The Best One Yet - Regulators hit the Mt. Rushmore of tech, Apple’s WWDC, and the biggest private real estate transaction ever (=$18.7B)

Episode Date: June 4, 2019

Shares of Google and Facebook both fell over 6% on word US regulators have coordinated to take them on. Meanwhile, Apple’s big Worldwide Developers Conference unveiled fresh new iThings. And then private equity firm Blackstone led the biggest private real estate transaction ever -- and became Amazon’s landlord.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick, this is Jack, and this is Snacks Daily. It is Tuesday, June 4th, and we got the best one yet. Great mix of stories here, except it's all tech story. Jack, toss on your soylent. Markets trickled down because of this big tech story. The sheriff has come to Silicon Valley. Regulators are going after big tech. Facebook and Google stocks fell 6% each. That tells you a lot. Meanwhile, Apple is desperately trying to host its big worldwide developer conference in San Jose. No big deal. It's like a big party. They're serving all hors d'oeuvres. They're like trying to get the guests to have fun and mingle. And this regulatory news was a major buzzkill. Everybody in the audience's phone was vibrating. There was a lot of unimportant Apple news. We're going to tell you exactly what you need to know.

Third story is pretty much not tech, but there's a tiny tech angle. The biggest private real estate transaction ever just happened. and Blackstone is officially the top landlord of Amazon. Forget what your parents told you about water views. This is all about warehouses. Efficient, clean warehouses, probably better than your apartment. Very, very nice warehouses. But before we get into that, tonight we need to celebrate the end of Ramadan, which is the 30-day fasting from sunrise to sunset for Muslims worldwide.

Now, we're talking no food, no water while the sun is up, which is a feat. We can barely get through an entire podcast recording without food and water. No, I've got, I've got like two kind bars here. I've got a bunch of dried mango. Sometimes I have to stop the pot and feed Jack just to get him through this thing. I got a red button just in case. Now, Ramadan, it's serious dedication. It requires commitment, and it makes you appreciate what you have.

It's a great tradition. But the key is tonight. It all ends, and you get to feast. And that's always big. We just got to say, eat bubaric. Happy Ramadan. government lawyers are taking on the Mount Rushmore of Tech. The Mount Rushmore of Tech being Amazon, Apple, Google, and Facebook.

Very chiseled crew right there. These four giants need some cybersecurity because the Federal Trade Commission and Justice Department are like in a bunch of government buildings planning an attack right now. They've been meeting up. Apparently all weekend long this thing finally leaked that they are coordinating exactly how to go after technology firms. Yeah, we learned about it from the Wall Street Journal and the Washington Post. the regulators themselves didn't say anything, but they're going to be attacking a bipartisan issue,

which is that tech, it's considered too big, too powerful for its own good. And then on the political scale, because you've got to talk about the political context here, conservatives believe that technology may have some built-in liberal bias. Right. They've been complaining about that forever. And liberals believe that these tech giants are so huge that they can kill jobs, that they're driving inequality, stifling competition. It's actually a pretty long...

It's very long. It's very long. We can actually stay here a while. But the surprising thing, despite these complaints, nothing has happened. You had the Cambridge Analytical scandal with Facebook, for example. Then you had the fake news scandals with Facebook. Then you had the Russian interference issues with Facebook. And what's happened to Facebook? Absolutely nothing. It has been untouched by regulators. Basically, Mark Zuckerberg has had some, like, scolding on Congress, but that's it. And that's been the case up until apparently this past weekend when everything is about to change. Right. So the news that rocked markets yesterday was that the Federal

Trade Commission and Justice Department, they basically divvied out these four tech giants and they're like, I get these two, you get those two. Let's go out and sue them. You know what this reminds of us of. I mean, Jack, this is bringing me straight back to like fourth grade. It's bringing me back to recess when you pick a couple captains and you pick what players are on your team, except instead of teammates, this is like who we're going to put to sleep with lawsuits. You got the Federal Trade Commission is bicep left and Justice Department is bicep right and they're just punching down on tech companies right now. And how are they going to divide this whole situation up? Apple and Google are on the Department of Justice turf and Facebook and Amazon get the FTC.

Now, the key here is that regulators have very specific powers. In this case, they have the power to sue a company and the power to break up monopolies. And they plan on exercising those bicep powers. Exactly. They did it like back in the 30. We all learned about it in history. I think they tried to do it in the 90s with Microsoft. But the two companies that are considered most vulnerable to antitrust action, which is what we're talking about, is Google and Facebook, because they're just, like, well known to be monopolies. And that's why shares of Google and Facebook fell the most out of those four companies, 6% and 8%. So, Jack, what's the takeaway for our buddies over in Silicon Valley wearing all birds in tech?

