xahrepap
Slightly tangential thought:My belief is: legislation
needs to either make it just as hard to merge two
companies as it is to unmerge them, or make it just as
easy to unmerge two companies as it is to merge them.It's
insane to me that for how often companies merge and cause
competition issues, we effectively never see the opposite
happen. I know there's a ceremonial approval for merging
two companies (at least in the US), but it's just
impossible to undo or prevent the damage.
|
> condiment
This point of view has more to do with your
information diet than it does with reality. Companies
un-merge and spin out all the time, for many reasons.
Mergers and acquisitions are more interesting because
they are often associated with a growth story. We like
success.Aswath Damodaran, who teaches corporate
finance at NYU Stern, has a bunch of great talks and
content about this where he discusses how companies
should act their age. When older companies that are no
longer paying dividends are moving into a divestiture
phase, they restructure and split up. What we are
seeing with some of these big tech companies is that
they are transitioning from an exciting growth story
into an extractive dividend story in a way that's
becoming harmful to consumers. That's why we're
talking about breaking them up, and thats the line
their management will have to walk if they want to
maximize the value of the firm to shareholders through
the decline.
|
> > majormajor
This is true, I'd go much further than the OP here
and say the barrier for merger should be MUCH
higher than the barrier for spin-out or
split.There's no shortage of obvious problems that
can arise from concentration of influence and
control over a market. So just try to prevent it.
Trade some max efficiency for redundancy +
anti-corruption/pro-competition/pro-consumer
market forces.
|
> > > londons_explore
The real benefit of a merged company is that
where the two original companies were
competing in the same market, it would be
illegal for them to collude to set the same
prices as eachother.However, when merged, they
can do exactly that - which allows them to
extract more profits.Rather than denying
mergers, I suggest merged companies have an
extra sales tax for ever on all goods they
sell where they used to be competing - with
the size of that tax set by the regulator to
estimate the benefit they get.
|
> > > > Panzer04
Merged companies are more able to compete.
Combining duplicate corporate structures
let them save on costs, etc.It's not a
strictly bad thing - iirc spirit?
Airlines? Wanted to merge with someone,
got denied, and went bankrupt anyway,
depriving people of any competition at
all.
|
> > > > > ungreased0675
Not exactly. Competitors like Breeze
and Allegiant filled in some prior
Spirit routes. Those are better budget
airlines.Poorly run companies are
supposed to go bankrupt, that's the
feedback loop keeping management in
check.
|
> > > > > > saturn8601
Companies that have massive
startup costs (Automakers,
Airlines) are harder to replace.
This is a failure of the system we
are in. Seems like the free market
cannot properly evaluate value
when all the cash is going into
nonsense like Bitcoin, NFT and now
a lot of the AI.Allegiant is an
old Airline that has had a lot of
problems. Breeze is new but both
are starting super small and are
not planning to really cover
Spirits extended network anytime
soon. The result of Spirit dying
is alot of that prior investment
in second tier cities/airports is
just gone for the forseeable
future. The potential value that
could have generated will now not
come to pass.>Poorly run companies
are supposed to go bankrupt,
that's the feedback loop keeping
management in check.The problem
that is occuring in my opinion is
that Spirit is a symptom of a
greater problem. The "K shaped"
economy is not only segregating
groups of people into haves and
have nots, its extending into
regions of the country. Losing
major airlines access is the
precursor to entire regions
declining, and ultimately dying
completly. If the AI robot world
comes to fruition maybe many
humans just have no economic value
at all.
|
> > > > > saturn8601
To be fair, Spirit suffered from
multiple reasons and a merger with
Frontier may have just delayed the
inevitable.Note: I was very
emotionally invested in Spirit because
they made possible many fascinating
trips that wouldn't have happened so
my take may be biased. I can only
think of a handful of companies that
clearly positively impacted my life
and Spirit was one of them.1. Post
COVID, the structural costs went up:
pilots, flight attendants, suppliers
demanded more money. Spirit paid
decently well, had decent benefits
from what I heard. When you are
Spirit...to attract good people you
gotta pay. It really showed in their
operations, they had 0 crashes during
their 34 years and had notable
excellence in their maintenace
operations. People thought they flew
rickety junk planes. The reality was
that they had a stellar run.2. Pratt &
Whitney GTF issues: Spirit actually
had quite a young Airbus only fleet.
Great for lowering costs through
fuel/maintenance savings, customers
enjoy the newest best planes...the
downside is that if a major issue
comes out, it could spread across the
entire fleet. Thats exatly what
happened: They leased brand new planes
and then a serious engine issue
occured that forced grounding of many
new planes for 1+years....while they
are still paying the leases on those
planes.3. The bigger competitors are
really just credit card companies that
fly planes as a hobby on the side.
That gave them the financial ability
to siphon off customers by introducing
a barebones tier. Spirit customers
aren't really the type to play the
credit card points game so they
couldn't copy what the big guys do and
despite travel increasing after COVID,
people decided to pay a bit more to
not have the barebones experience.4.
