Given that FB paid $19 Bln for WhatsApp, €110m seems to be a cost of doing business for Facebook. That may be calculated play.
USA got very liberal antitrust policy, allowing massive M&A. Good for shareholders, bad for everybody else.
E.g. the biggest four airlines in USA got over 80% market share. In Europe they just have 48%. That's why United can re-accommodate passenger and get away with it:
>My thoughts exactly. The information they gained is worth orders of magnitude more.
Which information did they gain? The accounts of Whatsapp? If you read the press release, it says that even if the European Commission had known that they could merge the accounts, the decision would have been the same.
"Today's decision has no impact on the Commission's October 2014 decision to authorise the transaction under the EU Merger Regulation. Indeed, the clearance decision was based on a number of elements going beyond automated user matching. The Commission at the time also carried out an 'even if' assessment that assumed user matching as a possibility. The Commission therefore considers that, albeit relevant, the incorrect or misleading information provided by Facebook did not have an impact on the outcome of the clearance decision."
Worth it in their minds. They wouldn't have hid it if they didn't think it would somehow impede the merger. It didn't end up being an issue (or at least the Commission claims it wouldn't have), but that could still be thought of as money they set aside for that risk.
I wonder if we could kill the secrecy by just doing this upfront?
"Sure, you can have your acquisition. Here's a price sheet for the changes you've requested."
Less hide and seek or regulatory expense, you can assess much larger penalties for dishonesty than for up-front admissions, and you can point the fees to something pro-social and help mollify people about Facebook's low tax rate.
We could, but that just turns into a tax on doing the things that society has deemed bad through the government. That's what the current situation is effectively, so what you're suggesting might be an improvement. I would prefer that we make the fines actually painful enough to work as a deterrent however. A percentage based fine is the only way to do so that I can think of since corporations are doing larger and larger deals all the time. If the fine for something like this was say 50% of the purchase price, that should at least cause some hesitation on the corporation's part.
> the biggest four airlines in USA got over 80% market share. In Europe they just have 48%.
But...the US is one country and Europe is...more than one? I get that airlines tend to be international, but in general it seems like we'd expect to see more companies in any given industry across all of Europe, than we'd expect in the same industry in the US. It's double the population, apart from all the borders involved.
Europe is made up of multiple countries, most countries keep a national airline even if they have to subsidize it because of its strategic importance.
You also not comparing apples to apples in Europe today you have A4E which makes up EasyJet, Ryanair, KLM, Lufthansa, IAG (which owns British Airways, Iberia etc.) and a few others and it controls over 95% of the market share.
If the lack of competition in America and its negative effects upon pretty much everyone, but a few oligarchs is getting you down, I suggest getting involved with New America Open Markets.
A part from Air France almost every country's dominating carrier has around 60% or less. And this is for domestic travel only, which is not very extensive due to the smaller size of European countries and the vast reach of high-speed rail.
If you look at international travel the main carriers have massive amount of competition from low-cost carriers as well as airlines from other European countries:
It's probably real, but we also don't know the full context. It could be a banter-y way of him introducing Facebook to a friend who hadn't heard of it, or something, and he could've just been kidding about actually giving information. Who knows for sure?
But knowing everything we know about Facebook now, it's probably more than likely true.
>> According to the Merger Regulation, the Commission can impose fines of up to 1% of the aggregated turnover of companies, which intentionally or negligently provide incorrect or misleading information to the Commission.
Anyone read this and imagined the Facebook lawyers saw this clause, and said to Mark "Yes, the ROI on providing misleading information is completely in Facebook's favor"
Makes me wonder if this sort of thing isn't a more civilised version of the bribe. "Tell us what we need to hear to drive this through and we'll fine you later." The beauty of the system being that no-one ever needs to explicitly offer or ask for money.
The saying usually goes that laws should be designed to a) disincentivize and b) not set bad precedents.
This law fails on both counts. No investor/shareholder will actually worry about this paltry fine. All other companies will take notice and decide that the penalty cost of infraction is much smaller than the opportunity cost of expansion. This is the kind of precedent that emboldens companies to do as they please.
Of course, all this assumes that governments and top tech companies don't have some mutual back scratching agreements going on.
Can only speculate, but that doesn't sound out of the realm of possibility.
The possible gains due to all the loopholes are a big part of the problem. Seems that businesses like Facebook are incentivized to do the wrong thing.
But they also have to face the backlash of their actions.
Though this sanction is barely going to deter any business from lying again, maybe public perception will.
