Morning Brew Daily - Vital Internet Cables at Risk in the Red Sea & Apple Pays $2B Antitrust Fine

Episode Date: March 5, 2024

Episode 272: Neal and Toby explain why the conflict in the Red Sea is threatening internet connectivity in Europe and Asia. Plus, Apple was hit with a $2 billion fine from the EU and why big box stores are looking to get smaller. Toby shares his favorite trends and the SpaceX-backed startup that is making a... Flying car? And finally what are the most physically demanding jobs in America. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, people are living further away from their jobs than ever.

Are we an era of the super commuter? Then what is the most physically demanding job you can work in America? New government data has given us a definitive answer. It's Tuesday, March 5th. Let's ride. Bitcoin is currently sitting at $67,000.

of coin getting closer and closer to all-time highs, which means that another asset class has also come roaring back meme coins. These are cryptocurrencies, which combine silly little pictures of animals on the internet with some unbridled financial optimism to produce multi-billion dollar market caps based mostly on good vibes. Neil, what are some meme coins the people should know about that? The ones I've been tracking of Pepe, which is a token based on a frog meme, is up 245% in the last week in setting record highs. The coin bongk is up 184% over seven days. And my personal favorite, dog with hat, which is just a dog with a hat, has jumped 220%

to a market cap of $1.8 billion. Meanwhile, the OG Doge coin is also climbing after hitting rock bottom following Elon's SNL hosting gig. It looks like meme coins are coming back, but we should warn, these things are not based on anything except vibes and memes. can crash at any point. I commend you for getting through that whole spiel with a straight face. You're saying dog whiff hat. That's W-I-F, not even W-I-T-H, though. Very funny. It is insane living through a few of these cycles at this point. All the signs of return, you got NFL players

posting laser eyes again. You have micro-straties selling convertible notes to buy more Bitcoin. But I think the biggest sign we've reached kind of that peak euphoria again is I received this text yesterday that read, Toby, please tell me you found some sort of odd coin like Pepe or something. I'm not trying to work anymore. I tell them I'm just a humble podcaster, not a financial advisor, and just move along, please. Yes, expect your relatives to start texting you about Bitcoin. I think that is a sign. That is definitely a sign. All right, before we jump into our show today, let's hear a quick word from our sponsor Factor. Neil, you and I are different people, right? I think so. We eat different things, right? For the most part, except when you come over and

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so the focus has shifted on potential sabotaged by them, but it's not clear yet what happened. the cables could have easily been damaged by a ship-dropping anchor as well. Whatever the cause, the incident highlights how the internet, which we often consider to be this intangible network that exists in cyberspace, is actually enabled by physical cables laid all over the world that allow data to travel across continents at lightning fast speeds. And just like the Red Sea is a bottleneck for ships carrying goods, it's also a bottleneck for cables carrying data.

14 cables currently run through the Red Sea, transmitting over 90% of communications. between Asia and Europe. And if something happens to them, financial transactions would be complicated. Zoom calls between London and Hong Kong would glitch, and overall connectivity would slow down. Yeah, the first thing I thought of when I heard this story is, wait a minute, what about Starlink that we've heard so much about these satellites in orbit? But despite the hype, physical subsea wires are still do the yeoman's work of transporting internet data. over 99% of internet traffic between continents is transmitted via hundreds of undersea cables. And the Red Sea is arguably the most important and the most vulnerable part on Earth. It is such a great place to lay internet cables, not only because it's location, but it's also

relatively shallow, so it makes the actual process of installing them easier. So this is a choke point that you don't think about because it's literally underwater, but it is very important. Right. And it actually takes back to 1870 when the British, empire wanted to establish connectivity, telegraph connectivity with its colonies, they laid these undersea cables for telegraph connections to be able to go from Britain to India and other parts of its empire. And when you're laying cables, why take a new path? Just go where it exists already.

So the telegraph was replaced by coaxial cable and then by fiber optic cable to connect internet between Asia and Europe. And these things, there's over 800,000 miles of these cables. all over the world. They're incredibly, incredibly long. There's one, the Asia, Africa, Europe internet cable that travels 15,500 miles along the seafloor, connecting Hong Kong to Marseille, France. It is just one of those things you don't think about.

Like, you need the internet to physically run through cables. To us, it's so intangible, and it feels like it should travel via satellite, but it really is these cables that are doing a lot of the work. It's also some of the issues surrounding the Red Sea right now has led to some of the cable repair ships becoming very, very expensive. They usually just loiter around in the general area waiting for something to go wrong with these cables.

They're costing as much as $150,000 a day to insure right now. So the entire supply chain, entire repair system is also out of whack right now. And Toby, you don't think about internet cables, but you know who does is big tech companies. Meta, Amazon, Alphabet, and Microsoft are now basically dominating the industry. they are constructing their own cables and owning and operating them because they need their cloud services to function. Google needs YouTube to work. Google needs search to work.