Spirit was in the process of revamping
their entire offering to better
compete. More simple tiers with things
baked in and less extreme
customization that they used to offer.
Makes sense: 9$ fares were gone for
good so maybe they could compete as a
solid basic tier. They did not move
fast enough to turn things around. Its
a bummer because it looks like they
had an interesting plan after the
second bankruptcy but we never got to
see it fully play out.5. The final
nail in the coffin: The Iran war took
out any remaining breathing room. They
were just coming out of their second
bankruptcy. I personally feel they had
a viable plan to try and turn things
around but the Trump admin just let
them die without really trying. From
my understanding(and I could be wrong)
Trump pulled some nonsense where he
wanted like 90% of the airline for
peanuts, they would support ICE
transport operations etc. The owners
of the debt obviously said no and that
was the end of that. Great job losing
17k employees their livelihood. Since
this is a tenure based industry, many
end up starting from scratch at
another airline. A emergency merger or
something would have had better
consequences for the employees. Will
be interesting to see how this affects
the midterms since Spirit was based in
Dania Beach, FL (Miami area)The idea
behind a Frontier + Spirit merger
makes sense. The airlines combining
together can cover a greater network,
Spirit was getting rid of its poor
leases through bankruptcy and maybe
they could have been a major airline
in the low end. The argument against
is that Frontier is not doing too well
either so should you really combine
bad + bad?
|
> > > > spwa4
The whole problem of monopolies is that
they can set the monopoly tax as high as
they want. There is no real upper limit.
What you suggest will1) make monopolies
legal2) set a floor for the monopoly tax
(whilst excessive company profits are bad,
obviously companies MUST make a profit,
and hence whatever this governor sets as
extra tax must be added to the costs for
customers. Profit = good (even if you are
a communist), only excessive profits or
profiteering are bad. Otherwise, after a
short while, no more company, no more
goods, no more service. No exceptions, not
even under different systems. Or in other
words: communist companies must make
profits too, and just ask some older
Russians, even if that means making a
profit at the expense of employees)This
seems to me like it would be by far the
worst of all worlds. This would mean lots
of monopolies, with the specific purpose
of making life more expensive.
|
> > > mastermage
100% we do not need one company that makes
everything hi there Samsung.
|
> > > > kelvinjps10
The other day I was looking up Samsung and
they make everything in south Corea, even
boats and all kinda of stuff
|
> > > > mschuster91
Conglomerates may not be as nimble and
agile as single-focus companies, but they
are uniquely more resilient to economic
shock events, and branches being
"unprofitable" for a time can be supported
by others.Unfortunately, MBA
beancounter/neoliberal extremism aka
"throw out everything not the core
business" has become the norm... and so,
with Covid, Ukraine and Trump's tariff and
Iran wars, we got a ton of "single focus"
companies that are struggling hard, and
with everything deemed "not the core
business" including internal IT, cleaning
etc. sourced out, many a corporation has
become internally enshittified.
|
> > > > > airstrike
Conglomerates aren't a strictly
optimal form of organization. They are
more resilient, but they are also
massively bureaucratic and can lose
their focus. They may also be able to
exert a disproportionate amount of
leverage on vendors and suppliers.I'm
not saying infinitely asset-light
companies are strictly superior
either.I'm saying there's no silver
bullet or free lunch here.If you look
at it from one layer above, capital
markets that enable the continuous
recycling of corporate structures into
smaller or larger as needed are more
resilient than those in which company
structures are ossified.Of course not
every deal is for the better. But no
M&A isn't good either. Speaking as a
former Wall St M&A banker.
|
> > > fpoling
A progressive tax on the size of the company
can do this.
|
> > > > Nasrudith
And to what end does discouraging scaling
in an industrial economy serve?
Corporations don't grow huge for the fun
of it.
|
> > > > > fpoling
After certain size benefits of
hyperscale do not compensate for the
harm done to society.
|
> > > > briandear
Don't we have enough taxes? Taxes should
fund government not be used to force
people to do things.
|
> > > > > Arkhaine_kupo
> Don't we have enough
taxes?Objectively no. For example
carbon taxes or other environmental
taxes have been proposed by free
market advocates since the 70s and
never been implemented (from the left
you see advocacy for environmentalism
but not related to taxation)Also if we
had enough taxes, the wealth
inequality would not be ramping up to
great depression levels and basic
necessities like healthcare and
housing would not be catastrophically
related to bankruptcies in america.If
you are a worker, specially one in the
upper middle class range of salaries,
then yes. You are being over taxed.
But that is simply because those below
you have nothing to contribute and the
system refuses to tax those above you
appropriately. You are a local maximum
in a system that is not globally
efficient, so you have too much tax,
the country doesnt
|
> > > > > > heavenlyblue
How's carbon credits not a tax?
|
> > > > > master-lincoln
> Taxes should fund government not be
used to force people to do
things.Others think differently:
https://en.wikipedia.org/wiki/Steering
_tax
|
> > > > > bandofthehawk
Considering our massive yearly
deficits we definitely do not tax
enough.
|
> > > > > apercu
Taxes are disproportionately applied.
