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.
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.
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.
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.
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.
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?
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 will
1) make monopolies legal
2) 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.
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.
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.
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
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.)
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.
> 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.
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.
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...
>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.
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.
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.
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.
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.
> 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.
> 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 :-/
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.
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.
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.
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.
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.
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.
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 alternatives
Where is your data showing that people “prefer” this?
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 alternatives
The 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.
I think it's the hierarchies of agents summarizing each others' summaries before presenting a final answer to the user. The principal agent has the full context from all its workers, but when it distills this down to a message to the user it summarizes it into a mess of confident jargon that pertains to a conversation the user wasn't a part of and never saw.
Very cool interface and reminiscent of figma/excalidraw in the way they provide an infinite 2d canvas for shapes and figures. Most tools of these types tend to implement layers as well, which might be loosely analogous to multiple desktops and could be a neat interface element to explore. The impetus for layering in a drawing tool is very different from the impetus for doing such in a desktop windowing tool.
The 3d demos are similar to what you experience when using a VR headset with desktop emulation software. I ran experiments with that for several months and while the concepts were interesting, context switching in a simulated physical space was actually a lot slower than alt+tabbing between things.
I played with XR UX years back. Three quick thoughts.
I liked a hierarchy of context switching devices. Open tabs, windows, workspaces, for me are distracting clutter, scaled by some distance metric. Having to physically carry a laptop to elsewhere in a room had "I've left work for home" nicely strong context switching vibes. Followed by resumable-but-not-currently-live VMs/workspaces, etc, down to, well, gazing at a different window. So variety in costs and benefits.
I wanted a drawing-like experience for a laptop keyboard, eyes-on-screen hands-on-tablet, so kbd as touch surface (and 3D tracking above it), with the screen showing, in faint shallow-3D offset, hand position and a dynamic kbd UI. Meh. But shallow-3D UI, something 3D one can live with all day without VAC eyestrain, seemed intriguing but little explored.
With current AI, even with small 1080p laptop/HMD viewports encouraging manual packing, I'd be tempted to try escaping the whole decades-long "how do I arrange windows" mess, and tool up a personal-assistant-like "knowing what you're currently up to, here's a screens/canvases/workspaces/windows tasteful layout for that, arranged in ways you've liked".
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.