Yes, I was shocked that earlier conclusion was left standing. That's like being caught robbing a bank, but let to keep the stolen bags of money and just ordered to pay a parking ticket for a getaway car waiting outside on a sidewalk. That's a very bad precedence and message to future deals, that it's OK to ignore EU laws if you are ready to pay small (comparatively) amount of money for it.
the merger was approved accounting for user matching ("'even if' assessment that assumed user matching as a possibility").
Knowing this in advance would have not changed the approval from the commission, your comparison is wrong, and it would set a bad precedent only for people who didn't actually read the case.
It is obvious that it would be possible to match accounts in a great many cases, and if the commission wanted to know more precisely how good the matchings could be, it seems like it would make more sense for them to ask Facebook and WhatsApp for social graph data and hire their own scientists to investigate that than to trust Facebook's answers on such a subjective point. But really it seems like they must have basically just been OK with Facebook monopolizing messaging because it was obviously pretty terrible for competition to allow this merger even assuming they thought the users of Facebook and WhatsApp wouldn't be able to be merged very well. However, I would be really curious to hear from someone who knows something about their actual thinking and motivations (and I guess what the law says since they may be quite constrained by that).
Why a fine? Why aren't they being banned from operating WhatsApp in the EU? And being forced to delete any data connecting the accounts to Facebook accounts if they want to continue operating Facebook within the EU?
can't imagine what would ban of Facebook messenger and whatsapp do for european IM market, sadly it ain't gonna happen but people in Signal and Threema would be celebrating for months
Well of course they were aware. And the Commission should have been aware. Here's a quote that stuck out to me:
“Consumer communications services: the Commission found that Facebook Messenger and WhatsApp were not close competitors and that consumers would continue to have a wide choice of alternative consumer communications apps post-merger”
I suppose it's because they are not rivals? They were pre acquisition. Because they definitely operate in a similar industry with a similar product/service. It’s true that consumers can choose to use alternatives.
There are hundreds of messenger apps out there that roughly work the same way. If facebook suddenly charged $100/day for whatsapp, people would just use something different. Like Kik or whatever. Its true that those competitors dont really have market share. But thats not the point. They exist and are readily accessible. If facebook wants to shoot itself in the foot in trying to force its customers to use their competitors, thats just healthy competition.
Therefore, there's no real threat of a monopoly here. Facebook bought a network effect, not a monopoly.
Compare that to something like mobile carriers. If At&t buys verizon and spring or whatever they're called, there ARE no other options.
Antitrust laws are mostly about keeping market mechanics in tact. Facebook and Google cant really force anyone to use their products. If their products are too expensive, there are lots of competitors. That's why they want to get rid of net neutrality. Making it expensive to run competing services strengthens their position.
Bit off-topic, but the end of the article lists the three reasons the original deal was cleared. They seem naive to the point of absurdity: Facebook Messenger and WhatsApp were "distant competitors"? They are number one and two messaging apps in my circle of friends and acquaintances.
Facebook affirmed they could not cross information between their users and whatsapp users. Dual SIMs are irrelevant to this, a very very small minority of the users will be providing using this feature to have separate numbers of facebook and whatsapp.
I don't get it. How could anyone be deceived? How could anyone imagine that anyone could be deceived? How could anyone assume - how could it technically be the case - that data from one system should not be mergeable with data from another?
The deception does not have to be believed to be a deception. Facebook explicitly lied to the EC:
"When Facebook notified the acquisition of WhatsApp in 2014, it informed the Commission that it would be unable to establish reliable automated matching between Facebook users' accounts and WhatsApp users' accounts."
"The Commission has found that, contrary to Facebook's statements in the 2014 merger review process, the technical possibility of automatically matching Facebook and WhatsApp users' identities already existed in 2014, and that Facebook staff were aware of such a possibility."
Fines like this are mostly pointless, a cost of doing business.
If governments want to stop being defrauded by corporations, they need to respond with criminal penalties like imprisonment, the same as they would to a regular citizen.
We throw people in jail far too often as it is, and you want to add to the prison population for something that didn't harm anyone? I honestly don't follow. If this were executives covering up the harmful effects of their product on humans, I'd agree.
The Government makes the vast majority of their money off corporate profits, so they have a vested interest in seeing them succeed.
I do agree that we throw people in jail too often, but if we're going to let corporations straight up lie for a low price, what we're charging is a usage fee, not a penalty.
110 million is nothing for Facebook in comparison with the treasure trove of data and user identities they have conveniently "acquired" from all the countries which are using Whatsapp.