We have more than enough taxes on
working people and not enough on the
wealthiest classes.
|
> > > > > > tovej
It's crazy to get downvotes for
this matter of fact, good faith,
truthful comment.What's going on,
HN?
|
> > > > > > opo
Vague assertions with no evidence
don't really help the discussion.
If someone is going to assert such
a strong claim like "We have more
than enough taxes on working
people and not enough on the
wealthiest classes.", they really
need to at least define what they
mean by "working people" and
"wealthiest classes" and then give
some evidence to show that "taxes
are disproportionately applied"
between these groups. (You say it
was a "truthful comment" but how
can you even be sure you are
interpeting the comment the way
the original poster meant?)(In
general, whether people agree or
disagree with an assertion I would
hope they wouldn't downvote
something as long as the person
contributes enough to the
discussion that the reader can
understand what they are asserting
and can check for themselves if
the evidence they give supports or
doesn't support the assertion.)
|
> > > > > > tovej
It's not vague at all.Wealth
inequality in the US is so bad
that the statement is true with
pretty much any reasonable
interpretation.The top quantiles
of the population (10%, 1%, 0.1%,
billionaires) are paying less
taxes than they should in a fair
system; and that statement becomes
increasingly illustrative of the
situation the smaller and richer
the quantile you choose is.The
fact that wealth inequality is
_accellerating_ should be enough
to tell you that the taxation
system is unfair towards the
poorer end.
|
> > NuclearPM
> This point of view has more to do with your
information diet than it does with reality.
Companies un-merge and spin out all the time, for
many reasons.That's condescending and wrong.
Mergers and acquisitions are hundreds of times
more common than spinoffs.
|
> > tehlike
I would say google is still in its growth phase,
albeit a slower one. Especially with capex
spending etc.
|
> > > als0
Google is the new IBM. All the signs are
there.
|
> > > > jojobas
IBM is more than 100 years old, has
defined a huge part of how we think about
computers, made plenty of its employees
and workers of the wider field rich, has
sold many businesses it considered
distracting, and is still worth $200B+.
Anyone saying "IBM" in the sense of
"stagnant failure" is delusional.
|
> > > > > tucnak
Not to mention they are still at the
forefront of materials science and
industrial design, and just so happen
to manufacture bespoke CPU & server
platforms that run circles around all
the hyperscalers...
|
> > > > > > bigfatkitten
Though of late, IBM has apparently
decided it should be just another
Indian outsourcer.
|
> > > > > > tucnak
Google will do the same
eventually.
|
> > > > > tehlike
I don't think this is what I respoded
to. We cannot deny IBMs contribution,
just like we can't deny google's.But
where they are in their life as a
company is a different question. IBM
is beyond growth phase. May even be on
the decline phase.My point is Google
is still in its growth phase, still
inventing, growing, etc.
|
> > lotsofpulp
>What we are seeing with some of these big tech
companies is that they are transitioning from an
exciting growth story into an extractive dividend
story in a way that's becoming harmful to
consumers.Alphabet is rolling out autonomous
driving vehicles in many cities around the USA,
potentially getting rid of the need to drive a car
in 90% of today's use cases.How is this not still
an exciting growth story? My kids might never need
to drive a vehicle, even though we live in a car
dependent suburb.
|
> > > fsh
Some cute tech projects do not justify a
massive monopoly. Google is financing Waymo
using the ~300 billion dollar it extracts
annually from consumers via ad spending. I
would rather pay substantially less on
anything I buy, and have the free market sort
out self-driving cars.
|
> > > > lotsofpulp
A product/service that can drastically
reduce the top cause of injury and death,
as well as give safe mobility to so many
who do not currently have it is not a
"cute tech project".>I would rather pay
substantially less on anything I buy, and
have the free market sort out self-driving
cars.Alphabet's entire revenue divided by
the total amount of goods and services
sold is miniscule, so I don't see how it
could be mathematically possible to pay
substantially less on anything you
buy.>and have the free market sort out
self-driving cars.This is the free market
sorting out self-driving cars.
|
> > > > > fsh
Google is one of many monopolies that
are collectively bleeding society dry.
Of course, the others should be broken
up as well.Waymo is currently financed
by a monopolist and has negligible
revenue itself, so it is not part of
the free market.
|
> > > > > franga2000
Self-driving cars are an absurdly
inefficient way to reduce traffic
deaths that exists only because it
makes substantially more money for
shareholders than the alternatives.
