The Vergecast - Breaking up Apple, Google, Amazon, and Facebook

Episode Date: March 12, 2019

How would we break up the world’s most powerful companies? Live from SXSW, The Verge's Nilay Patel, Dieter Bohn, Casey Newton, and Ashley Carman discuss just how one would break up giants like Amazon, Apple, Facebook, and Google. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Build Me a Revenue Dashboard on our Salesforce data. And Retool actually builds it on your company's data, in your cloud with enterprise security built in. Go to retool.com slash Verchcast. We all need to retool how we build software. What's up, y'all. I'm Skylar Diggins, seven-time WMBA All-Star, Olympic gold medalist, and mom. And I'm Cassidy Hubbard, host and reporter for nearly 20 years, covering the biggest names and stories in sports and mom. And this is Am Mom, a community for athletes, game changers, and moms of all kinds.

dropping May 14th. Tap in with us. Everybody's seen on from the Vergecast. This week's interview episode, not an interview at all. It's actually our live Vergecast from South by Southwest. Me, Dieter, Casey, Ashley,

and an audience of live crazies. They were so much fun. We just did a Vergecast. We talked about what's going on in the news. We had some audience participation. We did the normal thing. Casey told some jokes. It was great.

Check it out. Hello, and welcome to the Vergecast, the flagship podcast of Vox Media. I will remain employed for the next 10 or so minutes until someone realizes that I have hijacked this entire situation. It's lovely to see you. I'm Eli. That's Dieter.

Ashley's here. Casey's here. We have a live audience in front of us. We're at South by Southwest. I'm saying this for the people who are in their cars listening to this later. These people know what's going on. And I want to start with something I think is very near and dear to my heart. I think very important to all of you.

Very important to the streets of this city, which is the scooters. Scoot down. The scooter. Cassey, you were telling me the scooters are the breakout hit of South by South West. Yeah, like the reason you come to South by Southwest is to see what cool people are doing, right? Or like cool people and nerdy people and media people, like the intersection of those people, what are they doing? Like, you know, four square happened here, Twitter happened here, like what is next? And so I show up here for my six South by Southwest and what is happening.

The streets are littered with a scooter apocalypse. Scootpocalypse. There's a scootinato. Yeah. So Casey, you are not a fan of the scooters. Well, look, here's the thing. I am a 6' 5 man. My center of gravity is at my Adams apple.

I can barely stay upright on a subway. Okay, so the idea that I'm going to get on a scooter and go 20 miles an hour, like with no helmet, like I would not have made the verge. I would be verge casting from Skype in the hospital. I would, we've done it before. We'll do it again. Paul quit the internet for a year.

We can get through anything. Okay, so Ashley, I believe you scooted for the first time yesterday. Yeah. And you're in it now. I'm a scoot lord. That's what I'm calling myself now. Unlike Casey, I'm 5'2. So scooters, this is like where I thrive.

Like this is my level. I feel like I own the streets. I'm dominating. I'm going so fast. Do you ring the bell? No. There's bells? I rang a bell on a scooter.

So I've been a scooter for a while, you guys. I rang the bell on a scooter yesterday. I felt like it was such a power move. But it's like a little, it's like ding, ding, ding. And I'm like, yeah. Yeah. No one was with me on that. Scooters are amazing.

I am convinced this is the future of transportation. I love them. I love them. But is it the future of being able to walk on the sidewalk? Because that's a problem right now. No, we need bike lanes. Like, Austin is great for it because you have dedicated bike lanes, wide streets, sidewalks aren't like crazy.

New York City, I don't even want to, I don't even want to picture it. It would be a disaster. Well, like, okay, so you have all these, like, lovely bike lanes here. and the scooter people are not using them. Like the scooter people are on the sidewalk, right? There are no norms. Like, we truly are in the Wild West right now. Yes.

So here's something I've been trying to come up with. When you're on a scooter, everyone else becomes the other. And in particular, the bike people are your mortal enemy. No, this is the law of transportative righteousness. Whatever mode of transportation you're currently using is good and true and right, and everybody else is an asshole. If you're in a car, you hate people on the bikes. walking you hate people in the cars.

And if you're on a scooter, well, no, you're the asshole. So I have one, I have two problems. One, when you're on a scooter, you need a derogatory name for bicyclists. I've been calling them two wheels. It hasn't stuck. Scooters also have two wheels.

Right. That's why it doesn't work. It's like very clear. You can't be like, get out of the way, two wheels. Like it doesn't, that's something I'm hoping that you can help me with. Tweet it me. Second, I think because we are theoretically at least like a show about technology in a loose, I got in a fun way.

We should talk about the scooter companies. Yeah. What's your scooter of choice? Well, I've just been using Uber's because I have an Uber app. I've been jumping. Yeah. Yeah, because I don't want to sound like that. And jump makes scooters and bikes, is that right?

Yeah, okay. I think the lime scooters are the best. Wow. Because they have a bright green speedometer and I am definitely the sort of person who's like, I'm going faster now. And that is, but they're all fundamentally the same. Right? They're all the same model of, like, Jaume scooter.

versus Bird be the new like Android versus iOS. That's my hope. Yeah. And then they can all have names for each other. Yeah. I don't know if you've ever met like a bird fanboy. They are in the comments. Where my friend's at?

Do you have bird fanboys out here? My dude's like, I don't want to commit to this. But so like the weird thing about this business model is that the hardware is all the same. Right? So they're just trying to compete, which is cool. Like they're trying to compete on price. You're trying to get you to have the app. they're trying to have as many out there.

