The Vergecast - Quibi is shutting down / Google faces antitrust charges / Foxconn’s LCD factory is Wisconsin isn’t real

Episode Date: October 23, 2020

Dieter Bohn and Nilay Patel talk to Julia Alexander about Quibi shutting down, Adi Robertson about the US government filing antitrust charges against Google, and Josh Dzieza about his report on Wisconsin's empty Foxconn factory. Stories from this week: The ambitious effort to piece together America’s fragmented health data  Microsoft wants to cut down pollution from its business travel   Is Quibi done for? Quibi is shutting down 11 reasons why Quibi crashed and burned in less than a year Quibi’s top executives are ready to blame themselves, not just the pandemic, for Quibi failing Watch AOC play Among Us live on Twitch with HasanAbi and Pokimane The US government has filed antitrust charges against Google Who is Google’s market power hurting? Senate committee approves subpoenas for Mark Zuckerberg and Jack Dorsey How to retweet using Twitter’s new temporary format Republican lawmakers are furious after Twitter asks users to read stories before retweeting Facebook’s independent oversight board is now accepting cases The 8th Wonder of the World Exclusive: Wisconsin report confirms Foxconn’s so-called LCD factory isn’t real Apple iPad Air (2020) review: take it from the Pro Amazon Echo (2020) review: music of the sphere Beats Flex review: wireless earbud basics done right Learn more about your ad choices. Visit podcastchoices.com/adchoices

This week on the Vergecast, Julia Alexander joins us to talk about Quibi falling apart. Addie Robertson joins the show to talk about the big antitrust suit against Google, and Josh Jezza comes in. Foxcon, empty buildings in Wisconsin. It is a bar and burner of Vergecast coming up now. Support for the show comes from Retool. Too many companies run critical operations on duct taped spreadsheets, Slack workflows, and whatever else they could cobble together.

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I'm a friend, Eli. I'm here. Deider Bone is here. I'm your fast friend. That's a quick joke. Oh, God. It's going to be so many quibby jokes today. Julia Alexander is here. I'm your short friend. Like a short form video. Just a quick bite of a friend.

I'm just going to say this at the very beginning. We are not going to tell you what iPhone reviews today. There's too much other news. So on Tuesday, Deeter and I are going to do a whole episode on the iPhone with our friend Joanna Stern. We're just going to go deep on iPhone reviews because normally we would spend like an entire Vergecast on the new iPhone. So we're just going to do that with Joanna on.

Tuesday. So sorry for the delay, but this week alone, Julia's here because Quibi shut down. We published a gigantic Fox Sun story. Josh Trez is going to join us and talk about that. And the United States government sued Google for antitrust violations. And Addie Robertson is going to join us to talk with that. So just a lot of stuff that we need to talk about this week. We're going to push iPhones to another episode and bring in Joanna, which I think will be very fun. So before we start talking about Quibi, before we start quibbin, I need to remind you, it's been 32 weeks. weeks since the president of the United States stood near a flow chart. I mean, he said Google was building the website, but he didn't hold the flow chart himself. He was just in proximity to the flow

chart, which was being held aloft by Dr. Deborah Birx. He said there'd be a flow chart that Google was building. 45 million Google engineers, admittedly in 10 minute bursts were building a website where you would schedule a task. The website doesn't exist. 32 weeks. Two other little bits of COVID news. Again, the biggest story in the world is this pandemic. Nicole Wetzman wrote a great story. It's super interesting about how the pandemic has basically brought together a bunch of hospitals, research facilities, academics, public health folks to knit together the wildly fragmented health data that exists in its states. It's like such a great systems problem, data problem. Really cool story. Check that out. And then I keep talking about second order effects. This is kind of a third

order effect of the pandemic. So there's pandemic itself. There's all the ways we react to it. And there's this, which is strange. Microsoft went mostly work from home on my Most everybody at Microsoft can work from home. They've extended that. Tom had a great scoop about that. And now Microsoft is saying, while it's in this mode, it is working with its airline vendors to switch the fuel they use when they travel. So the planes are more fuel efficient, which is just one of those things you can do.

A lot of planes aren't flying. And you're Microsoft and you're like, one day will be a big customer again. So let's take this opportunity. Super cool. Check that out. It's on the site. Third order effect of the pandemic. We're just going to keep going down the line.

Okay. That's that. again, biggest story in the world. Always, always top of line for us. But Quibi, Julia. Also arguably the biggest story in the world. What's bigger than Quibi? So Quibi was a video service. We've covered it extensively. I will just give the disclosure now. Fox Media is a media company. We make a lot of streaming television. The Vox people have a Netflix deal. The Verge has a Netflix deal. Vox and Polygon had Quibi shows. They talked to us about a Quibi show. I will reveal it now. We did a whole project with Baratunde Thurston for a Quibi show, which would have been cool. I was super excited to work with him. Didn't go anywhere, but we talked

about it. Basically, if media exists, someone at our company has talked about making money in that place because it's a big company. So now you know, we are usually pretty immune from that, unless we disclose it more specifically. But the company makes a lot of stuff. That said, there was a company called Quibi. Julia, what was Quibi all about? I like that you're already using past tense. That's fast. It was so fast. We wrote a story that's like, is Quibi done for? Literally the next story was Quibi is shutting down. Quibi was a short form video streaming service, which is a sentence and partially why this company never took off. It was going to build, I was going to basically release a bunch of prestigious, high quality short form videos that you could watch every single day. There'd be something new.

Some were really big and dramatic and had actors like Sophie Turner and were hopefully going to draw a lot of attention and others were. called Daily Essentials, which Jeffrey Katzenberg, who is the co-founder later decided were not so essential. I think he actually said it. Yeah. That was like a line. He said, he's like, turns out they weren't essential. Yeah.

Big Julia energy. He's kind of being like, turns out. And so the company, which launched in April, is now no longer a company. They are currently, and they, Jeffrey Katzenberg and CEO Meg Whitman are currently winding it down. They have just over $350 million left over in cash that they're giving. back to investors and they're trying to... Out of...

Out of $1.75 billion raised. And they are currently selling the product for scraps or trying to. So there's two things they could sell. There's all the shows, which they had some rights to. And then there's their technology platform, which was pretty good. It was fine. There were some issues with it, but I mean, there's issues with every app. So it was fine for what it was supposed to be, I think.

