Corporate Fascism


This post is by Jeff Carter from Points and Figures


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Salesforce told anyone that uses its product that they cannot use it for sales of firearms. That’s corporate fascism. If I were any gun retailer or wholesaler that used Salesforce I would sue them for antitrust, and sue them civilly for damages.  The way I’d drop the suit is if Salesforce made my data portable in an easy format so I could hop on a competitive system.

YouTube, a property of Google, is investigating a conservative journalist. Again, corporate fascism.  They never seem to investigate the other side.  It sure seems like YouTube attacks conservatives and limits their reach on their platform a lot more than liberals.  If you wonder why people might have this perception, think back to the day after Trump was elected President.  Google top management, including the founders, held a meeting about it.  A lot of folks are upset about “bro-culture” in Silicon Valley.  I know more who are upset about the active discrimination and Jim Crow culture when it comes to conservatives.

Facebook says that when you use Facebook you forfeit your right to privacy and that there is no privacy. Perhaps we already assumed that but good to have it out in the open. Wouldn’t it be nice if I could take all my Facebook data and port it over to a competitor that might value my privacy a little more?  Again, like Google, Facebook has been active in its discrimination against conservatives.  Here is some more evidence of their active discrimination once something gets traction.

Twitter decided to ban accounts and first went to the conservatives.  What’s that old saw I used to hear people quote all the time?  “First they came for the…  Doesn’t matter because it’s those crazy conservatives right?  Twitter mobs have destroyed people’s careers.  They target people.

The First Amendment for me but not for you? Twitter, Facebook, and Google are infringing on First Amendment rights to free speech and a free press.  We all know how the leaders of these platforms feel about the Second Amendment.

It’s not just social media companies.  It’s companies that are B2C and B2B.

The activity isn’t innocent.  It’s making it so some people can’t earn a living.  Sure, some of it seems “good” to most everyone when you expose the huckster like the “born again Christian minister” who has three private jets.  But, ethics and morals are not black and white.  What seems “good” to you might not seem “good” to me.

It’s not just the FANG companies that you read about in the paper every day.  It’s a lot of companies that you haven’t heard of as well.  In our business of B2B Fin Tech I have rarely heard a pitch where data mining wasn’t part of the pitch.  Usually, the only way data is valuable is at scale, so it’s not an integral part of the business from Day One.  But, it’s there and it’s on the mind of both the founder and the investor.

How is data valuable?

In the case of Salesforce, it increases switching costs.  Data is not a physical product.  In the case of companies like Google and Facebook, it’s ad revenue.  In the case of Amazon, it’s about recommending products for you and targeting you.  We are just in the early phases of how companies use data to target you.  Imagine when we have quantum computing, artificial, or maybe better describes as alien, intelligence combined with machine learning.  The ability to dominate your entire life will be out of your control.

One argument is that grocery stores have always stocked shelves with a planner using behavior patterns to get me to buy the most stuff. Except, I have the choice to walk into a grocery store.  When I open up my laptop, turn on my phone or tablet, they are automatically tracking me.  I don’t really have a choice.

Amazon has reams of data on me. Why can’t I request it and give it to Jet.com so they can recommend products for me?  Salesforce is a B2B company.  On Twitter, Laura Dierks made a good point and asked,

The problem with Salesforce is the switching costs.  The switching costs to go to a competitor are very high.  There isn’t just a switch you can turn like leaving one bake shop and going to another.  Not only do you have to re-integrate with custom API’s but you have to retrain your workforce to use the new system.  One thing I learned from trading is that when you got used to a certain front end system, you really didn’t want to change to a new one.  It’s not different when you use dashboards to enter and extract insights from data in everyday jobs.

Not only that but now Salesforce is impacting Camping World’s bottom line.  They are telling Camping World they can’t sell guns.  What if that product line is material to the contribution margin of the company.  How many people will lose their jobs when the profit margin goes down?  If they can tell them to stop selling guns, what’s next?  Are RV’s contributing to global warming so they can’t sell those?

What if the issue was different?  What if all the medical suppliers told hospitals, clinics, and doctors that they couldn’t use their machines and instruments for procedures like abortion?  Could the carbon fiber industry tell auto manufacturer’s they couldn’t use carbon in gasoline powered autos and trucks?

How far do we want this to go?

These are pretty big issues and I am sure they will be settled in court.  Or, at least they should be.  Camping World could throw up their hands and just quit selling guns.  But, it won’t stop there.

Professor John Cochrane tangentially talked about this in several blog posts. Here is one on health care and the way it currently is administered and how it should be administered.  He also talks about economic growth and GDP.   If you haven’t read the last link, read it.  It’s important, on point, and still correct today.  By the way, even though we might have higher GDP growth today than during the sclerotic no growth Obama era, our growth today isn’t sustainable.  It’s like an energy drink.  The public policy that constrains growth and constrains competition mostly still remains.  Trump’s deregulation is a good small step but there is a lot of weeding of the garden to do.  Tariffs aren’t helping by the way.

The simple fact is competition is great for consumers and growth.  Monopoly and Oligopoly and Monopsony generally are not.  In Zero to One by Peter Thiel, he talks about how when you invest in tech companies you are looking to invest in a company that can become a “winner take most” company.  That’s certainly true, but the end result is we get a situation as we have with Salesforce where a company can impose its will on society to infringe upon personal choice and freedom.

Sometimes to get competition, the government has to step in and fix negative externalities.  Unfortunately, with history as a guide, the government usually gets it wrong and picks winners and losers.  I prefer letting competition and creative destruction take its course.  But, data seems like a different sort of problem to me and it is probably worthwhile for the government to take a look.

You might listen to this podcast by Luigi and Kate to learn more about how companies like Facebook and Google interact with worldwide political systems. Economist Fiona Morton discusses ways to regulate them, and why to regulate them. To be clear, I heard her proposal and listened closely. Initially, my opinion was that I was critical. I even challenged her with a question that they mostly are opt-in services. Of course, Salesforce is not opt-in but it is an arm’s length transaction. I have come around to the idea that something needs to be done short of full antitrust “break up the company” type action. I think starting with forcing companies to make data portable is a start and could lead to a more competitive landscape.