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The other reason this framing is important is because it frames out opening opposition's concerns about mergers and acquisitions. Why is that? Because these industries are already highly concentrated, so the additional marginal benefit of further economies of scale is relatively limited. Like, genuine question: these are trillion-dollar companies. Why do you need even more mergers and acquisitions to get the economy of scale opening opposition is talking about? Therefore, this is mostly a debate about utilizing the consumer welfare standard to enforce antitrust legislation against companies like Microsoft and Facebook. |
What does this look like in practice? To be clear, I just want to be very clear about this before someone strawmans us: our argument is not that we will break up all big tech companies everywhere in the world and they will all go to smithereens. Our claim, more sensibly, is that there is a higher probability under our side that you do things like spin off OpenAI from Microsoft, that you, for example, sever WhatsApp from Facebook. And even if you don't split companies off, you are more likely to impose antitrust penalties or fines on these companies in cases where they could engage in anti-competitive behaviors. |
Why is this valuable? Three reasons for closing government. Reason number one: large tech companies constitute an existential threat to democracy. The platform of Facebook literally has more users than the entirety of the Catholic Church, and this is a problem for two reasons. Reason number one: large tech companies have enormous access to data. The reason this is bad is not necessarily just because of privacy; it's because when you have data from many different platforms—for example, Facebook has your data from WhatsApp but also from a social media platform—you can then increase the effectiveness of algorithms to increasingly manipulate people's political preferences to run more targeted advertising. See Cambridge Analytica. There are strong political incentives to do this because large tech corporations do stand to benefit from influencing political outcomes, especially in developing countries where the regulatory system is relatively weak. |
But secondly, it often happens that these companies control what information people are exposed to. They'll say, "Ah, but there's competition between different social media companies." But there's an oligopoly at play: a small number of social media firms and a small number of platforms. This means that the algorithms you are exposed to shape your political view. This means on our side of the house, even if we don't break up social media, we are more likely to have threats of antitrust penalties enforced against these companies that incentivize them to do things like moderate their algorithms to ensure that you see less sensationalist, hateful content. See the Burmese genocide and the literal provocation by hanging over on Facebook. OO |
<poi> |
The big tech companies are enormously productive, which we explain is on externalities because better technology grows unpredictably. Things help the environment, like energy technology, through cross-consumption... |
</poi> |
But there's an unproven claim here: why do you need the extra large economy of scale? We'll flip this: there are huge diseconomies of scale. The larger and larger a company is, for example, there are huge communication inefficiencies across the corporation. You are more efficient on our side of the house. Just to be clear, if you spin OpenAI off from Microsoft, OpenAI is still a multi-hundred billion dollar company. The benefit is you do not have the enormous inefficiencies that come from operating a vast company. |
Reason number two: we are more likely to get innovation on our side of the house. Why is that? First, you're more likely to get lending to smaller companies when the perception amongst investors is that smaller tech companies now have a viable chance because they will not immediately be killed or sued into the ground by a large company, like it's often engaged in patent evergreening and patent trolling to crush competition. There is now a credible threat that large companies might be broken up, which incentivizes increased capital flows to smaller firms. |
Reason number two: smaller companies are more able to access the crucial resources that are needed for innovation—like data, like power sources and electricity, like rare earth elements—which are currently monopolized by large tech companies. If small tech companies cannot get their hands on the data, they'll never build the groundbreaking AI they can if we use antitrust. Propose. |
</mg> |
<mo> |
Two things in the speech. Firstly, I want to vertically explain why larger Companies are more important economically. Secondly, I want to talk more about why regulation is better on the house and why it’s important to have skill larger companies actually abide by regulation and also follow the social good in the first place. So first on economics, I want to begin by explaining why the blocking of mergers and acquisitions are going to be overused on the opposition's side of the house. I know this is a less contentious word, but I also want to respond to the government POI about why judges are going to consider economics and err on the side of caution in this instance. |
I think the reason judges aren't going to care to some extent about economic interests is because oftentimes, in terms of the way the government is going to appoint judges, there is a conflict of interest. The premise of this argument is that the government has an incentive to win the case that they bring to court. This is a PR incentive. You want to look more successful; you don’t want to look like a failure, and you’re wasting resources by pursuing cases against companies that are ultimately going to fail. But we have financial interests as the state as well because often the state receives the settlement money from cases. This money can be used to, for example, fund other services for the people, which improves their democratic popularity. |
We can have incentives in these cases. What is the implication of this? The implication here is that it means that states have incentives to appoint judges with similar ideological interests conceptualizing what the social good is. So when they bring cases to the FTC, the judges that exist are likely to actually approve the cases and block the mergers and acquisitions, which also unlocks a meaningful amount of the Ocas on the margins about why this is going to be done and an overly large amount of cases. |