Please, start regulating and taxing these multinational advertising companies much more aggressively.
Once advertising companies like Facebook or Google reach a certain size, they should be required to pay taxes where the ads are shown to users.
Make a set of basic EU user terms and privacy policy for advertising companies masked as social networks, search engines, email providers etc, some of it mandatory, some of it that they can opt out off. But advertising companies above a certain size shouldn't be allowed to set their own (American) terms.
And please, split up these behemoths. It's not good for anyone that one search engine and one social network rules it all. They have EU-wide market shares above 90 percent. We would never allow that in industries as automobiles or television. We would never allow it for newspapers or tv stations. Somehow, we allow it for social networks and search engines.
On what basis are you splitting these behemoths? It was easy to split Ma Bell on the basis of geography but how would you split Google? Into American, Asian and European arms perhaps? Even putting aside the thorny problem of splitting the global infrastructure, how soon before one of the Googlets swallows the remaining ones either through acquisition or by out-competing them?
And that's just Google. I can't even imagine how Facebook would be split up because a big draw of Facebook is being able to contact people no matter where they are. I don't need to register on a separate website if they move to a different country. I suppose its theoretically possible to force FB to spin off Whatsapp, Instagram etc into separate companies but you'll have the same problem of one of them making the others obsolete. That's exactly why Zuckerberg bought them in the first place - the fear that they would make FB obsolete.
Too often I see comments exhibiting very poor understanding of economics being showered with upvotes on HN. While I agree that these firms should be more tightly regulated, I do think this policy of breaking them up is misguided.
The panic is understandable, though. The amount of power these companies can accumulate combined with their lack of ethical behavior and contempt for rules is anxiety inducing.
I see you did read that Economist article too haha
Facebook and Google are also not anywhere close to monopolies--in fact, they are behemoth competitors against each other for online advertising dollars, because media companies sell to advertisers, not free end users.
> Make a set of basic EU user terms and privacy policy
The problem is that they just won't care, the same as they don't care about the EU data privacy directives. All lawsuits end up at their irish subsidiaries who of course do nothing to anger their holy donors.
Google and Facebook are violating so many EU data privacy laws all the time, without real consequence, it's not even funny.
In general, we ought to be moving toward a unitary tax system, so multinationals will have to pay local taxes in the places they do business, rather than just being able to shift it wherever they want via transfer pricing. http://www.taxjustice.net/unitary-tax/
On a more serious note, it can be discussed when e.g. Google sells ad space to a German company which then advertises in France, whether the business is being done in Germany, France, or both. But it sure ain't Ireland or the Cayman Islands...
If there would be such tax, they wouldn't be able to become so big in the first place, investors would have far less faith in them. Their unrestrained growth was only possible with lack of regulation
Might seem a little far fetched, but Google and FB should offer a way to opt out of being tracked around on the web. The average revenue per user in North America is around $20 per quarter, so charge $80 per year to use these services without being tracked.
The $20 per user per quarter is mindblowing and that number is growing rapidly, no wonder selling user data is so lucrative.
> but Google and FB should offer a way to opt out of being tracked around on the web
In Europe, this is even regulated in the EU data privacy directive, the problem is that FB et al just do not care because there are hardly any consequences.
technically they have to adhere to EU laws because all of them have EU subsidiaries (mostly in Ireland) through which they act in Europe. But the irish government is obviously happy about all the jobs and taxes they bring to a small country without a lot of industry or natural resources, so all the lawsuits kind of go nowhere.
obviously. but they are only in ireland because it fiscally makes sense. there is no real reason for facebook to maintain a presence in the EU any more than they have to have a Seoul office to offer facebook services in south korea.
I think that the idea of taxing advertising makes a lot of sense for the EU.
Right now the US is effectively sucking the money out of the EU using its massive social advertising armada. I bet that most of the ads are driving consumers towards US-based brands at the expense of EU-based brands.
If the EU imposed a tax on advertising, it would allow the EU government to reclaim some of these losses and level the playing fields for EU companies by reducing the power of advertising.
This is an excellent idea. Advertising ought to be taxed like Tobacco.
Advertising is responsible for the increased monopolization of the economy, inequality, urbanization, over-consumption, greed, depression and many other issues...
Advertising is a cancer on society. It doesn't offer any value to the consumer (at least Tobacco offers some temporary pleasure), it must be taxed harshly.
>It doesn't offer any value to the consumer (at least Tobacco offers some temporary pleasure), it must be taxed harshly.
I'm quite sure I've received value from browsing ad-supported news outlets and using other ad-supported online services, so speak for yourself.