The content was not. The content was terrible. And that's also why it failed. in the big part. But it was an experiment that they thought was going to take off. And then a bunch of things happened, including the pandemic. And their whole design was for this to be experienced on the go when suddenly people had nowhere to go. They never adapted or they adapted too late to getting it on people's TV sets.

Within, I think a day before Quibi shut down, it was finally available on like Amazon TV devices. And so Quibi really is just a story of too little, too late and too much investment. in something that everyone could have told you would not have worked out. I mean, if you're, if the central conceit of your streaming service is you should turn your phone sideways sometimes and like you build everything around that, it's just, I don't know, it doesn't seem like that's enough. You might, you might say that the idea that you would go 90 degrees isn't, isn't going to work. Oh, my God. How long have you been waiting to say that today?

No one has said go 90 yet. I had to bring up the scale. I'm so excited I got to be the first one. It's true. A lot of people asked me yesterday if I was going to update the name of the Go 90 scale of Doom streaming services. Or the Vergecast official scale of Doom streaming services. Go 90 doesn't exist so they can't pay us to sponsor it. But if you're out there and you know the Go 90 budget line at Verizon, we're still available. And no, the answer is I'm not changing the name, even though Quibi has gone 90. If you're the first to fail spectacularly, you need to be memorialized forever. Quibi will be remembered for its own reasons. But Go 90s, it's in our heart. If you don't remember Go 90 was Verizon,

extremely wild bet the company streaming service that they launched. It lasted for longer than Quibi. Quibi will be lovingly remembered in Harvard MBA classes where some professor will go, children, don't do this. And we'll point to it as a case study. So, Julia, you wrote a piece, 11 reasons it failed. I want to go through some of them with you.

the one thing that just strikes me at quibby and they're the enormous amount of capital that they raised and the ambition that they had I will never forget this because Casey was in one of those early meetings with us and he just thought this was the funniest thing he'd ever heard was a huge part of their pitch was most people spend $100 a minute on content we spend $100,000 a minute on content and then their pricing was like they were going to charge for it which is hard when TikTok and you YouTube exists, but their pricing was less than Netflix. And I just could, like, just the, you just type all that into, like, the world's most basic Excel spreadsheet. It's like, the software should be like, this is a bad business idea. Like, we're going to have a thousand times more expensive product, but charge less than the most expensive competitor, always just seemed completely upside down to me. Yeah, it was more expensive than Apple TV Plus. And at least with Apple TV plus you get full-length shows that now actually are not that bad in movies that are pretty good

are now on the service. I've been thinking about the cost of Quibi a lot today because today also AT&T had it, your favorite company. AT&T had its earnings and John Stanky basically came out and was like, we understand that $15 is a lot for HBO content. And for him to say, listen, we get it. Like $1.00s a lot for the best television programming you're going to get. the idea that Quibi would charge a third of that for the worst TV programming you're ever going to get is still far too much.

And this was part of the issue. It was like everything that people recommended before they launched, they tried about a month before the company went under. Everyone suggested do an ad-free, sorry, ad-supported tier. They did that in Australia one month before the company went under. Everybody said, hey, you should probably figure out a way to screenshot so people can share this and becomes viral. they figured that out like two months before the company went under because they had to deal with some stuff there was no foresight going into this about what how people actually use their phones what they're willing to pay for content wise and everyone who recommended things cats and berg and whitman seemed to

just kind of wave off like as if we've done this before don't worry and it's like well you're trying to appeal to a bunch of 19 year olds none of the stuff is going to appeal to 40 year olds what you're trying to do this is not going to work out for you and they just ignored every single piece of criticism they got. So this is, I think you wrote a piece about this a couple months ago. And I think Tom Conrad, the CTO of Quibi, had like a really great threat about how difficult it was to build the screenshot functionality because they had to get around DRM. They had to make sure it worked on all the phones, all this, all this stuff. Very cool. It was very clever how they built it. But you had written a piece that was like shows are marketed online now. And you have no,

you have no ability to market these shows. You can run all these. ads in other places you want, but if your biggest fans can't screenshot the show and make memes out of it, you're doomed. And that just never seemed to hit them. Even today, Jeffrey Katzenberg said, or pointed to Disney and HBO and Netflix, and you said, you can't screenshot on there either. And I pointed out, yes, you can. It's on Chrome. And that's because they have website or web browser version of it. So you can go on and make, have screenshots and then those travel and then people download those or whatever, and then they spread them from there. Quimmy didn't have any of that. And it's, you should have known going, going.

into this, hey, there's an issue with DRM, we'd have to get around it. Let's figure out how to build this tool and talk to Apple and Google or whoever and figure out how to do this. Because they did. They just didn't want to acknowledge that this was going to be an issue to begin with. And that is at the fore, like the bottom of it, that is like the core issue with Quibi is there was no insight into what they were actually building. And I don't think they actually understood what they were building. They thought they were building an entertainment company in a traditional way and that doesn't work anymore. They thought they were going to have content that was going to compete with the biggest players. And that barely works anymore, even for the biggest players who are struggling

to find content to compete with each other. And they just went into this and assumed that things were going to work out because I don't even know. I don't even know why they would assume that this was going to work out because everyone kept saying, this seems like a really bad idea. Now it is. Now it is. Do you think they thought it would work out because they're smart people and it has worked out for them in the past. Like, I don't know, DreamWorks was like, whatever. Like, could anyone have predicted that a fairy tale movie about a big green, like, troll would have, like, been, like, a huge cultural moment? Like, sometimes you just kind of roll the dice, and they rolled the dice in their most, like, compelling show that I saw was, like, the Golden Arm video that someone used their phone to record another phone, right?

I thought that was amazing. But they just, like, sometimes, like, the entertainment just doesn't. But I think there's a difference between taking a bet on something like Shrek, which I would have predicted, it would have been great because Shrek is definitely a fourth generation. Only because of Smashmouth, right? No, it's, I mean, I could have a whole conversation about Shrek, but like, could be failed in part because there was no Shrek. But you can release movie like Shrek and you hope it works out because it's a big budget movie and you're hoping people go to theaters and it works out. There's difference between that and then finding a consistent string of content. that people are going to continuously pay month after month for.

Like, the thing with streaming in particular is not just gaining customers, which is based on original content. It's keeping those customers. And if we look at statistics from Netflix and Disney and HBO Max, even now that's newer, what's keeping people is those libraries. Like, they're tuned in to watch Stranger Things or Game of Thrones or The Mandalorian. Then they're staying to watch Marvel movies.

