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Llewellyn King: The case against mega-mergers is written in U.S. history

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A judge has green-lighted the $85 billion merger of Time Warner and AT&T. Unless the Trump administration appeals and wins on appeal, another behemoth will take the field.

This merger, it is assumed, will lead to a flurry of other mergers in communications. Witness Comcast’s $65 billion bid for Fox, topping Disney’s $52.4 billion offer.

This is heady stuff. The money on the table is enormous, in some cases dwarfing the economies of small countries.

Merging is an industry unto itself. A lot of people get very rich: They are investment bankers, arbitragers, lawyers, economists, accountants, publicists and opinion researchers. When really big money moves, some of it falls off the table into the willing hands of those who have managed the movement.

The fate of the real owners of these companies, the stockholders, is more doubtful after the initial run-up. The earlier merger of Time with Warner Communications is considered to have been disadvantageous for stockholders.

Another concern is the mediocre performance of conglomerates. The latest to have run into trouble is General Electric, which had managed to do well in many businesses until recently.

A more cautionary story is what happened to Westinghouse when it went whole hog into broadcasting and lost its footing in the electric generation businesses. This was spun off, sold to British Nuclear Fuels in 1997, then sold again to Toshiba and later went into bankruptcy.

From the 1950s, Westinghouse it bought and sold companies at a furious rate, until the core company itself was sold in favor of broadcasting. One of Westinghouse’s most successful chairmen, Bob Kirby, told me it was easier for him to buy or sell a company than to make a small internal decision.

In another pure financial play, a group of hedge funds bought Toys R Us and with the added debt, it failed.

In many things, big is essential in today’s economy. News organizations need substantial financial strength to be able to do the job. Witness the cost of covering the Quebec and Singapore summits. As Westinghouse proved by default, big construction needs big resources. That is indisputable.

When growth through acquisition becomes the modus operandi of a company, something has gone very wrong. The losers are the public and the customers. The new AT&T, if it comes about, will still need you and I to lift the receiver, watch its videos and subscribe to its bundles.

Recently, I was discussing the problems customers have with behemoth corporations on SiriusXM Radio's "The Morning Briefing with Tim Farley" when a listener tweeted that I hated big companies and their CEOs and loved big government.

Actually, I’d just spent a week with the CEOs of several companies, admirable people, and I don’t think government should be any bigger than needs be. I certainly don’t think government should perform functions that can be better performed in the private sector.

The problem is size itself.

When any organization gets too big, it begins to get muscle-bound, self-regarding. Although it might’ve been built on daring innovation, as many firms have been, supersized companies have difficulty in allowing new thinking, reacting nimbly and adopting innovative technologies and materials.

If large corporate entities were as nimble as small ones, the automobile companies would’ve become the airplane manufacturers in the 1920s and 1930s. They had the money, the manufacturing know-how and the engineering talent. They lacked the vision. It was easier to be rent-takers in the production and sale of automobiles.

Likewise, it’s incredible that FedEx was able to conquer the delivery business when another delivery system, Western Union, was up and running. But Western Union was big, smug and monopolistic. They had the resources and an army of staff delivering telegrams.

Companies like Alphabet (Google’s owner) snap up start-ups as soon as they are proven. That snuffs out the creativity early, even if it wasn’t meant to, and makes Google even more dominant. I would argue too big for its own good -- and for ours.

Llewellyn King (llewellynking1@gmail.com) is executive producer and host of White House Chronicle, on PBS.  He is based in Rhode Island and Washington, D.C.

The epicenter of merger mania -- Wall Street, with the New York Stock Exchange draped with the flag.

The epicenter of merger mania -- Wall Street, with the New York Stock Exchange draped with the flag.

 

 

 

Past time to confront the digital duopolists

 

 

 

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Adapted from Robert Whitcomb's "Digital Diary,'' in GoLocal24.com:

What to do reduce the corrosive power of the rapacious and unregulated duopoly of Facebook and Google?

One of the worst of their effects is that by gobbling up most of the digital advertising revenue in the United States they are destroying many local news organizations, whose work is essential in providing oversight of public and private institutions. Their demise is a green light for corruption.

David Chavern, CEO of the News Media Alliance, which represents about 2,000 newspapers in the U.S. and Canada, in a Feb. 26 Wall Street Journal article (“Protect the News From Google and Facebook’’), touted one way to start rectifying this situation: a bill in Congress sponsored by Rhode Island Congressman David Cicilline. The measure would reform antitrust laws to let newspapers and other news media collectively withhold their products from the duopolists at Facebook and Google to pressure them to give those smaller media an adequate return on their investment so that they can employ enough journalists to adequately cover the news.

