Marketplace - The EU cracks down on Big Tech

Episode Date: March 7, 2024

A big antitrust law goes into effect today in the European Union. The Digital Markets Act is an effort to regulate Big Tech companies like Apple and Google. It’s designed to make the internet more competitive, but enforcement may prove tricky. Also in this episode: new retail subscriptions, the latest Beige Book insights, and a cowboy-skier-friendly sport.

No, seriously, who says this economy is boring? From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Thursday today. This one is the 7th of March. Good as it always is to have you along, everybody. Washington, D.C. has been the center of the economic universe today. Jay Powell made another trip up Capitol Hill, the Senate side this time.

The Fed chair said pretty much the same things he said yesterday, which is what happens pretty much every time he does these back-to-back things. And then tonight, a certain speech that has been all over cable news, 9 p.m. Eastern, 6 out here on the West Coast. I'm going to go ahead and put the over-under on the number of times the word economy is mentioned. At 15, we will update tomorrow. In the meanwhile, we go to the actual heart of this economy, retailers and consumers on this program. Walmart and Target are getting serious about competing with Amazon Prime. Walmart Plus has a new on-demand delivery program starting Sunday. Target is launching its own version of Amazon Prime.

It's called Target Circle 360. That's coming in April. However, do consumers really have room for another retail subscription? Marketplace's Kristen Schwab looks at that competitive field. Raghu Iyengar is feeling oversubscribed. Netflix, Amazon Prime, Disney+, and then we have Sling as well to watch cricket. And then we have all the Razor and the grocery delivery and all of that. So I think across all of that, I would easily say 10+.

10-plus subscriptions isn't all of that. So I think across all of that, I would easily say 10 plus. 10 plus subscriptions isn't all that crazy. Iyengar, who's a professor of marketing at Wharton, says the average American has 12. But that doesn't leave a lot of room for another subscription, like Target Circle 360. Who are the customers that are willing to pay for an Amazon Prime subscription plus a Target subscription, that might be a very narrow list. Narrow, but not non-existent. Diana Smith, an associate director of retail at Mintel, says nearly 80% of Americans have access to an Amazon Prime subscription, and more than 30% of Amazon Prime members are also Walmart Plus members.

That means there might be room for Target to draw from its loyal customer base. But Smith says Target will be playing catch up. I do think that Target is coming in a little bit late. They are going to have an uphill battle with this. Target Circle 360 costs less than its competitors, a cheap introductory offer, then $99 after that. That's 40 bucks less than Amazon Prime. But all Target offers now is fast shipping, while Amazon and Walmart have streaming and groceries. The biggest challenge is just trying to differentiate itself from the other big players. Thing is, Target can't afford to not try. Katrine Keelans, a marketing professor at the

University of North Carolina, says it's getting harder to move customers past window shopping to actually pay for the stuff in their carts. She says subscriptions remove the credit card home address information barrier. So that is something that people tend to dread. So you really do lose a lot of shoppers. Helens says customers tend to be loyal to subscriptions. They want to get their money's worth. I'm Kristen Schwab for Marketplace. OK, true story. The Fed's beige book. It's eight

times a year regional look at this economy, which comes out, not coincidentally, two weeks before each meeting of the interest rate setting Federal Open Market Committee. You might remember we talked about the most recent one yesterday. Anyway, it is called the Beige Book because the cover is actually beige. It used to be red and for internal Fed eyes only until the early 1980s when the Fed started releasing it to the public and changed the color to beige to make it less conspicuous so it would not be taken as a preview of what the Fed is about to do at its next meeting. So beige? Yes. Boring? Au contraire, as Marketplace's Mitchell Hartman is about to convince you. The beige book paints a picture of how the national economy is doing through local eyes. So here's the snapshot from the guy who writes the report for Fed District 8,

St. Louis, Missouri, economist Charles Gaskin. The middle of the country, the heartland, so to speak. At a 10,000-foot view, we continue to see increases in economic growth, but probably at a slower pace. Moving east for another snapshot, here's Michael Gritton. He runs Kentuckiana Works, the workforce development agency for the Louisville region, also in Fed District 8, and home to major operations for UPS, Ford, and GE. This economy is about as good as you could hope for it to be. I mean, unemployment is below 4% across our region. We're a manufacturing and logistics place.

