed lamentation on why we can’t have world peace etc.)
Facebook is free to stop operating in the UK if it wants. If wants to continue operating in the UK, and retain ownership of Giphy, then any UK based assets they have (such as revenue from UK business) will probably end up being forfeited via fines from the regulator.
Cmon. They have a huge engineering office there bringing in massive amounts of tax revenue already. UkGov doesn’t want to chase off 1000x employees bringing in £100M of income tax revenue. FB’s VAT on ad sales in the UK is probably only £500m.
Facebook paid just ÂŁ28.5m in UK corporation tax in 2018, despite record ÂŁ1bn in UK Sales.
Once again, cmon.
Facebook has a significant and legitimate cost centre in Menlo Park, CA.
As in, sure, FBUK sell ads, but the value is backed by a 4billion eyeball set of social networks that didn’t just build themselves.
> FB’s VAT on ad sales in the UK is probably only £500m.
It is probably closer to ÂŁ0. VAT is only chargeable on non-business ad sales. Where a Facebook does pay VAT for a sale to a business, that cost is passed on to the buyer, which can claim it back from HMRC. The exception being very small businesses that are below the VAT registration threshold.
I don't know what Giphy's financials looked/look like, but it felt like the type of startup that could only ever run on VC funding to eventually be bought up by a larger player. I'm not convinced there's a self-sustaining business, there.
I'm sure Zuckerberg is hard at work thinking of how to start his own government soon enough
Well, he's already started his own supreme court...
https://theconversation.com/why-facebook-created-its-own-sup...
Honestly I don’t think this will end well for the regulator.
I am not a lawyer, but I am guessing that if Facebook blocks giphy usage in the UK there is very little the UK regulator can do to them. I see that as the likeliest scenario as they won’t want to sell giphy.
This will only make the regulator look foolish. The average person won’t understand why Facebook owning giphy is a problem (it’s not a social network) but they will be annoyed when they lose access to giphy in slack, WhatsApp and other platforms that use it in.
What? How will blocking giphy in the UK help?
From the regulator “ Facebook’s acquisition of Giphy would reduce competition between social media platforms and that the deal has already removed Giphy as a potential challenger in the display advertising market”
So the finding is Facebook has too much control in the market. Blocking giphy just shows how much control they would have if the acquisition is completed. If anything, blocking giphy makes it worse.
Will this pan out well for the regulator? Who knows, who cares. But it shows if your business gets a bad reputation like Meta has, you’ll find regulators starting to kick you about.
_> This will only make the regulator look foolish._
I'd say the opposite: If a regulator can't regulate something as trivial as a _gif sharing website_ we might as well shut down the regulator, because they can't do shit.
The presupposition there is that regulating something trivial should be easy, and regulating something important should be hard. I would suggest _exactly the opposite_ is what we should aim for.
How does blocking Giphy in the UK remediate the situation? If they don't want to sell Giphy, then I imagine the regulator will start fining them and seizing UK based assets, including any revenue they derive from UK companies, or via UK based banks and payment processors.
So FB harms their UK business and gets a big fine. UK FB goes without GIFs - not a huge deal!
> without GIFs
I'd say they're not GIFs, they're embedded mini-websites with their own tracking cookies and JS and whatnot. If only they were GIFs.
Good point!
thats not how gifs work ffs
Giphy is much more than a GIF though. Here's a link for example:
https://media0.giphy.com/media/mlvseq9yvZhba/giphy.gif
If you load it in a browser you get an entire HTML page full of spyware - it is not a GIF. They're detecting the user agent and deciding whether to send spyware or not - only curl'ing the link gives you the raw GIF by the looks of it.
Blocking giphy does not solve anything, just means more fines or other action by the regulator.
> I am not a lawyer ... This will only make the regulator look foolish.
Look in a mirror. Evading the regulator would require exiting the UK market entirely.
Okay, I am as concerned about monopolization as the next guy, especially after Facebook bought WhatsApp and Instagram...
But Giphy? Really? I mean, it's not exactly a sticky site. It's basically plumbing.
It's a new opportunity for the regulator to show they aren't (still) sleeping behind the wheel, I guess.