You are being witheld a good and cheap
solution now for the promise of a
worse and expensive solution some time
in the future. All the while people
keep dying.Oh, and what's this "those
who don't have it" bullshit? If
anything, turning driving into a
subscription service will mean
mobility becomes harder for many
people, as dirt-cheap used cars slowly
stop being available. As for people
who can't drive for whatever reason,
they already have taxi apps. And don't
think for a second that self-driving
taxis will be cheaper in the long term
than regular ones, only the margins
will go up.
|
> > > > > > lotsofpulp
I prefer to live in reality, where
American suburbs are nowhere near
dense enough for public transport
to pencil out, plus there is no
political will from the voters for
it. No one is tearing up existing
roads and replatting all the
detached single family homes to
more dense housing.Waymo is a real
solution to reducing injuries from
distracted and drunk drivers, as
well as reducing insurance costs.
Obviously, if Waymo is the only
game in town, then prices will be
high but hopefully there will be
competition. Owning a car 24/7
along with space to store it and
insure it is not necessarily
always cheaper than renting it per
trip.A robotic car can be utilized
for far more hours per day
amortizing its costs over far more
trips making each trip cost less.
Which, if there is competition,
should result in lower prices.
|
> > > > > > keybored
> I prefer to live in reality,
where American suburbs are nowhere
near dense enough for public
transport to pencil out, plus
there is no political will from
the voters for it. No one is
tearing up existing roads and
replatting all the detached single
family homes to more dense
housing.Car Country was designed
by the US car lobby. Political
will of the voters? Oh yeah sure,
now a century into it that's also
not palatable for home owners and
the like.
|
> > > > > > lelanthran
> Oh, and what's this "those who
don't have it" bullshit? If
anything, turning driving into a
subscription service will mean
mobility becomes harder for many
people, as dirt-cheap used cars
slowly stop being available.Too
many people are in the "You Will
Own Nothing And You Will Be Happy"
camp.Apparently the thought of
lifelong indenture is a plus to
these people :-/
|
> > > > > > inglor_cz
* a good and cheap solution *You
mean public transport? I live in a
country with one of the best
public transport systems in the
world. I enjoy it, but please
don't fool yourself into thinking
that it is cheap. It is not, very
much NOT. All the big Czech cities
spend between 25 and 35 per cent
of their municipal budgets on
public transport, and those are
mostly already mature systems
where the most expensive work like
laying track is already amortized.
New trams and buses, repairs,
drivers wages, electricity,
nothing is cheap nowadays.Sure, an
American city can decide to build
a new tram or subway system from
scratch, but don't promise anyone
that it is going to be cheap. It
won't, doubly so if the mayors
stipulate high wages for the
workers, like NYC does.And even
the best public transport system
fails at the peripheries, where
density of the population drops
under a limit of viability. Then
you have two buses a day even here
in CZ.
|
> > > > > > franga2000
Compared to every person owning
their own car, but now it has a
bunch of extra sensors and a cloud
subscription? And the city still
needs to build and maintain the
roads.Or a bunch of robotaxis,
which reduce the up-front cost and
amount of parking needed, but the
operational and infrastructure
costs remain.
|
> > > ungreased0675
I am not excited about my transportation
becoming a subscription service, likely
through regulatory capture. It will almost
certainly mean less freedom of choice for me.
|
> > > > lotsofpulp
I am a fan of kids being able to roam
freely because we don't have to worry
about people in their huge pickup trucks
and SUVs looking down at their phone
mowing down people and not even
noticing.It will certainly mean more
freedom for those who don't want or can't
use a giant vehicle to move around.I trust
automated vehicles with cameras and LIDAR
to do a much better job of avoiding
collisions.
|
> > > eldaisfish
what i personally find most insightful about
this website is how the techbro culture will
do anything except consider the needs of the
many. why bother with good transit when we can
automate cars? why bother with copyright when
we can just steal content at a scale that few
can comprehend.
|
> > > > lotsofpulp
The "needs", or rather revealed
preferences of many, is to live in
detached single family homes on minimum
3,000 sq ft lots, with space for personal
car storage.There is no way public transit
works in that kind of non dense living
arrangement.Do you have data to show
Americans want to live in Manhattan/Tokyo
style or even European style 4 story
apartment/shared wall buildings?Population
trends in the US show me the suburbs are
far more popular, at least among those who
end up having children.
|
> > > > > eldaisfish
You are not a transport planner and it
shows.People in the US don't magically
"want" giant pickup trucks and
pedestrian killing SUVs. They want
cheap and practical vehicles, neither
of which are available in large
quantities. Notice how the advertising
for pickups works? Straight, white,
rural men in jeans telling you how
your expensive pickup can drive off
road? And then you read the manual and
warranty where that exact usage is
either forbidden or discouraged.Same
with the suburbs. Those we designed
and pushed by the car lobby and the US
made it illegal or very unprofitable
to build any alternativesWhere is your
data showing that people "prefer"
this?
