Google chief economist Hal Varian writes an opinion in the Financial Times explaining why the tech giants of Silicon Valley compete so intensely. It’s hard not to see this as a response to the Economist’s recent criticism of power concentration in business. Varian claims competition helps the consumer. Which is of course easy to agree with. The only problem is: what competition? Silicon Valley may be famous for many things, but competition ain’t one. No coincidence, this is by conscious design. Arch-venture capitalist slash tech ideologist slash Bond-villain Peter Thiel details his investment strategies in his 2015 book from Zero to One. Only startups with the potential to be niche monopolists are worth considering. Already in the 80s, as the editor of a Stanford university paper, Thiel laid out the four-step plan for Silicon Valley’s world domination: 1. No government 2. No tax 3. No copyright 4. No competition. It’s fair to say it worked. Competition may exist in theory, but when one player controls 90+ % of the market, it’s not competition. Yesterday’s disruptors are today’s incumbents.
Professor Varian, if you read this:
Competition would be great. You can lead the way by creating a transparent Adwords-auction. The one Google uses today – of your design – gives the ad-seller an asymmetrical information advantage over the ad-buyer. Next, your company could start acting like a responsible part of the value chain trying to maximize the benefit for everyone in your echo-system, rather than saying things like you’re a technology company, only an intermediary or combatting infringement would be a violation of free speech. Google’s famous mission to “organize the world’s information and make it universally accessible” is like a wet blanket over competition online. What if that information belongs to somebody else? What if that somebody would rather not have Google organize it and make it universally accessible?
Professor Varian, with respect, make the company you work for stop acting like it owns the internet. Then you can talk about competition. For now, such words from Google are nothing short of preposterous.
PS Thank you for signing your book for me when I attended your seminar in Stockholm last year.
