As tech changed the world, it also changed the meaning of the word "competition," Axios' Scott Rosenberg writes.

How it works: In most other businesses, competition means several rivals are fighting to win a prize — typically, the customer's dollar.

• To win that competition, a company might offer a better product, a lower price, or some magic brand aura people crave.
• In the tech world, quality is often hard for users to gauge, prices for many consumer offerings are zero, and very few brands have had time to build auras.

Most tech companies still view themselves as engaged in fierce competition. They're just going after a wider and more complex set of prizes.

• Sometimes it's scale. Sometimes it's owning a standard. Sometimes it's seizing the moment to set the course of the next technological wave or dominant platform.
• Sometimes it's just earning a big payout for founders and investors at the right moment. And sometimes, the winner does end up with a monopoly — but no tech firm expects that to last long.

This different understanding of competition explains the deep mindset mismatch at the heart of today's epic struggle between Silicon Valley and Washington, D.C.

• The view from the tech corner office sees an industry in a state of constant churn and paranoia, perpetually hungry for new products and afraid that some newcomer will eat their lunch.
• The view from the Beltway, and from many homes and small businesses outside tech, sees a handful of giants with strangleholds over key markets.

Why it matters: Your view of whether tech companies actually compete with one another will shape how you think about plans to regulate them or break them up.

• The enormity and power of just five companies — Apple, Google, Microsoft, Amazon and Meta — have triggered the loudest monopoly alarms since the trustbusters broke up Standard Oil a century ago.

Catch up quick: Tech's history is a serial record of successive monopolies.

• In the IBM age, one company ruled the mainframes that ran big business and government.
• In the Microsoft age, one company ruled the personal computer operating system, and for a while the web browser, through which individuals worked.

These companies' stories established the industry's psychic underpinning: A belief that, as Intel CEO Andy Grove put it, "Only the paranoid survive."

• You had to scan the horizon for the next paradigm shift or new platform so you could control it. Otherwise, your competitive advantage would erode and your dominance would fall to a nimbler upstart.

Yes, but: In the 21st century, tech's shape has changed.

• In the past two decades, five companies — Apple, Microsoft, Google, Amazon and Facebook/Meta —have seized the industry's reins and held onto them with a persistence and strength that shows no sign of waning.
• Their combined market value has hovered between $7 trillion and $10 trillion for the last two years — roughly 23% of the value of the entire S&P 500.
• Their products — the smartphones that have become our outboard brains, the key apps we use every day, the services that we use to work and shop and get around — shape our lives.

Be smart: The question regulators and critics keep asking today is whether these companies are entrenched in an unfair way that blocks new entrants and ideas.

• This view — held by the leaders of the Biden administration's tech policy crew, such as Federal Trade Commission chair Lina Khan and White House adviser Tim Wu — sees today's tech landscape as a market failure.
• The giants, they say, have created self-perpetuating monopolies in specific markets like search, mobile app distribution, online advertising, e-commerce, and social networking. They run must-use platforms that unfairly advantage their own products. They shoot down new rivals if they can, and buy them if they can't.

The bottom line: If these critics are right, then lawsuits and new regulations are needed to restore competition.

• But tech's leaders argue that their competitive advantages edges are fragile and evanescent.
• The way they see it, the five-way scrum of today's overall tech market means there's always some amount of consumer choice and product improvement.

Each day this week, Login will look at competition in tech from different angles:

• The broadband market's limited choices
• The areas where tech's big five directly compete
• TikTok's extraordinary road to the doorway of Big Tech's exclusive club

Stay with us for this special week-long spotlight as we dive into these stories and more!

The upward march of market capitalization for tech's big five companies is just one yardstick for their dominance, but it reports a story of steady growth from already huge starting points.

• Global calamities like the COVID pandemic and broader downturns like the market's current dip look like minor hiccups in the tech quintet's upward climb.
• Facebook/Meta is the youngest company in this club. Its recent humbling could prove a minor setback if the company's metaverse dreams prove profitable. Or it could be a harbinger of long-term decline.

California's legislature is on track to pass tough online privacy rules for kids this week, as the state once again pushes past the federal government in internet regulation, Axios' Ashley Gold reports.

Why it matters: Any rules California sets are sure to spur copycat laws in other states and could push Congress to act on similar nationwide legislation.

What's happening: The proposal, A.B. 2273, the California Age Appropriate Design Code, is poised to pass the state Senate and Assembly this week and then move onto Gov. Gavin Newsom's desk for signature, sources following the proposal told Axios.

Details: The California proposal resembles new rules passed last year in the U.K. that govern how tech firms can target kids with push notifications, require messaging controls, and provide other features intended to keep minors safe online.

• The bill, which includes hefty fines for noncompliance, puts California's attorney general in charge of enforcement. One tech industry win is an amendment that gives potential violators a "cure" period of 90 days before any fines.

The California bill targets online services "likely to be accessed by children" under 18.

• Industry reps pushed unsuccessfully for that age to be lower.
• The U.S. law governing children's online privacy, COPPA, applies to sites specifically targeted to children and protects those under 13.

What they're saying: "While this bill has improved, we remain concerned about its unintended consequences in California and across the country," Dylan Hoffman, TechNet's California executive director, told Axios. TechNet represents tech firms like Amazon, Apple, eBay, Google, Meta and Snap.

• Bill opponents say a major component of A.B. 2273, age authentication via "estimating the age of child users," is overly burdensome and invasive for users.
• "[A.B. 2273] would erect digital barriers throughout the internet for everyone; drive some businesses out of the industry entirely; expose everyone, including children, to greater privacy and security risks," and cause other harms, Eric Goldman, a law professor at Santa Clara University law school, wrote in a Aug. 22 op-ed.

What's next: The bill will be voted on in the state Senate as early as today and is expected to pass the Assembly quickly after. If signed by Newsom, the law would take effect July 1, 2024.

On Tap

• Burning Man people still burning.
• VMware Explore takes place in San Francisco.

ICYMI

• Most U.S. cellular carriers collect and store their customers' geolocation data, according to documents released Friday by the FCC. (CyberScoop)
• The reference to "Far Out" in Apple's event invites has some speculating that the phone could feature satellite connectivity, astrophotography capabilities, or both. (Bloomberg)
• Trademark filings suggest Apple will use the name "Reality" for its long-rumored AR/VR headset product expected next year. (Bloomberg)

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