|
> > > > > > lotsofpulp
My data is the far lower prices
for equivalent sized townhouses
(homes that share walls) compared
to detached single family houses,
the increasing volumes of larger
vehicles sold over smaller
vehicles, and higher proportions
of children in suburban areas
compared to urban areas.People
like space, people like choosing
who to share space with, and
people like feeling more powerful
(sitting higher up in bigger
vehicles).In my area, Zillow shows
sold home prices for comparable
townhomes vs detached SFH at
roughly 30% lower price per square
foot. People are willing to pay a
couple hundred thousand dollars to
not share walls.>Those we designed
and pushed by the car lobby and
the US made it illegal or very
unprofitable to build any
alternativesThe US (federal
government) didn't make it illegal
or unprofitable to build more
dense housing.Local city and
county level voters made it
illegal and unprofitable, because
more dense housing means poorer
people, and poorer people means
schools with kids who have poorer
parents, which typically means a
peer group that may not perform as
well.
|
> vlovich123
You're basically advocating for unscrambling the
omelet to be easier. Should be obvious why it's harder
to unmix than it is to mix.
|
> > yndoendo
Splitting a large company is already done to shed
and transfer liabilities. Divisional Merger Tactic
/ Texas Two Step. [0] [1] Keep the yoke and drop
the albumen with time and patience.[0]
https://batesonlaw.com/divisional-merger-tactic-ho
w-liabilit...[1]
https://www.creditandcollectionnews.com/u-s-suprem
e-court-de...
|
> > ryandrake
You can bet that if the board of directors could
show that unscrambling the omelet would result in
greater shareholder value produced, it would
suddenly be really easy to do...
|
> > > qlte
Happened with Dow-Dupont! A three-way split,
even (from a two-way merger). Took roughly two
years and was the shareholders' plan from the
start. By most accounts it went very
smoothly.[1]
https://www.investors.dupont.com/news-and-medi
a/press-releas...[2]
http://www.dow-dupont.com/
|
> > > > schmidtleonard
Progressive corporate taxation could make
it happen for reasons other than dodging
the ghosts of chemical sins past!
|
> > > > > ethbr1
It is a key point... if splits are
encouraged and made easier (and I
agree it'd be healthier for the market
if the largest companies did), then
liability needs to be handled
carefully.One doesn't want to create a
'snake sheds its skin' scenario where
Meta (for example), stuffs all its
liability in a spin-off, yet keeps the
profits those actions accrued in the
other entity.
|
> > > > > briandear
Can we stop with taxing everything you
don't like? Taxes should be equal and
used to fund the government, not as
tools to make people do things you
like.
|
> > > > > > psd1
I question the assumption that
taxes you don't like will not fund
the government"Should" needs some
unpacking; there's a subjective
value lurking inside.Personally, i
prefer economic incentives over
coercion. My starting point: there
is a degree to which society must
govern entities within it.
|
> > > > > > softjobs
What type of taxes, state or
federal? Because federal taxes do
NOT fund federal
spending.https://mmt101.substack.c
om/p/an-explanation-of-why-taxes-d
o...
|
> > > > > > ericjmorey
Taxes used to offset the costs of
undesirable activity are the most
effective and efficient taxes, but
you want less of that?
|
> > > > > > schmidtleonard
Can we stop with pushing all of
the taxes into the work-consume
economy and out of the
invest-return economy? The latter
is eating the world, would it
really hurt it to help clean up
its own messes for once?
|
> > > teaearlgraycold
On a technical level it would still be a
nightmare. But yes it would actually get done.
|
> > > > NeutralWanted
My first tech job was at HP, in 2015,
started there just in time work and live
through that split. That was a smoother
one from what I hear but it was not a fun
job to have at the time
|
> > xahrepap
I'm advocating for controlling the damage. The way
I said it is cutesy, not literal.I intended it to
point out that it's too easy to merge companies
together but it's effectively impossible to stop
someone from becoming anticompetitive without a
real consequence.If we can't make it easier to rip
them apart then we shouldn't be so slap-happy
about approving them in the first place.
|
> > makeitdouble
Why skip this part ?> legislation needs to either
make it just as hard to merge two companies as it
is to unmerge them
|
> > > Arainach
Nothing was skipped - the point is that this
is directly analagous to unscrambling an
omelet. Separating mixed things is
significantly more difficult than mixing
them."The laws says X" doesn't change whether
X is possible or not.
|
> > > > edgyquant
It's quite literally not analogous as
breaking up companies has happened a bunch
but no one has ever unscrambled an omelet
|
> > > > > positr0n
fwiw I thought it was a good analogy.
Sure splitting a company is possible
and scrambling an omelette is not, but
it sure takes a lot more effort to
effectively undo entropy.In a merger
you can take as long as you want to go
from1. Two separate companies except
at the end of the quarter we add their
revenue and expenses together in a
spreadsheet to transition to2. One
fully integrated organizationAnd
usually you are becoming more
efficient and saving time and money as
you integrate.Splitting a company
needs to happen quickly or you'd get
all sorts of weird effects where
coworkers are ostensibly competitors
whilst sharing resources during the
transition. And you have to expend a
huge amount of effort. Just a couple
random complex systems that need to be
untangled off the top of my head:
physical property and leases, IP space
for every IT service you run,
multi-year contracts with every vendor
from janitorial to SaaS, multi year
contracts with customers depending on
how the split goes, and of course all
the intermingled finances and HR and
spreadsheets every company in the
world lives on. I'm sure there's
thousands more considerations.I agree
antitrust is a big problem that needs
to be solved. But "it should be the
same amount of effort to merge and
split a company" is just fantasy.
