Tech Brew Ride Home - (SPC CST) The Facebook Antitrust Blowup With @Kantrowitz

Episode Date: July 3, 2021

lex Kantrowitz of the Big Technology newsletter comes on to try to help us work out what happened with that Facebook Antitrust case blowup. Also, what does this mean for regulating other companies. Hosts: @chrismessina @brianmcc Check out Alex's Big Technology Newsletter Here Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. What's up, Chris? What's up, Alex? How's it going? Good. Long-time listener, first time caller.

It should be on the show. Same. Same. It's exciting. I feel like you've been in my head for a long time. And so this is good to actually have an interactive experience. Sure is. Yeah, I briefly tuned into your conversation this morning as well about making it in the world of, I don't know, the crater economy. It sounded bleak. Oh, yeah. You know?

It's a mixed bag. I think that the incentives are to make it sound like the best thing ever. But it's entrepreneurialism at the end of the day. So you have to be right for the highs and the lows. And there's plenty of both. Yeah, I think it's interesting, right? Because there's this transition, I suppose, that happens for some people, where they start out doing it because they'd love to do it.

I forget the woman's name who was there with you, But she was like, I was just a YouTuber and it was fun. It was great. And then she got this boyfriend or husband now. And he's like, oh, you got to monetize this and you got to merch that. And, you know, you got to get on TikTok. And it's, yeah, it turns into a slog after a while. Yeah.

I think the key is just to keep it in perspective. And one of the things is you can say yes to everything. So being selective about the stuff you take on is the best way to survive in that type of world. You know, at the same time, though, it felt like there's, this, and I know that was actually said in terms of like a message. Yeah. But there seems to also be this fear of obsolescence, fear of people moving on. And I think that the burnout and the things that people talk about is because they let the

platforms dictate what they're doing as opposed to being true to whatever it is that they want to do and, you know, being okay with the, I don't know, everything sort of follows the crypto boom and bust cycles. and eventually it levels out. And you have to be able to ride those. It's almost like waves of nausea. Yeah. Well, I think that that's especially true when you're subject to the algorithm.

Yeah. When you're trying to, you know, do all the things to get YouTube in front of, you know, the people that subscribe to you, that can be extremely exhausting. I think life is much better when you're writing to people who subscribe and say, I want you in my either RSS feed or, today. The modern version of that is the newsletter or in a podcast feed. So you don't have to rely as much on, let's say, a Twitter algorithm or a Facebook algorithm to connect you with the people who, you know, raise their hand to hear from you every week

or day or whatever it may be. And I honestly think that, like, if I was, you know, newsletter writing and podcasting is, is no walk in the park. But if I was crushing my fingers to, like, get Facebook newsfeed distribution in order to reach people and stay in business, I would probably go totally nuts. I mean, given the stuff you write about. Okay, we've got Brian here. I want to make sure his audio is working. Brian, you hear?

Yeah, verify that. Number one, this is the first time that I didn't get a notification. If you hadn't sent me the link, I still don't see that the space is happening, at least on my Twitter. and having weird issues here. I have a fan on in the background, so let me know if we've got weird sound issues happening. Brian, is it like 100-something degrees out in Brooklyn today?

Yeah, it is. And we've already had a couple rolling blackouts. We lost power once. So anyway, FYI, if I disappear on you. That's what's happened. It's actually chilly here in Oakland. And actually, I'm sure, Alex, I'm not sure if you're in San Francisco, but yeah, it's kind of foggy. I have in San Francisco, and it's foggy and cold, as our typical summer.

Everyone else is burning up, but it's... I do feel for the people in New York, but also understand it could be worse. Yeah, well, right. We could be in the Pacific Northwest or Vancouver. Totally. Okay, so I'm going to kick this off and then we'll get into it. Alex, you're a pro, obviously. It's great to have you here.

For everyone tuning in now, this is the tech meme ride home experience. Brian and I use this opportunity to go deeper into the conversations swirling around our minds and social media and elsewhere to try to understand what's happening in the tech world, to put into broader context, to bring the lens of, I guess, maybe tech history and also product and product design and put it all together to try to figure out what's happening. We are, and by the way, this is being recorded, and it will be published to the spacecast feed probably tomorrow. Today we're being joined by Alex Cantorwitz, someone who I've both followed for a long time. I listen religiously to his podcast.

I read his newsletter. And he's in this, actually, I think maybe we started, or I started to be aware of your work back in the Uber days when I was at Uber. And of course, you've been a pretty staunch, both critic of technology, but also someone who's trying to, as you say, get fair and nuanced views of what's happening. And so, Bright and I have not gone deep on all the stuff that's happening in the government regulatory world. And it feels like this stuff is so important. And I don't know, could have a really, really big impact on what happens, what we're able to do in the tech world, that we needed to just sort of break these things apart. and get a sense for what's happening, why the remedies that are being proposed are being proposed, which of them are reasonable and might have certain outcomes,

and then to look at certain actions that have happened recently to help us understand this. And of course, Alex, you've been writing about this, talking about it. So that's why we're super excited to have you here. Well, and... Listen, not to pull the rug out from under everything, but like literally what I need to know, Alex, is, first of all, the judge ruling this week sort of came out of left field, I feel like, for most people. To set the table for that, like, basically they dismissed the FTC's case against Facebook,

which we can get into, that might not mean the end of it, but was that out of left field for folks like you that are watching this stuff closely? You know, in situations like this, I tend to end up in shocked, but not surprised territory. And again, I've been talking about this for a while. So I think it's this really underscores the big issue here, which is that you have the FTC, which has an annual budget of $330, $350 million a year going up against a company like Facebook, which makes that much money in two days. And so obviously the resources are going to weigh heavily in the first.

favor of a company like Facebook to be able to fight against the FTC. And I think that's what happened here. You know, Facebook has a legal team. You know, they immediately tried to challenge the suit to, you know, throw it out. They'll do whatever they can. And you're seeing this with both companies, right? I mean, even Amazon is now pushing to get Lena Con throw an opportunity, which we'll talk about.

But, you know, it's the FTC is up against, you know, the biggest companies in our economy. and they're not going to see them go down without a fight. So, you know, it's definitely, I was aware that Facebook was challenging. The suit, you know, it didn't seem this week to me. But, of course, you know, now the FTC will have to go home and revise, amend, and bring it back. So I think this is a good opportunity for the Lina Khan FTC to actually, like, start making its mark saying, you know, okay, Facebook, you want to play this game? we're going to actually come back and, you know, revise the suit, file it again, and then it's game time.

So, you know, potentially, you know, Facebook's moves might have backfired in that front. It might backfire because it could give, you know, members of Congress more ammunition to pass the five bills that are now for them that are meant to rain in big tech. It can make Lena Khan angrier, although, you know, I'm not sure if anything they do right now will add more incentive to her to try to rein in big tech. men. Right. Let me, let me give this to you in two different ways, which is number one, not to please everyone listening, I'm not being political, but there is a school of thought out there that the Trump administration, which originally it was, the suit was brought last year, and maybe it was rushed, maybe there weren't the best people, the best lawyers behind it, to what degree do you feel like that maybe they just screwed it up?