Also: I disagree that Giphy has no value, it's exactly because of its ubiquitous presence on other sites that it has value for Facebook: yet another way to stalk and profile web users.
It's all about the Ads.
> Regulators also determined that the deal was uncompetitive because it shut down Giphy's advertising business, therefore eliminating Giphy’s competition to Facebook's ad business.
To be fair, Giphy was not a serious competitor to FB's ad business.
Their (Meta nee Facebook) platform really only has Google and Amazon as real competition in the ad market, and potentially Apple and TikTok in the future.
It wasn't yet. The regulators seems to be annoyed by Facebook buying and shutting down potential competitors before they've had a chance to grow into real competition.
> The CMA found that Giphy’s ad services would have been able to compete with Facebook’s own display advertising services, while also encouraging innovation from other social media sites and advertisers.
> Facebook shut down Giphy’s advertising services at the time of the merger. The CMA said this is a cause for concern, especially because Facebook controls nearly half of the £7 billion ($9.4 billion) display ad market in the U.K.
> Stuart McIntosh, chair of the independent inquiry group carrying out the investigation, said in a statement Tuesday that the deal has already removed a potential challenger in the display ad market.
https://www.cnbc.com/2021/11/30/facebook-owner-meta-told-to-...
It's another (big) data source for Facebook to track you across the web and build a profile to sell ads against.
With that logic it would mean that Facebook is barred from acquisition of big data sources in the UK.
That would be breaking news indeed.
Such things can be by degree, and bans can be caused by previous misbehaviour.
For example, it’s fine to drive at 70 mph on a UK motorway (usually), but not OK to do 90. And if you’re repeatedly caught doing 90, you may have your license to drive at all revoked.
Instagram was a tool for applying filters to photos and posting them on Facebook.
After Facebook bought Instagram it became the rebranded version of Facebook for women.
For all those who consider Facebook irrelevant, or fading, you should realize that Facebook (Instagram) is the portal through which almost half the population almost exclusively use the internet — it’s AOL and Internet explorer and Yahoo rolled into one.
Isn't Instagram itself fading because of the rise of TikTok?
> Instagram was a tool for applying filters to photos and posting them on Facebook.
Incorrect, it could also post to Twitter ;)
It would allow Facebook to get even more information about what services and applications people are using.
Giphy collects a ton of data which Facebook is very much interested in.
> But Giphy? Really?
So why did Facebook buy it?
Bold move for a declining country like the UK to pull a business-hostile move like this. Meta could probably just pull out of the UK entirely without any serious bottom line impact.
You'd think the UK would be pulling an Ireland and throwing around tax shelter bargains and generally offering sweetheart deals like there's no tomorrow. Trying to bully businesses they desperately need is..._brave_.
You should vary your press, the UK is booming. The unemployment rate is lower than pre-pandemic at 4% with wages growth to match. The OECD thinks the UK economy will expand 6.7 per cent in 2021, the highest rate of growth among the G7.
UK is in the top 10 higher number of facebook users.
How much tax revenue to Meta bring to the UK? Perhaps they're better off without each other.
> Bold move for a declining country like the UK
Agreed
Not sure why the UK regulators are even concerned about the Giphy deal, it's small time... like, compared to the Nvidia + Arm deal.
> Meta could probably just pull out of the UK entirely without any serious bottom line impact.
Not sure about that, but there are plenty of options. Meta probably needs data-centers in the UK, but those could in theory move to Ireland at great expense, probably at far more expense than the Giphy deal was worth. Then comes the issue of Facebook employees in the UK, and to what extent their jobs contribute to the UK economy, and what impact that would have for those jobs to move to another country. I'm not sure regulating Facebooks' small-time deals like Giphy is worth the potential risk of losing Facebook in the UK.
Another potential way forward would be to sell Giphy, then create new Giphy-like business unit. I'd argue this is perhaps the least expensive way forward, costing more than it was to buy Giphy, yet much less than the cost of moving UK operations out.
I don't know anything about these laws and companies so forgive my silly question but... what about Giphy's responsibility? Can be bought against their will? Or do they sell just to cash in? Because if they do it sounds to me like they have no better morals than Meta.
When Facebook bought giphy like any other buyers the buyer assumes all liabilities.
Succession season 3 describes this accurately
good to see that post-brexit britain is remaining just as relevant as ever...