But since the fundamental hardware is the same, it's just like winner take all to see who will run out of money first and then who will like be left standing. And as far as I can tell, that's like a horrible business model. I mean, that's the business model of every tech company, like which is the problem? Why is it the case that there can't be three scooter companies

that like compete over the long term? No, because there can only be one and they should be a monopoly. And then we will break them up. It's going to be great. How would you break up a scooter company break them up. You get the handlebars, you get the wheels. Get out of here, two wheels. It's great. Okay, there's one more

South by thing I want to talk about, and then we have to talk about this breakup stuff. So Scooters is the big story this year. Four Square 10 years ago was the breakout hit of Southwest Southwest. It was Four Square and Twitter, I think, we're the ones that like everybody thinks of. Everyone's here to make it happen. This is Foursquare's 10th anniversary and I have a new thing. Are you into it, Casey? Yeah, so the other thing called Hypertrending, if you have the Four App on your phone. I went and re-downloaded it. I'm a lapsed 4Square user, but I downloaded it, and you can just shake

the phone, and it opens up a real-time map of Austin, and it shows you kind of a heat map for where is everyone? For most of the weekend, it's just shown the airport. Oh, he's got it. Where's everybody right now? Yeah, he's got it right here. So, yeah, like, where is everyone right now? What's like the number one place? Right, so, yeah, so according to 4, Square, the Vergecast, is the place to be. You know, it's an interesting, you know, it's a tradeoff once again between, like,

and cool consumer stuff. Like, Foursquare is tracking you, not just in the Foursquare app, but their API powers like Twitter geo-tagging and Snapchat and Uber, like a couple other big apps. So because of that,

they actually do know where people are in real time, and so they can show you what's hot. I should point out, Google Maps also does this. Like, if you search for like a brunch venue, it'll tell you how busy it is. So, you know, it's not brand new, but I did think it was cool that Foursquare on its 10th anniversary kind of went back to their roots

and tried to introduce like a fun little game for us all to play while we're eating tacos. Do you go to their party? The four square party? Yeah. I was not invited to the four square party. Yeah. Yeah.

Well, everyone was there according to the Apple. Oh, great. All right. I think those are the two big things in South West Southwest. Scooter Apocalypse, Four Squares were like trying to track you, but like in a nice way. Yeah. The other thing that's happening here, I don't know this. If you have felt it the way that we have felt it, this South by Southwest has been so different in its vibe.

Like the amount of actual money and power and politicians that are here, like very earnestly talking about fixing things is off the charts as far as I can tell. So Amy Klobuchar yesterday, she had some weird idea about taxing data. Yeah, I mean, I'm a Minnesotan, so I want to respect it, but there was a very strange idea about, like, if a company trades data, then they get taxed on the trade?

Yeah, it makes no sense. Yeah. I also want to point out when Dieter says he's from Minnesota, you know all those stories about Minnesota and I say and Amy Klobuchar actually being a monster? Yeah. That's what I live with. That's just real.

So she did that. John Kasich was, I saw him speak yesterday. He talked about his shoes a lot. Didn't really, it was very confusing. It really was. At one point he's like, sometimes God gets angry and everyone was like, this has nothing to do with tech regulation. AOC is here.

She's actually, we saw, we hung out with her last night. She's super interesting. Has a lot. She's AOC, right? Huge ideas about stuff. Not willing to commit. She's going to make her, she had other stuff to say yesterday about capitalism and socialism. And then Elizabeth Warren

on Friday put out a medium post because when you threaten to break up the biggest companies in the world, you do it on medium. That makes sense. She put out a medium post saying if I become president, I'm going to break up Amazon, Google, and Facebook. She had some rubric by what she would do this. The rubric, the main one was

if you make more than $25 billion a year in revenue and you run a marketplace, you should not be able to put products in that marketplace yourself. Yeah, so the Her quote here is that she wants to call them platform utilities. So these companies will be prohibited from owning both the platform utility and participating in the platform. Right.

So if you, I'm assuming you are here because you have heard the Vergecast before. I don't know why you're here otherwise. I know there was a cider tasting, so maybe that's fun. So if you listen to us, we are always talking about Apple owning iOS and how they're promoting their own apps. Google owns Android. They're always doing their own thing. Like, this is something that we talk about all the time because the platform vendors are not necessarily great consumer experience like vendors.

They exist to make money. It's great. Sometimes those incentives align. So you break them up and maybe that means that like the platforms will have more open competition on them. So I think this rule is designed for Amazon. I'm sure all of you bought something from Amazon. Amazon gets to see what everyone buys. And then they make like the Amazon basics, the version of that product and destroy that company.

And like, this happens to Kickstarter companies that Ashley talks to all the time. Like, I think the most famous example is, you know the sort of classic laptop stand, like the metal aluminum one? Like, there was a company that made it. They were a Kickstarter. They were really into it.

Amazon made the Amazon Basics version. And that company just doesn't exist anymore because their market was in it. So you break them up. Like, you can't make these products. You can't do that. That rule is great. If you think about that rule for more than five minutes,

which I interviewed Elizabeth Warren yesterday, and, like, pushed her on it, well that rule includes Apple. And I was like, do you want to break up Apple? And she's like, they're in. That was actually her answer. Yep, they're in. No, the best part was, for a second, I believe she was an Apple blogger.

Because in the Apple blogosphere, it used to be a thing where like John Gruber, Jim Dalrymple, when they wanted to confirm a rumor, they just put up a blog post with the word, yep, and that was the whole post. And so, Neil was like, so you want to break up some companies? She's like, yep. How about Apple? Yep, they're in. I mean, literally my entire interview with her could have been just me naming companies

and her telling me that she would break them up. I was like, Comcast, NBC Universal. She's like, break them up. AT&T Time Warner. She's like, yeah, break them up. Break them up. So I just want to go through some of the big companies and how you might break them up.

So Casey, I want to start with you. You cover Facebook all day and all night. We won't let you stop. You're exhausted. Nor would I stop. Yeah, I've asked. So how would you break up Facebook? So, I mean, the obvious way to break up Facebook

is you force it to spin off WhatsApp, and Instagram and try to reintroduce some semblance of competition into social networking. And so right now Mark Zuckerberg is out there saying, I'm going to focus on privacy and actually combine these things. Do you think that is as much a response to us? Yeah, before Warren can get elected, he is going to unify the backends of all of those apps in a way that makes it extremely difficult for them to ever be separated again. And as like kind of a sweetener to consumers, he's saying, but it will all be encrypted. We'll never be able to read your messages.

the government won't either privacy is the future. And so at least part of that announcement is about trying to put a happy face on avoiding regulation. Yeah, I'm just going to point out I'm not going to discuss his feelings about RCS and SMS in this conversation. Just know in your heart that I'm very angry. Continue.

