Companies get money from workers (i.e. customers), pay some back to workers (employees), and keep the rest as profit (or waste it on some kind of bureaucratic inefficiency). Workers can get more money by either paying less as customers or getting paid more as employees.
Monopolies screw them on both ends. Customers pay more because there are fewer suppliers, and then employees make less because there is less competition for hiring which also makes it easier for the large employers to coordinate non-poaching agreements.
In a market where there are only a small handful of incumbents and then a bunch of precarious cash-strapped startups, the incumbents collude with each other so that they only have to outbid the startups. The startups, meanwhile, are at a disadvantage because e.g. the incumbents control search engine rankings or app distribution channels, which lowers their competitiveness and therefore the amount they can afford pay to employees in competition with the incumbents. The incumbents are then the high bidder even while offering something less than they would have had to in the alternative.
So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
> So in what world are startups going to have the funding or the infrastructure to have warehouses worldwide to compete with Amazon or servers to compete with AWS?
In a competitive market you don't have that. Instead of a massive conglomerate having a warehouse in every region, Alice, Bob and Carol each have a warehouse near New York, Dan, Erin and Frank have one near Houston, etc., and then a dozen independent aggregators each negotiate with a warehouse in each region to store goods for anyone who wants to offer fast delivery everywhere.
Meanwhile doing that, whether you're Amazon or not, is inefficient for anything that doesn't need to be delivered on short notice. If you have a recurring subscription to get a box of toiletries every month, it doesn't matter if it arrives on the 17th because they mailed it from a local warehouse on the 16th or a centralized warehouse on the 10th, and delivery companies offer discounts if you palletize shipments based on region even if they come from a central location, which removes the cost of having local warehouses for those regions.
> Or in Google’s case the infrastructure to design custom processors with the demand to actually buy enough slots from TSMC to make it affordable?
If there is aggregate demand for those processors then you sell them to the other people who want them regardless of whether they're within the same corporation, and then they don't have to be.
> You can’t make laws to undue scale efficiencies. A startup isn’t going to make a phone in their garage to compete with Apple no matter what magically thinking they have about the government passing laws.
The defect is in expecting one entity to make the entire phone.
One company makes a screen, one makes a battery, one designs a processor, another fabs it, another makes memory, another makes the OS (or it's open source), another lays out the system board to integrate the various components, another does final assembly, etc.
When you don't require the whole thing to be done under the same umbrella it doesn't take a trillion dollar company to do any given piece.
> Most startups can’t even pay the wages of a mid level employee at BigTech company that has been out of school for three years.
Suppose phone components were easily available as a fungible commodity, and had standardized interfaces so that integrating them was only a modest amount of work, i.e. a year of effort for a full-time engineer. Then you get a phone which sells as an also-ran -- a million units a year for three years, less than 0.5% of Apple's sales volume. The phone sells for $250, less than the cheapest new iPhone, and 0.5% of the retail price goes to pay the engineer.
Then they'd be making $3.75M for that year of work. Those numbers could be off by 10 fold and still be a competitive salary.
Except that the market is too concentrated and the standards don't exist, which means it's not that easy as things are now.
> Just like any other industry, if a startup can’t afford the free market price of labor, that’s a them problem.
The issue is, is it a free market, or a captured one?
Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience.
If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN?
Do all of these companies who want their own TPUs have to negotiate with TSMC?
> Everything you suggested gives customers a worse user experience - see Android vs iOS and Windows vs Macs - and higher prices because each component in the chain needs to make a profit and slower product cycles than when one company can offer an integrated experience.
None of that is true and the impression only comes about because concentrated markets create a small sample size and Microsoft and Google in particular care less about user experience than Apple.
Putting aside things like third party support (which come from incumbency and scale rather than design choices), which desktop operating system has the best user experience: Windows, macOS, or Linux? It's Linux by a hair, then macOS, with Windows a mile behind either of them. Which doesn't make any sense if vertical integration is a huge advantage, but makes perfect sense if specifically Microsoft sucks and being insulated from real competition allows them to.