They're staying to watch, I don't even know it's on Netflix anymore. Frazier, who knows, maybe. Quibi, one, didn't have. the new shows to bring people in so people were already like, I don't want to spend, you know, whatever, five, six bucks on this. And then after you're in there and you're kind of looking around, there's nothing to keep you, why would you continuously pay? So it's not even just spending $100,000 a minute on content, because you need content. It's spending $100,000 a minute on content that is going to take people's attention away from not only the other

streamers, but also Fortnite and TikTok and YouTube and Instagram and that. There was never anything on Quibi, even from launch from the gecko that made me want to open that. lot. You know, it's funny, Parks and Rec just went to Peacock. And so Parks and Rec is like Becky's comfort food show. So it was on Netflix and like she would just watch it all the time. Which is always always on and I went to Peacock and like here we just signed up for Peacock. Like, and I have a choice. Like that's the thing that she wants. So we signed up. I have to disclose Peacock is owned by NBC and NBC is an investor. Every time you're on the show, Julie. NBC is an investor in box media. But like it made me really think about the value of that live.

right like here's this huge i have no idea what's new on peacock it doesn't matter to me if they make a new show and put it on that service it just has a library of things that we wanted to have and so now we have it i don't love it i don't i much preferred when it was all in netflix as much as i love competition it was a lot more convenient when netflix was my one television monopoly provider but there was never a moment where i was like oh i got to pay the money to cats like never he and i think i I went back and read the feature that Ashley wrote at CES, where we sat down with Katzenberg and Whitman, and we went to their insane CES launch event where they didn't even show the app. They just said things like, this is the third generation of film narrative.

And Katzenberg was like, I've been doing this since before you were fucking born, which is a real thing that he said to us. And we were like, I don't, there are guys with pressure washers on TikTok that have a larger audience than all of Quibi. Because the mobile apps are designed to algorithmically find audiences for you. And you're competing against infinity. Like, infinity and free is your competition. And you're like, I'm spending more money on cast off shows from networks that know they can take me for a ride. No, I think part of the issue is that they wanted to launch a traditional media company in a very revolutionary period where traditional media doesn't work.

And we're seeing that because every single entertainment. company and conglomerate that your parents grew up with are now publicly coming out as streaming companies. Like they've all pivoted where they're like, hey, by the way, NBC Universal, like we did a bunch of cool movies and news and TV. Now we're a streaming company. And they're just coming out and saying it. And Katz and Whitman came in and were, they're the opposite. They said, we're going to basically release a bunch of shows and we'll find an audience over time. It's like that doesn't work that way. Disney Plus launched with one of the best, I'm biased because I love to Steve, But one of the best libraries and one new show.

And even they were like, oh, like we're building our subscribers, but we got to get new content on the platform or we're not going to keep people. And that's why Netflix works so well. Netflix releases a bunch of average shows and movies, but they do it so consistently. And they have such a good library of licensed titles. They're like, I don't even think about spending an extra $12. And next year, when Netflix introduces a price hike, and you won't think twice while spending $14, $15.

You're going to be like, yeah, that makes sense. and I will pay for it. And Quibi, even if they had an ad-supported free tier, and that might help them grow their subscriber base a little bit, it's not enough because they're not playing the game the way it needs to be played now. So let's end by giving cats the benefit of the doubt. There was a pandemic.

Right. There continues to be one. He did pitch this thing as premium on the go. So you're commuting, you're bored at work. You would like to watch CBS 60 and 6 or whatever their version. of, was it 20, 20? No, CBS is 60 minutes. So they're going to do 60 and 6.

So you want to watch premium news instead of just seeing whatever garbage is on Twitter or whatever radicalizing content, the YouTube algorithm is going to serve you. I mean, that was his pitch, right? Is there is a world in which people will pay for quality and I can deliver them quality. Whether or not the shows were not actually quality. But then there is a pandemic. So no one's doing that. Everyone's just sitting around.

Do you think that that is the thing that broke them? Because a couple months ago, he was like, the pandemic is breaking us. I think it's unfair to say it's entirely on Quibi and Quibi leadership because, yes, there's a pandemic. The pandemic did this really beautiful thing of accelerating trends that would have taken five years. And it's amazing. Like, I obsess over it. And everything that we thought was going to happen, 48 months is now happening right now.

And so if you look at Quibi and it's like, yes, the pandemic did hurt you and that sucks. Your other competitors, the acceleration hit them too and they just grew exponentially. They, I mean, people on their phones. Like, Instagram saw increased usage. I don't know about Snap, but TikTok obviously saw a massive increase with people being at home and recording. I don't think Katzenberg and Whitman's idea is necessarily wrong. I just think it's very hard to come into a field like this without understanding the importance of interactivity and viral memes and creators and influencers. Well, also, and not acknowledging that all the daily stuff that he thought people might tune in for are already being done by YouTubers and TikTokers.

Like, they'll do daily new shows. They'll do daily recaps of things and better and more fun. And they have an audience and they're doing it regularly for cheaper. And so I think his biggest downfall was just he thinks he's never failed. And that kind of arrogance doesn't fly in an industry that is rapidly changing every 30 days. Yeah. One thing that really caught me at launch, I remember when they said this to us, but ESPN did a show on Quibi. And Katzenberg was like, ESPN is doing a show.

it's exactly what I want. It's today's best highlights. Like, you don't get that on ESPN anymore, and that's what I want. I want highlights. And it was like, the reason ESPN doesn't do highlights on cable is because highlights are free everywhere. If you are a sports fan and you open Twitter and you follow anybody related to the teams that you like, you will inevitably see the highlights.

They are just available for you on ESPN.com for free. They're available for you on NBA.com for free. Like, wherever you want highlights, they're there for free, saying you have to pay money to watch ESPN repackage highlights. ESPN doesn't even think that's a good business anymore. The leagues have partnered with the social sites. The NBA is partnered with Twitter. So that way you can directly get it from the NBA on Twitter.

Yeah. That was the one where I was like, oh, like the plane just flew over your head. Like, goodbye. Yeah. I still want to believe that some kind of pitch like what Quibi is saying could work, that I will pay you money to do the work of providing me like some daily stuff and some quality stuff I can watch quickly, so I don't have to wade through the algorithms on YouTube and TikTok and whatever.