They just, the lawyers didn't get it right. They didn't draft it the right way. And so that if they do have a do-over, maybe that's all it is. This is a bump on the road, and they'll come back and redraft it. And it'll be nothing. Let me jump in here and just say what the court wrote, and then we can go from there. So what the court wrote was the company, they allege, they being the FTC, has long. have a monopoly in the market for what they call, quote, personal social networking services,

which, you know, PSNS, I guess we need to define. And it has allegedly maintained that monopoly in violation of Section 2 of the Sherman Act through two different kinds of actions. First, by acquiring firms that it believed were well positioned to erode its dominance, most notably Instagram and WhatsApp, and second, by adopting policies preventing interoperability between Facebook and certain other apps that it saw as threats, thereby impeding their growth into viable competitors. So one of the things that I just want to call out from a legalistic framework, and I'm not a lawyer,

but one of the things that is illegal is to maintain your monopoly position without the government granting you that monopoly status. Monopolys aren't illegal unto themselves, but it's certain anti-competitive activities that is what the government wants to avoid or curtail or whatever. So in this case, essentially the court was like, look, you didn't define what the personal social networking services space or marketplace is, and you didn't articulate how Facebook is actually a monopoly. It took it as prima facie or sort of common knowledge. Established that Facebook is a monopoly. And yet this whole case is whether or not by the

existing definitions of monopoly that Facebook is, in fact, a monopoly and is doing things to maintain their monopoly over time. Okay. Correct. That's right. To address Brian's juicy question, I don't think that this was had much to do with the Trump administration. The head of DOJ is politically appointed. The FTC has a set term. And in fact, fact check me on this, but I think they actually brought this case after the election. So, from my understanding, the FTC is much more insulated from political pressure than the DOJ is. It's like once Biden nominated for a con, for instance, you know, that you can't fire. And so I know that there was pressure within the federal government to get some suits going, you know, against the tech giants.

But from my understanding, you know, in this case, it didn't get thrown out because of, you know, this floppy work that was done, you know, in a rush. And I do think that, you know, the lawyers at the FTC are diligent and really care about this case, and they will amend it. And this isn't the end of the line for Facebook. Now, the bigger deal is that the judge threw out, I think there was something like 40 plus cases being brought by state attorney generals. Or maybe one case being brought by is 40 plus attorney generals. They do not have the opportunity to amend. And when these cases first came out, that seems like pretty important to me because Facebook could settle with the FTC like it's done time and again for very little penalty.

You know, I mean, $5 billion for us is a lot of money. $5 billion for Facebook is not the worst thing in the world. So what happened was the court throughout the state AG cases, which means that it's going to be easier for Facebook to settle this because, you know, it's much easier to settle with. with one FTC is much harder for Facebook to settle with 48 plus state AGs. Now, the question is, which FTC is Facebook going to try to settle with? Not the one that brought the suit. Now it's Lena Kahn's FTC.

It's going to be a much harder task. Well, let me give you the second part of my question, which is, and this is a Lena Kahn question, which is she sort of made her name by saying that the way we think of antitrust and anti-competitive and regulation is 100 years old or more, and that the terms are outdated. And in a sense, the court is kind of saying that to the FTC. It's like, well, you didn't actually define it based on the terms of the law as it exists. And so, as I said on the show this week, in theory, this could bounce back and be like, well, all right, either A, the FTC is going to come back and like redefine their terms and then, all right, we're making a much more focused case, or this is just more fuel for the people that are antitrust engaged right now to be like, well, we need updated antitrust legislation and regulation and more updated stuff to do that.

Like, if what they're saying is that the terms of what the market irregularities are or unfairness is, it doesn't fit this case, then that is sort of like what people like Lena Khan have been saying for years, right? Yeah, correct. And maybe it's both. So maybe it, you know, the FTC does refile and the case gets heard. and it also sparks some more awareness among members of Congress that, you know, potentially the laws need updating. Now, just to address the one thing, and I'm kind of interested to toss this one to you guys. I do think the judge hit on the weakest part of the case, which is that Facebook, you know, Facebook being a monopoly. I don't see Facebook as a monopoly in personal social networking.

I mean, obviously, it is the directory of the Internet in some ways. but you look at its competitors and it's a zero-some game in social media where competition is for people's attention and from what I understand for like maybe the last 12 13 months running the number one downloaded app in the US always has been TikTok which is just crushing Facebook TikTok and Snapchat make its move for time and yes Snapchat of course is revitalized after the bump in the road after Facebook took stories so from my perspective I think it's going to be really The judge might let it go, and we might end up seeing a case. But I think common sense dictates that Facebook really doesn't have a monopoly

and is, in fact, the most vulnerable of all tech giants. Right. Do we know why this is the first one? And we'll definitely get into the Amazon thing and everybody else. But I feel like Facebook was always the low-hanging fruit because it sort of goes across the aisle, and it's like, you know, liberals have... Well, it's the easiest to hate. Everyone's upset with Facebook. Yeah, yeah, yeah. So maybe is that part of it, too, is that, like, this was the one that was the easiest to swing your bat against.

And then... The thing... Sorry, I'm going to reaffirm my thought out this before you guys. that. You're right in the sense that if you're defining the market in terms of social media, it's very easy to make the argument that Facebook does not have a monopoly. If you define it in terms of advertising, then you've got a better case, but even then, it's a duopoly and they're behind Google. And so it's sort of like if all you wanted to do was make headlines or go after the thing that people were the maddest about, then that's why they went around Facebook first.

But maybe Facebook is not the one that is the most in the line of fire here or in danger here in terms of what the law actually is as it exists now. Correct. This is a question I'm still investigating why Facebook goes first. I do think that Facebook was the target of a lot of animosity from both sides. for the 2016 election. And in fact, I shouldn't have announced anything now, but whatever. So we're a family here on Twitter spaces. I'm speaking with the team of David,

Representative David Cicillini, who's leading this whole thing. Nice. About coming on Big Technology Podcast, hopefully he'll be on next week. And the one thing I want to ask is what the motivations have been. Now, of course, like we start to see that, you know, Facebook has used the, market power and grown extremely powerful, especially over the past five, six years. So what are the consequences of that in terms to newspaper publishers and stuff like that?

By the way, I think a lot of publishers have been the loudest in making the case that Facebook's a monopoly. So potentially that's part of the reason why it's here. But I really would like to understand what the motivation is. Is it the 2016 election? Is it some consolidation of market power? to me it's still kind of easy. One thing I'd like to hear from Congress is, hey, this is the reason why we've decided all of a sudden to start making these moves. Yes.