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> > > > saghm
Do you really think it's impossible to
pass legislation that makes something
that's currently easy hard without making
the reverse any harder as well?
|
> > > > > Arainach
Yes, because the difficulties in
separating integrated pieces have
nothing to do with a merger.What makes
splitting a company out difficult
isn't (directly) a financial or
paperwork burden - it's that tightly
integrated systems are very difficult
to untangle. There is nothing
analagous that could be introduced in
the merger process. You could add a
mandatory delay, but that's not making
it "as hard", it's just making it
slower.
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> > > > > > saghm
I don't understand why you think
the only possible ways to make
mergers harder need to be
"analogous". If they put a hard
cap on the size of companies
allowed to merge, that would make
it harder, without making it
harder to break them up. It's hard
to take seriously the idea that
you think there's literally no
possible legislation that could
end up changing the relative
difficulty in the way the parent
comment describes when I was able
to come up with an insanely
trivial example without needing to
think about it for more than a
couple minutes.
|
> > > > > > computably
The law could make mergers
executed provisionally for up to X
years, with a binding plan to
"unmerge" that must be updated
every Y months. The FTC already
half-does this with post-merge
divestiture requirements.
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> > > > > > Arainach
This still amounts to "don't mix"
which is far easier than unmixing
once it's happened.
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> > > > > > saghm
Yes, that's the point, making
something hard means that
sometimes it will not happen. Only
comparing to the cases where it
does happen is missing the entire
point.
|
> > patcon
Yes, this is obviously the ask: why doesn't
government unmix the omelet. Your very body
unscrambles the omelet and makes you. It's what
intelligent things do when they are moving agency
into the proper places.what is the purpose of
regulation except to resist entropy in such
strategic places?
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> > > schmidtleonard
Progressive corporate taxation would give the
market an incentive to do spinoffs and undo
the merger wave.Or we could just roll
antitrust policy back to what it was before
Ronald Reagan and Robert Bork installed the
Consumer Welfare Standard, the idea that
companies must be allowed to merge if they can
scribble a tall tale with crayons on butcher
paper about how the merger will benefit
consumers, for sure, pinky promise. This is
obviously mega-rigged, it comes from the
Robber Baron era, it was defeated before (look
up Louis Brandeis) and it can be defeated
again (look up Lina Khan). They didn't even
change the talking points (dontcha know, the
Standard Oil monopoly reduced the price of
Kerosene by 70%?!) -- time is a flat circle
when it comes to anti-trust policy. Let's spin
it back to the part of the circle where we
win.
|
> > > > pocksuppet
Progressive corporate taxation would lead
to every company splitting its revenue and
expenses across 50 shell companies,
without actually splitting operations.
|
> > > > > schmidtleonard
Not if the gaggle of shell companies
was difficult to invest into or had
enough rights to make it a strategic
threat. But sure, wave those
infomercial-hands some more and maybe
you'll convince me that I can't use a
screwdriver.
|
> > > > > psd1
...which is common today.I like
globalisation on its face. The
second-order effects are a bitch. I
don't want to go full protectionist,
bit we should swing the needle back a
bit.
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> > EA-3167
Undoing mistakes is usually difficult and costly,
but still worth doing on the road to not making
the mistake again. Grandfathering in the
subversion of the economy and our democracy is
worth fighting.
|
> > saghm
No, they're advocating for more scrutiny of
whether the omelet is going to be very bad for
everyone who isn't part of the omelet (yes, this
metaphor is weird, but I didn't introduce it)
|
> > otterley
That's one half. The other, more interesting half,
recognizes that unscrambling the egg is difficult,
so we must take more precautions before scrambling
it in the first place.
|
> > > Grombobulous
I've been saying that an easy solution is just
don't allow companies with even modestly large
overall sizes to merge or acquire other
companies. At all. For any reason.I think that
despite this reform being a blunt instrument
it would work surprisingly well.It would allow
companies that should have declined to decline
and it would give massive incumbents a major
incentive to innovate in-house.
|
> > account42
He's saying that if we can't unscramble the omelet
then we should make damned sure the omelet will be
healthy before allowing it to be scrambled.
|
> > romanows
I don't think it's particularly unusual for a
company to spin off another company?
|
> > UpsideDownRide
That is about as bad of an analogy as you can make
|
> > rectoverso
PE companies do it all the time.
|
> > > Arainach
PE companies do it with very little regard for
if any of the pieces are viable and survive
after the fact, so their model isn't one I'd
suggest following.