But the problem is I just think that the strength of those algorithms is so vast that trying to compete with them with just saying, no, we're going to take care of it for you and get you the content that you want, that's quality out from professionals or whatever. It's just, it's really hard. And in order to pull it off, you actually have to pull it off. you actually have to pull it off and make that content, and it just sounds like they didn't. Yeah, Peter Kafka at Recode wrote a very strong piece yesterday, arguing for more quibbies,

which is like just an incredible troll of the headline. His instincts are very smart to write that headline. But his point was the new media model, which is what we have been discussing this whole time, which is you make a tech platform, a bunch of people put content on your platform for free, and then you sell bites of attention to advertisers. and everyone feels cheated. Like every YouTuber in the world like inevitably makes a video

about how YouTube is cheating them. It doesn't matter what kind of YouTuber they are. It's just the end point of your YouTube career. Every Instagram influencer feels cheat. Like, right, the platforms extract all this value from free stuff. And then the algorithms do all kinds of bad things that ruin democracy.

And he's like, that's the new model. That's bad. We should have more things that are Quibi's model, which is we're smart and trusted and expert and experienced. We're going to make a bunch of stuff and then charge you for it. Yeah.

I don't disagree with it. I mean, there's a huge race towards subscription models across the media industry. Everyone from big publications to individual reporters. Like, I see that, but this doesn't,

my disagreement with Peter is not in the argument and the substance of the argument. It's that Quibi never realized how small of a pitch it was making. Like, how teeny tiny of a business it was describing. It only described itself

as we will change the way everyone in the world uses their phone. Well, and to Dieter's final point, we're kind of seeing it happening. I'll be quick, but if you combine two things that I think are very interesting happening at the same time, one is that Disney Plus is seeing like pretty good viewership of shorts. That's why they keep making shorts. And part that's because kids have short attention spans and they'll just watch the same thing over and over and over again.

And it works for them. But on the other side, you have people like Netflix, you have their chief product officer coming out and going, the majority of what people watch is through our recommendations. Like, that is the majority of what people watch because they don't want to sift through stuff. and we hyper-target those recommendations while also plugging their stuff. And if you kind of combine those two, like there's a business where it's like you figure out what really works. You have the content to do it.

And you have the teams who understand what they're doing and not just somebody who's thinking like, I'm going to try the streaming thing. It seems like a hot, hot ticket. There's a world in which the idea of what Quibi wanted to be exists. It's just that Quibi didn't end up being what Quibi wanted to be. That is the nicest, most complicated logic puzzle of the Quibi explanation I've ever heard my entire life. We got to wrap it up. Deeter already made me say it, but I'm just going to say it. Quibi has gone 90. It happened. We're going to have to update the chart.

Julia, who do you think is, what is the next service that could potentially go 90? Paramount Plus? Because that's it. That's one that people are going to be like, what is that? That's CBS All Access rebranding in 2021 as Paramount Plus. So I'm just going to say that because no one knows what it is. That's great. That answer was at once both like you, you thought about it, but it was also on the tip of your tongue. All right, Julia, a pleasure as always. We're going to take a break. We'll be right back with Addie Robertson to talk

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Adi Robertson is here. Hi, Adi. Hi. So a big week on the policy desk at theverge.com. Something happened with Google, I believe? Something did happen with Google. So on Wednesday, the Justice Department brought a very, very long-awaited anti-trust lawsuit against Google, saying that its search product had basically cornered the market on this

very important area of search. and was locking out potentially better competition. And it's asking for, among other things, potential structural changes to the company. We don't really know a whole lot more than that. Before we get it too into the nitty-gritty, which I'm very excited for, can you just, on the scope of things that the Department of Justice does,

this feels like it's on the level of them going after Microsoft in the 90s? This isn't like a little thing that will go away after a couple of weeks because the news cycle has moved on or whatever, that like this is going to be some kind of big fight, even if the Department of Justice completely loses because their argument is questionable or whatever, that this is a big ambitious, meaningful thing that's happening, not just a government agency complaining about big tech. Yeah, this is a really big deal. This has been in the works for a very long time.

There are antitrust investigations against all of the big four tech companies, and this is the first of them and also the first really big action against Google for a long time. time. There was an FTC, I believe, case against Google almost a decade ago. And this is going after Google search, which is the heart of their business. And it's going after just the general idea of their size. And so, yeah, we don't totally know what the rest of the case is going to look like. One of the weird things is that a fairly small number of attorneys general has signed on to this. But they're definitely going for something that is Microsoft scale. Yeah. I think the comparison. since the Microsoft case, they're kind of cutting in in both directions. So, like, Tim Wu,

who is a friend of the show and someone we generally trust to have smart ideas about this stuff, he's like, they just modeled it after the Microsoft case. It's the same argument. And then there is some other folks out there who are like, this is totally different, like a different argument, different case, different time. So I think we have to see how that plays out. Adi, you were talking about what they asked for at the end. So they do mention at the end, we want structural relief, and that is legal code for breakup Google. And then it's like, and also anything else the court thinks would be good. And that's the part that is the missed to me, right?

Like this thing doesn't tell a story. It describes a problem, which is that Google is very big. We should get into the pluses and minuses of just describing that problem. But it describes a problem, but it doesn't really, it doesn't feel like the DOJ is like asking for something. They're just like, look at how bad this problem is. It also seems like there's structural remedies. I mean, it does sound like.

for Breakup Google, but that's not really implied by the suit. Like, the things they're actually complaining about concretely are, A, Google has these deals where Android phone makers have to install certain apps if they want to have any Google apps pre-installed. That Google Chrome, its default search engine is Google Search, that Google has this revenue sharing deal with Apple, that they're alleging provides this huge chunk of Apple's profits that means that it's the default search engine for Apple products. And all of those remedies, it kind of just seems like the solution they're insinuating is that Google needs to stop having these deals or that it needs to add something like a preference menu, like you can select your browser when you first,

sorry, I keep saying browser, I mean search engine, that you can select your search engine whenever you open its browser, like stuff like that. It's not really clear unless they, I don't know, spun off search how breaking up Google would help. this particular case that they're making. The only part of, like, I think that whole, like, they're abusing Monopoly power because they make good deals with Apple is really weird. But the part where they argue that the default actually matters, and even if it's easy to change the default, nobody does it.

I think Google believes that. They have been incredibly consistent in telling me that, like, they care about the default. Every time I yell at them about messaging products, and there's a million of them and how do I choose or whatever, they're like, look, everybody just uses the app that says messages on the home screen. And like a tiny portion go over to something else and make that their main messaging app. So you have to get the default right. The flip side of that of them knowing how valuable that default is is they will do whatever they can to make sure that they're the default on as many browsers as possible to make sure that the Google search is the thing that is just easy to use that you don't have to think about.