I'm sorry to jump in if Chris had one, but go for it. If I could speak to Representative Cicillian, the first thing I would ask would be, yes, it was a mistake for Facebook to be allowed to acquire WhatsApp app and Instagram. But that was a decade ago. So it's kind of, and this, again, I'm not a lawyer, but like the legalistic part of it is like, so even if now you say, well, that was a huge mistake and we screwed up, I don't, I don't see how there's any way that they can undo that. You know what I mean? Like, even if you can get to the point where it's like, well, this gives

Facebook too much dominance in this particular market, even if you can make that argument, even if you can make the argument that it's harming consumers or whatever. I don't see how you can undo something. And that's specifically with the state's case got thrown out for. Specifically, the judge said, like, there's no precedent for that for throwing out something that happened a decade ago. I will say that I think the WhatsApp acquisition should have had more scrutiny. I don't really see how you can make the case that Instagram shouldn't have gone through. But yeah, I think one of the interesting things that we're going to watch is,

this case goes on is that, you know, there's a chance that Facebook is going to be made substantially weaker as the FTC, not because of the FTC action, but as the FTC takes this action, you know, through the courts or as Congress passes. What do you mean by weaker? I just think, I happen to think that, that the TikTok threat is massive, the Snapchat threat is massive. I mean, look at Instagram right now. The company seems to be telegraphing the fact that it's going to be.

change its entire product in order to compete with TikTok, which is not something you do when when you, I mean, I don't know. It's one thing to add stories. It's another thing to completely change your feed in order to head off competition. And so I don't know. I mean, Facebook is obviously going to remain powerful, but is it going to be the overwhelming powerful presence that it felt like it was in like 2015, 2016? That's really tough for me to see right now, given the competitive I want to step back a little bit from this because like we've been talking about for a long time. One, the government is very slow to act and to make changes. We're seeing that right now and what they're fighting against are things that happened 10 years ago.

So by the time that any of this actually gets adjudicated and put through the courts, it feels like to your point, Alex, like either Facebook is going to be largely a different business, in which case regulating it according to what would have made sense eight or 10 years ago doesn't make sense. and the competitive marketplace feels quite vibrant. Like, just because the old people are not using new apps doesn't mean there isn't competition out there. Like, to try to assert that Facebook is a monopoly in the conventional sense, like, back in the day when you could only actually choose from one provider, that just isn't true. You can go to the app store. You can go to the top 10 list of social media apps and download all of them and sign up for all of them.

The problem, it turns out, comes back to human behavior, human attention, human attention, human effort, trying to move your social network from one to another is a problem. But that's not really a product problem. I mean, it is in a way, but it's a problem of behavior. It's a problem of convincing your friends that something else is better and they should leave Facebook behind. So I don't know what type of remedy could actually be introduced in a timely fashion that is going to oxygenate the market more than competition, you know, from better product. Now, maybe that's naive and maybe it's because I'm a product guy and I just think that like better product tends to win. But I think what you're saying is super spot on because Facebook and Google, frankly,

and all the big companies don't really move unless they see a loss in concentration of their customers. I mean, I worked on Google Plus. I was there when Google became aware that Facebook was going to eat its advertising lunch. And that motivated the company to move and spend a lot of money in a very short period of time. And that type of competition and the way that these companies compete, it clarifies their mind and they focus.

And to see Facebook moving in this way feels like the way that Google moved when it recognized the Facebook threat. So the fact that that cycle is repeating now, and there's a different, Facebook, I guess, is the incumbent, and now they're being disrupted by an algorithmic feed,

the real problem that Facebook has on Instagram, which is, I think, their most leading-edge sort of defender of culture, perhaps, and owning the future of culture, is the behavior. The behavior on TikTok is different. It's more TV. It's more subtle. It's not feed-based. It's not control-based. So the fact that Instagram spreads across the era of folks like you and I who are used to or at least experienced a chronological feed, and the TikTok generation grows up, having never experienced a

chronological feed and not wanting it means that TikTok doesn't risk losing or alienating half of their user base. And that, I think, is existential in a way for Facebook. Not only that, not only is it sorted, you know, out of chronological order, but oftentimes the people that you see are people you never follow. And following doesn't even really matter. People get millions of followers and it doesn't make a difference. Exactly. Yeah. So it's a big challenge for Facebook. Obviously, I think what you said earlier or spot on, you don't change the whole product unless you see that you're losing users. And I think that's what Instagram is doing now.

And remember, Instagram became the crown jewel after Facebook couldn't hold the port. So if Instagram goes, you know, what's left with Facebook? Totally. Let me ask you to pull it out from just Facebook. Should we read anything into the larger Washington wants to go after big tech in general? or is this, as we've been saying, like maybe a Facebook specific thing? So, i.e., to get into Amazon or Google or Apple or whomever, any other suits that are coming down the road, should we just assume that, no, this might be a speed bump right now,

but the momentum is still in Washington to do something against big tech? I definitely think there's still momentum to do something. And, you know, again, like one of the big issues here is that the U.S. intentionally basically kneecapped its regulators over time, felt they were too ambitious and, you know, said, okay, get out of the way. Are there examples of that? Just, Alex, like, historically, what was it that they were regulating that was overzealous and that they needed to be kneecapped? Or is that just what business tends to prefer? Like, get your hands off. Yeah, there was a period of, so there was a period of.

So there was a period of time in the U.S. where we went full-on businesses, our key to growth, took down the tax rate, and started to pull back the funding of these regulators. So I think that there was just a general preference for a much easier regulatory environment. And that's why you see FTC and DOJ antitrust funding actually start to go down, which is strange because usually in Washington, agency funding just goes up. So I think that we'll see, number one, like the bill with the, so of the six bills that Congress introduced, the one with the chance to get passed, the best chance to get past is one that will increase funding to the FTC and DOJ trust department by tens of millions of dollars, which I think is needed. Because, you know, if these agencies can't even act as a check on tech giant power, then you'll start to see some of the,

basically reckless anti-competitive business practices that we're seeing up. Obviously, you want to do this stuff and not destroy these engines of the economy. You want to keep the good that they're doing and try to mitigate the bad, but it's a very, very difficult thing to do. So I do think that they're still hungry in Washington to do it, more than I even expected. They certainly didn't seem smart about what they were doing when Mark Zuckerberg came in for the hearing and they thought, they asked him how do you make money? How do you make money?

How can I send an email on my WhatsApp? But they changed. They changed. They did. They've been extremely impressive. Of course, Selena Con was a big part of that. She worked with Cicelene's antitrust subcommittee to help produce their report. So now she's, you know, in charge of the regulator. They're about the fund.

I remember even doing a segment where I literally pointed out that she was sitting behind Cicillane. And being like that that's meaningful. This is the person sitting behind. And now she's in charge of the FTC. Exactly. So yeah, I would say that there's hunger. And just sort of the big question is,

so the regulators are going to get funded. They have the, you know, person who's most against big tech running the SEC. And the big question is whether any of the subsequent five bills are going to get passed, especially Cicilini's bill. which looks at anti-competitive practices, particularly when it comes to self-dealing. So, for instance, Amazon prohibiting Amazon from taking data from a merchant that sells on it and then using that data in order to enhance its own offering, which they're starting to look at.