So, they want to be paid off. The standard EU/UK MO.
How about holding Facebook responsible for the stolen IP available on Giphy with the same fervent prosecution which was shown to the Love Guru pirate?
Do Amazon next thanks
AFAIK Giphy is of little to no consequence, with no business case except through spying (ie generic signals value)
It sends mostly copywrong funny little animations along with text messages, on every service that cannot be thought to be very secure.
Facebook here is arguing correctly that for most of these 'people use it and it's somehow social' the only business cases come out of combined signals intelligence, or there may be investors that simply care about time spent with a service or total customer volume. Facebook's engagement stats etc. are thusly valueable that there is a business case at all. What value is it, if it weren't some sort of hedgemony being build?
"will also be required to reinstate the innovative advertising services that Giphy offered before the merger."
UK is very funny! It does not understand 'computer' that well yet, but now it commands what's probably the most exploitative/derogatory/negative component of Giphy to be reinstated! Such savvy government activities. Certainly, this will 'materially' impact the advertisement market, hahaha!
While seeing FB, Twitter, Google,etc. get hit by regulators & governments doesn't really bother me (because these monopolies should be getting attacked, not necessarily for the fact that they're monopolies but because they behave in an anti-competitive, scummy way, to mention only one reason), what i do wonder is how exactly does this pave the way for new emerging platforms that are more secure, less censored and better designed than these ones.Especially when you consider the amount of regulations one has to "obey" when launching a new platform.
While it's certainly easy to cite few companies that have better ethics than these major corporations, the attacks of EU&US regulators&politicians feel like it's just both a money-grab and also political talk in order to restore "trust in institutions"(Which is down-trending in EU since 2015 for example) while degrading the influence of these platforms (which again, it's not a bad thing, just an over-looked fact).
<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML 2.0//EN">
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US Regulators: ok
EU Regulators: ok
UK Regulators: waaaaait a minute
Honestly, I don't mind the UK's rationale here, but I would still tell them to pound sand, or "sod off". Fairly decent sized market but I would consider denying them service and seeing what happens next. Sure, gives room for a competitor to come in but also breaks their internet in the near term.
So FB is exempt from all UK law because FB can always say if you enforce your laws we'll pull out from the UK and break your internet?
Thus proving _exactly_ why we should break up companies like facebook, lest they exert undue control over the country.
Yes, absolutely, where have you been?
It doesn't matter how it makes you feel, or the ideals your animated civics class taught you in School House Rock, countries are in competition with each other for business, and this gives leverage to businesses that exist beyond the governance ideals of any single country.
If I was a decision maker in an organization of that size, I would let them find out how much of their private sector has incorporated products that would make their websites not load if we exited the market, and how much of their communication and _communication history_ is tied up in the products too.
If I was in the government, I would also play the cards I was dealt on behalf of the people and try to break them up.
I don't have strong opinions on anything, I can play any side of this, this is really easy for me.
What if multiple nations' governments collaborated on this? The recent global minimum corporate tax agreement indicates that international cooperation isn't completely impossible. And it's not as if the current American administration is a big fan of Facebook.
yeah, I can see it being very risky, a lot of people want Facebook to turn off but feel ensnared or addicted to it.
I can't help but think of Aesop's fable about the goose that laid the golden eggs. That goose is the tech industry and what may kill it is pointless, kneejerk political or regulatory action.
In the social media space, if Facebook has such a monopoly, why have there been a number of competitors that have come along and represented an existential threat in the same way Facebook did to Myspace? Examples: Instagram, Twitter, Snapchat and Tiktok.
But this regulatory ruling isn't even about Facebook's dominant business, it's about the _potential_ harm to the _advertising_ business from a $30m easyily-reproducible company. Sure, Giphy had a lot of installs but it's not even the only such company in this space (eg Tenor? IIRC).
And if you're going to go after a company for dominance in advertising and you go after _Facebook_ and not _Google_? How does any of this make sense?
These companies are also facing competition from competitors who aren't and won't be shackled by the threat of government intervention. Instead, those companies are extensions of the state. I am of course talking about China and the likes of Tencent, Alibaba, Tiktok and so on.