"Each company has to make a margin" doesn't increase costs whatsoever because each company only gets the margin on the part they're doing. If the RAM has a net production cost of $20 and the flash is $25 and they're both made by the same company with a 10% margin then the total cost is $45 + 10%. If they're made by two different companies then one costs $20 + 10%, the other costs $25 + 10% and the total is still $45 + 10%.
And the same is true for steps that happen in series rather than in parallel, because margins aren't a fixed percentage, they're the amount you can get away with before the customer goes to a competitor, which in a competitive market is related to the cost of production + cost of capital. Having a combined retailer and wholesaler means the combined entity then has combined costs -- the "retailer" has to negotiate with manufacturers and the "wholesaler" has to operate retail stores, and therefore needs both margins to operate.
Meanwhile market consolidation is the thing that actually increases prices, because the lack of competition is what allows the supplier to increase their margins without losing business to competitors.
> If I want a regionally redundant infrastructure do I now have to negotiate with multiple companies in a region (multi AZ) and multiple regions? Do I have to negotiate with thousands of Points of preference for my CDN?
If you want a cart full of groceries, do you have to negotiate with hundreds of orange groves and chicken farms? No, supermarkets do that and then you go to any of the numerous supermarkets to get your groceries. That doesn't require the supermarkets to own the orange groves or chicken farms.
> Do all of these companies who want their own TPUs have to negotiate with TSMC?
Do all of the companies that want their own GPUs have to negotiate with TSMC? No, AMD/nVidia/Broadcom/NeoMagic/Qualcomm/etc. negotiates with TSMC/Samsung/GlobalFoundries/Intel/etc. and then you buy a GPU from a GPU company instead of the GPU/TPU customer needing to design their own GPU/TPU.
> None of that is true and the impression only comes about because concentrated markets create a small sample size and Microsoft and Google in particular care less about user experience than Apple.
Let’s look at the set top box market and integrated smart TV OS. There is Roku, Amazon, Samsung and LG off the top of my head. All of them suck compared to the AppleTV and use cheaper hardware.
Android OEMs have been customizing Android for years and they are all worse than either Apple or even stock Android.
In the PC market which was commoditized like you want, have you seen the crap the OEMs do to their computers when left to their own devices?
> Putting aside things like third party support..
“Other than that, how was the play Mrs. Lincoln?”
> It's Linux by a hair, then macOS, with Windows a mile behind either of them.
Did I somehow miss “the year of Linux on the desktop”?
User experience means for me - long battery life, runs cool, app availability, integrates well with my other devices, runs quietly.
> doesn't increase costs whatsoever because each company only gets the margin on the part they're doing. If the RAM has a net production cost of $20 and the flash is $25 and they're both made by the same company with a 10% margin then the total cost is $45 + 10%. If they're made by two different companies then one costs $20 + 10%, the other costs $25 + 10% and the total is still $45 + 10%.
That makes absolutely no sense mathematically.
> If you want a cart full of groceries, do you have to negotiate with hundreds of orange groves and chicken farms? No, supermarkets do that and then you go to any of the numerous supermarkets to get your groceries. That doesn't require the supermarkets to own the orange groves or chicken farms.
So you suggest I go through a middle man with their own markup?
Right now, I can with one text file of yaml or one CDK app create a globally redundant infrastructure with databases, VMs, queues, load balancers, a CDN, network infrastructure a cloud hosted call center (one of my specialties), storage (S3) and access 6-7 LLM’s all running on one set of infrastructure along with fast interconnects owned by one company.
And when I have a problem, I talk to one organization. Are you suggesting I should go through a third party now to do all of that? What do I gain?
> Do all of the companies that want their own GPUs have to negotiate with TSMC? No, AMD/nVidia/Broadcom/NeoMagic/Qualcomm/etc. negotiates with TSMC/Samsung/GlobalFoundries/Intel/etc. and then you buy a GPU from a GPU company instead of the GPU/TPU customer needing to design their own GPU/TPU.
And out of all those companies, who have top of the line mobile chips or desktop chips that are designed in conjunction with their hardware and have a good experience?
If you like commoditized phones and computers where dozens of manufacturers can choose what to pick up off the shelf, you are welcomed to buy a PC or Android device. Apple is in no shape form or fashion a monopoly in the mobile space or desktop space.