Both of those businesses are still thriving. Further south and east, Sean Snaith directs the Institute for Economic Forecasting at the University of Central Florida. Many were certain that there would be a recession. There's really nothing resembling a recession right now happening in Florida, quite the opposite. Tourism's strong across the region, which is Fed District 6. Consumers, though, are stretched. We're expecting some slowing in Florida's economy because of the erosion of household budgets. But the strength in the labor market is allowing people at least to, you know, come up and get their head above water. There's less evidence of labor shortages around

the country, according to the Beige Book. Michael Gritton's seeing that in Louisville. We are not getting the kind of frantic phone calls that we were getting in 2022 where employers were really desperate. One worrisome development, a huge health care employers vacating its 27-story downtown headquarters. That's a big psychological blow. It's a problem in a lot of places, says the St. Louis Fed's Charles Gaskin. There's definitely challenges in office space, and we're hearing that from a lot of contacts. Our malls have been a challenge over the last decade. Though he says smaller retail space seems to be doing fine.

I'm Mitchell Hartman for Marketplace. On Wall Street today, not so boring either. We will have the details. Yeah, then, when we do the numbers. There are moves afoot in Washington, you might have heard, to ban TikTok in this country, unless it is spun off from its Chinese parent company, ByteDance. The social media platform has run afoul of both Democrats and Republicans in Congress, and the White House is said to be mostly on board. So this might actually go somewhere.

Over in Europe, meanwhile, a big new antitrust law takes effect today, a law that's going to bring some big changes to how the biggest tech companies do business there. Google and Apple are going to be forced to open up their mobile operating systems to downloads and payments from outside their app stores. There's going to be no more default browsers like Safari on iPhone or default search engines like Bing on Windows. Meta has to let users de-link their Instagram and Facebook accounts. And messaging apps, that'd be like iMessage, WhatsApp, and Signal, they all have to be interoperable. But as Marketplace's Megan McCarty Carino reports, any law is only as strong as its enforcement.

This isn't the EU's first big effort to regulate the tech sector. Since 2018, Europe has had comprehensive data protection rules known as the GDPR. And enforcement has gone so-so, according to analyst Eric Sufert with Mobile Dev Memo. He says Meta, Amazon and Google have slow-walked compliance, tied up claims court, and often just paid hefty fines rather than change their practices. The fines may seem eye-popping, but in the context of the revenue of some of the largest tech companies in the world, they're just seen as sort of a cost of doing business. The new Digital Markets Act was crafted with those challenges in mind, says Nicholas Rodelli at CFRA. The animating lesson from a case-by-case enforcement approach is that it's far too slow to be relevant. He notes violating

the DMA could be more costly than running afoul of GDPR. The new law imposes fines of up to 10 percent of a company's global revenues or up to 20 percent for repeat offenders. Where the GDPR relied on member countries to bring complaints, the DMA establishes a Europe-wide commission. But the real question is going to be, do the enforcers have the resources and commitment necessary to really launch and finish investigations. Samir Jain at the Center for Democracy and Technology points out the commission will have only about 80 staff members to investigate companies that have a big financial incentive not to cooperate. Anu Bradford, a law professor at Columbia, says there's a lot at stake in demonstrating the DMA can be enforced.

We need to now show that you can actually have democratically accountable governments set rules and enforce rules. Especially as the EU rolls out two other major reforms governing social media and AI. I'm Megan McCarty Carino for Marketplace. According to the most recent data, building permits for privately owned housing units, that's homes and non-bureaucrates, they were down a little bit month on month, up more than 8 percent though year on year. That is potentially great news for would-be homebuyers as well as would-be home builders, which brings us to this latest installment of our series, Adventures in Housing. My name is Paula Stone. I live in a dome home in Fredericksburg, Texas.

