The evidence is piling up — Silicon Valley is being destroyed
Silicon Valley is the story of overthrowing entrenched interests through innovation.
Children dream of becoming inventors, and scientists come to Silicon Valley from all over the world.
But something is wrong when Juicero and Theranos are in the headlines, and bad behavior from Uber executives overshadows actual innovation.
$120 million in venture funding from Google Ventures and Kleiner Perkins, for a juicer? And the founder, Doug Evans, calling himself himself Steve Jobs "in his pursuit of juicing perfection?" And how is Theranos's Elizabeth Holmes walking around freely?
“Eventually, the rhetoric of innovation turns into .... a Google-backed punchline.”
These stories are embarrassing, yes. But there's something deeper going on here. Silicon Valley, an international treasure that birthed the technology of our age, is being destroyed.
Monopolies are now so powerful that they dictate the roll-out of new technology, and the only things left to invest in are the scraps that fall off the table.
Sometimes those scraps are Snapchat, which managed to keep alive, despite what Ben Thompson calls 'theft' by Facebook.
Sometimes it's Diapers.com, which was destroyed and bought out by Amazon through predatory pricing. And sometimes it's Juicero and Theranos.
It's not that Juicero and Theranos that are the problem. Mistakes — even really big, stupid ones — happen.
Business Insider/Alyson Shontell
It's that there is increasingly less good stuff to offset the bad. Pets.com was embarrassing in 2000, but that was also when Google was getting going. Today it's all scraps.
When platform monopolies dictate the roll-out of technology, there is less and less innovation, fewer places to invest, less to invent. Eventually, the rhetoric of innovation turns into DISRUPT, a quickly canceled show on MSNBC, and Juicero, a Google-backed punchline.
This moment of stagnating innovation and productivity is happening because Silicon Valley has turned its back on its most important political friend: antitrust. Instead, it's embraced what it should understand as the enemy of innovation: monopoly.
As Barry Lynn has shown, Silicon Valley was born of anti-monopoly.
Elizabeth Holmes, CEO of Theranos.
Larry Busacca/Getty
In 1956, a Republican administration and AT&T signed a consent decree forbidding AT&T from competing in any but common carrier communications services. The decree also forced AT&T to license its patents in a non-discriminatory manner to all comers.
One of those patents was for something called the transistor, which two small companies — Texas Instruments and Motorola — would commercialize.
“In the 1990s, a suit against Microsoft allowed another startup named Google to offer an innovative search engine.”
In the 1960s and 1970s, an antitrust suit against IBM caused the company to unbundle its hardware and software, leading to the creation of the American software industry. It treated suppliers for its new personal computing business with kid gloves, including a small company called Micro-Soft. In the 1990s, a suit against Microsoft allowed another startup named Google to offer an innovative search engine
and ad business without fear that Microsoft would use its control of the browser to strangle it.
The great business historian Alfred Chandler, in his book on the electronic century, called antitrust regulators the "Gods" of creation. Antitrust was originally understood as a uniquely American "charter of economic liberty".
But there hasn't been a Sherman Act Section 2 anti-monopolization case for 15 years. And the anti-merger Clayton Act is not being enforced. Neither Bush, nor Obama, nor Trump (so far), has seen fit to stop the monopolists from buying their way into dominance and blocking innovation.
Take Google.
Sergey Brin is the President of Alphabet, Google's parent company.
Robert Galbraith/Reuters
Yes, the company created an amazing search engine over fifteen years ago. Since then, the company bought YouTube, Doubleclick, Maps, and Admob; it buys a company a week at this point. And it often shuts down products that don't reach 100M+ users, while investing in luxury juicing machines. Surely Google is creating cool technology. But is that technology really being deployed? Or is it locked away, as patents were in AT&T's 1956 vault before the government stepped in?
What once were upstarts and innovators are now enthroned. For instance, the iPhone is ten years old. Innovation means waiting to see if Apple will offer a bigger screen.
“Innovation means waiting to see if Apple will offer a bigger screen.”
It's almost as thrilling as seeing yet another press release about how self-driving cars are almost working. I'm on the edge of my seat.
This is a ridiculous situation. Silicon Valley helped created the personal computer! It commercialized the internet! Popularized email!
Its scientists and engineers change the world. We have such amazing technology, and such big problems. But our liberty to address those problems in the commercial world must be protected by a democracy in the form of antitrust rules and suits, or Silicon Valley will die.
Mark Wilson/Getty Images
Is that what Silicon Valley scientists and business leaders really want? To invest in and produce subpar juicers while everything cool waits on Jeff Bezos's whim? Is that what they dreamed when they were young? Is that why they admired astronauts and entrepreneurs? Was their goal really to create "anti-competitive juice packet lock-in"?
That is where a lack of democracy has brought us, and Silicon Valley.
It is time for leaders in Silicon Valley to start demanding from our government the birthright of every American, which is an open market for commerce, innovation, and personal liberty.
It is time to demand antitrust, so that what once were innovative upstarts, and are now Kings, do not stop the next wave of innovation. Then there will be so much more to invest in, so much more to invent, and so much more to actually create.