We got to write a new definition of monopoly because whip out a pencil in a row. racer. It's not just about prices anymore. No, it is not. In the past, monopolies were simple. It wasn't just a board game. It was a complaint that companies would be raising prices to mess with us. Exactly. You got a mini monopoly in Yankee Stadium. You'll pay $10 for a beer because you only have one person to go to. That's it. Now, the future monopolies, the definition is going to be different. The complaint isn't about prices because technically they're free. What is the new complaint about monopolies of the future? It's that they can abuse customers and society. It's that they can abuse customers and society in other ways. Like Facebook, it completely controls communication and news in some places.

Or Google, it completely controls your internet browsing experience. Right. Amazon has like taken over the retail industry and then Apple. Apple, it's got the app store. It's got a little bit. Out of all four, Apple is the one that barely kind of fits in there. And that's why we're going to cover it next. And that's why we've got a new definition of monopoly. And disclosure, this is Jack and I own shares of Amazon. For our second story, we're going to take you on like a happier trip into technology with Apple's big worldwide mouthful, way too long, terribly named developer conference.

That just kicked off. The WWDC is basically, hey, we've been working on a ton of epic projects super secretly at our headquarters in California. Here's everything we've been working on. It's kind of like an overload. They invite a lot of people there. You get those, you know, the lanyards with the badges and your name, like everyone's walking around with one of those. Yeah.

They're also super late. Conference season was a couple months ago, right? It was. But anyway, Apple decided to host it. It was in San Jose. It's multi-day. And it basically just kind of covers a bunch of operating system updates like that you can now watch your phone in dark mode. Yeah.

So the screen is going to be mostly dark and a little bit white to protect those retinas. Extremely exciting. However, there were some, like, some pretty interesting updates here we should talk about. For example, Apple TV Plus, Apple's got a new TV show coming out called For All Mankind in which the Russians beat the Americans to be on the moon. Alternative history shows are really in right now, and I think it's got to stop. But I was most interested in the new AirPods innovation. It's kind of sad. The timeless romantic act of sharing headphones with someone to listen to the same song, it's going to die because of this new feature.

Now, it also means that you're not going to have the awkward earwax situation because everyone has. an awkward earwax situation with AirPods. But now you can just hold your phone next to someone else's phone and they can hear what you're listening to via their AirPods. It's kind of like AirDrop, but for music. And then you've got Siri, she's going to get an update, she's going to have a new voice to sound like a little more natural. And finally, the big split. iTunes, which has been on your iPod original since 2001, it's getting split up into music, podcasts, and TVs. Keep it all separate. R-I-P iTunes. But there was one, particular update that a lot of people didn't pay attention to, but we actually thought this was the

most important update of the entire event so far. Jack, what is it? Four words for you. Sign in with Apple. We've all seen these before, the like you go to register for some random site just so you can buy a pair of khakis, and it says, do you want to sign in with one click? Do it with Google or Facebook? Right. And if you do it with Google and Facebook, you'll save a ton of time. You won't need to think of a new password, but you know you're giving even more information, more personal data to Mark Zuckerberg. Now Facebook knows you really wanted this pair of cackies, and Google is going to start throwing you cackies ads up the wazoo in every possible shade of cacky. They're going to tell you all the data they won't give to third-party providers, but they won't tell you the data

they are giving to third-party providers. Yeah. Shocker, now some random third-party company knows my waist size, and I didn't disclose this to anyone after this. All right. So Apple thinks it can do this better. And the main way is through face ID. It can authenticate your identity without handing over third-party data. Now, you're wondering why this is important. It's because it is a direct punch to both Google and Facebook, because they are the ones who have owned one-click sign-ins. Am I right? You're absolutely right. So, Jack, what's the takeaway for our buddies over at Apple and Cooper Tina? The next big tech battle is over privacy. Let's take a little trip back memory lane here. Over the last decade, technology has been defined by one theme, and that's connectivity, and it's because of social networks.

And you saw where that got up. Regulators are getting ready for a huge battle right now. So, Jack, what's the theme of the next decade with technology companies? Privacy. Apple is positioning itself as the leader in privacy here. It hasn't had the same number of tech scandals as Facebook's had or privacy scandals. I can't think of any major privacy scandals that Apple has had. Meanwhile, Tim Cook, the CEO, has actively called. for new regulation for his industry. And then Apple proudly states how it doesn't share your data with other third parties. It keeps it local on the device you're using it on. Snackers, case and point,

most people listen to this podcast on an Apple device. Apple doesn't tell us anything about your listening. We have no idea how you guys are. If this were a Facebook device, oh my God, we would know a lot about you probably. We would know way more than you're comfortable with us knowing about you. We would know enough that we would probably get invited over to dinner, and no one really wants that. Extreme intrusiveness. Apple's differentiator is going to be all about privacy. For our third and final story, the largest private real estate transaction ever just happened. Jack, the price tag?

$18.7 billion. You really kept us hanging there with the pause. I actually didn't know what you were going to say. Well, I was thinking about Amazon here because Amazon is... is affected by this deal and is going to awkwardly have to change its auto pay rental situation at the end of each month. They got a new landlord. Is that what you're trying to tell me? That's what I'm saying, Nick. Thanks for the translation. The new landlord is New York City-based Blackstone, which just acquired 1,300 warehouses from GLP, which is a Singaporean warehouse company.