I live in a dome home in Fredericksburg, Texas. My interest in domes started when I was in the sixth grade. The Montreal exhibit was going on, and Buckminster Fuller was a big deal, and he had designed this wonderful geodesic dome that was the architectural icon of the expo. And I was just fascinated with it as a kid. I drew these domes all summer, you know, and thought about it. So that's always been in the back of my mind, you know, for what, 50 something years, I guess. I was an interior designer in San Antonio, which is, you know, is a large city. And I wanted a place in the country to retire to. And then I looked up last year and decided, you know, I'm not getting any younger. If I'm going to have a dome, I need to get on with it. So I sat down to draw a little bit, sketch a little bit, and I drew this five interconnected circles. And the minute I drew it,

the minute I saw it on that paper, I knew that was it. The dome is not cheaper than a regular house. I mean, this one's 4,600 square feet, so it wouldn't have been cheap either way. Nothing in Fredericksburg is cheap. I mean, the city's been pushing for affordable housing, and in this part of the world, affordable housing is anything under a half a million dollars. It's just the dome is less maintenance. It's more energy efficient. My house with the five domes from the front, it looks like some little sea creature that would crawl on the bottom of the ocean. One of my friends, when she first walked into it, she said, wow, this is like a big hug. And I think that's right.

It just feels better than a regular house. But you don't build one because you think it's going to be cheaper. old one because you think it's going to be cheaper. One of the tenants who lived out here, I hadn't seen him for a couple of years, and we ran into each other at the post office, and he said, well, what have you been doing? And I said, well, I'm building myself a dome to live in. And he laughed and he looked at me and he said, who but you would think of that? And who but you would have the nerve to do it? And I thought that was so funny. Why would it take nerve to build a dome? I mean, you may want to live in a rammed earth house or an underground house or there are all kinds of neat things out there. But to just live in what's available,

I mean, when you're young and broke, that's one thing. I mean, you have to live in what's available, what you can afford. But as you get older and you realize what you want, you should reach for it. Come on, how great is she? Paula Stone in her dome home in Fredericksburg, Texas, which you can check out on our website if you want to see it for yourself, which I do.

Whatever the shape of your domicile, share the story of how you got there, would you? Marketplace.org slash Adventures in Housing. Coming up. All three inches that were on the ground and we scraped it all up and were able to make enough to have a course built. Snow as economic necessity. But first, let's do the numbers. Dow Industrials up 130 today. That's points. One third of one percent. Thirty eight thousand seven ninety one. The Nasdaq surged 130 today. That's points. One-third of 1%, 38,791. The Nasdaq

surged 241 points. That's 1.5% there. 16,273. The S&P 500 up 52 points, 1%, 51.57. We heard from Kristen Schwab about retail subscriptions that are offering to compete with Amazon Prime. Trying anyway. Amazon up 1.9% today. Target went the other way, down 1.2%. Walmart dipped a third of 1%. 148 years ago today, Alexander Graham Bell received a patent for the telephone. According to the latest research by Pew, 97% of American adults now own some kind of cell phone.

15% of adults have Internet access through their smartphone, but do not have broadband internet at home. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. Many, many people in this economy are working more than just their 9-to-5s. Side hustles, gig work, call it what you will. Content creation, as amorphous as that phrase is, is a steady go-to for a lot of those people. And as the digital economy grows, Amazon wants to tap into that by paying regular everyday people to make product review videos for the Amazon website.

Caroline O'Donovan wrote about these Amazon influencers for The Washington Post. Caroline, welcome to the program. Thanks for having me. So this is all through, it's a formal actual Amazon program, right? That's right. It's called the Amazon Influencer Program. And these people make money when people watch the videos and then go on to buy the product, yes? Exactly.