AWS is not a monopoly in cloud computing and devoutly doesn’t stop someone from using a Colo.
None of these big tech companies are hard to avoid.
It is fairly easy with around a quarter million of capital to start your own phone hardware business, fly to China and negotiate with ODMs (not a typo) and they will customize a run for you where you choose from one of their “platforms” and run your own version of AOSP.
> Let’s look at the set top box market and integrated smart TV OS. There is Roku, Amazon, Samsung and LG off the top of my head. All of them suck compared to the AppleTV and use cheaper hardware.
> Android OEMs have been customizing Android for years and they are all worse than either Apple or even stock Android
The thing you're objecting to here is the anti-competitive behavior. If the software it comes with is worse than stock Android then people should be replacing it with stock Android, or a community Android fork which is even better. Except that they're prevented from doing this by the OEM or Google, which is the anti-competitive thing that should be prohibited.
And isn't the hardware being cheaper the advantage? They're all fully capable of playing the video, so why would you want the device to cost more than necessary to perform its function?
> In the PC market which was commoditized like you want, have you seen the crap the OEMs do to their computers when left to their own devices?
The PC market has both OEMs that install crapware and those that don't. But they get paid to install crapware, which allows them to charge slightly less, and then because it's not a locked platform, you can remove it. Which means it can be to your advantage to take the discount and then remove the crapware rather than paying more, which makes that option popular. The option to pay slightly more for one that comes without it is also available.
That's the benefit of competition. You get to choose what you want.
> “Other than that, how was the play Mrs. Lincoln?”
Third party support comes from market share, which yields a massive incumbency advantage. The #1 and #2 desktop operating systems are both from companies founded in the 1970s.
And unlike the long-term trend of that coming at the expense of Windows, this year it came at the expense of Apple.
Because the user experience is actually good and the market share is getting high enough that the third party support is getting better.
> User experience means for me - long battery life, runs cool, app availability, integrates well with my other devices, runs quietly.
Battery life, runs cool and runs quietly are all related hardware design trade offs. To make that happen you either need a low-power processor (low-performance or you need the latest fabrication process to get high performance at low power which is high-cost), or you need a big battery and heatsink to make a high-power processor quiet with long battery life, which adds weight.
None of that has anything to do with vertical integration. Apple is taking the trade-off in favor of high cost, but a competitive market gives you every one of those options and lets you choose. It also has Apple Silicon as a separate company whose chips are available in any device that wants to pay for them.
And "integrates well with my other devices" is the thing where you want open standards. Nobody has any trouble with Safari or Chrome "integrating" with nginx or apache even though they're made by independent entities. The problem only comes when some unrepentant oligopoly is trying to lock you into a specific ecosystem while you're trying to use devices from a different one, which is the thing that ought to get them in hot water.
> That makes absolutely no sense mathematically.
Are you actually disputing that ($20 x 1.10) + ($25 x 1.10) is the same total as ($20 + $25) x 1.10?
> So you suggest I go through a middle man with their own markup?
I feel like you're misunderstanding how markups work in a competitive market.
If a company is doing nothing of value and yet has no monopoly on anything, nobody patronizes them.
An aggregator is doing something of value. It's doing something that a vertically-integrated monopoly would be doing internally, but doing it as a separate entity. If that thing is made reasonably easy to do then lots of competitors offer aggregation services which keeps their margins thin because the customer will choose the one offering a reasonable level of service at the most competitive price.
Which makes the margin they can add less than the one the monopolist would, because unlike the monopolist, the company operating in a more competitive market can easily lose your business to a competitor if they try to charge more.
> And when I have a problem, I talk to one organization.
If you don't like the oranges you got from the supermarket then you talk to the supermarket rather than the orange grove. That still doesn't require them to be the same entity.
> Are you suggesting I should go through a third party now to do all of that? What do I gain?
You get a more competitive market and in turn more options and lower prices. If Google Cloud has TPUs and Amazon S3 has cheaper object storage then the aggregator offers you both from a single source and prevents you from getting locked into a single cloud. Meanwhile the aggregator itself has competitors which require them to keep their own margins thin.