|
> > > > nradov
From a public policy perspective it
doesn't matter if some pieces are unviable
and fail to survive. Across the entire
economy, this creative destruction allows
for quickly reallocating resources to more
productive uses. Most of the companies
that take PE investments do so because
they're badly managed and unable to obtain
capital from other sources; they would
likely fail anyway. At least the PE
investment gives them a chance to survive
and brings in more financially disciplined
management.
|
> > > > > RetroTechie
There's many examples of companies who
were conducting a low growth,
long-term viable business. And where
then PE stepped in, ripped out the
most profitable part(s), and discarded
the less-profitable parts as a dead
husk.In the process, the public lost
the benefit that less-profitable part
provided. Besides ripping up a company
that was doing fine as-is.You call
that "reallocating resources to more
productive uses". Yes that may be
what's happening in some cases. But
not always.Less-profitable !=
non-beneficial to the public. At this
point I regard PE entities as
value-extraction machines. Which
sometimes, but rarely, work with the
public's benefit in mind.And let's not
get started on cases where PE secured
loans, sold off a company's assets,
only to lease them right back. Leaving
company deprived of their assets &
debt-laden, going under shortly after,
while PE firm runs off with the
goodies. Most people would think of
that as theft & destruction. But in
high-finance world it's named
differently & somehow legal.
|
> > > > saghm
Maybe if a large company is
anticompetitive and the parts would not
survive on their own, we should be letting
those pieces fail
|
> > > > eigen
its not unheard of for large public
companies to do spinoff. a few examples
that seem to have worked out fairly
wellPhillip Morris / Altria / Kraft /
MondelezHP / HPE / Agilent / Keysight
|
> > insane_dreamer
large corporations spin off divisions into
separate companies all the time
|
> > manvillej
Eh, thats a bit of a False analogy. spinning off a
division of a company is easier than fully
integrating another.
|
> Arainach
> or make it just as easy to unmerge two companies as
it is to merge them.[Disclaimer: I work at Google, all
words my own and not representative of anyone,
etc.]There's no such thing. Let's stick to software
since it's what HN knows best, but it's a universal
truth.Merging two companies: you take the two sides
and they keep running. You probably need some extra
accounting work to make sure the mandatory reports
from each side get combined, but that's all you have
to do.Splitting two companies: oof. If you split
ChildCo out of ParentCo:* You need to hire all the
roles that weren't part of that organization before
(HR, legal, compliance, etc.)* You need to register
this new entity in all the countries it operates
and/or has employees in* Technologically it's
somewhere between messy and impossible. Now you no
longer have Google's build stack or monorepo. You have
to rewrite everything. You can't just move some VMs to
a cloud provider of choice
|
> > rigrassm
I suspect a large majority of the issues you
brought up with splitting can be addressed by
legislation.Off the top of my head, something
along the lines of having a mandatory period of
time where the company being acquired must be kept
separate enough that the merger can be dissolved
in a timely manner should it be deemed necessary.
How long that window should be would be up for
debate but personally I'd argue the window should
scale somehow based on things like the valuations
of each company involved, headcounts, and maybe
even competitive landscape.An example would be
requiring both companies to perform a pre-merger
assessment to determine positions/roles,
technology use and regulatory requirements that
must be maintained for a clean separation and
creating a plan that gets filed with the relevant
agencies to be used if/when the merger needs
dissolving. If the time comes that they need to
dissolve the merger but they don't maintain that
separation, they still have to do it and you slap
a fine on them equal to some percentage of that
mergers cost to be paid by the parent
company.Hell, that idea alone would accomplish
both making it harder to merge and easier to
dissolve the merger.
|
> > > shimman
I think a better framing we should ask
ourselves is why is the onus on the government
to make sure a breakup is clean? Nothing in
the constitution guarantees the rights of
corporation.
|
> > > hammock
What can't be solved with legislation?
|
> > > > mullingitover
A malevolent electorate.
|
> > > > rigrassm
Lots of shit can't be solved by
legislation, what's your point?
|
> > xahrepap
I disagree with your premise that I shouldn't
express concern/opinions or point out problems
with things that affect me simply because I'm not
a trained expert in that thing.
|
> > > Arainach
"I think that the law should make this happen"
without any thought for whether what you're
proposing is possible or consistent with the
laws of the universe is lazy.This is similar
to people who think we should just legislate
secure encryption that has law enforcement
backdoors. It's not possible, and people
demanding it without an understanding of the
area they're trying to regulate is lazy and
insulting.
|
> > > > xahrepap
I think you should reread my post. My post
is making a very specific point that your
reaction tells me you get, but aren't
applying.Read it more like a poem and less
like a proposed bill.
|
> > > > > airstrike
It's not really useful to write poems
when proposing norms.
|
> > alex1138
I have less sympathy for Facebook/Meta. Zuckerberg
is on record as saying IG can hurt us. The
Whatsapp co-founder Acton saying "it's time.