So I'm confused by this move because it seems ultimately pointless. Anyone claiming it's "sending a message" miss the point that this cuts both ways. It can embolden those who oppose regulation as government overreach and this may hurt actual anticompetitive practices rather than potential anticompetitive practices.
All around, this just seems so... dumb.
1) "But this regulatory ruling isn't even about Facebook's dominant business, it's about the potential harm to the advertising business"
Yes, using it's dominance to control a market and decide where people get to advertise, rather than people having a choice.
2) If you think Giphy is easily-reproducible, it shows how little you know about things in general.
3) "And if you're going to go after a company for dominance in advertising and you go after Facebook and not Google?"
1 minute of research would show you that the CMA already are and have been at Google's doors too. More recently about Google's power when it comes to third-party cookies; which is for advertising.
The CMA are pretty much always going at the big companies for something.
It seems like you need to understand what you're talking about, before you try and talk about it.
>If you think Giphy is easily-reproducible, it shows how little you know about things in general
Is Giphy fundamentally different in some way than Imgur, Photobucket, Tenor, Gfycat, or Animoto? Seems like there's a pretty healthy amount of competition in the space unless I just don't understand what makes Giphy special.
Imgur, Photobucket and Animoto aren't comparable to Giphy. They're targeting different things. That would be like comparing Youtube to LinkedIn. Both social websites but ultimately have different goals/aims.
What makes Giphy special is the content/user moat that it has.
Anyone can easily create a Giphy website and search engine. You can most probably buy a Wordpress theme for $20 to do it. You can not easily-replicate what Giphy has achieved in regards to content moat and user numbers. I wouldn't call 2 other businesses in the same industry, healthy competition.
You seem to have a lot of very strong opinions stemming from a blocked acquisition of an "easily reproducible company that doesn't really matter."
The idea that regulators shouldn't regulate because someone (the regulated?) might be upset is laughable. We don't acquit murderers because their community would miss them.
The only people who will oppose this are "captial-at-all-costs," folks who are happy with the continued consolidation of power/resources.
The only reason Giphy isn't reproduced is because there's no need. If FB shut off Giphy tomorrow, do you honestly think it'd take more than a few days for some other GIF extension to take over? Really? If nothing else, Tenor and other existing companies would immediately fill the void.
> The idea that regulators shouldn't regulate because someone (the regulated?) might be upset is laughable.
So let me address this straw man by stating what I'm actually saying:
1. The time to block an acquisition is prior to the acquisition;
2. If you placed conditions on that acquisition (which regulators often do), you should need an _actual_ violation of those conditions rather than a _theoretical_ violation;
3. Regulators should focus on actual problems. In the US, the Sherman Act was a result of the Standard Oil monopoly. Standard Oil controlled production, refining and distribution of petroleum products (primarily kerosene). It's just not the same with many of the so-called big tech problems today.
FB's most troublesome acquisition is WhatsApp and even in that case it was a company started by someone who famously got rejected by a job with Facebook in the late 2000s (ie Brian Acton). If you can establish a real threat to a company after that company has a huge lead, it's pretty good evidence that that company doesn't have the wall around their "monopoly" you think they do.
There's a lot of political grandstanding around this now. My point is that companies shouldn't be regulated. It's that rolling back Giphy is just such a pointless exercise of that regulatory power.
> That goose is the tech industry and what may kill it is pointless, kneejerk political or regulatory action.
The only "geese" that will be hurt by this are those that feed on "engagement", illicit data collection and human misery in general. I'd say those geese can go and burn in hell.
The legitimate tech industry that make real, sustainable products/services in exchange for money will not be affected by this at all.
Only those whose "business model" (if you can call it that) is to get tons of VC cash and either end up as a monopoly or get bought out by a bigger fish is going to be affected, and again I'd argue that's a net win.
Oh, it means facebook.
Farcical CV padding.
Who is padding their CVs? The ... regulators?
Yup.
Yes
Western, mostly UK an EU, regulators are dumb. They wanted to help their citizens with privacy, instead the whole world gets annoying cookie pop ups. Boomer energy is too strong in the Western world.
The UK government is considering withdrawing the requirement for consent to cookies from UK law. To be clear this was an EU Import into UK regulation.
It was an import to US regulation as well.