> And out of all those companies, who have top of the line mobile chips or desktop chips that are designed in conjunction with their hardware and have a good experience?
The state of the market is poor because they're allowed to keep buying each other. New chip companies are formed that start to offer the things customers want and then Qualcomm or Broadcom buys them up. Apple is allowed to buy out all of TSMC's leading-edge fab capacity.
> If you like commoditized phones and computers where dozens of manufacturers can choose what to pick up off the shelf, you are welcomed to buy a PC or Android device.
Android isn't a real competitive market. It's captured by Google and has limited competition on the hardware side. In particular, the ability to run stock Android with a vanilla Linux kernel on a competitive phone is quite lacking.
> AWS is not a monopoly in cloud computing and devoutly doesn’t stop someone from using a Colo.
AWS is not a monopoly, but who was claiming that they were to begin with? They do some unsatisfying things to lock you into their platform if you make use of them, but computing infrastructure is a fairly competitive market in general.
It's iOS and Android that are the trouble.
> None of these big tech companies are hard to avoid.
What practical phone can I use that avoids both Google and Apple?
Even less than that, show me even a mid-range Android phone that can run the vanilla Linux kernel with in-tree drivers.
> If the software it comes with is worse than stock Android then people should be replacing it with stock Android, or a community Android fork which is even better. Except that they're prevented from doing this by the OEM or Google, which is the anti-competitive thing that should be prohibited.
So it’s anticompetitive when one company controls the whole stack and it’s anticompetitive when dozens of companies get parts from different parts makers (just as you suggested) and compete by differentiating?
They still run Google Play Services (outside of China).
> An aggregator is doing something of value. It's doing something that a vertically-integrated monopoly would be doing internally, but doing it as a separate entity. If that thing is made reasonably easy to do then lots of competitors offer aggregation services which keeps their margins thin because the customer will choose the one offering a reasonable level of service at the most competitive price.
And is that aggregator going to pay to lay their own internet connection worldwide? Are they going to have multi AZ storage that is redundant across 3 available zones? Are they going to integrate thousands of POPs to create a CDN?
And tell me again how are any of the cloud providers monopolies when the CEO of AWS said that only 10% of all IT spend is spent on all three cloud providers combined?
> If Google Cloud has TPUs and Amazon S3 has cheaper object storage then the aggregator offers you both from a single source and prevents you from getting locked into a single cloud
You have no idea how much trouble multi cloud is at scale do you? (Hint: I use to work at AWS ProServe doing large implementation and now I do it at a third party company). Have you thought about that whole issue of having your data on one provider and your processing on another provider instead of having them both in the same data center? That whole network latency is going to kill you. Not to mention compliance, security, etc.
You’re always “locked into your infrastructure at scale. I’ve seen it take years to move a large implementation thst was nothing but a bunch of VMs.
> Apple is allowed to buy out all of TSMC's leading-edge fab capacity.
So that’s why Intel is so far behind because of Apple? That’s why AMD had to give up manufacturing their own hardware? Nvidia has been dual sourcing between Samsung and TSMC for years and Tesla just announced they are using Samsung for manufacturing chips in the US. Not to mention there is still Global Foundaries.
> Android isn't a real competitive market. It's captured by Google and has limited competition on the hardware side. In particular, the ability to run stock Android with a vanilla Linux kernel on a competitive phone is quite lacking.
Tell that to all of the manufactures in China. HN is full of people who run De-Google’s Android. There are hundreds of Android manufacturers and the Google Pixel doesn’t exactly have a high market share.
> What practical phone can I use that avoids both Google and Apple?
Even less than that, show me even a mid-range Android phone that can run the vanilla Linux kernel with in-tree drivers.
Ask all of the people on HN that run alternate de-Googled Android phones and the billions of people in China.
You yourself can fly over to China and work with ODMs and do a run of phones that they will both your own AOSP customization. I mean you may not be able to but a decently capitalized investor can. This is what some of those point of sales customized tablets do.
I use to work in field services where large companies did this.
> Meanwhile Linux desktop market share is up to 5% this month, +40% YoY:
You sound like every startup founder: “we increased our market share by 100% over the past year from .01% of the market to .02% of the market.