Furthermore, even though no one likes to admit they're positively persuaded by ads, it's universally true. How many times have you seen an ad for a movie and then gone to look up its reviews and considered watching it that weekend? Ads are just a way for companies to get the word out about their products / services, and sometimes they're legitimately useful.
They are legitimately useful, but they are also legitimately harmful by creating needs that you didn't have.
They are categorically not just about informing people.
And saying you received value from ad-supported stuff strikes me as very backwards. You still pay, but you pay through being manipulated into buying stuff you don't need.
Jesus people, the medium is the message. Advertising is not a scourge on society because of what it does to convince viewers. Rather, it's the precedents set by advertising that are so awful: using repetition and other cheap psychosensory tricks to induce brand recognition; relying more heavily on ads than making a good product; using sleazy, mathematically unsound data and fooling execs everywhere into believing the figures; and don't forget the music - the horrible, monotonous music that plagues the modern ear everywhere it goes. Advertising does work, but it works by instilling maddening mediocrity in many simultaneous forms to arrive there. I believe that society could be worth more than what the ad industry thinks of us, but today they do treat us like the easily fooled buffoons that comprise the majority of our culture. Until we stop being such low effort creatures, we should expect ads to continue to contribute to our increasing global media fatigue.
I agree with this but think you've missed what I think of as 2nd and 3rd order effects.
So 1st order problem: Adverts are harmful in that they distort markets increasing the effort required by consumers to make good decisions & increasing poor decision making.
But they also create a whole bunch of activity that is now not a buyer / seller interaction. Why do you get click bait and fake news? If the viewers had to choose to pay for it then this would never occur but with advertising the viewer is the product. So you get content that is compelling but worthless. Fake news & clickbait. You even get HSBC dictating content to the Telegraph [1].
I honestly think Google originally had good intentions "Don't be evil" but their business model is fundamentally at odds with the wellbeing of their users. If you have a market optimizing for user manipulation you will evolve effective manipulators.
So the 2nd order problems of advertising are that advert supported activity doesn't have it's interests aligned with it's users. Even if the people in these industries want to do good the market will eventually evolve corporations that harm their users since the more efficient the harm the greater the profit.
But the biggest problem in my mind is the 3rd order effect of wasted human capital. Much like the biggest problem with wall street is all our gifted peers who ended up doing zero sum bullshit for banks. Advertising, regulatory capture and other corporate innovation that isn't making a better product signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
I really loved reading your reply. It was well thought out and very respectful. I am not used to such things on the internet anymore. Cheers to that. :)
You correctly point out that the human waste caused by ads, like our banking industry, is monumental. What fascinates me about your view, though, is that I have always viewed the cause for US banks' human waste factor to be the absurd regulatory environment and the close ties it maintains to the upper echelons of government.
Media/Advertising, on the other hand, feels much more sparsely regulated at the government level, but it does maintain its own absurd regulatory environment in the private sector, and its own ties to the upper echelons of government. I think it's hard to deny that this industry's self-regulatory environment is as ineffective and chaotic as the politically-instituted regulatory environment enjoyed by the banks. But little research has been done into the impact of the media industry's self-regulation. Makes me wonder what exciting secrets may be out there to uncover.
The other second order effect is that advertising will influence you even if you opted out of everything you could and lived under a rock. As long as you have friends who are exposed to advertising, you are exposed to advertising through them.
Car manufacturers specifically optimize for this effect, which is why car ads are targeted at people who already own said car, not potential new buyers.
You overestimate the consumer's agency, something cannot be taken away that they did not have to begin with. The reason why ads are profitable is that a surprising portion of the general population will buy something if it's put in their faces. If it was something they didn't need before, they bought it anyway.
That is what I think was meant by the comment above yours.
When I rip on the agency of consumers please consider that with any small amount of agency they would search for the best product to suit their needs and advertising would be worthless. In fact advertising makes the product more expensive. Entire product lines are sold on advertising alone despite the existence of better cheaper alternatives.
what kinds of ads are you thinking of when you say "If it was something they didn't need before, they bought it anyway"? There are different types of goods, some with clearer reasons for purchase than others. An ad for a mountain bike is clearly only going to attract people who saw the ad and thought "I want a mountain bike". For luxury goods that rely almost entirely on perception (eg. Tag Heuer watches), people choose to buy something that they think will make others see them in a different light. Classic "bad guy" advertisers like McDonalds are trying to influence customers to pick them over Burger King or KFC when they fancy an easy meal on the go.