That is maybe, in my opinion, again, not a lawyer, but this is what it's all going to hinge on, if this goes forward, is this idea, it's all going to come down to the self-dealing because all of these big tech companies essentially have platform business plans, right? So that it's, you know, I would argue that it's the software eating the world sort of reality, where once you get big enough, once you are a tech company that can put a computer in everyone's pocket, you have software that everyone has to use every single day. You have services that people have to use every single day. There's essentially no market that you can't go into, right?

And so the question is going to become, again, I would ask Cicillene, is that what you're trying to define? Are you trying to define a situation where in the 20th century when the phrase was, what's good for GM is good for America, GM didn't also try to get into selling dishwashers or laundry detergent or clothes or like they stayed in their lane. Is that what the regulators want? And if so, like, okay, you can be Apple and you can only do certain things and you can be Google and you can only do certain things. Is that not realistic for the 21st century where if software is eating the world, that's kind of hamstringing competition in and of itself?

else. That's why I think that's why this stuff is so tough because you know, you write the wrong rule and all of a sudden you've started to kneecap your economy. So I think that is the question, Brian. It's where does this end? And what are the, you know, obviously you have a problem, you write the bills to address the problem. What are the second order effects to that? And I wrote about that a little bit, you know, especially in regard to this bill that would prevent, essentially prevent big tech from making acquisitions full stop, which just seems to me to be, you know, a needlessly aggressive bill that could really constrain, you know, startup's ability to exit, which would, you know, potentially change the incentive of whether

you wanted to start a new company or not. So that's the cool part about democracy, though, is that we get, you know, a number of months, maybe years to look into these and start assessing the all different sides. And of course, you know, the tech companies should make their case, you know, better off that they make it, you know, themselves versus these, you know, vague, you know, anomalous third parties that they pay to do it for them, like the Chamber of Progress, which, what does that mean? But, yeah, I think that this is going to be a key part of the debate.

So I just want to let everyone know that I have pinned several tweets that link to Alex's newsletter and a bunch of the stuff that he's written about this, specifically that one bill that he just mentioned, where he goes into some of the secondary or second order effects of some of these regulations. And that's kind of what I wanted to talk through in this, I don't know, this next part of the conversation. I feel like we've laid out the landscape. We have a sense for what's been going on, maybe why regulations haven't happened. I also posted a link to what I think is the FTC's historical budget. And it seems like it did dip around 2012, ironically, around the time of some of these acquisitions and mergers. And it's gone up since then. So there is still

funding. I mean, you know, way more than in the 80s or 90s. But of course, it doesn't tell the complete story about what purse strings are being pulled and et cetera. But I want to talk through some of the, I don't know, let's say that you're having this conversation with Sicily and we're talking about the goals, right? If we take a long arc of history or maybe even 10 or 15, 20 years. And we think about what would the consequences of regulations that are imposed now do to, as our friend Profchi likes to say, oxygenate the marketplace of competition. How would those things actually impact the market? What would be the sort of lived reality of everyday person? And why is that better and for whom? I know these are like high level things, but I think

these are important because, for example, one of the conversations or one of the pieces, let's see, it's the, let's see, there's a couple about acquisitions and we just talked about that, but there's the one that's, what is it, the Platform Competition Opportunity Act? No. The one about Interop. Access, the Access Act, which is short for augmenting compatibility and competition by enabling service switching, blah, blah, blah. Okay. So I know Alex, you, dished on this one a little bit, and I'd love to unpack your thinking here, because I used to work on decentralized social networks, and I've had a number of conversations with folks about decentralization, and there's a whole, I would say, Gen Z preference for ideas, and Randy's in

the audience here, of an interest in decentralization, because they've only known a world in which they've been centralized. So I just, when I think about the interop question, It feels like one, doesn't go far enough. Two, there's a set of assumptions, just like the FTC made about Facebook being a monopoly, that decentralization isn't actually sufficient. Whether you can achieve it technologically, let's say you can. Let's say you do it with Web3, blockchain, ERC 20 tokens, whatever it is that is the enabling technology, you still have the coordinating aspect.

And I guess I wonder if there's or where the logic of interoperability comes from, and if it only comes from the telephone world where if I'm a GoogleFi subscriber and you're a sprint subscriber or AT&T or whatever it is, we can all call each other, right? And that's interrupt and that creates competition and choice. And that's good for everybody in theory. But in the social networking world, if you have a feed that can't render the kind of content that I'm producing, or if I'm producing, or if I'm producing, reels on Instagram and you're producing TikToks on TikTok, but we don't have the same feature set, then the interrupt actually is not going to be that great. Or you're going to be essentially munching a bunch of metadata into a media format or object, like a movie file, and rendering it elsewhere as a non-interactive, non-editable, sort of, I don't know, it's like taking a web page

and putting it into a PDF and trying to then edit the PDF. Like, it doesn't work. So what are your thoughts about this space? Because I know you're hyper skeptical, and yet it's one of the four bills going through Congress. Six bills, by the way. I don't know. You can probably articulate this a lot better than me. I just thought like the Congress writing a bill that will let you like take your data from platform, a platform. I don't really know. I mean, you're right. There are different experiences there. So like if I take my like, like what data am I taking this? stuff I've liked on Facebook and then somehow that has to transpose to TikTok or the people I'm friends with it on Facebook. Sometimes how that has to transpose to the people I follow on Twitter or the photos I have on Facebook and I have to be able to like bring those to another platform. I've yet to hear someone fully articulate, you know, why this is going to be something that's

useful, you know, first and foremost to people. Maybe it will be. I don't know. I'm just trying to think through, like, you know, of my wish list of stuff on social media platforms. I'm like, well, what do I really want? And does this rank, you know, way up there? Could I imagine myself trying to port my data from one platform to the other? I don't know. It seems. You know, let me jump in here, actually, because as you're talking, I came up with one idea. And it's actually very relevant. I don't know if you saw this. But the Twitter account today, and I'll pin a link to this tweet in a second. second, posted out that they are offering NFTs through a presumma partnership with Rarable. And so it's called the 140 collection vitamin T, I think is one of the NFTs. Anyways, what's useful and interesting and powerful about what I saw was two things.

One is that with the NFT space, you have something that's registered on the blockchain. And that is portable. That means that there is one instance of this thing, and as opposed to creating copies of something that just proliferate your data everywhere. In other words, like Google takeout or download your data from Facebook or Twitter and uploading it to someone else, and then having a bunch of junk, basically, that's not connected to anything. In the NFT space, you have a reference to a single object, and especially if you host it on something called IPFS, which is the interplanetary file system. So essentially there are lots of copies out there or whatever, and you're linking to, I guess, the signature of the thing. That starts to get to something that's a little bit more interesting. But that isn't about, I mean, it is interop, but it's more like deciding to agree on a similar set of maybe object primitives out of which you construct a social media environment.

