Aswath Damodaran, who teaches corporate finance at NYU Stern, has a bunch of great talks and content about this where he discusses how companies should act their age. When older companies that are no longer paying dividends are moving into a divestiture phase, they restructure and split up. What we are seeing with some of these big tech companies is that they are transitioning from an exciting growth story into an extractive dividend story in a way that's becoming harmful to consumers. That's why we're talking about breaking them up, and thats the line their management will have to walk if they want to maximize the value of the firm to shareholders through the decline.
There's no shortage of obvious problems that can arise from concentration of influence and control over a market. So just try to prevent it. Trade some max efficiency for redundancy + anti-corruption/pro-competition/pro-consumer market forces.
Alphabet is rolling out autonomous driving vehicles in many cities around the USA, potentially getting rid of the need to drive a car in 90% of today's use cases.
How is this not still an exciting growth story? My kids might never need to drive a vehicle, even though we live in a car dependent suburb.
>I would rather pay substantially less on anything I buy, and have the free market sort out self-driving cars.
Alphabet's entire revenue divided by the total amount of goods and services sold is miniscule, so I don't see how it could be mathematically possible to pay substantially less on anything you buy.
>and have the free market sort out self-driving cars.
This is the free market sorting out self-driving cars.
Oh, and what's this "those who don't have it" bullshit? If anything, turning driving into a subscription service will mean mobility becomes harder for many people, as dirt-cheap used cars slowly stop being available. As for people who can't drive for whatever reason, they already have taxi apps. And don't think for a second that self-driving taxis will be cheaper in the long term than regular ones, only the margins will go up.
Waymo is currently financed by a monopolist and has negligible revenue itself, so it is not part of the free market.
thing i like: free market
i would rather people like you please stay silent instead of polluting the world with lazy thinking fit not even for dog
That’s condescending and wrong. Mergers and acquisitions are hundreds of times more common than spinoffs.
[0] https://batesonlaw.com/divisional-merger-tactic-how-liabilit...
[1] https://www.creditandcollectionnews.com/u-s-supreme-court-de...
[1] https://www.investors.dupont.com/news-and-media/press-releas...
I intended it to point out that it’s too easy to merge companies together but it’s effectively impossible to stop someone from becoming anticompetitive without a real consequence.
If we can’t make it easier to rip them apart then we shouldn’t be so slap-happy about approving them in the first place.
> legislation needs to either make it just as hard to merge two companies as it is to unmerge them
"The laws says X" doesn't change whether X is possible or not.
In a merger you can take as long as you want to go from
1. Two separate companies except at the end of the quarter we add their revenue and expenses together in a spreadsheet to transition to
2. One fully integrated organization
And usually you are becoming more efficient and saving time and money as you integrate.
Splitting a company needs to happen quickly or you'd get all sorts of weird effects where coworkers are ostensibly competitors whilst sharing resources during the transition. And you have to expend a huge amount of effort. Just a couple random complex systems that need to be untangled off the top of my head: physical property and leases, IP space for every IT service you run, multi-year contracts with every vendor from janitorial to SaaS, multi year contracts with customers depending on how the split goes, and of course all the intermingled finances and HR and spreadsheets every company in the world lives on. I'm sure there's thousands more considerations.
I agree antitrust is a big problem that needs to be solved. But "it should be the same amount of effort to merge and split a company" is just fantasy.
What makes splitting a company out difficult isn't (directly) a financial or paperwork burden - it's that tightly integrated systems are very difficult to untangle. There is nothing analagous that could be introduced in the merger process. You could add a mandatory delay, but that's not making it "as hard", it's just making it slower.
what is the purpose of regulation except to resist entropy in such strategic places?
Or we could just roll antitrust policy back to what it was before Ronald Reagan and Robert Bork installed the Consumer Welfare Standard, the idea that companies must be allowed to merge if they can scribble a tall tale with crayons on butcher paper about how the merger will benefit consumers, for sure, pinky promise. This is obviously mega-rigged, it comes from the Robber Baron era, it was defeated before (look up Louis Brandeis) and it can be defeated again (look up Lina Khan). They didn't even change the talking points (dontcha know, the Standard Oil monopoly reduced the price of Kerosene by 70%?!) -- time is a flat circle when it comes to anti-trust policy. Let's spin it back to the part of the circle where we win.
I think that despite this reform being a blunt instrument it would work surprisingly well.
It would allow companies that should have declined to decline and it would give massive incumbents a major incentive to innovate in-house.
Phillip Morris / Altria / Kraft / Mondelez
HP / HPE / Agilent / Keysight
[Disclaimer: I work at Google, all words my own and not representative of anyone, etc.]
There's no such thing. Let's stick to software since it's what HN knows best, but it's a universal truth.
Merging two companies: you take the two sides and they keep running. You probably need some extra accounting work to make sure the mandatory reports from each side get combined, but that's all you have to do.
Splitting two companies: oof. If you split ChildCo out of ParentCo:
* You need to hire all the roles that weren't part of that organization before (HR, legal, compliance, etc.)
* You need to register this new entity in all the countries it operates and/or has employees in
* Technologically it's somewhere between messy and impossible. Now you no longer have Google's build stack or monorepo. You have to rewrite everything. You can't just move some VMs to a cloud provider of choice
Off the top of my head, something along the lines of having a mandatory period of time where the company being acquired must be kept separate enough that the merger can be dissolved in a timely manner should it be deemed necessary. How long that window should be would be up for debate but personally I'd argue the window should scale somehow based on things like the valuations of each company involved, headcounts, and maybe even competitive landscape.
An example would be requiring both companies to perform a pre-merger assessment to determine positions/roles, technology use and regulatory requirements that must be maintained for a clean separation and creating a plan that gets filed with the relevant agencies to be used if/when the merger needs dissolving. If the time comes that they need to dissolve the merger but they don't maintain that separation, they still have to do it and you slap a fine on them equal to some percentage of that mergers cost to be paid by the parent company.
Hell, that idea alone would accomplish both making it harder to merge and easier to dissolve the merger.
This is similar to people who think we should just legislate secure encryption that has law enforcement backdoors. It's not possible, and people demanding it without an understanding of the area they're trying to regulate is lazy and insulting.
Read it more like a poem and less like a proposed bill.
Spinning off companies happens all the time.
You could give a copy to both successors. Probably would want to excise some of the repo on both sides, but build tools for sure would be fine to have a second copy. There's no need to rewrite everything, especially if Parent and Child are barred by court decree from entering overlapping businesses.
For things that really need a single corporate owner, you could potentially spin that off as well and have both successors contract from that one or depending on the terms of separation have a joint partnership.
Hosting would be messy, yes. But somehow the tech world outside google manages to run systems without Google tools. It would be an adjustment, potentially a large adjustment and take a lot of hours.
> You need to hire all the roles that weren't part of that organization before (HR, legal, compliance, etc.)
> You need to register this new entity in all the countries it operates and/or has employees in
This costs money, people, and time, but it's straight forward. HR and legal would likely need some additional people, but likely you assign the people who work with the spinoff business to the spin off corporation and then back fill as needed.
I then worked at FireEye during it's split.
Fun times.
Chrome is one of those nebulous areas. If they're dictating web standards they deserve at least an antitrust glance
It's hard isn't really a blocker, it's just saying 'this isn't convenient for us', which is why it would have to be forced by legislation.
No CEO wanted to merge when it would turn two 5mil a year jobs into one 5mil a year job. Cutting taxes on the rich enabled profiteering by CEOs.