None of these decisions are forced by the advertiser, and "influence" as a concept is pretty plain on the face of it. The psychological hacks that advertisers use are mainly restricted to trying to make you under-price or over-value a product in your head, or in the case of late-night shopping channels, to get you to impulse-buy things (which I would consider to be fairly exploitative but is in the minority in terms of advertisers). Influence: The Psychology of Persuasion is a good book on the subject.
> When I rip on the agency of consumers please consider that with any small amount of agency they would search for the best product to suit their needs and advertising would be worthless.
I think you're conflating agency and rationality here. A rational agent would indeed shop around, but any old agent can choose to buy or not buy something based on whether they think it has value to them.
"None of these decisions are forced by the advertiser"
Pavements don't force you to walk on them, but I'd bet you tend not to stray off them. Pathways through the park don't force you to stay on them, but most people tend to stick to them.
By escalating the bar that advertising needs to reach to influence agents to "force", you're proposing a binary relation where there is a continuum. I think it's disingenuous.
> They are legitimately useful, but they are also legitimately harmful by creating needs that you didn't have.
> They are categorically not just about informing people.
> And saying you received value from ad-supported stuff strikes me as very backwards. You still pay, but you pay through being manipulated into buying stuff you don't need.
This was the ancestor comment I was responding about. This person is suggesting that an advertiser can make you buy things you wouldn't otherwise want. My point is that it isn't true - you have to want the product at some level to be interested. If you'd read my comment you'd realise that I agree that they can influence your decision, but not if you weren't at least mildly interested in the product in the first place.
If you walk into a shop, and you see three items on the shelf, you're far more likely to buy one of the items on the shelf, than the one that's hidden behind the counter that you have to ask for.
It's not force, but almost nobody will ask for the thing behind the counter. It's the effect that matters.
I'm well aware of the techniques they use, but my point is that no matter how much an advertiser tries to influence you into buying their product the final decision and action is always your own. You could argue that people with poor impulse control should be protected from advertisers, and I would agree with you to an extent, but that's a separate issue.
It's not only about poor impulse control. A lot of those techniques work in such a way that people don't even realise that something is trying to influence their behaviour. Usually, these techniques "catch" people when they are off guard. There is a lot of psychological literature describing how unreasonable people behave for the most of the time.
Sadly, when it comes to manipulation, human kind has already lost this battle.
I think you overestimate the power of these techniques. They don't add up to making people buy things they don't want. They just change the perception of the goods' value or cost. No matter how many ads I get shown, I'm not going to buy a McDonalds unless I'm hungry and want something quick and cheap that I don't have to cook. They just use adverts to position themselves as a good choice in that situation, or to improve the public impression of the meat they use (and such claims are legally required to be true so they can't just say "we use great beef" and cook you up a rat burger).
> relying on attempts to place yourself as an informed authority
I've spent 5 years studying psychology at uni so even though I don't consider myself as an authority, I think I've got enough knowledge to know what I'm talking about. I don't give a flying fuck if the person reading my comment will be convinced or not. With that said, if they at least do a research on the subject, we'll all be better off.
> In contrast to your comment, an ad for Viagra is straightforward
Care to elaborate a bit?
How discussing with someone anonymously on the internet compares with a situation where a company is using all kinds of techniques to trick people into spending money on their product?
At any time in your life has someone been close enough to you to influence you? I don't think anyone can answer no to this honestly, if they could I'd think them quite unfortunate! Really it's nice to have friends and partners who understand what makes us tick. Obviously we would hope these people are trustworthy only using this influence for our own good.
But to suggest that a wife, husband or parent cannot influence our choices is naive. Even if we were perfectly rational actors these people have far too much insight into our inner mind and too much control over what information we observe.
Surveillance capitalism of the type google and facebook are currently trying to engineer is about putting this level of understanding & control over information sources in the hands of people with a massive incentive for you to make bad economic decisions.
With machine learning & big enough data sets it would be surprising if their ability to manipulate you wasn't eventually orders of magnitude better than the average partner or parent. You think playing Go against a top ranked player is harder than feeding lies to your average rube?
Do you claim that everyone always needed what they are enticed to buy by advertising? Because I'm pretty sure there's a boatload of psychology research that says otherwise.
Put yet another way, if ads weren't effective at making people buy shit, then why would companies make Google and Facebook obscenely rich?
If people would merely be informed by ads about the existence and benefits of products, why would the ads have such strong emotional messaging and be so free from actual solid information?
If you want to get informed you don't read the ads, do you?