Right. Dieter is mad about messaging services. Do you think that the privacy thing was a front run on like, people kind of knew this one announcement was coming, right? Yeah. I mean, and lots of people, you know, Tim Wu has also been out there making the case. There's like among progressives, but also some people on the right, there's a lot of appetite to break up big tech companies for some reasons that are good and for some reasons that are insane. But there's a lot of that talk out there.

So I do think they want to get out in front of it. But, you know, yesterday I interviewed Alex Stamos on stage here, former chief security officer at Facebook. And what he said was, if you're Mark Zuckerberg, you are sitting on more data about like consumer behavior than almost anyone in the world. and he knows how many people are sharing to the newsfeed. He knows how many people are sharing to Instagram. It's very likely that we've already seen the peak of the Facebook newsfeed. And if that's true, and you're Mark Zuckerberg and you're super paranoid, which he is, you have to find the next act for your company.

And so as he looks around, he sees what's growing. It's group text, it's small group messaging. It's intimate. It's not public. And so according to Alex yesterday, this was a kind of burn the boats moment where he's saying, I'm going to get out there. I'm going to declare the future of this company is around private messaging

and we're going to steer the whole ship that way. Yeah. And that to me, if you just think about the Warren plan, if you run a marketplace and you make more than $25 billion a year, we're going to break you up. That has nothing to do with Facebook and Instagram. Her plan is also,

we're just going to review some mergers that happened in the past and make sure they're not anti-competitive. So her plan fundamentally comes down to you. I have a rule that will break you up. And also, I might just break you up. if you just look at it that way, it's like very entertaining. I'm deeply entertained by it.

At one point, she spoke about developing this plan to me in the third person and said, gosh, girl, why wouldn't you just go with obligation neutrality all the way through the range? And I was like, is that how you sit around talking to yourself? Like, I'm a deeply nerdy person. I think what she's doing, this is my theory, is she is making us actively consider these breakups. Like, if you want to break up Facebook, what would you do? And then she's backing herself into some. rules to put some legal foundation in front of it.

And here's where it's great, right? Like, even if you disagree with elements of the policy paper and probably everyone can find something in there that they hate, the important thing is that we are having this conversation. Like, we are hurtling toward a world in which there are only six companies. It's not a good world, right? There should be more companies. And so, like, dude, there's like 55 scooter companies.

Yes. A scooter company for every town. All right. So, Ashley, you cover dating apps a lot. Yeah. One thing that you and I have talked about constantly is that they are all owned by one company. So just, I don't know if everybody knows this, but walk them through the state of dating apps. Yeah.

So Match Group owns Tinder, OKCupid, Match.com, plenty of fish, and then a ton of websites around the world that you might not have heard of because they're abroad. Tinder is their main moneymaker. And actually it was just reported this week, reportedly, that Tinder's worth $10 billion by a lot. itself and Tinder's what makes match all of the money that it has. So it's just wild to think about the fact that one company is feasibly has access to all of our dating information. So that means people who your preferences of who you date. And they don't have like a gay only dating app, but like that can be very personal for gay dating especially. And then personal preferences. Also, you're chatting, your phone numbers, where you live, where you are at all times, among the

apps. And so far, like, they haven't outright abused this data. Like, there is a world in which you could see on OKCupid if OKCupid's not doing well. They could say, hey, you should try Hinge. Oh, yeah, they also own Hinge. You should try Hinge or you should try Tinder and push people over. Right now it's really unclear what kind of information sharing they do, if any. But what's interesting is Facebook is now launching Facebook dating. So it's like one monopoly against another monopoly in the dating space, which will be fun to watch. That's what you want. I would not trust Facebook with like finding me someone, like just not even a little bit. From what I've seen on Twitter, no one likes Facebook dating.

They have been slow to roll it out to more countries. Yes. Yeah. Here's my main question. Are they buying the other companies just to protect that Tinder $10 billion? Because that's what it seems like. I think they're trying to find what the next Tinder is. I just actually just remember they invested in another company that is called ship,

which is based around group messaging as like their shtick. So I think that they need to find something other than Tinder to keep the company afloat. But it's like right now if you wanted to talk about breaking them up, I don't know what that would look like because Matches line often is that people use multiple dating apps at once. It's just like what does it mean when every dating app you use comes from the same company? I have a thought about this. Like every media app is a fad and dating apps are just another social network, right? And there has never been a durable social network, right? Like the one that's probably lasted the longest without really changing is the tweet.

Like everything else, people just kind of do it until they're done with it. Dating apps are sort of the same, right? Like, OKCupid is hot until it isn't. And there has to be like a next thing that comes along. So in a way, the IAC people are in the same position as Mark Zuckerberg. They're always going to have to be out there buying whatever the new fat is if they can't build it themselves. And that's what you've seen them do. Like with this ship app, they're trying this group dating.

It's really oriented towards women, which is a demographic. They've had a hard time getting to like really stay with dating apps. And also they bought Hinge, which totally pioneered a new way. There's no swiping, which is the user interface that most people think of when they think of Tinder. Matt is trying to figure it out right. I just think dating apps are fascinating because the end goal of it, if you run a dating app, you're a CEO of a dating app company, your goal is to get users to stop using your shit.

Yeah. Right. The explicit promise you're making to people is like, one day this will not be part of your life. I don't know that's the whole process. That goes to the durability of the network because you're always, there's always new 20-somethings you want to bone. Like, we just keep making them.

Eventually they get older and they're like, I would like to stop living this lifestyle and move on to another. So their user base rotates through, which I think is very different. Well, that's why, like, Bumble has really done Bumble biz and their friendship one. And they're trying to make it more of a lifestyle brand than just dating. I feel like a lifestyle brand called Bumble. It's, like, really difficult.

Like, I'm a Bumbleer. All right, Dieter. Yeah. What are we going to do with Google? I'm so happy about this. The next time is going to be even louder. All right. How did you break up Google?