So these companies are piling into building undersea cables to kind of own the pipes that allow the internet to function. And now those four are the dominant players in the industry. Speaking of our big tech overlords, let's move on to our next story. and Apple a day may keep the doctor away, but not European tech regulators. The executive arm of the EU announced it was hitting Apple with a nearly $2 billion antitrust fine for setting unfair rules and abusing its dominant position in the music streaming market. This mammoth-sized settlement dates back to a complaint filed by none other than Spotify, who said that Apple's App Store rules prevented it from communicating with its users directly in the Spotify app.

For instance, if Spotify wanted to tell you how to upgrade or promote its new subscription, it couldn't do it within their own app per Apple rules. So understandably, Spotify is pumped with the ruling saying that it would lead to changes that would address Apple's, quote, longstanding unfair practices that led to users paying more for subscriptions than they needed to. Apple also understandably is not happy at all. They issued a response saying Spotify is just trying to, quote, rewrite the rules of the app store to gain a competitive. advantage. Two things that said out to me about this case, Neil. One, just the sheer size of this element, it's a lot bigger than even most antitrust experts were expecting. And two, Apple's walled garden is suddenly getting hammered on all sides. It is. And the EU has a lot to do with it. This competition leader, Margaret Vestager, just hates big tech companies. I mean, it's very clear.

She makes this very known. She thinks they've got way too powerful that they're violating all sorts of antitrust policies. And she's cracking down. Apple's fine was the first for Apple from the EU, but not even the biggest that the EU is handed out to American big tech firms. There were two bigger ones that went to Google over the past few years, one, a 4.3 billion euro fine, and another a 2.4 billion euro fine. This all is a huge swirling mess for big tech companies that are actually having to adapt their policies to address what is going on in the EU. Yeah, the new thing that is happening in the EU. actually this week is the Digital Markets Act takes effect. The goal of this is to aim to make it easier for smaller rivals to compete against

these really big tech companies, the Apple, the metas, the Googles of the world. Under the new rules, Apple will be required to allow alternative app stores to operate on its iOS system. Remember, this has long been the prize possession of Apple's Waldgarden is that the app store is their app store, and you can't really access apps through any other means. They've always said that it comes down to privacy issues. They want to ensure that the quality of apps are being sold on their iPhones are high and they don't have viruses or anything like that. But a lot of anti-competitive regulators have said,

listen, you've got to let other people play in the sandbox here. You have far, far too much power over what ends up on iPhones. Meanwhile, critics of the EU and its competition policies say you're stifling tech innovation. And the reason that all of these firms are American that you're regulating is because you have an allowed the tech industry to grow and prosper within the continent. So that may be another angle here too. All right, moving on. Whole Foods said yesterday that it's opening a new type of store in New York called

Whole Foods Market Daily Shop, which range from 7,000 to 14,000 square feet and serve the grab and go needs of hurried urban customers. What is this? A store for ants? Yes, actually. Regular Whole Food stores are at least three times bigger. But the grocer's foray into more petite locations is not unique. Whole Foods is part of a wave of retailers that think size doesn't matter.

Last month, both Macy's and Best Buy said they're trading in the big box for a smaller box with plans to open smaller format locations across the country. And Nordstrom, Target, coals and more chains are scaling back their huge stores that have typically anchored malls and focusing on expanding more compact and efficient stores. Overall, the average store size in the U.S. is the smallest it's been in the last 17 years. Toby, what is going up? I think customers are just using stores differently these days, whereas before you wanted to go to a big box retailer both for customer or product discovery, like literally wandering the aisles was how you came across new products. That has completely shifted these days.

You don't browse the aisles anymore. You browse online and then use maybe smaller stores to go pick up the items that you ordered or check in and see, maybe try on a product in person or something like that. So I think that you still want stores nearby and accessible, but you just don't need as much overhead anymore to, because you're not discovering products there anymore, you're discovering them online. And I think overhead is probably the biggest factor here. Rents are skyrocketing. So smaller stores means you're paying less in rent. And then also there's labor shortages in retail.

If you have smaller stores, you need less people to work, fewer people to work there. And that also costs less. So I think just retailers are also trying to cut costs. And smaller stores help them do that. I'm really digging the IKEA model as well, because IKEA is known for their gigantic, gigantic furniture stores, but they've also opened at least 26 mini stores, which is some just for picking up orders and others that resemble just showrooms. Because, again, there is some value to seeing a physical object in person that you don't get online. Furniture is one of those things that you do want a sense of how it's actually looking and the size of everything. So IKEA is kind of staging exactly what their customers want, which is a place to pick up their stuff, a place to see.

the furniture without some of the gigantic footprint that IKEA is known for. And one final wrinkle of this that may be surprising to people because Whole Foods is opening up at smaller stores in cities. And you might think that cities would be the primary location of these smaller stores. But that's actually not true. Retailers are opening up smaller stores, mostly in suburban areas where people are moving to. And it's an ability to get into secondary tertiary markets with a smaller location where you, you're going to. You can be a little more flexible. If it doesn't work, it's easier to close down.