Ads have one primary purpose: To make people make more irrational decisions.
ads are great at increasing the likelihood that you'll pick their product over the competition, and they might encourage people to impulse buy in the future. But there's no way an ad can get you to buy something you genuinely don't want. That's nonsense.
And you're shifting the goalpost. I never said they get you to buy something you (genuinely) don't want, I said they create needs.
Seems like you don't seriously disagree with that either, just over-interpreted my original statement.
I would also argue the idea of "genuine" needs is a fallacy. Unfortunately one that is common in economic thinking. There is not fixed hierarchy of external needs that we want to satisfy one after the other. That's a really bad model for human consumption behaviour.
If all your friends start having something most people will find that they start wanting it, too.
But maybe if you didn't see that ad, you would have come across a different product/service which is actually better quality. Maybe your expectations of quality have slowly eroded over time (because of advertising).
For example, in the old days, most items of clothing would last a lifetime. These days most items of clothing tend to fall apart after a few years.
Also, many kinds of food items used to be better quality (I've read many articles about how low the quality of farmed vegetables like Tomatoes have become).
I think that even Mcdonalds' used to be much better quality 20 years ago. At first I thought it was just because my memory was fuzzy but I later found out from someone who worked at McDonalds that one day, they suddenly swapped the buns of the Quarter Pounder burger to smaller buns but no one noticed except the employees.
Also big Pizza chains in some countries have been making the pizzas smaller and smaller over time in order to maintain the low prices.
Advertising allows big companies to keep pulling back on real quality whilst replacing it with an illusion of quality.
As much as I hate ads, it's just not true that they don't offer any value. They often can and do inform consumers and businesses of products that will be of value to them. They often though advertise things that are also of the opposite (negative value) and play on human weaknesses.
"- Market failure: not the "best" product wins, but the one with the biggest advertisement budget behind it."
This is actually a beneficial outcome. Similarly to how genetic algorithms and simulated anealing require and element of randomness to avoid getting stuck in local minima, so I suspect advertising serves the purpose of preventing us getting stuck in local minima.
Equally too much randomness and the algorithms fail to converge on the global minimum and so perhaps, too much advertisement prevents us truly discovering the best products and services.
Either way though, it is in finding the balance that real value is found.
You forgot the largest plus: Ads pay for many useful and enjoyable services that are free for the consumer (or cheaper). Things like broadcast television, local news, most of the internet, games, concerts....
I don't disagree that there are many cons, but it's disingenuous not to include the services they power as one of the pluses.
But I can add another minus: ads as a monetization scheme are unnecessarily restrictive, since the only way for an organization to increase their prices is to jump from an ad-based scheme to a paid scheme, and this jump is too big in many cases. Instead, if we paid for everything with money (not with data), then pricing would be more clear and there would not be any threshold in changing prices.
I'm not sure I fully understand, this would be pay walls on everything wouldn't it? If so, I agree it greatly increases pricing clarity but I'm not convinced it's an improvement necessarily.
I'd also mention that many freemium businesses actually introduce paid models to control costs rather than improve profitability - particularly true for streaming media companies.
>> Market failure: not the "best" product wins, but the one with the biggest advertisement budget behind it
I think this is the most important point.
It changes the competitive landscape from being quality-based to being awareness-based.
By driving attention towards their own products, big companies are shifting attention away from more deserving competing products which have a smaller marketing budget.
I think this explains why big companies are so inefficient and yet still maintain their market share.
Advertising allows companies to substitute real quality with perceived quality in order to increase profit margins.
> By driving attention towards their own products, big companies are shifting attention away from more deserving competing products which have a smaller marketing budget
You think small companies would benefit from an advertising ban?
Remember that products can still be found through search. If there are no ads, there will probably be better "product discovery" websites to fill the gap if necessary. And of course there are the regular channels, i.e., recommendations by friends, forums, review sites, etc.
The problem is that many consumers might not even be aware that its a decision worth researching. For example, in some areas of the US it is cheaper and quicker to order online through Walmart than it is through Amazon. But most users order through Amazon by reflex, not even considering if there is an alternative.
Advertising helps here. It tells them "look there is an alternative. Consider it!"
People go to Amazon for online shopping because Amazon pays to have a bigger web presence through advertising than WalMart does. Had there been no advertising on either end, you'd have a level playing field where people would have to discover the best / cheapest / most efficient online shopping on their own.
Seems strange that you think advertising helps here when you also claim that people are responding to advertising with negative outcomes.
Websites with ads are selling eyeballs to advertising companies, who then turn around and sell them to your local cranberry juice company.