I mean, the interesting thing is that they've tried to put forward a counterpoint to that by citing back in 2014 when Mozilla signed this deal to make Yahoo its default browser. And they're like, everybody hated Yahoo. They all just switched back to Google. And then it is true that Mozilla then terminated its deal with Yahoo, basically saying they wanted to do a thing that was better for their brand and their product. But that definitely does not disqualify the larger point. Doesn't it? So I am of two minds about this case.

And this is really the thing I wanted to talk to you about to help me figure this out, because I just don't know where I stand. I think you've been listening to the Vergecast or reading The Verge, you know, we're very interested in antitrust, you know, we're very interested in competition. We've been covering this stuff very closely. It is true that in many places there is not enough competition. So Google search on mobile, I think we've made this point 5,000 times, has just become cluttered and full of Google services and ads. And it is like, it's veering towards frustratingly unusable. It's not quite there. Everybody still uses it. But you can just see that the user experience is getting worse because

what are you going to do? You know, when you use Bing? So, right? Like, that's what that feels like. Yeah. So you can just feel there's not enough competition there in particular.

And I think, you know, across sort of the ad landscape, Facebook and Google are this duopoly. A lot of advertisers and marketers will tell you it's a problem. So on and so forth. But then there's the reality, which is, yeah, what are you going to do?

Use Bing. And no one does it. And then there's this case in particular. If you read the complaint, It just spends pages and pages going on about Apple and Google paying money to Apple to be set as the default on the iPhone. And I'm just like, well, that's that's busy. Like Microsoft isn't poor. They could just pay Apple more money.

And then Bing would be on the iPhone and you have this, you know, there's always this argument that the amount of data you collect in search makes the search engine better. And it's hard to, well, Microsoft could just pay Apple the money and they would get a flood of data from iPhone users. And they don't. And like, is our government suggesting that Apple has done something wrong or that Google has done something wrong by paying Apple money? Apple does not lack bargaining power. I don't feel bad for Apple in this situation. They demanded a price and they got it. So that whole part of the argument to me just undercuts this case in a way that makes, to me, makes it feel like a huge missed opportunity.

Like Google's going to just win this one walking away because they're going to be like, what do you want to do? Make the iPhone worse? Judge. And the judge is going to be like, I love my iPhone. Can you help me FaceTime my kids? Because we just see that happen all the time. Am I just like, am I missing something? I've been trying to figure out if I'm missing something since the case hit.

I can't tell. It's so hard for me to tell because I am not a lawyer and totally willing to believe that the people at the Justice Department know something I don't and are smarter than me. But I have also, there have been all of these sort of. rumors that they were rushing this case before the election and not making the strongest case that they could. So, yeah, it's really difficult for me to tell because that's also an argument I haven't seen brought up all that much in other antitrust complaints about Google. Like, I feel like most of them have not brought up the Apple Google relationship to nearly the same degree as a bunch of other factors.

And what's weird about the Apple thing is the case against the bundling that they do on Android and forcing a bunch of carriers and especially manufacturers into. to agreements that they might not necessarily want to agree to is relatively strong. The EU used it successfully to, like, make some changes to the way that Android is supposed to operate and the way that bundled Google apps are supposed to operate in the EU. And it's, you know, I know that Android doesn't have the same mind share in the U.S. that Apple does, and, you know, not the same market share it has worldwide and blah, blah, blah, but it just seems like there's a case there that also has some precedent that worked

and they could have potentially drafted off that success. No, this is the other thing that I think is weak about this. Truly, the EU did that, right, they forced Android to be unbundled. I think that is a much stronger argument. Right. So if you're an Android phone vendor, you're LG, and you want to ship an Android phone in the United States, your phone is going to fail unless it has the Play Store on it. To get the Play Store, you have to sign up for every other Google thing, put the Google search bar on your home screen,

blah, blah, blah, blah, blah, right? Okay. And so that's like a form of tying. And you, like, walked down this whole antitrust argument, right? Microsoft gave you Windows, but to sell Windows you had to do it and explore, boohoo Netscape went away. Are we all that side about it? Mark Andreessen's like the richest person in the world and Chrome exists.

Like, it was fine. But like, that's that argument again. I think that's where the, this is a carbon copy of the Microsoft case comes from. With Android, there's just tying. But then you look at the EU, which has been chasing after Google for one decade, And they have accomplished, from the consumer perspective, nothing. Yeah, there's a pop-up menu, right? No, but like Google's market share is as high as ever.

I remember when the EU decision about Google being forced to unbundle Android and Chrome in search came out, I was near Satchinadella. I was in the room with him. And I was like, oh, you can make a phone now. You can make a Microsoft Android phone that has the Play Store, which you need, but do all this stuff. And he's like, I don't think it's to me as good as you think. and then they made an Android phone and it has all Google services on it just the same as ever

because that's what people want and that to me is if you are a regulator in the United States United States Department of Justice you're one of the Attorney General's who you're one of the attorneys general who signed on to this case you picked the same thing

that didn't accomplish anything in the EU like you're just driving down the same road there's a chart Eddie I shared you this tweet it was from like the former chief economist of the EU Competition Commission

and it was the meme, like how it started, how's it going? And like the how's it going is like the market share of Google search is just a flat line for a decade. Why would you, that's the thing. Like, why wouldn't you, you're the Department of Justice. It's two weeks before an election. You work for the craziest administration in history. Why wouldn't you just be like, I think we should break up YouTube? Just something, whatever.