In response to the government, what are the actual harms of this? The first thing I want to do is explain why economies of scale are actually important for lowering costs. The government just says in a single line that they get economies of scale. This means they have efficiency, which lowers prices. These are just words; let me explain what economies of scale mean or actually do. I want to walk through why economies of scale actually meaningfully lower costs. |
So the premise is that capital is a fixed cost. So when companies want to produce, they also have to invest in fixed capital, which takes a substantial amount of money. The difference now is they don’t have to duplicate capital across firms. If you save a significant amount of development costs, we can increase production nonlinearly to the amount of capital. But furthermore, you can also optimize for the best resources different companies have. |
So Company A has very good and efficient manufacturing capital, but Company B has more efficient resources for innovation in other areas. You can use the best resources from each company to combine them. You can have better capital allocation, and you can actually have a company that is working more efficiently because the technology they have access to is better. |
Secondly, I want to explain why we also get better innovation because again, the government fails to explain why larger companies are actually needed to get more innovation, saying that bigger firms are doing more research because the total money in an industry stays the same. They don’t explain why having it all consolidated is uniquely important. |
So I think that, firstly, similar to the economy, research has upfront costs where you have to invest in R&D. Most critically, R&D is often incredibly speculative and risky. I can put a lot of money into research and development, but it can all just go to waste if it produces nothing in the end. You have to have a larger pool of capital to really take the risk in the first place when companies merge together. |
Secondly, it’s important for innovation because you get more talent and knowledge sharing across companies. When the most talented workers, innovators, and researchers from two different companies can come together and share knowledge and resources, they can also, for example, share company secrets and engage in industry research as well, which allows these two firms to combine their knowledge and engage in innovation in this way. |
Thirdly, it’s important for innovation because larger firms can also borrow at lower interest rates because they are often perceived as more stable and less risky to go under because they have more capital to work with. This is important because if you’re perceived as more safe, you can borrow at lower interest rates. Interest rates from loans are often seen as insulation against the risk of default. If you’re seen as being less risky, you have less need to insulate against this risk in the first place, so you can have lower interest rates. |
Similarly, for example, bonds are higher; it’s easier to raise money, and yields are lower because you’re perceived as safer as well. Finally, the last economic thing I want to add, which is completely distinct from the opening conference, is that companies also have less incentive to want to expand as a company as well. This also applies to things like trust-busting and breaking up companies. |
I think the government also put forth their characterization, and the reason this is because of an incentive to not want to expand as a company is because oftentimes you’re uniquely afraid of, for example, being busted because of all the reasons given about why this is going to be overused. The reason that you risk being broken up as a company outweighs your other financial incentives to want to expand. |
Similarly, expansion carries some risks. When you break into unknown markets, if you fail to adapt to the market, all of your money can go to waste. So this becomes a unique tipping point to not want to undertake the process of trying to expand into other markets and make more profit if you think you’re going to be broken up in the process. Even when you expand, the profits are no longer worth the risk when you actually have increasing threats of being broken up as a company. |
This uniquely harms underdeveloped regions. After this, I think all the need to be expanded to are emerging markets that currently don’t have businesses to neglect, the significant part of the world that currently does not have access to goods and services. Opening |
<poi> |
Companies can grow in the absence of mergers and acquisitions, but M&A as a mode of growth often comes with massive layoffs to thousands of workers, dips in productivity, and the process of aligning business activities can also lead to mergers and acquisitions. |
</poi> |
Because the reason you want to use M&A in the first place is you know have the necessary resources to grow in the market. It’s not what the CG says; we have economies of scale. If you’re like economies of scale, you’re not going to have the same trade-off and regulation. |
So I want to first begin by explaining why scale is actually important by abiding by the social goods. This is because it’s often not profitable to abide by these social goods. For example, having less profit means you have to spend money on lawyers to make sure you’re compliant with regulation in the first place. You can’t produce as efficiently, and this is generally not profitable; therefore, you only have an incentive to want to do things like, for example, care about the environment if you have enough money to do so. |
Companies have incentives for regulation, but I also want to respond to government arguments. I think, firstly, citizens themselves have a growing demand in many democratic countries. For example, if they want to, they can protest or boycott companies with bad environmental or social practices. These protests, even if they don’t directly harm company profits, create enough unrest that the shareholders that deterred from investment as well, which means this instability is also bad, even if we boycotts themselves are not very effective. |
I think shareholders have many other incentives to care about as well. Often, for example, oil is becoming increasingly volatile, making it more sustainable in the long term. This is also bad for shareholders, even if the company can survive it, as it harms, for example, the profit and the amount of equity or dividends a shareholder can have. Companies have separate incentives to care about regulation, which proves that companies self-regulate even if all the incentives that the CG outlined about why imposing regulation is very hard are true. |