There are two types of eyeballs:
1. Those who don't end up buying cranberry juice: In this case, you've wasted their time showing them the ad - especially if they never talk about the ad to anyone else. Companies have a very direct incentive to avoid false positives, so you don't need to do anything there.
2. Those who end up buying cranberry juice: Unless you have a problem with the cranberry juice itself, the only problem here is that the cost went up slightly to pay for the advertising. If I'm willing to pay 10 cents more for cranberry juice than an alternative like tomato juice and 10% of the total cost is advertising(on average), then the benefit of advertising is:
dValue = dBenefit - dCost = 0.10 - 0.1 * cost
which is negative if the juice costs more than $1. (This assumes that without advertising, I would've picked the alternative)
In order for dValue to always be negative(your claim), either nobody anywhere is innovating(dBenefit is never very large) or advertising companies are charging too much(dCost is very often large).
How cheap would advertising have to be for you to consider it a net positive? Give me a number as percentage of total cost for a few example items. Unless dBenefit is always 0, such a number must exist when you subset to the case #2 group. This number seems like it would be related to your proposed tax, too.
It drives up the cost of living for regular people because of higher real estate prices in big cities (due to limited space).
This benefits the rich (landlords and big company shareholders) and drains resources away from smaller suburbs and less wealthy citizens who are forced to move to big cities to find jobs.
I think in this case he's including the suburbs in urban, as contrasted with rural living. In that light urbanization is generally harmful, as rural living tends to have less of an effect on wildlife since individuals are rarely stopping foxes, deer, etc from crossing through their property in the same way that miles of sprawl and deforested lawns do.
Don't forget that if you see ads online or during shows and movies it's because you are choosing to consume content. The ads are how that content is funded. It's the content makers and/or content venues that buy the ads, not the advertisers. The ads are there because you and I aren't paying for the content we consume. We could get rid of a lot of advertising if we paid for the content we consume, but we choose not to. This ad-driven model allows content producers to get their material in front of many many more people than they would have otherwise since they get to offer it for free.
BTW, ads are taxed, I believe the OP's point was that ads should be taxed in the locale in which they're shown, to give back locally rather than concentrating the tax revenue wherever adCorp is incorporated.
I used to be as against ads as you are, and then I tried to start a business. In today's landscape, it is impossible to get people to try your product. There is so much noise and clamor for consumer attention, and there are so many amazing choices for free content, that if companies aren't sending out reminders that they exist, most people will forget.
Overall, I'm in mild agreement that society would be better if it weren't ad-driven, but that's a utopian ideal we can't change with taxation, that's a brand new society and a brand new government. Taxing ads more won't make them go away, at all, it will just raise a few tax dollars. I'm in favor of using taxes on ads to pay for psychology and statistics education for all.
> Advertising is responsible for the increased monopolization of the economy, inequality, urbanization, over-consumption, greed, depression and many other issues...
yeah screw moderation... let's be extreme all the way
Advertising is not "responsible" of urbanisation.. urbanisation is a fact of life.
If advertising is a cancer on society, what is advertising? If someone blogs on their company's platform and this is submitted to HN, or there's a "we're hiring" post on HN, or someone replies to "who's hiring", is that an ad and therefore cancer on society? If I enrolled to an evening school which I heard about from a YouTube ad which clearly knew my interests (real story), is that cancer on society or, since I think it was valuable and did not directly contribute to urbanization and other issues, is this no longer an ad because if it were an ad it would have been cancer?
Why? Why I should when a company hits a certain size that suddenly regulators should go after it? The bigger question is why Europe struggles at creating 10x companies.
Distgusting that you propose to dictate others life. If you and people like you have a problem with something, you need to come with solution on your own on. Its people like you who makes others hate their own governments.
All companies with with network effect should be pre-emptively regulated for their emergent monopoly potential. Capatalism must reduce this first mover dominance crap, or you get facebook FOREVER.
Regardless of the taxing system, Facebook would already show you as many ads as possible. It makes no sense to me that they would show more ads in EU in that case, because that means that they could also increase the number of ads shown in the US and increase their profit. If anything, it would just cut their surplus.
I don't believe that's entirely true, Facebook has endless channels (e.g. messenger) in which they could introduce or increase their advertising frequency (think Forbes). They could even disclose to end-users that these additional advertisements were being served specifically as they are within the EU, similar to the ubiquitous cookie pop-ups they are already well adjusted to seeing.