All right, so according to this rubric that Lizith Warren set up, it's if you run a platform utility, we got to spin off, like, either the platform utility or like some other part of the company. The stuff that's on it. So Google runs two big-ass platforms that make money. There's like double-click and just ads. And then there's Android and the Google Play network. Oh, that's not what I would have said at all.

What would you say? Google Search? Well, no, but search is a utility. Okay, so there's search, but it's not a net. but it's not a network that directly makes money. They don't make money by selling search placement. They make money by putting ads in the search box. So the question is, like, search.

They preference their own stuff in some ways they say they don't in search. But like the way that the money happens is through ads. Yeah. So like the reason I'm characterizing it this way is assume this crazy plan happens. Like the company's going to get to argue. Well, you want to break up search, but really the money's over there. So we're going to spin off that thing and keep doing the same thing over here. here. Yeah, that's a decade of Google lawyers getting handsomely paid to yell about stuff.

Yeah, but the Android one is even more complicated. Do you think that Facebook, uh, integrating WhatsApp and Instagram into its system more closely makes it harder to break up? It's got nothing on Google Play. Android, like, unless you're in China, your Android phone is basically like garbage, unless you are getting Google Play apps and Google Play services and Google is increasingly distributing all the parts of Android that matter through Google Play. So if they have to stop participating in that, they have to break that up somehow. Like, I guess you don't get Chrome? Yeah.

The funniest outcome of this to me is, I don't know if you were of YouTube. It's a video service. Some people like it. It's the second biggest search engine in the world. So it has a search engine that distributes videos. So it's a marketplace. It's also a video provider.

Google also makes YouTube originals and YouTube red. Raise your hand if you would miss YouTube originals. One guy. Okay. That dude makes the YouTube original. He's like, hi, I'm Mark, I have a YouTube deal. It's great. No, it's take the money and run, dog.

I think this is where this breaks down, completely for me. If you write a regulation that says to YouTube, you can't make YouTube originals. Like, what harm have you prevented in this world? Like, honestly. Cobra Kai season three. Yeah, exactly. Like, what YouTuber is, like, living in fear of YouTube originals right now?

Like, I think that's where this just breaks. It's like, there are very, real problems. We talk about them all of the time, but then you actually drill down into what it would mean to break up a Google, break up an IAC, break up Facebook, although I definitely think we should break up Facebook. I'm going to be honest with. But like this, we should actually try and do this exercise a little bit more seriously because like there's no like from on high reason that the company that like runs the ad marketplace has to be the company that like writes the code for the search engine. Right. They could just like license their services to the other company and vice versa.

And so it's actually possible to like just say, all right, this is where it's getting broken up. You all figured out. And they'll spin up two different companies. Those companies will be best friends. And then in 10 years, they'll merge again. It'll just be the, you know, Verizon story all over again.

Yeah. The Verizon story is, you know, we broke up AT&T in the constituent parts. So there's like Cincinnati Bell and Ameritech in Wisconsin. And then like Reagan deregulated the economy. And then they just made AT&T and, again. Like they just literally started buying each other until singular, which was most of the old AT&Ts,

bought the last remaining AT&T company and then rebranded itself as AT&T. Like they just like swat like Borg like rebecame AT&T. And so like that is the natural tendency of these companies is to not compete. Like they don't want to and if you're at South Byte, you're probably a budding entrepreneur. You should not really want competition, right? You want a monopoly in your field.

You want to collect all the profits. But as a consumer, as a customer, I would actually like there to be another search engine that Google is competing. I think it is good that iOS and Android are, like, locked in a fierce competition. It makes the phones better. I think the reason I keep saying we should break up Facebook

is if Instagram was very different from Facebook, and they're like, we're actually more privacy-focused, we've built these stories, we're about these, like, smaller shares that happen on Instagram. We've built this influencer, economy, Facebook would have to do something about it. They would have to actually react to that instead of just saying, well, we have that too. And I don't think we see that in many of these markets right now. So the one that's really interesting to me, and I think she left it out

of her letter because it is the least defensible one. But when I sat down at it... They would have stolen the headlines. Maybe. Well, she gave me that... I mean, Casey was like, she's a genius. She got two new cycles out of it. So I sat down with Senator Warren yesterday, and I said, you made this rule. There's one company that fits this rule that you didn't mention it. And before I was even done saying the sentence, she was like Apple. So that's interesting. And she says we need to break apart the iOS App Store from Apple. If you think about the rule overall, this also means like Apple has to stop making TV shows because they run a video distribution service. And like, yes, they put a billion dollars in the TV shows and Oprah's going to do something. But right now the harm that the government

would be protecting us from is Planet of the Apps. Right? And so the idea that that is a harm that the government needs to like, like the state, which has a monopoly on violence, is going to show up and be like, Tim Cook is going to jail if you keep making Planet of the Apps. I would appreciate being protected from Planet of the Apps, honestly.

Yeah, that's a service. So this one is really interesting to me. It's similar to Microsoft. So if you have this rule, Microsoft and Sony would not be able to make first-party video games for the Xbox and PlayStation. Like, that's a wild unintended consequence of this rule. And so what Casey and I were talking about earlier is the problem with the App Store

is not that Apple Clips is in it or pages. Like, no amount of Apple promoting itself has made pages a viable product. Like, it's just like, has not happened. Well, whoa, whoa, that's not, hang on. Do you use Pages? No amount of Apple promoting itself has made, I mean, I stand for clips, first of all. But pages, sure. But some amount of Apple quote unquote promoting itself by locking you into being only able to use the first party email client for mailed links, the first party browser, the Safari browser engine.

