Alan Kohler: Tackling technology’s mysterious monopolies

The US Department of Justice anti-trust lawsuit against Apple is a reminder that these big US tech companies are just businesses, not benefactors, and like all businesses they incline, where possible, towards monopoly and rapacity.

But does anybody actually care? Or understand what’s going on with Big Tech?

It’s similar to the stuff that social media companies are getting up to – data harvesting and algorithm influencing – which, as I wrote here a week ago about TikTok, is like having a listening device in your home and GPS tracker watching where you go without your permission.

The United States is only worried about that when it’s a Chinese company doing it, and as many (oh so many) Twitter correspondents felt obliged to tell me, the American-owned Facebook and Instagram are just as bad, and anyway, what’s the big deal?

Full stack computing

And now artificial intelligence is taking it all to a whole new level.

The leader of AI, Nvidia, has just released its new chip, the Blackwell, which is definitely not what you’d call a “chip” – it’s the size of a human palm and contains 308 billion transistors, and will sell for between $US30,000 and $US40,000 apiece.

Nvidia is trying to emulate Apple’s “walled garden” approach with what it calls “full stack computing” – not just the GPUs (graphics processing units) like Blackwell that form the basis of AI, but complete hardware and software systems that make the cost of switching to a competitor greater than the benefit. Just like Apple does.

The resemblance to Apple extended to the Blackwell launch event, where Nvidia’s CEO Jensen Huang was dressed in black and looked like Apple founder Steve Jobs when he launched the iPhone. The event was similar too, likened to a Taylor Swift concert, with Huang onstage performing to a cheering crowd.

Jobs opened his iPhone monologue in January 2007 with these words: “Every once in a while, a revolutionary product comes along that changes everything…” And he went on to say he was now launching three revolutionary products in one – a widescreen iPod with touch controls, a revolutionary mobile phone and a breakthrough internet communications device. It later became a camera, torch, payment device, navigator etc.

In March 2024, Jensen Huang was similarly expansive: “Generative AI is the defining technology of our time. Blackwell is the engine to power this new industrial revolution.”

And as it happens, Nvidia’s market value looks set to pass Apple’s pretty soon – it’s currently $US2.36 trillion versus Apple’s $US2.66 trillion (each of them is worth a lot more than the entire Australian stock exchange).

Locked in, held captive

The complaint against Apple filed last week in the District Court of New Jersey by the US Justice Department and 16 states actually kicks off with a story about Steve Jobs, and his response to a 2010 ad for the Kindle e-reader.

The ad shows a woman using her iPhone to read a book on Kindle and then she switches easily to an Android phone. “Not fun to watch”, said one of Jobs’ executives.

The lawsuit then says: “Jobs was clear in his response: Apple would force developers to use its payment system to lock in both developers and users on its platform.”

Well yes, we’ve all known that for as long as Apple’s been around, and I don’t think we mind.

People used to line up at midnight for the latest iPhone, and we’re still coughing up $1987 for the Pro Max because it’s pretty much an essential part of life – the most useful consumer product ever invented.

And we understand that you really need an Apple tablet and Apple computer to make it all work properly, but the problem for regulators is that it does all work very nicely indeed.

Apart from the fact that it’s about 10 years too late, if US DoJ actually wins its case against Apple, what will the remedy be?

Breaking the company up is very unlikely, but anything less won’t be effective. The courts might force Apple to take a smaller clip than the usurious 30 per cent it gets from the apps sold in its store, which would be a good result, but won’t fundamentally change the structure of computing and smartphones.

The other problem for regulators dealing with Big Tech is that even though computing is now dominating everyone’s life, nobody really has much of an idea how it all works.

That is increasingly so with artificial intelligence. When the anti-trust regulators get around to dealing with Nvidia’s AI monopoly in 10 years’ time, the technology will be a complete mystery to all. It already is.

The other day I tried to read the scientific paper that began the AI revolution, written by six Google engineers in 2017, and titled “Attention Is All You Need”.

Here’s the opening sentence of the abstract: “The dominant sequence transduction models are based on complex recurrent or convolutional neural networks that include an encoder and a decoder”.

Show me a supermarket oligopoly and I get it straight away and want something done about it. But AI? No idea.

Poaching the brightest sparks

That’s why the true monopoly behaviour developing in technology now is for talent – that is, the rare individuals who understand AI and can do it.

Last week, Microsoft raided the co-founders and staff of an AI start-up called Inflection; instead of buying the company, they just hired the people, skirting the anti-trust problems with mergers and acquisitions.

Up to now, the Big Tech companies made acquisitions mainly because of the people in them. As Mark Zuckerberg of Meta/Facebook once said: “We buy companies to get excellent people.”

The global AI race is rapidly becoming a contest for talent, and the technology giants are winning because they have the scale to offer the greatest rewards, both in money and satisfaction.

That especially applies to Microsoft, the world’s most valuable company, worth $US3.19 trillion (twice as much as the entire Australian sharemarket).

Could regulators actually do anything about Microsoft hoovering up all the people who are good at AI?

Alan Kohler writes twice a week for The New Daily. He is finance presenter on the ABC News and also writes for Intelligent Investor

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