Why oh why are antitrust laws applied to little publications and not to the gigantic Google and Facebook? Those two empires are in restraint of trade just as much as was the Standard Oil Trust at the end of the last century.

I’m mostly talking about local media; the big national ones, such as The Wall Street Journal, The Washington Post and The New York Times, will be okay.

Llewellyn King: Notebook --The new publishing giants; failing upwards; U.S. gastronomic capital?

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When A.J. Liebling said that freedom of the press meant freedom for those who owned the presses, he spoke in a time when there were nearly 2,000 daily newspapers in the United States. Today there are fewer, and they depend on more than presses to stay in business. They depend on the indulgence of Google, Facebook and Twitter.

Freedom of the press now depends on those few companies that own the algorithms on which all publishers depend to get a wider range of readers, even while making no money off them.

The newsboys and newsgirls of yesterday delivered the papers. That is all. The news deliverers of today control the whole publishing world. They can determine success or failure and, as we are seeing, have the power to censor.

William Horsley, a retired BBC correspondent who is involved with media studies at the University of Sheffield and is vice president of the Association of European Journalists, says that the newsboys are now the publishers.

In the billions of words that have been spouted about freedom of the press here and around the globe, Horsley has identified a new and terrible reality about the freedom of the press and along with it, the freedom of ideas.

Quite simply, we now live in an era in which an algorithm buried somewhere in the secret depths of Google can do more to change what we know, think and say than any dictator has been able to achieve.

While the creators of Google, Facebook and Twitter probably did not dream of such power, such control, such hegemony, it has come to them.

The mind reels with possibilities, each more disturbing than the previous, of what would happen if any of the Internet giants fell into the hands of malicious owners or a dictator. Think of the damage if Steve Bannon, who presides over Breitbart, or some like ideologue, were at the helm of Google, Facebook or Twitter.

George Orwell, at his most pessimistic, could not have imagined the existential evil that could await us, courtesy of technology, plus a sociopath.

 

Dumb Luck, Sir. Dumb Luck.

 

A professor at Brown University congratulates me on my life choices. He implies that my peripatetic journey through the world, clutching a press card, has been because of sound choices. To which I have to respond, “My life has been one of dumb luck and failure.”

Luck, I say, because it is what determines your being at the right place at the right time. Failure, I say, because it is possible to fail upwards: I have, often.

Had my career been on an even keel, I would have finished high school, maybe gone to university and then gotten stuck in one of the early jobs, making it my “career.” As it is, I dropped out of high school, went into journalism and failed a lot.

If I had kept any of those jobs I failed at, I might have had a duller life: a jobbing writer in Africa, a news writer at ITN in London, the creator of America's first women's liberation magazine (which failed to liberate any women, but liberated all my money) in New York, an assistant editor at The Washington Post, and a trade journal reporter at McGraw-Hill.

So, Mr. Professor, I recommend that you prepare students for the success of failing upwards. Sometimes that goes for relationships and marriages. Do not bivouac too early on life’s open road.

 

The Gastronomic Capital of the U.S.: Is it Rhode Island?

In France, it is pretty well agreed, the area around Lyon is the gastronomic capital.

In the United States, New Orleans is mentioned. Well I have eaten many a meal in New Orleans, especially during a time when I was making a lot of speeches at conventions in New Orleans. But I have to say that good food rolls in Rhode Island. So much so that smart visitors come to Li'l Rhody on gastronomic tours, including friends of mine, who, like myself, have eaten the world over.

Now there are a few quibbles, to be sure. One big one is that there are woefully few French restaurants in the state, and the Italian influence in the restaurants is pervasive. Also I think that there could be more top-of-the line and regional Chinese restaurants, although a Uighur restaurant has just opened in Providence. Other Asian cuisines -- Korean, Indian, Thai and Japanese -- are well represented.

Still, the eating in the Ocean State leaves New Orleans with a way to go in my book.

{Editor’s Note: Rhode Island does have a few good French restaurants,  such as Chez Pascal, on Hope Street in Providence.}

Llewellyn King (llewellynking1@gmail.com) is executive producer and host of White House Chronicle, on PBS.

 

 

On NPR: ISIS.... and Google?