You can only use the actual app store to install apps unless you want to do some super dank enterprise certificates from the dark web, which, yeah, please do. Dank enterprise certificates is my new jazz band name. So there are lots of like lock in harms in the Apple app ecosystem. just largely invisible to people because they think of them as being part of iOS and not apps that Apple builds on top of it. So this is what I'm getting at. We can very clearly identify the harm of the platform being locked down. Like we see it. We feel it. Like you can't switch from Safari. Apple Mail is just a part of your life. Like it's just what Tim Cook wants to use Apple Mail and sometimes it just shows the fuck up on your iPhone and you're like, I didn't want to

use this today, but here it is. That is not what she's talking about breaking up. Like it just isn't. And I think developers are like real mad about the 30% cut in the app store. Spotify is like on the warpath that you should not sign up for Spotify in the app store. They've like tried to sue Apple. Ashley's been writing about Spotify for months now. She just wrote a big piece about it. Like Spotify is trying to become another kind of company. Ryan over here from Veracruz, official tacos of the verge cast,

was telling us that if you use CarPlay, Spotify podcast won't pause when the next GPS direction. Like that is the pettiest shit in the world. Like, if you run the world's richest company and you're like, the way we're going to beat Spotify is we're not going to let their podcast pause when the GPS talks on CarPlay. Like, you just need to reevaluate your shit. None of those are the harms they're trying to fix. The 30% cut doesn't appear to be in here. No. But, I mean, like, that is the actual problem that I see with them having a monopoly on distribution is that the only way companies can compete is, like, by growing their brand big enough that they can actually ask their customers to go sign up at the website in.

instead of through the app. And like we've seen how many companies do this? Spotify and Netflix and Fortnite, I think, are like the three. Again, there are going to be six companies in the world. And all of them will be Fortnite at the end of it. All right, I'm jumping in to the crazy live recording and saying we need to take a break for an ad. Support for this show comes from Shopify. Starting something new isn't just hard.

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Yeah, this is my dream. That was so happy. That was genuine. I'm going to die when this is over. I've accomplished all I can accomplish. I have no more ambition. So that one is genuine, I think. I think the whole point of this is for her to be able to say,

we're going to break up Amazon. And the number of politicians who want to say we're going to break up Amazon on the right and the left is massive. Do you know, all of the antitrust action before this Warren thing was like Lindsay Graham. Right? Lindsay Graham was like, we need to like up the antitrust activity in America. And Elizabeth Warren was like, I got that. Like that belongs to me now. I'm going to roll on Bernie with this, right?

She says she's a capitalist. It's like, what is the capitalist way of doing things? You like put more entrance into a market. And Bernie's like, I'm going to nationalize Amazon. Right? It's like I, Bernie Sanders, will now run Amazon Prime. Which is an amazing outcome to think about. And eventually, like, another price.

Like, can you imagine, like, we nationalized Amazon? There's, like, three more elections and, like, Donald Trump Jr. runs Amazon. Like, that's, like, an amazing outcome. So, Warren's plan is, like, I'm a capitalist. We don't want to do that. We're going to break it up and put more stuff in the market. But breaking up Amazon is, like, super complicated. So how would you do it?

Okay. Stepping back from Amazon. Like, she's got, like, this plan. I'm like, all right, $25 billion. You run a platform. We break up the platform. I think what everybody actually wants is just company by company. Well, okay, with Amazon, we'll break off at U.

and we'll say stop making Amazon basics. With Apple, it'll stand out the app store. With Google, it'll be this. But if you have to set the same rule for everybody, which makes sense, I like the rule of law, I have no idea how that applies to Amazon. Like, is AWS a marketplace? No idea.

Amazon itself is. It's like Amazon shipping a thing where they're like, they're overloaded the USPS and UPS and FedEx. Now they're like on the sly making their own airplanes and building out their own shipping network. Is that a platform? Like, what is a platform? It isn't burning.

And should we all switch to Windows phone? Yes. My God, that would be, if we go from breaking up to everyone in this room switching to a Windows phone, that would be very surprising, I think, to everyone, including Microsoft. We've been like, we got 200 Windows phone customers here. Sotcha, do you know what's going on?

So that's, like, massively confusing, right? Because Amazon's business model, fundamentally, is to have Whole Foods or the store as the customer for these modular components that they sell to everyone else. Can I introduce like another idea? Yeah. What if we just did individual antitrust investigations into say the five biggest companies in America?

Yeah. Like there's no, there's no, like there's no reason that we have to like write the one true law that perfectly divides every baby, right? It's like you can just do multiple investigations. Yeah. So I asked, so there's another team. to this. I asked Senator Warren about this yesterday. I said, wouldn't, if your cap is $25 billion,

Jeff Bezos is good at math. He's one of the greats when it comes to math. He's like, he's sitting at home, he's doing algebra. Better than he's texting. He's like, I'm going to put that rocket in the sky. Like, let's do some math today. Like, wouldn't he just manage Amazon to $24.99 billion of revenue? Like, you can just do it. You would like split off all these subsidiaries. You would just, like, get there. It's not out of the realm of possibility. And she's like, yeah, but then I would like have regulators all over him. Because I would say your platforms have to be neutral. We'd have this like fair and reasonable neutrality standard.

Everybody could sue them if they didn't think they were neutral. That would be so hard, he would just like break himself up. That to me is like, A, it makes me happy because it means the lawyers will have jobs. And those are those are my people. But it's also like the range for that level of scrutiny in her plan is $90 million to $25,000. billion dollars. So it's like every other company now has to like be neutral and then if you're successful enough, she's going to like show up and break you up. And I think that's like fairly interesting. But it also implies that there will be this additional scrutiny for most companies.

It's just the biggest companies we're just going to write this bright line rule. And her point was the rule makes it simple. I don't have to show up. We don't have to like do this like neoliberal exercise of like who can measure the harms and will like this office agree with this other office. We're just going to break them up. No, but that's the reason this move, it will never happen. But why it's so clever is when somebody from the right says, oh, you just want to regulate more. She's like, no, I don't. I don't. I want to regulate less. And if you break them up, you don't have to regulate. Someone from the left is like, no, no, regulation is good. She's like, well, no, actually I'm a capitalist. Stop calling me a socialist. She gets to like forestall all the traditional responses that

there would be to this sort of regulation by saying, no, I'm a capitalist, and we're going to break them up because it makes everything simple. Break them up. Break them up. It's amazing. Break them up. See? I got to go.

I can't. I don't want to lose this moment. I just want to have it forever. Just name, just name companies. All right, all right. Microsoft. Comcast. Break them up.

Disclosure Comcast is investor. Rossi. AT&T. Wake them up. See, this is super. You can just keep going for days and days. Salesforce. Break them up.