If it does work, maybe you can expand. So it's just a great way to test whether your products work in new locations. All right, before our show gets shrunken down into a smaller footprint, let's take a quick break. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College deal, everything you need to study and play with. with select Windows 11 PCs.

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One size, absolutely does not fit all. Get a quote or find an agent today at thehartford.com slash small business. I know many of you are listening to us on your commute right now, so I cooked up a Toby's trend that is right up your alley. So grip that subway pole, fasten your seatbelt, and settle into your train seat as I, a much too online gens here educate.

wise beyond his year's millennial co-host, Neil, about a recent trend I've had my eye on. The trend I want to talk about today is the rise of super commuters. These are the people who are loosely defined as spending at least three hours traveling to and from the office each day. It's actually not as insane as it sounds. Let's go back to the pandemic when lots of people packed up shop to move to quieter, spaceier places while holding on to their big city jobs due to the rise of remote work. As a result, according to a new study from Stanford Economist and payment provider Gusto,

researchers found that many Americans live roughly twice as far from the offices as they did pre-pandemic. Combined that insight with the fact that employers are calling people back to the office and you get this growing niche of super commuters willing to drive or even fly into the office in order to get the best of both worlds. Reading some of these commutes, Neil, insane. Someone is flying from Iowa to San Francisco. Another is commuting into Manhattan from Cincinnati. Suddenly our morning routine, it doesn't sound all too bad.

No, it's insane. But when you hear interviews with these people, they justify it by saying, I can get a big house, raise my family out in Iowa, are in Cincinnati. And flying these days is just not that terrible. You can get from Cincinnati to Newark in an hour and a half. And so they do the math in their head, and they're like, maybe this works. This is definitely not for everyone. There's a very specific type of person that is a super commuter.

but in the age of remote work where you only have to go in the office a few times a week, or maybe just once a week or maybe once every two weeks, then it could work for some people. Yeah, if you do the math, and you have to come to the office three days a week, which is kind of the standard for hybrid employment these days. If your original commute was 10 hours a week, which is one hour each way, five days a week, you can now live 40 minutes further away and still travel the same amount for work. So, again, on surface, it sounds just absolutely insane to do something like this. But if you start doing the math boats financially, too, paying Cincinnati rent is surely a lot less expensive than paying Manhattan rent.

And so if you factor in the ticket costs of the airplane as well, sometimes the work even pays for your commutes. And it starts to make a little sense. So where are you moving? I don't know. Where have we said that we're going to move? I think North Dakota was on the list or Northwest Arkansas. Or Northwest Arkansas to Newark. That might be a little bit of a stretch.

But I'm kind of on board with the super commuter here. Yeah. And this is not available to everyone. This is a very specific type of person. It is the remote hybrid worker. It is also largely concentrated among people who earn more than $100,000. For people who earn under $50,000 a year, their average distance to work has not budged at all in the past few years. Plus, it is focused on millennials with young children.

Those people 30s, 40s looking for a bigger home where they're raising their family. Yeah, really quickly, the winners and losers here, big cities that accommodate the needs of these people who love to work like this, they're going to win. The losers might be the mid-tier cities like the Clevelands, the Syracuse of the world, who have long been kind of these regional hubs but are now losing some of the people to the tier one A-list. I don't want to say A-list cities like that. So, of course, there's always winners and losers whenever you analyze a trend like this. And some smaller cities might be on that loser list. And it still shows how the pandemic is really upending the economic geography of the United States.

Okay, they promised us flying cars, and it turns out they may have delivered a flying car. The SpaceX-backed startup Olive Aeronautics claimed yesterday that it has 2,850 pre-orders for its Model A, a car that can drive and, yes, also fly. Since the Model A costs $300,000, that means this company has a total order value of over $850 million. And how's this for Chutzpa? Olive said that this number of pre-orders, which require a $150 deposit, makes the Model A the best-selling aircraft in history. more than Boeing, Airbus, or anyone else. It's going to need some close to because flying cars or any other kind of electric air taxi, they have not taken off yet.

In 2017, Uber planned to fly passengers with its air taxi by 2020, before selling that unit to a startup called Jobi, which pledged to have service as early as 2023. That didn't happen. Because even if the tech is there, regulation is not there. Olive has received clearance by the FAA to conduct limited flight tests, but it'll likely take years before we see this thing in action. The company is hoping to produce at least one car by the end of 2025.