So again, if Instagram is trying to run after TikTok and compete, by imitating or creating a lot of the same features, but they have to move over their entire user base to this new concept of how you receive content and it's like washing over you and it's all algorithmic. It may be the case that Interop doesn't actually make sense for the next generation. Right. It's not even the same graph.

Exactly. What TikTok does is not the same thing as what Facebook or Instagram does. So the Web 3 or the Interop or whatever it is that this bill is trying to presuppose almost needs like a hard reset of the whole. social space in order to function with the logic and the gravity of a decentralized social media and the social web because privacy has to be completely rethought access has to be rethought permissions have to be rethought the set of expectations and norms that you get by being inside of one closed container don't apply to decentralized platforms unless there's policy and enforcement

at a different layer of the stack. So I'm very, I guess, activated and like turned on by this because these are ideas that we were talking about a long time ago that in some ways would have prevented some of this concentration of power that people seem so worked up about. But they weren't interested at the time because they weren't looking to the future to see how this would go. So now we're trying to retroactively apply solutions

that would have made sense if we started there 15 years ago to things as they are today. and it seems like it's going to be a big waste of time. So back to Brian's point, like, why is Washington doing this now? It's because they realize that they have lost a great deal of power and legitimacy in the digital era and the digital age. And they're using, I guess, the mechanisms of democracy, which is good, which is laudable, to try to control this space, which may turn out to be far less controllable than we might have thought, I guess, possible. coming from a superpower like the United States.

Listen, I've made the point before that in the end, a lot of this comes down to power is always jealous and not to be too cynical about it, but yeah, if an industry gets too powerful in any country in any era in any realm, the political power gets jealous about that and they want to rein it in. So, you know, in the end... That would never happen in China.

Right. He's making a joke. He's making a joke because that's literally happening right now. Let's unpack that, right? Because in China, you have the most successful entrepreneur ever there in this quasi-capitalist, communist... All of them now, though, Chris, because all of them. All of them now are. walking back. It's just not, it's happening behind

the scenes. All of the companies are being cowed right now, which maybe Alex can talk about. Is that working as intended? It's working as intended for the Chinese Communist Party. Okay.

Keep going. No, okay. Actually, Alex, let me do a hard reframe on this. If the momentum is still there to curb the power of this giant industry that has become powerful and a third of the economy or whatever it is. Who do you think is the most exposed?

If Facebook dodged a bullet right now, if you had to put your betting hat on, who's the one that is most likely to get their knuckles wrapped the worst, do you think? Probably Google. I mean, if it comes down to your inability to self-preference in your own product, Google does that all the time with maps and Google the answers they have and docs and YouTube. So I think Google is definitely the most exposed. But it's interesting because there's a bill out there that would break these companies up essentially. So does that leave Microsoft off the hook? Like, for my understanding, Microsoft's been rooting on this whole process. I'm like, I don't know what you're doing there, Microsoft. Oh, man, those guys are snakes. Yeah.

They're so clever. You guys might be feeling good right now because I thought you didn't have to go to the hearings, but it doesn't mean that these bills won't address the work you do. And of course, there's plenty of Microsoft product interoperability that could be an issue. So Amazon, of course, you know, it's really tough to say, like, what is the, what is the one that's going to get hit the most? I mean, you'd imagine Amazon would get hit as well, especially if by some stroke, the DOJ ends up breaking off AWS from the rest of the company. Well, the whole company runs on AWS. You talk about the retail.

You talk about the Echo. And talk about Kindle and then even the fulfillment centers. Like, when you're the robotics and the fulfillment centers run on AWS, when you're, you know, signing in and all that stuff. You're using basically stuff that's relying on the AWS back in. It's like that company is so integrated with all that stuff. That's the software. That's the software eating the world thing again. But it also does come back to this idea. In my mind, again, none of us here are lawyers. None of us here are lawyers. But the thing that is, in terms of exposure, the thing that is probably the easiest

for them to do is the self-dealing bit. So anywhere where it's like you have a platform where you have other entities, third-party entities on your platform, and then also by the way, we're on our own platform too, and by the way, we have the access to the data because we own the platform. That to me is the lowest hanging fruit or the easiest case to make legally, I would think. Right. So that...

Yeah, but who else would be enjoined in that? Who else does that apply to? Apple, baby. Apple, yeah, Apple and Amazon. And Walmart. Yeah. Right? Well, Walmart, you need a certain number of users.

I don't think Walmart has the requisite number of users or the market cap right now. What kind of users are we talking about? I think it's 50 million U.S. users, but you also need a 600 billion market cap. It's so specific. It's like not Disney, but... everyone above. Yeah. Well, it's like, what is that?

They did that law in Florida that you have to, you're exempted. Right. Right. Right. Right. Right. So, we're exempted if you own an amusement park. For us Amazon and Facebook.

Your first name is Bob. Amusement parks. Born in January. Yeah. And you're good. Yeah. I don't know. It's, yeah.

But there, look, there isn't there, there are a few things that would be really nice. Like imagine being able to, I don't know, maybe use Google Assistant with your iPhone or, um, I'm sure that's coming. Or call up Spotify. You can. Instead of Apple music. I guess you can do that now. But how long did they kick and scream before they want to do that or make it the default?

Yeah, but that's also the point is that, okay, again, talking about low-hanging fruit. And I'm going to argue against what I'm going to posit right now, which is, so all right, the easiest argument against Apple is, well, that's not fair that Spotify has to compete with Apple music on Apple's platform, right? So you can see, all right, easy remedies there. But then Apple can say, well, does that extend to our weather app, our stocks app, are everything? So that again, like, where do you draw lines in terms of, you know, every time there's a WWDC, we do stories about like, well, that kills this startup because Apple did the VPNs or whatever, you know. No, like that, but like, how do you define these things, right? Because Facebook has, what, dozens, hundreds of apps? And so if I go to Facebook, what actually even is Facebook? Like, the fact that I search for AirPods Pro on Facebook, I will get marketplace listings. Does Facebook now need to include Amazon results and other third-party seller results because they can't combine all their different products and the same search results? That's what I'm saying. Like, if you literally said to Apple, okay, you can't do Apple music.

then what else can't Apple do? Right. What do you strip off? You strip off Apple Music, you strip off the App Store, you strip off all the apps that sort of come for free that make MacOS usable function. It begs the question of like, what is a computer? Yeah. I think it's more just like a good law would say you're not allowed to make your default service

or your own service the only service people can use or shut off competitors. But that's not the way it is, right? It's more bundling, right? And the EU went through this with Internet Explorer a decade ago, and the remedy was now Internet Explorer doesn't even exist. And they're using Chrome as their browser. Right. Well, it does seem, okay, so sometimes the more that you dig into this, it does seem that like what Congress is doing, maybe not an intent, but in effect is just, you know, potentially throwing the whole slew of laws at the tech giants. That's just going to slow them down.