That dude is like, break up salesperson? Why do you want to break up salesports so bad? I work for a big. If you're in your car, he said I work for a competitor. Name another company. Sony. I can just do this for days. I saw Samsung executive yesterday, and he was like,

how could they break us up? And I was like, break him up. Wait, Samsung literally makes boats. You can spit off the boat division. Samsung already spun off a weapons division. A true fact about Samsung. Samsung had a weapons division. Yeah, yeah.

They sold it off. They spent it off. They also started milk music. RIP. My favorite one of this, by the way, is she has, Warren has a list companies. And so she's like Amazon, we'll break out Whole Foods, we'll break out Whole Foods, we'll break up Marketplace, all the stuff. Google, you got to get rid of Double Click, which is the ad business.

You know, they own Google Maps. They shouldn't have ways. And she has like Nest in there. And it's like, the Nest didn't work. What is the consumer harm of Google owning Nest? It's just angry Nest executives. Like literally an ocean of angry nest and drop can executives. Well, also like forgetting to mention that they had a microphone in their products.

There was that. That's like a real Google move. So I think everything Facebook does is like intrinsically evil. Sorry, Casey's like, he has to be like a diligent objective reporter. And I'm like, there's a bunch of salespeople. Like they're just doing it. I tend to think Google is just like intrinsically like a clumsy puppy. Like I know that they're a big company and they're not like that.

But they, the way they make mistakes is like a dog that learn the doors exist. And it just like keeps running into the door to try to get it to open. Because that microphone, I think they legitimately forgot. Like I think they legit like some engineer is like, I'm a speck in a microphone. I didn't tell anyone. Yeah. He was like, I'm going to message someone.

He was like, which messaging service do I use? And he just like, couldn't get it through. So, like, with Google, it's like very, you would actually break out YouTube. You would say YouTube has to go compete. And that might create opportunity for, like, a Vimeo. Yeah. Okay. So we've got a few minutes left and we want to take questions.

But I come away from all of this. And what I think, and I was talking about a bunch of people last night, Casey, you were talking to folks last night. I don't think this is a real plan. I think this is a plan that makes everybody talk about breaking up tech companies. Yeah. It gets me to have this moment with all of you. which I will cherish the rest of my life

where we all just screaming, break it up when I say the name of literally any company. Twitter. What the fuck would you break? Periscope, you're out of here. They're like, we weren't a success. No, it's quote tweets are a separate company. It's a Twitter competitor,

but retweets are endorsements. Actually, what about Spotify? They're like trying to take up her podcast. Ashley? Yeah, I mean, yeah, they want to dominate. And don't they have, like, their own music that they promote within their playlist and things like that? So this is, I don't know if Danny's here. Danny DJed here the first night.

Danny D.L. Our reporter covers that side of the creator world. Like, a conspiracy theory that exists constantly is that Spotify, like, has secret recording artists, like, in the basement, making, like, chill hip-hop to study to. And there's just, like, a guy who's just, like, mumbling into a microphone and, like, doing some garage band loops. and like that's Spotify promotes it because they don't have to pay for it, which is like a medium level conspiracy theory. I have to say, very plausible.

Yeah, that would make, they have to pay licensing fees. They have the power, the playlists are everything. They just put their own people on there. Right. Done. So that would be a perfect example of this. You pass this rule.

Spotify is a marketplace. They distribute music. The cops burst in. They find like the mumble core rapper in the basement. Get out of here. And they kick him out. But, like, Spotify has some incentive to do that. They have a lot of incentive to do it in podcasts now, right?

Yeah, because now they're getting into their own exclusive podcast where they're going to be making content. And they also dabble in video stuff too. So, like, who knows where they're going to go. But with podcasts, they could easily, and they want to improve discoveries. They want to promote their own shows. Like, why wouldn't they?

Which could disadvantage the beautiful open world of podcasts. Like, Vergecast might not get promoted, ever. If anyone from Spotify's here, I will milk music the shit out of you. No, that's not true. It might be true. But so, like, we, podcast is, like, it's a market right now that's, like, competitive, right?

There's Apple, there's Spotify. There's Overcast. There's Pocketcast. There's Pocketcast. I know. Do you think that market's going to consolidate it? Like, is this a rule you need of pass to protect how competitive it is right now? Or is it, like, in your mind to wait and see?

I mean, I think creators are extremely worried about the podcast. market consolidating just because right now you can you can launch a podcast and get nars s feed and put it anywhere you want and you can be on abel podcast you can be on spotify you have you run your own ads you can like you are your business but if spotify let's say came in and was like we want to actually help we want to be the ad network we're going to promote our ads over your ads or we're not going to promote your show if you don't let us do some ad work with you so the thing i'm worried about or just could see happen is if spot you Spotify starts taking over podcast, they start streaming them more dynamically instead of us

downloading off of RSS. I love me, some RSS. And when those ads start, they start getting more metrics and more data about how people are listening. And in the exact same way that, like, the ad platform on YouTube has fundamentally changed the way the creators make videos, because when the ads show up, how the ads show up, what the content of the ads are, what the content of the video is and how that affects the ads. Like, all of that is driven by a ton of data and the algorithm. And if that algorithm comes for podcasts, that's very interesting. Potentially terrifying.

It's like, I mean, podcasts right now are the web. And Spotify is maybe Facebook, right? So like if Facebook comes along or, you know, Spotify comes along and all of the audio attention in the world is on their platform, everyone can still upload their crappy podcast RSS, just no one's going to listen to it. So there's going to be no ads. And just in the way that Facebook and Google now scoop up 90% of all incremental ad revenue, you know, that would otherwise be going to us, the podcasters on their

RSS fees are going to have the exact same problem. And that's how you get the bad actors on your platform is if you start being able to insert ads and making money off these, people are going to start getting on there with potentially bad intentions. Like we interviewed the CEO of Anchor, which Spotify just acquired along with Gimlet Media. And Nila and I were sitting there like, all right, man, you really want to build like basically the Facebook of podcast. Yeah. like, all right, after watching everything that's gone down, you're like, this is still a good idea. Well, I mean, Mark Zuckerer is super rich. Like, I don't think he's like mad about that.