So imagine you're shopping on Amazon. You're not sure which, I don't know, coffee maker you want to get. And you're clicking around. You're trying to look at the photos. Is it going to fit under my counter overhang? You end up watching a video. Maybe you thought it was like a customer video

or maybe you thought it was the seller. Sometimes it's these people who get paid a commission to make the video. So if you watch the video and you say, you know, OK, that's the one I'm going to buy and you buy it. Someone in Wichita or whatever might make a dollar or three bucks from your purchase. I don't have an entrepreneurial bone in my body. But even I recognize that the incentives here for these reviews to be overwhelmingly positive is the whole kit and caboodle here, right? Because if you do a negative review, nobody buys. You don't make any money.

You do a positive review, people buy. You make money. Right. I think that's something a lot of these influencers were sort of wrestling with. They don't want to mislead people. A lot of them have already gone through being part of multilevel marketing schemes. They didn't like pushing products on their friends. These were honorable, nice people who didn't want to feel like

they were tricking people in order to make money. But like you said, if someone sends you a free product and you're making a video of it, you're not going to make any money if you say, hey, this was garbage. So I talked to one lady who was sent a free hair dryer and her hair got sucked up into it because the vent was in the handle. She's okay. She's okay.

But she sent the hair dryer back and ended up not making a video of it. But then the company sent her another product to review. So it's sort of this question of like, well, should you make a negative review of the hair dryer so other people don't buy it or you just kind of sit it out, you know? Yeah. I imagine you watched a zillion of these things. Did any of them entice you to, even on your dime or the Washington Post's dime, to buy the product? The Washington Post is definitely not spending money on Amazon.com on my behalf or anyone else's behalf. I will say that there was one outdoor reclining lounge chair that might fix a very particular problem that I have,

that I have been tempted by. Wow. All right. Well, there you go. That's a positive thing. And we should say, we'll get the disclosure. And as we did last time, Jeff Bezos owns Amazon and in his personal capacity owns the Washington Post. Thank you. So we'll get that out there. What happens when these people run out of things in their home to review, right? Because that's what, at least it looked to me like a lot of these people were doing stuff in their homes. And they're like, oh, yeah, I'm going to make a video about this. Totally. So that's one of the things that captured my attention at first. Some people go to stores, like when they're doing their grocery shopping, they might scan stuff so that they know that the new things that they're buying are products that they can review, maybe shopping off the Amazon bestseller page.

But then some people really do start to push the bounds of maybe what you would think is like an honest review, like booking an Airbnb just so you can review all the items in the Airbnb. I'm saying review, but I think it's an open question if these are reviews or just paid promotional content, right? Yeah, they're like product placement. Yeah, for sure. Sorry, this is just the latest in a string of side hustles that the digital economy is giving us, right? I mean, it's sort of a natural extension. Totally.

I mean, a lot of the people doing this also are on websites like Fiverr making cheap digital content. So it's definitely part of a broader trend of people making – doing little bits of online gig work essentially, right? Like getting paid very small fees to create little bits of content. very small fees to create little bits of content. And it's part of, you know, Amazon has offered a lot of different ways that they want you to try to make money on their site, whether you're making deliveries in your own car or in one of their vans or you're selling stuff. That's something I'm really interested in is all the different ways Amazon sort of advertises itself as this way you can ride its coattails, right, and access the scale of its platform. This is a little flip, but it's Amazon's economy and we're all just kind of living in it.

I wouldn't say that you're wrong. Yeah. Caroline O'Donovan, The Washington Post. Caroline, thanks a bunch. Appreciate your time. Thank you so much. Okay. What do you get when you put skiing and horses and cowboys and local tourism together?

If you're like me, until you heard this story, you had no idea. If you know of ski-joring, well, then you're a step ahead. Horses with cowboys aboard pull skiers literally down Main Street and many parts of the Mountain West. The name, by the way, comes from the Norwegian word for driving, as in ski driving, ski-joring. It has been a wintertime boon to small communities all over the West, but as Caitlin Tan reports now from Wyoming Public Radio, ski-joring depends on snow, which isn't always dependable in a warming climate. All right, folks, here we go. Make a little noise. All right, folks, here we go. Make a little noise. Hundreds of people came out over a recent weekend to watch ski drawing at the rodeo grounds in Pinedale, a little mountain town in western Wyoming.