And, you know, the letter of the law matters, but just the process. like it did to Microsoft, you know, might end up, like, dragging them down. Yeah, I've been playing, like, a lot of, like, tower defense games lately, and there are those, you know, there's, like, the archers and there's, like, you know, the catapults or whatever. But there's also, like, I have this one where there's a tree, and it's, like, roots go out on the path, and it feels like that's what you're describing. Like, it's just sort of, like, slowing them down.

It's not really meant to solve or address these problems because they're just too thorny. Even if, even if lawsuits aren't happening, I've made this point before, probably on here, but definitely other places, that even functionally right now, there are deals that aren't being done because the companies know they would be too risky to try, right? Google hasn't made an acquisition since January 2020, according to this website that I found. Yeah, but you get up having the companies end up copying stuff instead of like talking to companies and not waiting, you know, usually a company, that's what I wrote in the acquisition

piece. company, a big company, a way to beat and say, hey, do you want to acquire and they have a conversation? And then, like, maybe a year down the road, they're like, all right, they're not coming over, let's copy. But now they're forsaking the copy, the acquisition conversation altogether and going straight to copy, which is interesting. Well, and listen, historically, like, there's an argument to be made that the giants that we have today, X Microsoft are all here because Microsoft, even though they didn't get broken up, even though in the end, they did lose the lawsuit, but they didn't have any remedy that meant anything.

Amazon didn't, or I'm sorry, Microsoft didn't buy Amazon when it was a $5 stock, which you know a thousand percent they would have done in 2002. Or Microsoft didn't buy Google because they knew they couldn't. They never even tried. They had to do bang. So there is an argument that could be made that even if this is all strum and drunk and nothing comes of it, we're going to get a few years here where what could have been an acquisitive sort of feeding frenzy is put on hold.

And then you have companies that have that breathing room to reach their size, which is a point that I'd made before where if you're just, if every company that is. successful just becomes a part of everybody's tool belt, then that's not a healthy market. Like, you have to allow companies to find their place. That is a more healthy market to me, I think. So let me ask a question about this, because one of the things that I feel like is a little bit missing from all this analysis, and it may actually be irrelevant, but I think it's relevant to these tech companies, which is that, one, they are largely, if not completely,

global companies. and most of their growth is coming from outside of the U.S. You know, Facebook is pretty saturated. Obviously, Google is saturated. So they're all looking to Asia or Brazil or Africa or other places to grow. So if those restrictions are put upon, you know, American companies, does it really make that much difference if they're going to continue to behave in the way that they already do everywhere else in the world? I mean, looking for growth, obviously, you know, if, if, if, if, if, if, if, if,

Amazon buys some e-commerce player in India. Which I feel like they've been doing daily. 100%. Yeah, there is that, but then... Yeah, I don't know. The question more to me is... To what degree... And maybe Alex, you have a thought on this.

Is it that... is it that everywhere in the Western world, it is that sense that governments feel like power has been taken away from them. And certain people on Twitter have been making the case that, like, you're missing the forest for the trees here. We're in a competition with China and other places like India or whatever. And, like, it is a global market. So where are we going to kneecap our most successful companies here in the West with some sort of myopic sort of thing where it's not a fair competitive environment here in the West, but you're missing that it is a global environment, as Chris is saying.

and so maybe you should, as opposed to kneecapping your successful companies, you should be promoting their growth as is happening if you're a Chinese company, except for the fact that we just were saying that they're kind of kneecapping. So I don't know, I argue myself into a policy. Well, one question, though, and maybe a better way to structure this, would be if you want the best possible, strongest, most responsive American companies to thrive, let's say, what rules would need to be in place, right? Like if you think about, and I think about this a lot with just the analogy of sports,

you know, whether it's soccer or football or baseball, you have a set of very clear rules and you have a bunch of different teams and they all optimize for those rules. Some, you know, cheat from time to time, but essentially you have fitness for purpose. So are there a set of, you're saying handicapping, but I'm wondering if it's more like, you know, if we put bricks on someone's shoulder, older, does that make them super macho? Do they, you know, train in like the Alps and like low oxygen environments so that when it comes to competing on the global stage, they're actually

far more responsive and nimble and, you know, they move as opposed to becoming encumbered and slow and bureaucratic as many big companies do. And that would be like the goal that you'd want to sort of strive for. And that's sort of like the purpose of competition. If things get too big and they suck all the oxygen out of the room, then that means that it is less possible for those smaller upstarts that might be more fit for the current moment to actually thrive and survive.

So I guess I'm just trying to think about what is the shape of competition that is sustainable long term in the digital marketplace? And are we almost being too narrow in circumscribing these set of rules to American companies? There's this recent tax change

where, because of all, all the ways in which largely big tech companies, but also other rich companies, move their tax liabilities around. So they basically end up paying no taxes, right? Very clever. But if you look at the market as the globe, as the entire planet, then you can start to coordinate amongst all the players so that more people are playing on more equal footing. And then we're all playing the same game, as opposed to, as we say, like self-dealing or

prioritizing or privileging oneself by being able to. make choices or fix the rules such that you don't have to play the same game that everyone else does. I'll just say this. This is why this stuff is so hard. It's because you have to make, you know, these companies are the engine of the economy. They're also anti-competitive in some ways. Yeah. So you have to make rules that's going. Are they anti-competitive or self-preserving? And is there a difference? Well, you know, there's self-preserving, but there's also like when you end up starting to take data from the vendors that are serving that are working on you yes you become anti-competitive yeah um so you know so so can you start to address some of the anti-competitive stuff

while uh preserving that engine of the economy that's that's the real question here and if you misfire you're you're you are going to be in bad shape because you're right like the you know this whole like you know you're the tech giants have this whole defense of facebook especially you know you better like us, because imagine if China were in our place and it's a bit contrived, but also it's true to some extent. So it's something that they have to pay attention to. Alex, one more for me and then we can let you go here soon. But I did a segment last week, a hat tip to Casey Newton for this.

The idea that regulators are fighting the last war, like while this is going on, in theory, Facebook is locking down with acquisitions the entire VR space, which might be the space of the next 20 years. What are your thoughts on that in terms of while we're undoing things that maybe happened 10 years ago, no one's actually paying attention to what's happening now? Yeah, it's a good point. Facebook didn't make that acquisition of Oculus, but I don't know. First of all, I'm sure I'm going to regret saying this in a couple of years. but I'm really not sold on VR.

You know, it just doesn't, at least within our lifetimes, it doesn't seem like it's going to end up, you know, taking off in the way that a lot of people hope. And, okay, you know, there could be people who say that I'm wrong here. But, you know, during this whole pandemic, when everybody was stuck at home, I didn't have a lot of my friends, you know, getting Oculus goggles and hanging out with each other and Facebook's little. You know, so, Alex, I'm going to push you on this one because I heard your interview.