Mickey Mouse should be the CEO of Google. Just like, we have a different idea than the EU. that has accomplished nothing. Like when I say it's a missed opportunity, that's the thing I think. But, Addie, it seems like a lot of people are saying this case is going to mutate a lot over time. Yeah. So the argument that I've heard from people who are fans of the case, which include people like the head of VP of Policy at Yelp, who is obviously a huge critic of Google, is that this is like a stake that they're going to then move past. That maybe they're going to start with this and then other states are going to join this complaint.

or they're going to add more charges, it's going to get into something like ad tech, where Google does actually have this giant company that it bought that it could spin off, and that from there, it's going to be something much stronger. And there's a, it's the Texas Attorney General has a case that's like pretty narrowly focused on ads, like ad tech inside of Google, which is, I mean, that's, if you want to hurt Google, that's where it hurts. Actually, let's explain the attorney general thing. So there's the case from the Department of John's,

It was joined by what appears to be mostly red state attorney generals. And then it's like Tish James from New York and a bunch of other people are going to file their own suit later. Yes. That's the thing that I understand, although it's all, again, it all seems a little bit fuzzy to me. So, but it's likely that there's another big antitrust action against Google coming. It definitely sounds like other, yeah, other states are working on their own version of this case. And it's not totally clear what it looks like yet. but the thing that I have, that people seem to think is that there's going to be advertising

stuff in it. Do you think that's stronger? I just keep coming back to the notion that people want to use Google. Google's really good. I mean, it sucks now. It's worse than it's ever been and it's still really good. I was on, I think I was on John Gruber's show a while ago after the antitrust hearing. And we just, I think we talked about, like, 10 minutes about why Apple hasn't built a search engine.

And now we know, like, because Google pays some billions of dollars and that it's easier to just get a check than make a search engine. But it's just wild to me that there are no competitors to general search. There's Bing and there's Duck, Duck, Doe Go, which licenses a portion of Bing. I think Dock.com, it, like, synthesizes a couple of different indexes. But, yeah. But right. But no, there's Google and Bing as the general indexes. And there's a couple, like Yahoo's Bing and Doc.

Bing and Duck Echo is a synthesis. Like, no one else is just trying to do the thing. I'm not sure what Yandex and Baidu use, actually. They obviously do not really operate in the U.S. But that is the sort of competition in Europe was Yandex. It would be crazy if the bill bar, DOJ, was like, we'd like Bidu to come and really be a player in the United States general search. That to me suggests, like, we know Google is a good business, right?

They would print money. The fact that no one else has been like, we should bite off a piece of that good business, except for Microsoft. which is historically hates Google. Dieter, do you think there's something there that just prevents people from competing? So, I mean, there's the, Google is magic and has a ton of data

and is better at algorithms than anybody, and it's just too big a moat for anybody to even want to try to cross because in order to build up the data and expertise you need in order to be remotely competitive, you'd never get any traction. So there's one theory.

Another theory might just be that, like, ad tech on the web is incredibly complicated, the way the auctions work, the number of players, the different levels, the different ways money flows around. It's like, it would take us forever and you would give up if we tried to explain it. And like I would need to do a bunch of research to not sound like a complete idiot about it. So I'm talking these vague generalities here. But Google's dominant every part of that hugely complicated stack. And so if you want to run a search engine, it's got to be free and therefore you're going to need ads to, you know, subsidize it.

And therefore, you're going to need to, like, start participating in the ad market at a scale that actually can, like, subsidize your search engine. And I think that is equally, if not harder. It's equally hard, if not harder than trying to compete with Google on just, like, the core technology of having a good search engine. Our company's chief revenue officer, Ryan Polly, he's in charge of advertising at our company. One of his funnier lines is, like, the only reason the ad tech ecosystem is as complicated as it is, is so that the people who understand it can keep their jobs. which I always thought was very funny. But that comes back to this Apple deal, right? Which is why it would be at the heart of this lawsuit.

The lawsuit is basically split into three parts, conceptually and split into more parts. But conceptually, it's, hey, Google's really big. Look at the size of its bigness. It has this Apple deal. Look at the size of this Apple deal. Google, we have evidence that says Google discusses losing the Apple deal is like a code red situation. And then here's a bunch of Android stuff. Right?

like those are the three. That's kind of how the lawsuit proceeds. I just don't know that you sue Google to change the way Apple does business. I can't wind my way through a method in which the government, particularly United States government, which does not have the competition law that the EU does, that really does not have the political capital to like individually regulate contracts between companies. Like that's just not how we do it. That you would sue Google because you don't want Apple to make a deal. And, like, Adi, I think you wrote a piece, who's the victim, like, who's Google really hurting? There's no victim here. So it's, like, really hard to make the case that anyone's even being hurt based on our current law.

Which is funny because there is this really, like Tim Wu cites this. He basically thinks the victim is vertical search engines, like Yelp and TripAdvisor and Kayak and whoever, that basically Google changes its search engine so that it's very, very difficult for them to compete even when they offer a superior product. And that really doesn't come up at all in this case. Yeah. Didn't you, you shared a slide that was like just Google showing it all the way so you can find bread? Yes. Bread and a question mark. Wait, hang on.

Their defense is you got to get that bread. Believe their defense is if you're like, what's bread, Google? You could be like, Google, what is bread? Or you can look up bread influencers on Instagram or you could like, I don't know, search for bread on Yelp. The point of that slide was that there are a lot of ways that people. people get information now that's not a literal search engine and therefore Google has competition that is beyond that. That's the same argument as Amazon says they're not hugely dominant because there's all

of retail in the history of humanity. Or Google says they don't own the ad market because magazine advertising still exists outside the internet. I don't know. That's off. It's not their strongest argument. It's very, but like Google doesn't routinely put out slides with literal like speech bubbles of someone saying, Alexa, what is bread?

Google put out that slide because a lot of the government's case is like, and now Google is going to dominate in voice search. And Google's like, yo, we're very much in second place. Thank you. Like, if you met Jeff, he's over there. He's in first place. And that being the first fight in every antitrust case is to define the market. And that's why Amazon is like stores exist. And Google is like other search exists. I think they, that's like basically has Pinterest on it. Yeah, it's basically anywhere you can look up information. Yeah. But at the end of the day, the fact that like, All of this is we think Bing got a raw deal is like really conditioned by the fact that Bing is not good. I mean, their argument is duck, dot go.

And I'm trying to remember the name of the search engine that was created by Google executive that's supposed to be paid search. Their thing is basically everybody hates data harvesting. And if Google weren't so powerful, maybe these small competitors that have alternate business models would be able to get a toehold. That's pretty good. I mean, I buy it. I just keep coming back to the notion that Apple should be prevented from taking the check. Like, how do you regulate Google? How do you punish Google in such a way that it can't make that deal?

You know, and I'm like, I just don't think a judge in any of our courts is going to write, is going to do software design and make the browser ballot, right? Because the EU didn't do it in courts the way that this is happening. They have a competition authority, right? There's like a specialized agency that thinks about it. And they were very happy to be like, we are mandated. a software design for Windows and Android. I just don't see a United States federal court judge being like, I have some thoughts

on software design. Like, here are the buttons you need to have to fix this problem. So I don't know. I just keep coming back to the sense of this is a missed opportunity. The other thing that I see in this case, so I now I'm just yelling, there's this line where it's like, in 2015, Google used its power over Android to prevent a major United States carrier from installing its own search engine on a home screen of phones. And I'm reading that. I'm like, yeah, rules.