But we did, we did Mike McNano, who's floating around South by, find him, demand that he make a podcast for you. But we asked him, like, how do you get the bad actors out of this platform? And he's like, most people make podcasts have good hearts. And that might be true. I don't know if he's listened to the birch cast. So do most YouTubers and most Facebook posters. Right. Doesn't matter.

So I think the move here is like Is Spotify going to become like the YouTube or Facebook A podcast and then When we're like chanting break it up which again Just my heart explodes One more time But for what company do we just do it? I will say this

This dude's like break up box media If we get to 25 fucking billion dollars a year in revenue You can have like the constituent pieces of box media I will personally deliver the verge to you This guy gets eater like we'll just Well, just it's done, right? Like, let me get the money and then you can, like, have it.

Like, we're not there, and I think that's, like, super important. But yes, everyone's like, we should break up box media. Go ahead, box media. See, half-hearted. You don't want that. But I think this is a moment where you see the harm that just having YouTube caused. You see YouTube creators who we care about, like,

deeply in cover and talk to, just stressed out, just burnt out. And YouTube is making videos, and it's like, how to avoid burnout on YouTube? Yeah, but okay, I see where you're going. All these platforms eventually lead to really terrible outcomes because they're big and because they're driven by algorithms. Is the solution to break them up or is a solution to regulate them?

Or is a solution like, I don't know. Would competition actually fix the conspiracy problem on YouTube? It's either that or Bernie Sanders runs Amazon. Those are my only two choices? I think fundamentally that is the question that we're going to have in the demo. I think that's super interesting. But like if you look at the podcast world right now, I'm sure there are many,

many terrible podcasts out there, right? What they lack is a viral distribution mechanic where they're being promoted via algorithm. Maybe there's some light version of that inside some of these apps, right? But for the most part, you don't have this situation where because you subscribe to like one popular podcast,

they're recommending like an anti-vaccine podcast to you, which is absolutely going to happen on Spotify. Like we have seen this play out so many other times. This is coming for them. And I just hope they have a plan for it because there's no way they escape it. Yeah. I don't think they have any plan at all.

Obviously not. They're very nice. They're Swedish. Very polite. But I think they bought this stuff because they see that opportunity. And as with most things, Ashley just read a great. You should read Ashley's story. It's not clear that they see all the way through.

They're being really quiet about the ad stuff. But it's true. They have talked about how they want to make a Discover weekly sort of type of thing for podcasts. And like that, if they can crack that egg, Like that is where you start running into problems. Right. And also we should say like they have to do this because their core product is renting music that they don't own and lose money on.

Right. So it's like the only way they stay an independent company is that they become the podcast YouTube. Yeah. Or there's a dude in the basement just like making ambient music to study. All right. We have eight minutes and 45 seconds left. Let's do some questions. Raise your hand.

We'll get some microphones. Oh no. There's Mike. Here we go right here. What do you do about the business? sectors of big companies that do make more than $25 billion that actually suck, right? Because Oracle has an AWS competitor. Literally no one uses it. So like how could you break something up knowing full well that this business sector is like destined to just fail? So Matt Panzerino

at TechRunch had a great take on that, which is like companies don't deserve to exist, right? A healthy market has a certain amount of tolerated failure in it. And so if Oracle started a cloud business and their plan to compete with Amazon, is they will just siphon monopoly profits from some other part of Oracle to prop up this business that's going to suck. That's actually a bad outcome, right? Like that business should either succeed or fail, and that's how the market should work.

So, like, again, I think Elizabeth Warren and I are like the last capitalists in the world. and like I would very much like to see more competition in market based on that business should actually compete with AWS. It shouldn't just be when you buy the Oracle product, they can like sell you for 20 bucks a month extra some like crappy AWS to prevent that competition. That's like that example. There's a million other examples that to me make no sense. Like the Microsoft Xbox Live example. Like Azure makes all the money. Should Microsoft not make forts?

Like that makes no sense. Right and like I think we're gonna have to get through that. All right more questions. Hey, I just wanted to point out this is the Facebook office You speak up to break this this is the Facebook office here. So this building? Oh can everyone base the Facebook office? Can we do this on three together? If you're in your car pull over and face what direction is that east west north? North turn in the car pull over face north and the crowd here is gonna do one thing three One two three, right? Everyone look at Facebook one two three break him up You can now drive just in case you're in your car listening to this. The building did not respond. My question is, if the next iPhone has a iPhone blaster in it, an IR blaster?

Yeah. Yes, super into it. The last open technology. I've come all the way around in my advanced gears. There's no buttons. There's no phase ID. It's just IR Blaster. Yeah.

If you can't hear him, he says if the next iPhone has an IR blaster. We should just come full circle. Technically, iPhone does blast infrared at your face with face ID. That's true. It'd be amazing. There's a skunk works project at Apple right now that's like turning the iPhone, like face ID into a remote control. Like, you just like faces at TV.

And Tim Cook is like, get this the fuck off my desk. All right, more questions. Hi, I'm from the EU, which is already broken up thanks to the Brits. But I was wondering in the EU. OGy antitrust gangster here, everybody. The antitrust law

helped to prevent some of the big problems you have with the companies and they're doing kind of a good job in investigating and throwing out some money of the companies. Isn't that an easier problem to fix to just have stronger antitrust laws here in the U.S. That's, I think, easier to do than break companies up.

So I asked Warren about this yesterday. This is, I love that you're all here. I love that we're like serving booze in the sun in Austin, Texas. And I'm going to tell you about the antitrust standard in Europe. Thank you. I don't know how it arrived at this place in my life, but it's fucking wonderful. So the European NSS standard is a competition. standard. So the government literally says, is there enough competition in the market?

Right? Which used to be the, like most good things in Europe, they copied America in the 30s. That doesn't make any sense. But like they did steal it. We changed our standard in the 80s. This dude named Robert Bork, who is famous for having a Supreme Court nomination fail because reporters leaked his video rental records and he was like renting like nasty VHS tapes. So like a data privacy scandal in the 80s, like tanked to Supreme Court justice. So everything is a perfect circle. But Bork wrote a lot of antitrust steps that said, there's no way to measure competition.