I knew this was coming. Okay, here we go. Well, actually, this might go in a different direction than you think. I heard your interview with the new, I don't know if he's new, but the Tinder CEO. And you know, you were talking about how people want to, you know, go out in the meat space and socialize as opposed to doing virtual dating, right? Yeah. And here's the thing. I feel, I don't know, I'm not going to go into like your specific age, but I feel like you and I are probably about the same general generation.

I think you're a few years younger. And I, this is the thing that's so hard to do. And I feel like I need to do a better job of talking to more Gen Z folks. But I feel like the sensitivities that you and I have to people spending more time locked in digital environments isn't the same with a generation that grows up in headsets playing Call of Duty or playing Fortnite or hanging out with friends in these quasi real virtual FaceTime house party spaces that the real world and the digital. digital world are merging in many ways, and it's not as uncomfortable 10 years down the road as it is for us. So I guess my point is not about, or in defense of VR, but that Facebook is making a bet to win the developers of the next generation of the Metaverse, and that Snap is also in a pitched battle with them. And if you look at Snapchat lenses and the apps that both provide

for building, you know, face things, those are building the primitives from a programming culture that will determine who is building for that new programming environment. So that's what I think it's actually more about. Well, let me try to thread the needle here. Yeah. It's quite possible. I mean, if you listen to the podcast I did with the Tinder CEO, you heard that, you know, people spend more time hanging out in Fortnite than they do in Battle Roy Almuk.

Right. Meaning that people are socializing. time making friends. Now the question is, do they want to do that in VR goggles or are they happy to do that on a computer screen or a TV screen? And it seems that virtual reality is actually, in some ways, playing out in 2D and not in goggles. And the question is whether people are actually going to want to put those goggles on. And that's what I questioned. And if they don't, then I would argue that Facebook is actually way behind. Because that type of stuff is being built by companies like Epic Games, by Roblox, and not by Facebook,

which has gone all in on one version of this future, not all versions of it. Yeah, I would argue that there's two paths. By the way, this is a meal, a meal welcome. Oh, so, yeah, sorry. So I think there's two paths. I mean, I'm sure there's many, but I'm seeing two right now. One is what Alice was saying is that VR never takes off. in which case Facebook conquers a tiny market and good for them.

Or it does take off, but we're so early that whatever they've conquered is not what the larger, let's say, Metaverse is going to be. And in which case there will be many, many competitors, not just, you know, Apple coming in with amazing AR glasses that so many people are expecting, but to Alex's larger point, there will be robots, there will be, you know, companies that we're not seeing at all doing things that we're not seeing at all because we're so, so, so early still. And I mean, one of the questions that just to connect this whole conversation, and Alex, you've been great. Thank you so much for spending an hour with us.

My pleasure. What of these rules, if any of them go through besides the one about getting more money for mergers, will determine or influence what these companies are able to do or to build when it comes to that metaverse, whether it shows up as augmented reality glasses or different watch faces or different television experience, Who knows what the actual hardware experience is? In what ways does this help to shape the metaverse future that is actually more inclusive and more competitive than the one that we're in right now? And I feel like that's not actually even part of the conversation. It's more retroactive or retrospective in saying, oh, we don't like how much power Facebook has over the elections and over advertising and it costs too much money.

And that's fine. But I think it's more important to think about where this is going because these companies are so far ahead of where the regulations are that by the time they get, get written and put into code, like legal code, they're going to be irrelevant and they won't even make sense. Well, that's why I think Brian's earlier point about the low-hanging fruit is around platforms makes sense because if you argue that, you know, if you write a law that's very targeted on, you can't abuse your own platform in order to destroy the competition, that will apply to, you know, let's say Oculus, but the larger Metaverse as well.

Right. I'd just say that I think it could get weird. It's going to get weird, no matter what. When Senator John Sherman wrote the Sherman Antitrust Act in 1890, he didn't expect that it was going to be applied to personal social networking, but here we are. And so, you know, once a hundred years down the road when almost, you know, there's going to be more companies that are going to meet these specifications that Congress are laying out in their legislation, how did those laws end up getting used? and, you know, I think it will probably be as unexpected and as strange as the applications that we're seeing today. Let me ask you. It's possible that nothing will happen and will actually be better off for it, even though we'll complain that nothing happened after all the...

Well, on that point, Alex, I want to ask you one more question. You're free to stick around if you like. I was going to open it up to a few comments. But given, you know, you've been covering this stuff for a long time. You've written books about it. You're obviously talking to a lot of people about this, including Sicilini himself. So what is your preference if you have one? Is there something you think that should happen?

You've been covering these companies for a long time. You've been writing about some of the abuses of power. Do you think that these things are headed in the right direction ultimately? Or is there something else that we should be focused on? I personally think that the set of legislation that Congress draft or introduced is a little too aggressive. Some of the bills I like. I like the idea of funding the regulators. I mean, let them do their job.

I think that's pretty crucial. And you think the existing regulations are sufficient or that those also need to be updated? You know, I mean, I might write a few, like, pretty narrow laws as well. Like, there's some that I like. I really like the idea of not letting up. So I think the way that Cicillini wrote it was a platform whose, you know, third parties depend on it to reach their customers. cannot take the data that it wouldn't have gotten from them otherwise to enhance its business. It's very specific.

Yeah, that's good a way. I also like the idea of, like, you know, not allowing a company like Apple to prevent third parties operating on it to direct consumers to places where they could buy services. It's a Spotify one. Yeah, yeah, exactly. So I think narrow stuff like that, you know, So stuff that targets like blatantly anti-competitive stuff, stuff that very clearly helps the consumer versus allows feeble competitors to get a leg up is to me the right way to go about things. Let me unpack that one, because I did have one thought about this, and I know I keep going, but yeah.

Oh, let's keep going. Okay, great. Who cares? We'll get some folks up here in a second. The thought that I had about this was it's very easy for us to look at like the big companies. that are fighting and to think about, oh, man, the underdog, you know, has the deck stacked against them. Like, when you think about Yelp and Google, or you think about Spotify and, you know, the App Store, and Spotify and Amazon and Audible, a bunch of these companies are like, look, we'll just direct people

to the web. We're not able to tell them about that because those are the rules of the app store, but we'll, you know, through lots of marketing and email and all the rest, we'll get them to go and buy outside of Apple's purview and we'll avoid their 30% tax. Now, the thought I had today was if you were to imagine that app makers could tell people about payment methods outside of the app store, I would imagine that a large number of very spammy, awful apps would start to send people outside of the app store and say, you can't use Apple Pay. You have to go elsewhere.

and that that could actually introduce a whole ton of fraud and other types of insecurity and horrible user experiences. And I know this is Apple's argument, but I think it's worth thinking about that if I want to get a refund or I want to cancel a subscription, right, it's very easy to do in Apple's App Store today. Like, they are very much on the customer's side. But if companies are like, you know, you think Spotify is ethical, it also opens. up the possibility that unethical companies and organizations all around the world would take advantage of that new sort of side door entrance and make things a lot worse for people who are Apple customers. Do you think that that is a reasonable concern, or do you think that that's just something we have to accept in the tradeoff for providing more choice and access?