So Blackstone is a private equity firm, which means it's using debt, big loans, to basically buy things. And then what does it do with them? Well, after it buys them, it wants to tinker with some things, improve the operations, boost the profits, and then eventually turn around and sell it for more than it bought it for in the first place. Now, here is the interesting technicality here, is that private equity firms tend to be private companies. But this happens to be a publicly traded company. Blackstone is actually publicly traded so you can buy shares of Blackstone, just like you would at another stock. Nick, I was lost. Thank you for clarifying.

Now you are found. Real estate is Blackstone's jam, okay? Yes. It owns the building formerly known as Sears Tower, which I think is now called Willis Tower in Chicago. Yeah, nice name change there. Good move. It also owns Stuyvesant Town, which is a beast housing complex in East Village of Manhattan.

And then it used to own Hilton Hotels and SeaWorld, both of which are Blackstone's success stories because they turned around and sold them. I like how the team at Blackstone, like, has a little fun here between the SeaWorld and like the ridiculously tall office towers. Now, in case you're wondering how this deal went down, it is a $19 billion deal, which means $11 billion is the own money of Blackstone, and $8 billion is debt.

It's money they've taken out for the deal as a loan. Yes, and context is key for this whole story. The context is the two-day slash one-day slash next-day shipping wars. We're talking like immediate shipping, the kind you need ASAP, because this year Amazon, Walmart, and Target, they all decided to like up their game simultaneously to one-day shipping. Each of them have been in an arms raise just to prove to you that they can get you like a roll of toilet paper faster. We're talking last mile shipping here. You get that impulse. You need that half roll. You know your parents would wish you'd ordered earlier, but you didn't because not everyone can just order it on time. And so you need that quick delivery. You need last mile one-day shipping.

Right. And for Amazon, for example, to deliver you that toilet, paper next day. It needs to be close to you and it needs warehouses that are close to the people, which is close to the cities. What we're trying to say is that warehouses in the city stocked with toilet paper, that's how you make one day delivery possible. That should be the takeaway for the story, but we're not there yet. So this deal, Blackstone is getting 180 million square feet of warehouses, most of which are close to cities. That's valuable real estate. Now, Blackstone, by owning these warehouses, is going to make money just like a landlord by charging rent. And Jack, who happens to be their biggest tenant now who's going to be paying rent?

It's Amazon. Ever heard of it? Oh, yeah. Correct. Jack, what does that mean about Amazon? That means Amazon is just like you and me. It rents. It doesn't own.

So, Jack, what's the takeaway for our buddies over at Blackstone who just enjoyed the biggest real estate transaction ever? This deal is about e-commerce. It's not about real estate. Blackstone believes that the future of shopping is online. And in order to get your toilet paper ASAP next day, that's going to require storage and distribution warehouses. Here's a quote from the Blackstone spokesperson. Logistics is our highest conviction global investment theme today.

Translation, Blackstone believes the future of shopping is online. And to make online shopping happen, it had to get these warehouses. $19 billion worth of them. Jack, can you whip up the takeaways for us over there? We need to think of a new definition for monopoly. It is not just about abusively annoying Yankee Stadium beer prices. And over at the Worldwide Developer Conference, Apple is fighting to stand out by respecting your privacy. And apparently ending the whole earwax situation with like sharing of AirPods.

Third and final story, Blackstone just became Amazon's landlord because it believes e-commerce is the future. It's making, you know, just a casual $19 billion bet on that whole thing. Now, time for our snack fact of the day. this one sent in by a snacker tweeted to us at Robin Hood Snacks, Ryan Ozzie from Cyprus, California. Well, he heard us talking about Disneyland expanding to its new Star Wars theme park, and he wanted to point out that Long Beach State University is much bigger than Disneyland at 322 acres. It's bigger than Disneyland and Disney Adventure combined, which Got Jack and I interested snack style to dive into this a little further.

Which college university campuses are bigger than Long Beach. Beach State, and we actually figured out what was number one. Now, you know, caveat here, no one actually knows how big an acre is, but it's nice to talk about. 322 sounds big, but apparently the biggest is Barry College in Georgia, which is 27,000 acres and has its own mountain. It is its own mountain. It's basically its own country, and it's the largest university in the world. Here are a couple other stories we're covering in our Snacks Daily newsletter.

First, Nestle is launching its own plant. based burger thing and calling it awesome burger. And then pet food icon shui.com's IPO is coming up, and it looks like it's going to be around a $7 billion evaluation. Wow, that is an exciting one. Snackers, that was an exciting pod too. We love doing this one with you. Let's just do this tomorrow, Jam. I'm in. I'll see you there. See you. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc, or any of its subsets, or any of its city areas or affiliates. The podcast is for informational purposes only and is not intended to serve as a

recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC member FINRA SIPC.