The only thing that you can measure is prices. So the only thing that we should care about as regulators is whether prices will go up or down. And that literally turned over the antitrust law in the United States of America. It's called the Consumer Harm Standard. And everything that we measure is, will this merger cause prices to rise? And if it won't, if we don't think it will, then we will let it go through.

The problem over there is that Facebook is fucking free. So there's literally no way for that price to rise. There's literally no way to that price. So like the consumer harm standard in America fails against these tech platforms because their products are effectively free

or in the case of Amazon, cheap to getting cheaper. The other thing I'll add to that is you asked about the antitrust law being stronger in America. The law, as written in the books, hasn't changed. It's our interpretation of the law. And so part of it is like, who are the judges and what, like, how do they interpret the law?

And they switch their interpretation to the consumer trust standard. So, like, we can make another law or we could put in judges that have a different opinion. So I asked Warren, do you want to change the consumer welfare standard? And she literally started laughing and said, I don't care. And then she was like, no, I shouldn't say that. And she's like, what I do care about is people. Like, she's a politician. That's what they do.

Her point is, we know what the outcomes are. Like, she can back into some legal interpretation. you can back and do some law. But the real problem, and like, we had Lena Kahn on the Verge Kass. You should go listen to that interview. We had Tim Wu on the Verge Kass. You should go listen to that interview.

The real problem is we literally built a standard around prices and everything is free now. Right? So, it literally broke the enforcement mechanism that we had set up. Whereas in the EU, they're just looking at, is there competition? And they're very happy to go up and say to Google, you have to unbundle Google Play from Android.

And then we'll see, and then Microsoft is going to make a, phone and this room is going to go nuts. Okay, I think we have time for two more. X-Callcomer here. I have a question about the semiconductor industry. So we have Apple having their own modern now. They are building their own GPU chips.

They're building their own CPU chips. They're putting competition out of the business. So is that a good idea to break up Apple in that case? Break them up. I don't know. Everyone can see the value of the integration, right? Apple makes it chips. They make the software.

The phones are very fast. Yeah. But you have an S-10. You love it. It's like a modularized design. You guys, I love it so much. The camera is like not great, but I'm in the honeymoon period. I just got it.

I love it so much. But like I know that like the Qualcomm processor it's in there. Like if Samsung, it's actually better than the Xenos this year, but Apple is able to make better processes because it has a fully integrated stack. And when you don't get a fully integrated stack, you get things like, I don't know, wear OS watches, which are hot garbage. And so there's value. We're not going to us fancy audience today, either. There's like one hearty chuckle and then a bunch of dead silent. They're so bad.

So is that full integration bad? Well, if they have a monopoly on all phones, then sure. But as long as there's enough people making enough phones with different chips in it, I'm not super worried about it. Okay. We got time for one more. All right. So it's South by Southwest, 2024.

What are the issues we're talking about? Are we talking about VR glasses, taking, having always on cameras, and that's our privacy issue, how much we get to opt? out of? I think it's a good question to go around the horn and end with. What do you think, Casey? Five years from now. We'll be talking about some act of terrorism that was planned and executed on a secure encrypted messenger owned by Facebook. Wow. Dark. No, like, we probably will. Yeah. We should have that conversation. I'm not saying I don't think apps should be encrypted.

I just think we should have that conversation. Yeah. I write a newsletter. I had a long conversation yesterday. I watched Kara interviewed Casey at this dinner last night. And I was sitting next to this very fancy marketing person. And we had a long conversation about I don't have a word to express pride in the interface because mostly what Casey writes about is horrible. Like there's literally no word for me like, great job doing the horrible thing again. But the interface, subscribe to it.

Casey will be talking about that. Ashley, five years from now. I think in the U.S. we'll be talking about bringing China's sort of like reward system, points system based off your behavior and facial analysis and what you do in the streets in the U.S. Botnets taking over all self-driving cars, just like in Fast 7.

Yeah, all right. I believe you. I'm not trying to keep it. I'm trying to end on this up note. We got like terrorist attack. We have like total surveillance. I got shillies there and controlling cars and center around the city and causing explosions.

That's good. We do have a botanet controlling a series of Chrysler vehicles in some sort of set piece. Where do I think we're going to be in five years? I'm going to go hope. I sell hope. I'm running for office in the first district from Wisconsin. That's my dream just to make my dad vote for me.

Which I think will be very confusing for my whole family. I honestly think that it's, If we're having a conversation like this, this year at South by Southwest is a bunch of politicians are here, a bunch of very serious, powerful money is here, and they are actually talking about how to reckon with what we made. So South by Southwest for the past, however many years,

was a bunch of coders and designers and food truck people being like, we built an app, they can track everybody. We know where the hottest food truck is. Oh shit, we tracked everybody. And now we're reckoning it this year. Five years so now, you know, There will either be the same or different president. There will have been two more major elections in our government.

I think what we will be talking about is, did this work? Did our attempt to fix it work? Did our attempt to redefine these platforms? Did we actually break them up? Did we have a serious conversation? Did it work? I honestly suspect, maybe I'm just super naive, but I did get a bunch of nerds to drink beer in the sun

and scream break it up at Facebook. So I'm riding high. I think we're going to get it more right than we get it wrong. I think most people know what they want out of these products. Most people, when they spend $1,000 on a phone, have a very clear expectation of what they should be getting. And they're going to start speaking both as political consumers, as regular consumers, as technology consumers. They're going to not just leave comments on the bottom of my articles. They're going to talk to their government.

And they're going to say, you belong to us. You're the people that represent us. We need you to help us have a better market. So that's, like, my hope. There might also be a botnet and equest your vehicles. But we're out of here. The shutdown full cast is next. They're our hated rivals.

We love you so much. Thank you. All right. That was our live episode from South by Southwest. Thank you to everybody who came out in the audience. That was so much fun. We're going to do more of those, I promise. Every time we do them, we say we've got to do more of them.

We're going to do more of them. Anyway, we're back this week with a regular Vodcast, and then back onto a regular cadence interview episode on Tuesday's regular cast on Friday. Next week. We'll see you then.