Well, I guess I wonder what's the, that we have a control already with the Google App Store. And I don't think it's rife with fraud. Like there's ways to end up banning developers who break rules, you know, or who do defraud people. So if you, yeah, I don't know. What's the story with Google? Do you guys have a sense of that? I mean, it just seems like there's so much fraud in all of Google stores. And in recent years, they've started to crack down.

But Google mostly doesn't care. And it is very much like caveat emptier and you're on your own. But, you know, Android has been, I mean, the top apps in the Android. at App Store for years was antivirus. So that should tell you something. Okay. That does. Yeah. There's there, there is some weird fraud stuff in the Apple App Store too, especially. I mean, there is, but I'm just saying when you open these things up, right? Because there's like a noble cause like Spotify, right? Like Spotify, you should be able to go to the web and, you know, sign up. It also opens you up to Spotify X or Spotify Y, which are nefarious or trademark violators. And then

the app store has to crack down in different ways, which may be fine. Maybe that's it. Maybe they put a whole, I mean, it's interesting that this last WWDC, Apple made it possible for you to literally build an app on your iPad and publish it to the app store. And you have all the features and benefits that keep people safe and secure. Now imagine that you instead make it easier for people to do payments outside of the app store. And that I just, there's so much motivation for people to avoid that 30% that I know for sure they would, and it would generally erode probably the quality of stuff that's in the app store. And that might result in Apple responding by becoming more draconian in the steps you have to take to get an app into the app store. So, you know? Yeah, that's a good point.

That's a good point. All right. So the level of fraud actually in both app stores is actually really close. Apple just wants to make it seem like there's a world of difference, but there really isn't. And this is coming from an Android user. So I'm biased. Are you saying that from a payment's perspective, though? Well, I mean, it wasn't there the case of, you know, I think there was like a crypto app where someone just stole a bunch of crypto and that was on Apple's App Store. So the payment argument is just, it's just Apple's argument. I mean, I think the crypto thing is a little bit like, that's harder.

That's a little more obscure. Absolutely. I'm not saying that there is not spam, fraud, all sorts of stuff in Apple's App Store. I'm saying that the use of Apple Payment. pay seems to reduce fraud considerably. And if I can tell my app downloaders to not use Apple Pay and to exit and go into a web browser and to put in their credit card into some random-ass website, you know, then I could probably get away with a bunch of stuff.

I just don't buy the argument that there is less or significantly less. I'm sure there's less, but I don't buy the argument that there's significantly less fraud because of Apple Pay. Let's say it was true, though. That's not the equation. The equation is, is that worth the trade-off to open up more competition for the larger, you know, market-pages. That is the question.

Yeah. And I would argue that, yeah, it's better to have, you know, a Spotify that's barely breaking even than, you know, Apple music just making all the money. That's better for the world, the trade-off for, I mean, you have tons of people, you know, kids spending money because it's so easy to spend money. and there's that problem because of Apple Pay. Actually, that's a good example. That's a counter example in the way in which Apple has introduced family controls and the ability for doing family approvals. Now, maybe that's a credit card feature, but living in the Apple Pay world,

parents have the ability to approve or deny payments. I'm not sure maybe Google Pay has something similar, but I guess I'm just saying that when you go back to the way of kind of magnetic strip-type credit card payments that are still, available on the web when you type in a credit card number and you put in the the ccv code um that's how a lot of payments would happen and i think that does i mean it does open up fraud regardless i'm not going to make an argument whether there is more fraud in one place or another i don't know i don't have good data on that i'm just pointing out that as alex pointed out um that there are second

order effects that just looking at the noble cause doesn't necessarily or is is an incomplete analysis Apple should just drop that fee a little bit. I think that would be the best. I mean, that's what Shopify is doing. Microsoft did. Amazon is done. They're all moving in that direction. And it just seems like it's like finally, what if Apple did? I mean, what if they just dropped it to 15%, 12%?

They might have to do it from a self, you know, speak about self-preservation. They might have to do it from a self-preservation standpoint. So, yeah. Comes everyone, they haven't yet, to be honest, I think they would have saved themselves a lot. And they did a little bit, right? But not to the degree they should, I would argue. Yeah, like, is it fair that every person who bought a ticket to this event tonight, 30%? No, I'm just kidding.

That's what will happen in a few years. That's totally true. That's what I always found crazy is that it's not just like the initial purchase. It's not just the subscription, but it's also just in-app payments. Like, what are they providing there? Absolutely nothing. Well, I mean, if you do use Apple Pay, it is a very smooth, clean process. Now, I know you're an Android user, so maybe it's different on your end.

I don't know. but there is something to it. Right, but then it should be extra, right? You should level the playing field and that, you know, extra, you know, cut that Apple gets should be on the end user. And if you want to use a different payment process there and have cost you less, that's great. And developers get to provide the option.

Developers want to provide Apple pay to their to the user. Well, that's what Microsoft is doing with their app store. So this is going to be a fascinating period where, again, the market is correcting itself faster than, then regulation can come and we're going to see how and what kind of stuff happens, like in a world where you can bring your own payment processor and you can bring your own app store to Windows 11. So we're finally seeing some real competition in this space, I think just in time. Yeah, I've long thought that Google missed the boat.

They should have swooped in and did this before Microsoft and, you know, provided a real, kind of like competitive edge to Apple and said, look, if you come to our platform here are the possibilities and you get to pay less and you know we're we're more open yeah folks it's been a pleasure i got to drop off totally i was just going to wrap this up Alex thanks so much for being here actually do you have anything i mean i know you do Alex why don't you give your spiel where can people find you what should they subscribe to tell us more and then feel free thank you yeah you can subscribe to big technology it's a newsletter on substack If you just type in big technology or maybe big technology substack or just go to my bio.

You can find it. And then big technology podcast is the podcast and your podcast app for choice. Amazing. Well, thank you so much for joining us here. This is really great. Really appreciate you taking the time. And we will be publishing this to Spacecast tomorrow, probably. Awesome.

Thanks, guys. Let's do it again soon. All right. Sounds good. Thanks, Alex. Hey, bye. Brian, you still here? Brian fell asleep. Okay.

Well, guys, with that, I am going to wrap this up. Thank you guys so much for listening. If you want to drop me a note, send me a DM at me. That's cool. You know how far to find me. We will be back here probably next week talking more about this stuff. Thanks so much for listening. This one was a deep dive into policy and government stuff, which is a little bit rare. But nonetheless, appreciate your attention.

and I'll talk to you next week. Thanks.