Yeah, there needs to be a lot of asterisk attached to everything Aleph is saying. The biggest one being that you only have to put down $150 to pre-order, so saying that you've booked over $850 million of value, it's a little bit skeezy, but I do like the confidence. One of the things that I do like about Aleph's approach in particular, though, is that a lot of the players in the market right now are building these cars I put in quotation marks that look a lot like airplanes. They have wings.

They have these big rotors on the sides. Olive's looks like a car. It actually works by rotating when it takes off to kind of turn the body of car into wings. It's this super, super light class of vehicle that actually falls kind of under the same classifications as a golf cart. So it might have a little easier chance with the regulators. As you said, that's always been a big hang up for people. But I do like that they are taking flying car to Spirit and design.

something that looks like a car. Right. He is boasting that this is actually the first flying car in history because it is, it looks like a car. It's meant to mostly drive. But I guess when you're stuck in traffic, you can pop up and then turn on your side and fly over everyone. You can do that. One person who's been a very vocal critic of flying cars is Elon Musk. He says, quote, if somebody doesn't maintain their flying car, it could drop a hubcap in guillotine you. So that is a big fear is that when you have these things whizzing about your head, there's a ton of safety issues that get introduced like that. Also, if we talk about its driving capabilities, you're not exactly. Golf carts. Yeah, it's golf cart speed. It's expected to go between 25 and 35 miles an hour,

although when it gets in the air, 110 miles an hour, so it can start zipping around. Yeah, I mean, flying taxis have been promised forever, but it does feel like the industry says the ingredients are starting to come together finally between regulators, money, and the technology. So maybe in the next few years, we'll actually see some of these on a limited basis. I mean, the first use case that comes to mind is vacation areas like the Hamptons or Martha's Vineyard where rich people are going to go from their homes and fly to their beach house. They're not populated areas, so you don't have to worry as much about a hubcap falling on somebody's head. But it does seem like there may be some movement in the space. The FAA has put out a plan to have a commercial air taxi service rules in place by 2028.

But again, it does feels like autonomous cars in the way that just one small slip up is going to. to delay the industry rollout for at least a few years. Yeah, I do encourage you guys to either Google this or come watch our YouTube video right now because this Aleph card does look cool. So it's got the looks going for them, which is, I don't know, half the battle for me. Let's move on to our final start of the day. You know the feeling after a long, hard day's work when you collapse on the couch, drained of all physical energy.

Well, thanks to new government data, we can actually pinpoint who among us has the most physically demanding job out there. And the answer, maybe unsurprisingly, it's fire. firefighters. It's the job that puts strain on all five of the physical senses requiring hearing of speech at a distance, exposure to humidity and heat, affords no control over your workload, and has to lift the heaviest weight. Now, if that felt like a random collection of data points, let's back up to figure out how you might put together a list of the quote, most demanding jobs. There's this massive data set prepared by the government to help determine disability benefits.

It's called the Occupational Requirement Survey and is a result of, five years of collecting 148,000 observations on the physical requirements of more than 480 different jobs. And yes, firefighters seem to come out on top of a lot of different physical requirements, but not all of them. Digging into this data uncovered some very interesting occupations that top the rankings in different categories. Right. One that stood out to me the most, ironically, was the jobs that stand the most. And most of those are in food service. The people who stand the most while at work are butchers, cooks, host and hostesses at restaurant,

food processing workers, dishwashers, food prep, bartenders. So if you like standing, you like talking to people, food service is the way to go. Yeah, food service is the way to go. One category that fighters do not dominate, unsurprisingly,

is they do not have the wettest jobs in America. That honor goes to dishwashers, which I also thought was a very funny piece of data to quantify as who has the jobs that get wet the most. There's also the job that get wet the most. There's also the jobs at least likely to require speaking. That comes along, those are dishwashers along with machine tenders in factory. So if you don't like speaking, head to the back of the kitchen and start washing dishes.

And the jobs that sit the most are unsurprisingly, programmers, aerospace engineers, web developers, editors, accountants, data scientists, anyone who just sits down. Where's podcast host? I don't think that was one of the four. We talk the most out of any job. That actually is 100% true. So if we go to the education piece, the jobs least likely require education are, again, dishwashers, groundskeepers, line cooks are all up there. The most education, though, are architectural and engineering managers.

That job requires 9.2 years of education, the most of any occupation. That's more than you need to be a CEO or even a physics professor. So if you're thinking about skipping out on school, maybe don't go into the architectural engineering fields. All right. That is all the time we have for today. Have a wonderful Tuesday. in New York City, don't forget your umbrella on your way out the door.

Looks like it's going to rain for about the next three days. For any hate mail, love letters or unhinged rants, please write to our email, Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Yuchinawa Ogu is our technical director. Billy Minino is on audio.

Hair and makeup will show up to work when cars fly. Devin Emery is our chief content officer and our show is a production of Morning Brew. No idea, Neil. Let's run it back tomorrow. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly, big board buck slot machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history.

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