  This interview includes the idiotic assertion that the same sort of people who want to do a Silicon Valley startup are the same sort of people who want to join .

The people who want to join the latter include large numbers of psychopaths who look forward to killing, raping and destroying, using the excuse of 7th Century Arab tribal barbarism. The folks who have founded the likes of Google are creators.

Let them take responsibility

 

By ROBERT WHITCOMB

 

In the appendix of Philip K. Howard's mordantly entertaining new book, The Rule of Nobody: Saving America From Dead Laws and Broken Government, is a well-named collection of proposed new amendments to the U.S. Constitution that he calls the “Bill of Responsibilities.”I over-summarize them here; read the book. Mr. Howard is an engaging writer, using stories (some grimly funny) to get across his strong prescriptions.

Mr. Howard proposes amendments to: “sunset” old laws and regulations; give the president power to far more effectively manage the executive branch — including line-item vetoes and expanded discretion to hire and fire and reorganize operations, all subject to being overridden by a majority of each house of Congress — and widen judges’ power to dismiss unreasonable lawsuits.

Finally, he recommends an amendment to create a “Council of Citizens” as an advisory body to make recommendations on how to make government more responsive to the public’s needs. This reminds me of the Hoover commissions on government reorganization of the late 1940s and the ’50s, named after Herbert Hoover, who chaired them. The composition of this council would be very federalist, with members chosen “by and from a Nominating Council composed of two nominees by each governor of a state.” The idea is to push along the ideas represented by the other new amendments. This is intriguing but the nomination process could get caught in political sludge.

The phrase “Bill of Responsibilities” gets to the heart of what Mr. Howard is saying throughout his book: that we have become so tangled up in laws and regulations that it’s often impossible to exercise authority and take responsibility — the avoidance of which, I would add, is attractive to many people, just as long as they continue to have the perks of their positions. As a result, it’s tougher and tougher to get things done, at the local, state and federal levels, whether it is fixing a bridge, creating a health-care system whose benefits are commensurate with its vast cost, or firing an incompetent bureaucrat.

Admiral Chester Nimitz said during World War II, “When in command, command.” President Truman said of the prospect of Dwight Eisenhower as president: “He’ll sit here, and he’ll say ‘Do this! Do that!’ And nothing will happen. Poor Ike. It won’t be a bit like the Army. He’ll find it very frustrating.” Well, Eisenhower turned out to be a pretty effective president but Truman was fairly accurate: It has always been hard to make government work, and in many ways it’s harder now than 60 years ago because of the accretion of laws and regulations, many of which should have been eliminated or streamlined long ago. A law or a regulation cannot cover every eventuality, Mr. Howard writes: You need judgment and common sense. Fewer laws and more decisions, please!

The problems that Philip Howard tackles remind me of the growing dominance of process over content (or maybe call it substance). You see this in daily life with the increasing time demanded to keep up with endlessly updated computer programs (planned obsolescence!), and the hours needed to fill out tax returns and insurance forms.

Meanwhile, the European Court of Justice has issued an advisory judgment that European Union residents have the right in certain circumstances to make search engines remove links to personal information that people think damages them. It’s “the right to be forgotten,” a cousin of Americans’ famous, if informal, “right to be left alone.”

This will be very difficult to enforce, given the vast complexity of the Web. But I like the idea of taking down the arrogance of Google, et al., a few notches. You don’t have to be much of a “public figure” to be the object of scurrilous inaccurate attacks on the Internet for which the likes of Google wrongly take no responsibility. In the Digital Age your good name can be instantly destroyed on the screen.

The court supported exceptions for “public figures,” especially politicians. But that’s very tricky: Almost anyone can become a “public figure” on the Internet. And is it fair to exclude politicians, etc., from such protection from attacks? Whatever, the European case at least raises the issue of responsibility for content, which the search-engine companies, most notably Google, have tended to avoid while raking in billions of dollars.

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A college “commencement” is a strange term because it seems much more of an ending, as emphasized by the dirge-like “Pomp and Circumstance.” Sadder is that so many colleges, supposedly refuges of the free exchange of ideas, surrender to demands for censorship by “activists” to block commencement speeches by people (usually with comparatively “conservative” views) whose opinions they don’t like. Cowardly college chiefs fail to take responsibility for protecting one of their central missions -- free and open discussion.

Robert Whitcomb (rwhitcomb51@gmail.com)  is an editor, writer,  fellow of the Pell Center for International Relations and Public Policy and a member of a management-consulting firm in the health-care sector.