Google should do that all the time. Like, that's obviously Verizon. Like, obviously Verizon wanted to put a bunch of AOL bloatware on their phone. And Google said no. And like, if they had shipped a phone with a bunch of AOL bloatware on it, dear would have complained. Yeah. We would have been like, this sucks. Google should take a firmer hand with Android, which is a thing that reviewers have said

since Android came out. Isn't there just a disconnect from the reality of like how we've, wanted Android to work. This is interesting because this is totally the thing, the case against Apple antitrust cases is that iOS is really good because it's really locked down. But I don't know, but maybe I just like, maybe like I'm the one who's always like yelling at competition. Maybe I should just accept carrier blotware in my life.

I mean, the, the subtext of some of this conversation is, is ultimately the solution here make Google search worse in some way and that opens a door for competitors. And that's like a fine argument to make, I suppose, but it's not one that's going to get you a lot of support. Not that like mass support from the people matters that much in a jujus case like this. But if like the subtext of your argument is Google search is too good and we need to like break that down so that other people can get in there, like that's not going to get you anywhere. I think it also just feels kind of intuitively wrong to a lot of people. like they're the gamer webcomic penny arcade did a strip about Google antitrust. And their thing was just, oh, hey, Google antitrust.

Yeah, let's put it in a Google Doc and then use Gmail to write about this. And then we're going to go watch a YouTube video. And then we're going to use Google search. And then we're going to put Google ads on it. Like that's, I think the thing that's much more intuitive to most people is Google just makes everything. Yeah, except a good messaging client, just to be very clear. Yes, they only kill those. They launched them to kill him.

We could keep going on this. It's obviously going to take years. Obviously, there's an election coming up. It feels like the Justice Department, no matter who wins, we'll carry on with this. It feels like these cases from the states are coming. There's a lot yet to come. But I would say that the gestalt of this that we've just been hearing is a lot of people are very happy.

And a lot of people, like me, think it's a little bit more of a missed opportunity because they rushed it out to get a headline. before an election, which you read it, you decide. But Addie's going to keep covering this. Addie, one more thing I want to talk about with you before I take a break and bring on Josh talk about Foxcon. There's just 230 noise in the world, as usual. The Senate has subpoenaed Jack Dorsey in Zuckerberg.

Twitter released a feature that House GOP is very mad about Twitter asking you to read the article, which is very, like, very funny in like a 2001 slash dot way. like Twitter's like read the fucking article and then like the government is mad about that which is incredible. Yeah, I got poor Twitter. What is the current state of just like 230 in content moderation noise? So the state of 230 is that there were, I believe there was another new bill this week that we didn't even get into or talk about and that the FCC has decided to move forward with that really bizarre plan that Trump has been trying to push since like earlier this year where they quote clarify. section 230 by completely rewriting it. And the interpretation is, look, still, you, you probably can't do that. And they haven't really moved on it yet. But it's all because everyone's really

mad at Twitter for blocking that link last week to the New York Post story. Right. Can you just real quick, I don't know how to talk about this real quick, but the FCC basically doing it about face. I don't know, no, no, we, we have something to say here. What, what exactly are they claiming and like can they do it and is it is that going to do anything or is it just more noise around 230 so the FCC is basically saying we have the authority to interpret this part of the communications decency act basically the only part left because there are words in it that are ambiguous like at some point it says that you can't be sued for blocking quote otherwise objectionable content and they're like we could totally rewrite this and this is largely considered not valid or

reasonable at all. And again, the election makes it really hard to talk about whatever might happen because it's possible just none of this will move forward. But it's been, the FCC has been widely derided for claiming that it can do this for a long time. It seems kind of at the edge of anything that could be considered acceptable. And it will also not stop Congress from just constantly trying to change Section 230 on its own. Again, I will remind everyone that in the context of 230, Donald Trump and Joe Biden have the exact same completely unconsidered position, which is repeal section 230. Neither, unless something has changed at it, neither campaign has issued any further guidance

on what that would mean or what they would do. But Biden will just be like, yeah, we should repeal it. And Trump is Trump, and he'll tweet it whenever he wishes. Yes. I mean, Trump is much more dedicated to it. Biden seems like he's just somebody asked him about it once and he was like, sure, why not? Whereas Trump just constantly tweets it now and it's just a huge hobby horse for him.

But it's just funny that on this one, which is like, you know, this dominates tech policy Twitter every 20 minutes. Like it just keeps bubbling up. They have, they have effectively the same position. I'm not even sure I consider Biden having a position at this point. I don't know. Like, I think it was a really dumb thing for him to say. But the fact that he's just kept so quiet on it makes me, like it just means I feel like

I don't have a good picture of how we would actually try to enforce anything if he's elected. Yeah, I mean, that's true. I mean, but they have said it. It's not just one throwaway. They've said it a couple of times now. All that said, what got me about this FCC blog post was it quotes a Scalia decision. And they're like, Scalia using his textualist approach, reading the plain language of this case says, we have the power to interpret 230. 230 is like not that old.

It was not, it's not like George Washington didn't write it. It's very easy to read. And it very plainly says that the platforms have the ability to moderate. And also the First Amendment lets them do it anyway. It's like just very fun. And then there was, do you see that I think I retreated this chart, but this adjut pie FCC, their position on net neutrality and the ISPs throttling and blocking content. Yes.

And then platforms doing it are literally diametrically opposed. So Pi, like when it comes. comes to ISPs, he's like, the government can't get involved, light touch regulation, there's no First Amendment issues at play. And then with Twitter, it's like the government has to step in here because it's a monopoly. And it's like one in 10 Americans uses Twitter. Like, that's, like, literally that's the size of Twitter, but it's like all we can see. So all of the government needs to be yelling at Twitter all the time is basically where we are. It's great. I love it the most. So we don't think anything else is happening with 2.30 until the election or is it just going to be,

there's this hearing. I mean, there's the hearing. I guess you never know because I don't ever want to make any predictions about anything that might happen now in government. But it seems unlikely that anything really big is going to happen before the election. That's not just sound and fury. I'm excited that we're recording this the night or the afternoon before the debate. It would be amazing if like half an hour of this debate was extremely substantive 230 proposals. I don't know what's going to happen. I'm just like, anything is possible in 2020. That's my, if I can get that bingo score, I'd be very happy.