> I used to be as against ads as you are, and then I tried to start a business
> Overall, I'm in mild agreement that society would be better if it weren't ad-driven, but that's a utopian ideal
Sounds like the typical conservative spiel. "I used to be idealist like you once, but then I realized how the world really works and sold out".
There's a short mini-doc freely available out there, made by an heir of the Johnson & Johnson family, about the 1%. He was inspired to do this partly because his father had, in his day, gone out of his way and caused trouble by participating in some controversial (at the time) anti-apartheid demonstrations. However, he was now berating his son for his "idealism" in discussing the issue of inequality, coming off as insanely hypocritical in the process.
That's hilarious; most people who know me consider me a socialist.
> There's a short mini-doc
I've seen it, and it's fantastic. It's not about advertising.
> It's a really poor way of arguing a point, imo.
That's hilarious coming on the heels of an ad-hominem. Do you have any counter argument? Poor as it is, it's true, I'm sharing my feelings as someone with experience on both sides. The person I replied to, and you, and me, we all have the power within us to make ads irrelevant to our lives. And yet we don't. Why? The person I replied to seems to suggest he has an inalienable right to consume free content. Is that true? Does he deserve high quality free content, ad-free? Is it really the advertisers' fault that ads exist? Do you believe that taxing advertisers is the solution to reducing the scourge of ads?
Man, I don't know what I did to trigger your animosity. I agree ads should be taxed. What else do you want? Why are you trying to take me down?
> Taxing ads, and outright banning them from targeting anyone but adults, seem like nice first steps.
I agree with that. What's your beef?
> Additionally, it's not an ad-hominem when I'm criticizing the form your appeal is taking.
Yes it is, that's exactly what an ad hominem is, you just nearly recited the definition. It is an argument against the person, rather than the position they are maintaining. That's what you did, you criticized me for sounding like a "typical conservative". That is an ad hominem argument.
> First, you sound like an american, so being called "socialist" doesn't really mean anything.
That's also an ad hominem argument. You're not asking me what I mean by "socialist", you're not trying to argue on the merits of socialism vs capitalism, you're claiming that my point is invalid because I sound American. You don't know I'm American, and it doesn't matter if I am American, because socialism is objectively something left of liberal and distinct from capitalism. But you claim to know better by assumption of association. It doesn't get any more ad-hominem than that.
I don't know what country you live in, but I disagree wildly with the statement that being called "socialist" doesn't really mean anything. You seem to lack experience in this matter. Socialism is a dirty word in the US, and people win elections by calling their opponents or their positions socialist. (Also ad-hominem)
> As for the matter in question, many of us do use advertisement blockers
Yes, I use ad blockers too.
> It's risible that you consider yourself a socialist when you unironically spin the peddling of addictive clickbait garbage
I'm very confused by your argument. If what we're talking about is garbage, then what is the problem? If you're not viewing the "garbage" in question, why are you so angry about it?
> As bizarre a way to describe Facebook or Buzzfeed as I've ever witnessed.
I never said Facebook or Buzzfeed, nor did I anywhere suggest that all ad-driven content is high quality. I'm in complete agreement that most of the content is bad and most of the ads attached are too. You are making vast assumptions in your attempts to disprove what you imagine I'm saying, without bothering to check if it's really what I'm saying.
Hey, you started this. You called me, by careless and casual implication, a utopian. I don't take kindly to being called naive for maintaining a inflexible yet reasonable and policy-driven stance on curbing the toxic impact of advertising in our society, especially from people who claim they've "graduated" from my current stance.
My utter disdain of ads isn't really tied to their impact on my life. I'm more concerned with all the manipulative ways in which they pressure people less prepared to deal with them than me into short-term relief by purchasing wasteful crap. By getting some content "for free", I am actually being subsidized by some poor sap throwing their money away on some fad propped up by a media campaign concocted by a team of advertisers and sellout psychologists.
Moreover, this worthless conspicuous consumption is a huge driver of the kind of activity that damages the environment, so there's that angle too.
I'm not sure I agree with this ruling. The question as stated is whether fb would be "unable to establish reliable automated matching between Facebook users' accounts and WhatsApp users' accounts" and it seems to me that matching based on entered phone numbers isn't really automatic - since it's only possible for those that enter their number, and is a manually commenced process.
USA got very liberal antitrust policy, allowing massive M&A. Good for shareholders, bad for everybody else.
E.g. the biggest four airlines in USA got over 80% market share. In Europe they just have 48%. That's why United can re-accommodate passenger and get away with it:
http://www.economist.com/news/leaders/21721201-americans-are...