Looking good, guys. Looking good. Let's go, buddy. Let's go. A skier whips around a turn, going at least 30 miles an hour, bracing himself for a huge jump. But he's not going downhill. The course is flat. The skier is pulled by a thick rope attached to a horse barreling down the track, ridden by a cowboy. Local skier Sean Boylan waits for his turn on the course, standing by his pickup in snow pants and cowboy boots, sipping a beer. Modelo, yeah, helps with the nerves. The course itself is snowy, but lining it is dirt and sagebrush. Boylan was worried whether the race would even happen for lack of snow. But at the end of the day, it's kind of just a rowdy time. So if you're skiing through mud, like, oh well. It's all good fun. A couple

weeks ago, event organizer Monty Bolgiano was stressed. We were starting to sweat it, wondering if we were going to be able to pull it off. They used a snow plow to scrounge up snow across town. All three inches that were on the ground, and we scraped it all up and were able to make enough to have a course built. Bolgiano grew up here in Pinedale, watching industries like agriculture and energy wax and wane. Outside of the little bit of industry that we have here, we are relying on tourism. So on what otherwise would be a slow winter weekend, the ski drawing competition is a huge draw. Get hotels filled up and restaurants filled up. Bolgiano says businesses saw an 80% boost in traffic over the weekend,

which all would have been lost if they hadn't been able to pull off the event. The conundrum of holding ski-joring on a low snow year has rippled across the West. Normally there are a couple dozen races, but some were called off this year. One in Montana and several in Wyoming had to be canceled. There was no snow and it was 55, 60 degrees a week before the event. Sean Parker heads up travel and tourism in Sheridan, Wyoming, six hours away. He says the rural community is known for this winter sport that's a marriage of cowboying and skiing. It's a big deal. I mean,

you go from nothing to something and any positive economic stimulus helps. Parker says the town sees more people in one day than in all of February. It means millions of dollars to the local economy. So they tried to make up for it by holding concerts and a hockey tournament, but it wasn't the same. We need ski drawing to see the really big positive impacts. Parker says if these kinds of winters continue, they'll need to move the ski drawing event out of town and into the mountains where there's more snow. Back in Pinedale, John Hyde is saddling up his horse Perry in the parking lot. He sports a handlebar mustache and leather chaps and says he lives and breathes ski-joring.

You get old, you retire from rodeos, have horses, men will use them. Hyde points to his horse trailer, which is divided into living quarters for him and space for his horse. And this now is our home on the road. He likes to win, and there's often hundreds, if not thousands of dollars in prize money. Before Hyde and Perry, his horse, head to the starting line, he shares his hot tip for winning. Hmm, I guess just go like hell. There are ski drawing events scheduled across the Rocky Mountain West through March, but all the competitors, visitors, and money that comes with the sport is dependent on snow. In Pinedale, Wyoming, I'm Caitlin Tan for Marketplace. place. This final note on the way out today, which was kind of inevitable, United Airlines says it's going to have to pause hiring new pilots. CNBC had the memo to staff. Here is the

operative sentence. We wanted to let you know that United will slow the pace of pilot hires this year due to continued new aircraft certification and manufacturing delays at Boeing. Ticker symbol BA, the Boeing in question, down 20% year to date. John Buckley, John Gordon, Rick Cardin at the Parker, Amanda Peacher and Stephanie Seek are the Marketplace editing staff. Amir Babawi is the managing editor. I'm Kai Risdell. We will see you tomorrow, everybody. This is APN. All over the country.

We need to improve reading in Wisconsin. Schools are changing the way they teach reading. I'm calling for a renewed focus on literacy. We have gotten this wrong in New York and all across the nation. And it's happening because of a podcast. I think your podcast has changed my life. And I'm going to share this podcast with everyone I meet. Sold a Story investigates how teaching kids to read went wrong. New episodes of Sold a Story are available now.