Home / Silicon Valley / The evidence is piling up — Silicon Valley is being destroyed

The evidence is piling up — Silicon Valley is being destroyed



Doug Evans, founder of
Juicero.

Juicero

Matt Stoller is a fellow at the Open Markets Program at New
America.

Silicon Valley is the story of overthrowing entrenched interests
through innovation.

Children dream of becoming inventors, and scientists come to
Silicon Valley from all over the world.

But something is wrong when Juicero and Theranos are in the
headlines, and bad behavior from Uber executives overshadows
actual innovation.

$120 million in venture funding from Google Ventures and Kleiner
Perkins, for a juicer? And the founder, Doug Evans, calling
himself himself Steve Jobs “in his pursuit of juicing
perfection?” And how is Theranos’s Elizabeth Holmes walking
around freely?

Eventually, the rhetoric of innovation turns into …. a
Google-backed punchline.

These stories are embarrassing, yes. But there’s something deeper
going on here. Silicon Valley, an international treasure that
birthed the technology of our age, is being destroyed.

Monopolies are now so powerful that they dictate the roll-out of
new technology, and the only things left to invest in are the
scraps that fall off the table.

Sometimes those scraps are Snapchat, which managed to keep alive,
despite what Ben Thompson calls ‘theft‘ by Facebook.

Sometimes it’s Diapers.com, which was destroyed and bought out by
Amazon through predatory pricing. And sometimes it’s Juicero and
Theranos.

It’s not that Juicero and Theranos that are the
problem. Mistakes — even really big, stupid ones — happen.


juicero    8Business Insider/Alyson
Shontell

It’s that there is increasingly less good stuff to offset the
bad. Pets.com was embarrassing in 2000, but that was also when
Google was getting going. Today it’s all scraps.

When platform monopolies dictate the roll-out of technology,
there is less and less innovation, fewer places to invest,
less to invent. Eventually, the rhetoric of innovation turns
into DISRUPT, a quickly canceled show on MSNBC, and Juicero, a
Google-backed punchline.

This moment of stagnating innovation and productivity is
happening because Silicon Valley has turned its back on its most
important political friend: antitrust. Instead, it’s embraced
what it should understand as the enemy of innovation: monopoly.

As Barry Lynn has shown, Silicon Valley was born of
anti-monopoly.


Elizabeth Holmes Theranos
Elizabeth Holmes, CEO of Theranos.
Larry Busacca/Getty

In 1956, a Republican administration and AT&T signed a
consent decree forbidding AT&T from competing in any but
common carrier communications services. The decree also forced
AT&T to license its patents in a non-discriminatory manner to
all comers.

One of those patents was for something called the transistor,
which two small companies — Texas Instruments and Motorola
— would commercialize. 

In the 1990s, a suit against Microsoft allowed another startup
named Google to offer an innovative search engine.

In the 1960s and 1970s, an antitrust suit against IBM caused the
company to unbundle its hardware and software, leading to the
creation of the American software industry. It treated suppliers
for its new personal computing business with kid gloves,
including a small company called Micro-Soft. In the 1990s, a suit
against Microsoft allowed another startup named Google to offer
an innovative search engine

and ad business without fear that Microsoft would use its control
of the browser to strangle it. 

The great business historian Alfred Chandler, in his book on the
electronic century, called antitrust regulators the “Gods” of
creation. Antitrust was originally understood as a uniquely
American “charter of economic liberty”.

But there hasn’t been a Sherman Act Section 2 anti-monopolization
case for 15 years. And the anti-merger Clayton Act is not being
enforced. Neither Bush, nor Obama, nor Trump (so far), has
seen fit to stop the monopolists from buying their way into
dominance and blocking innovation. 

Take Google.


Sergey Brin
Sergey Brin is the
President of Alphabet, Google’s parent
company.

Robert
Galbraith/Reuters


Yes, the company created an amazing search engine over fifteen
years ago. Since then, the company bought YouTube, Doubleclick,
Maps, and Admob; it buys a company a week at this point. And it
often shuts down products that don’t reach 100M+ users, while
investing in luxury juicing machines. Surely Google is creating
cool technology. But is that technology really being deployed? Or
is it locked away, as patents were in AT&T’s 1956 vault
before the government stepped in?

What once were upstarts and innovators are now enthroned. For
instance, the iPhone is ten years old. Innovation means waiting
to see if Apple will offer a bigger screen.

Innovation means waiting to see if Apple will offer a bigger
screen.

It’s almost as thrilling as seeing yet another press release
about how self-driving cars are almost working. I’m on
the edge of my seat.

This is a ridiculous situation. Silicon Valley helped created the
personal computer! It commercialized the internet! Popularized
email!

Its scientists and engineers change the world. We have such
amazing technology, and such big problems. But our liberty to
address those problems in the commercial world must be protected
by a democracy in the form of antitrust rules and suits, or
Silicon Valley will die. 


American flag phone iphoneMark Wilson/Getty Images

We will get frauds like Elizabeth Holmes and Theranos, and
predators like Marissa Mayer and Travis Kalanick. 

Is that what Silicon Valley scientists and business leaders
really want? To invest in and produce subpar juicers while
everything cool waits on Jeff Bezos’s whim? Is that what they
dreamed when they were young? Is that why they admired astronauts
and entrepreneurs? Was their goal really to create
“anti-competitive juice packet lock-in”?

That is where a lack of democracy has brought us, and Silicon
Valley.

It is time for leaders in Silicon Valley to start demanding from
our government the birthright of every American, which is an open
market for commerce, innovation, and personal liberty.

It is time to demand antitrust, so that what once were innovative
upstarts, and are now Kings, do not stop the next wave of
innovation. Then there will be so much more to invest in, so much
more to invent, and so much more to actually create.

Matt Stoller is a fellow at the Open Markets Program at New
America. He first shared a version of this story on Twitter. The original tweets are
below.

 stoller 2Screenshot/Twitter


stollerScreenshot/Twitter

This column does not necessarily reflect the opinion of Business Insider.


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