delete Facebook". The fact Zuckerberg's engineers
were apparently specifically asked to merge the
backends to make them harder to break up. I have
very little sympathy for that specifically. I'm
not thrilled with a lot of the things Google has
done with (say) Youtube - people LOST THEIR
ACCOUNTS because of forcing the link to Google+ -
but I don't think it's in the same leagueChrome is
one of those nebulous areas. If they're dictating
web standards they deserve at least an antitrust
glance
|
> > otterley
> There's no such thing.Spinning off companies
happens all the time.
|
> > tavavex
But what are you trying to say about the greater
argument? The parent had two parts to it - make
merging as difficult as unmerging, or make
unmerging as easy as merging. While you're right
that the wiggle room for making unmerging a lot
easier is very constrained, this doesn't say
anything about the feasibility of the other part
of the 'or' and the actual argument they're
putting forward. Unless you're trying to
extrapolate this to saying that both these changes
are impossible, it just comes off as being
pedantic.
|
> > toast0
> Technologically it's somewhere between messy and
impossible. Now you no longer have Google's build
stack or monorepo. You have to rewrite everything.
You can't just move some VMs to a cloud provider
of choiceYou could give a copy to both successors.
Probably would want to excise some of the repo on
both sides, but build tools for sure would be fine
to have a second copy. There's no need to rewrite
everything, especially if Parent and Child are
barred by court decree from entering overlapping
businesses.For things that really need a single
corporate owner, you could potentially spin that
off as well and have both successors contract from
that one or depending on the terms of separation
have a joint partnership.Hosting would be messy,
yes. But somehow the tech world outside google
manages to run systems without Google tools. It
would be an adjustment, potentially a large
adjustment and take a lot of hours.> You need to
hire all the roles that weren't part of that
organization before (HR, legal, compliance, etc.)>
You need to register this new entity in all the
countries it operates and/or has employees inThis
costs money, people, and time, but it's straight
forward. HR and legal would likely need some
additional people, but likely you assign the
people who work with the spinoff business to the
spin off corporation and then back fill as needed.
|
> > youngtaff
Companies that spin off separate businesses do
this stuff all the time, staff up the new business
to fill the gaps, license tech from the parent to
the new spinoff etc
|
> > kcexn
I think most of these problems could be solved
through contracts.A contract for purchasing Parent
Co.'s HR, legal, and compliance expertise for
child co.And a contract for sharing technology
infrastructure.The terms and pricing of the
contract would likely be strictly regulated to
prevent preferential treatment and encourage a
clean separation over time.I'm not a lawyer
though, so who knows.
|
> > NeutralWanted
I worked at HP in 2015 during it's split into Inc
and HPE.I then worked at FireEye during it's
split.Fun times.
|
> > codewench
This is far from impossible, and happens all the
time when, for example, a company spins off a
subsidiary, or any number of other situations.It's
hard isn't really a blocker, it's just saying
'this isn't convenient for us', which is why it
would have to be forced by legislation.
|
> > > Arainach
In none of those two cases is what's being
proposed "as easy as a merger" - especially
since those companies get to take as much time
as they want without any court or law-enforced
timeline.
|
> > golem14
And yet, Bell was split.
|
> bpodgursky
My experience is that "split" companies are often
split only at the superficial financial level and the
behind-the-scenes engineering systems are never
actually decoupled, you just have a services agreement
where the new company pays the old company to continue
providing software. Or vice versa. It's usually pretty
ugly and expensive and not the clean win for
competition you are thinking about.
|
> jeanloolz
Very often a demerge comes before an acquisition.
Example, a fund could buy a huge group/conglomerate
made of various companies, and then sell each
companies separately. Each company sold is merged to
another group but demerged from its original group.
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> roosterIllusi0n
We stopped this in the 1950s with a 90% federal income
tax bracket. CEOs could not make more thab the
equivalent of 5mil a year in 2026 dollars.No CEO
wanted to merge when it would turn two 5mil a year
jobs into one 5mil a year job.
Cutting taxes on the rich enabled profiteering by
CEOs.
|
> cryptonector
> My belief is: legislation needs to either make it
just as hard to merge two companies as it is to
unmerge them, or make it just as easy to unmerge two
companies as it is to merge them.Easy for companies to
merge, and... who is going to "unmerge" them when they
don't want to? It is easy for them to split up if they
want to you know, it's just: they don't want to.
|
> KellyCriterion
IIRC, the last real break-up was Standard Oil back
then?Since then, anti-cartel laws are written but no
more enforced
|
> > helpfulclippy
AT&T back in the 80s
Microsoft almost got it 2000-ish, but that did
seem to mark the end of it.
|
> elromulous
I don't necessarily disagree, but in practice it's
never as easy. Combing ingredients for a cake is
always easier than separating them back out. Getting
married is easier than getting divorced. It almost
feels like some kind of fundamental law.
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