I want to explain finally why this upregulation exists. I think the reason this regulation stops existing in other houses is that voters start to become complacent and trust in being safe is insufficient. This means that we have single-issue voters on the idea of imposing regulations in the first place. |
which me have less broad regulations, which is bad. Regulations apply to all companies. This is a more important impact on this for all these reasons we oppose. |
</mo> |
<gw> |
So this debate is not a debate about whether antitrust is good or bad. As for both the OO and CO case, which is the biggest problem on their case because their met is our standard results in more enforcement, and that's bad. Our exception being this: we explain to you why this doesn't actually apply to the vast majority of cases that both auctions want to talk about. |
This is largely a debate about how we want to regulate and how we want to curb the growth and anti-competitive expansion of large tech companies. That immediately minimizes all of the impacts that both teams want to talk about. More importantly, I don't think it's very fair the way this characterize your exception. Our argument isn't just about threatening democracy; it's also about innovation. |
We give you three independent reasons why we get more innovation on side CG. First, more investments into smaller tech companies that are currently prohibited due to these large companies' dominance. They buy out these smaller companies before they can even grow in the first place. Second, we reduce diseconomies of scale, which produces efficiency in tech companies at large. Third, there's a greater ability to innovate for smaller firms. They can access things like data, power, and rare earth minerals, which are often incredibly important and crucial for startups. |
For these companies to make sure the product can even get off the ground in the first place, there is no response detriment from their side. Two questions: first, let's talk about M&A and investments because that seems to be the only thing both sides want to talk about. Obviously, that has spin-off things like innovation, economies of scale, ya ya. The second thing is about how this regulation happens, who you appoint. |
Now, the first thing that M&A investment says, whether these large companies are good or bad, there are two ways to actually take out this argument. As long as I prove either one is true, the argument is out. The first is M&As don't actually significantly reduce, or this debate isn't about that, so the impact is minimal. The second way is large companies are just not good, so we're fine even if M&A goes down. |
Method one: the vast majority of mergers outside of all the reasons that has already given why they're not relevant in this round that happen are small-scale mergers. Increasingly, if you read reports from places like The Economist or companies like Bank of America, you realize that most mergers currently engaged right now across the world, including Europe, are small hat mergers. |
Because why? One, you tend to be able to increase your deal flow more, and two, often they're easier to negotiate within a shorter amount of time. Because often, guess what? Mergers and acquisitions are really negotiation-heavy and costly, because often companies can't agree on the same price. Third, they often require lower costs in general. |
What this means is that it's just empirically untrue that the majority of mergers right now are large. Often, they get so large to the point where you have these concerns in the very first place. This isn't a nice way, and like because OG CL, the M&A goes down. |
Oh, to Pro, our CL is the scale that isn't nearly as large as the either team wants to say. Also, case not applicable, all my friends. But no, no, no, let's take the case of their very best. This is not about whether it actually goes down, but a perception problem. |
So there's the fear from investors of uncertainty, but the large companies that tend to be implicated in anti-competitive mergers—think companies like Walmart, like Google, like Meta—are companies that are probably quite lucrative investments regardless. This is Google already having weights in Gemini. |
This is Microsoft rolling up the Microsoft Go pilot program to increase coding efficiency. These are companies with long track records and relatively high levels of performance. So at best, I think the impact is very, very minimal on their side. |
The second thing, the second way argument is that large companies, especially tech companies, are terrible as our case because, um, all the places, things like economies of scale are good; they're able to have upfront investments, and they can borrow at lower rates. |
So like, OO says these words, CO says it slightly fancier terms. Like, I don't know to what extent you want to credit the two sides; it doesn't really affect our argument. So we don't disagree with the fact that obviously there are some benefits that come from having a larger company. |
Our argument is comparative. This is why we don't care as much about those benefits as the part that actually harms. So even if we believe everything that CO says about how, and also OO about how economies of scale happen, like with terms of upfront capital and fixed capital—which, by the way, isn't a really good explanation of the case either—we argue the end outcome and benefit for people is small. |
So clearly, there are some benefits and power, but the importance of this is intensified harms with a group of people versus very diffused and speculative benefits that CG uniquely foresees. |
So yes, 30,000 people in China will die in cancer villages and live out because the Apple factories have dumped toxic chemical waste there for years and decades. So maybe the 1 million iPhone buyers every year can save five bucks each or have a slightly clearer camera. |
The reason why we care about the former group of people who face intensified harms so much is for three reasons. One, there is a greater degree of harm per person. This matters more because it substantially affects their lives more. This is their health and life or death, whereas for the other person, it's inconvenient. You can't buy, I don't know, an extra burger for lunch or something, and I don't really care about the second group. |
No, but also, second, those who are often intensely harmed face other disadvantages in their lives, which means it's hard for them to voice out their concerns. So, for example, if you live in a cancer village or if you live in really poor places, you don't have the ability to voice out; you don't have the ability to try to push for change. |
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