Okay, we got to wrap this up. Addy, I'd like you to stay because Josh is going to join us to talk about Foxconn, and there's a giant glass dome in that story. There is. I just like you to be around when we talk about giant, ill-fated glass domes. We'll be right back. Support for the show comes from LinkedIn. If you're a small business owner, you know that every hire counts,

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which includes access to all the features mentioned in today's episode. Claude. com. We're back. Josh Jezza. Welcome to the Vergecast. It's been,

is this your first one? I think it was on several years ago, but I honestly forget what it was talking about. Probably was Foxcon. Could be. So, Josh, I wanted to talk about this story. You published a huge feature this week about the quote, unquote, Voxon Factory in Wisconsin. There's a lot of color there.

But I just want to lead up to it. Just a little inside baseball for the listener. I don't think we've ever taken a reporter out of the newsroom for four months, six months. Like, this is all you did four months. Yeah, something like four months, I think, just on this. We've never done that before. So it's a huge bet, Josh, I think that bet paid off spectacularly. But you have just lived, you've been writing a story about nothing happening for like two years.

And you spent four months proving that nothing was happening, which is incredible. But give us sort of the lay-of-line. What on earth is happening in this building in Wisconsin? Yeah. So it turns out it's extremely hard to prove nothing is happening. And it took a long time to really confirm that. But nothing is happening. They've built some buildings.

It's unclear what will happen in them. They hired some people who had very little to do. They spun around looking for some way to generate money for a while and did some strange things that mostly fell apart. And now there's a building they call a fab. That's not a fab in a half-built sphere. All right. Let's take it at a building, empty building by empty building. So 2017, Trump, then governor Scott Walker, signed the...

this deal, they say, we're going to build the Wisconsin Valley, Foxxons here, depending how it added up four-ish billion dollars incentive from the state and local governments. Those incentives, tax subsidies would have been paid in cash if they hired enough people per the con. There's this contract at the heart of this whole story, contract between Wisconsin and Foxcon. That contract seems very contentious right now. Yes. So Walker signed this record breaking subsidy deal, Wisconsin, and local governments were going to do a bunch of stuff. They're going to wire land, build infrastructure, they did all that. And then the heart of it was about $3 billion in tax subsidies that would be paid to Foxcon when it hit certain hiring numbers. Foxcon has

desperately tried to hit those numbers by hiring people in the final months of the year and then laying some of them off immediately after the deadline. It has so far failed, but it's that sort moot because it's not building what is specified in the contract, which is a Gen 10.5 LCD fabrication facility. It's supposed to be a giant 20 million square foot LCD factory, the first one outside Asia. And instead, Foxcon said it was building a Gen 6, which is much smaller. And then it turns out has not really built a Gen 6, but has built some sort of building that it says we'll make LCDs, but is maybe just a last stage assembly building or a storage facility. That's great.

So this storage facility part of it is a little complicated. You reported it in the big feature that Foxx only got a permit to change the building of storage, but there's a little bit of complication there. Just explain that a bit. Yeah, so it's supposed to be in a normal fab, you would have part of it, and this was the original plan for this one, part of it that makes the actual LCD panel, which is the really heavy industrial component of it that would, you know, where you make the glass. And then you have another part of the building where you assemble it into a finished product, like a monitor or TV or whatever. Foxconn last month got a permit to change the LCD part of that factory. in the storage space.

And unclear exactly why it's possible that it's because that part of the factory would have required a lot of expensive safety measures that they no longer have to do in order to occupy the building. And so in theory, they could do some last stage assembly stuff there. They could use it for storage. They can do other things with the building, but they're not going to make LCDs in it. They might assemble products from components that are shipped in from China or elsewhere. So I want to get into the, I mean, the story is so sad because so many people believed and

they got their hearts broken and it's tragic. There are some parts with it that are pure comedy. Let's talk about all that. But just to wrap up sort of the beginning and end of the reporting, has Foxcon said anything now that the story is out? Foxcon has denied that they hired people just to hit the subsidies. They've said they've experienced some growing pains, not unlike the movie American factory. I rewatched American Factory last night. If you are saying what we're doing is like American Factory, you should just leave. You should quit.

You should quibby it up. You should get out. That movie is horrifying. That was what the Foxconn employees said. And they said it was, you know, they were told to watch it because it was an example of what they're going to do in Wisconsin. And then they watched it in horror. That movie is about a Chinese company coming to Dayton, Ohio and crushing a union. Yeah.

That's what that movie is about. Like, what are they doing? Anyway, so they've said they're American factory. And then they've said that they're going to make LCDs, though they've been a little bit more vague about that since the story came out. I forget Terry Goh's exact statement, but it was about being true to its commitment to Wisconsin as long as Wisconsin is committed to it or something like that, to that effect. It will be a good partner to entities that are a good partner to Foxcon. That's basically all they've said, but their latest statements about what they're doing is LCDs. This whole thing could have been for them if they'd actually built an LCD plant.

Racine Kid, who grew up to be tech editor and display nerd, tours LCD factory. Instead, they got Racine Kid, who grew up to be Editor of the Verge, very upset about traffic at his mom's house, made Josh write about it for two years. I'm just saying those are the branching paths that they've been on. So let's talk about some of the things they've tried to do. Actually, let's start with the sphere. They're building a sphere. What's in the sphere? The original plan for the sphere was, according to employees and the initial planning documents,

is it was going to be the dot in an eye spelling out FII, which is an acronym for Foxconn industrial internet, the Foxcon company that ended up taking over the projects. The sphere itself was going to be the network operation center for that data center. but Foxconne executives, when they saw how much a data center costs, didn't want to do it. But Terry really wanted a sphere. I mean, I want a sphere, too. I get the impulse. I mean, who wouldn't want a sphere?

There were some plans to have it ready for a Trump event. And so they went up with the sphere. It's maybe going to be some sort of event space, office space. You know, there's no data center. They brought in a modular data center, which is just sort of a shipping. container kind of thing that they're going to plug into it for the event that seems increasingly unlikely to happen. But yeah, there's a half-built sphere. Wasn't it going to be an exotic tree farm? Oh, right. Yes. What? So they accidentally bought too much land for the sphere from the other

subsidiary that was in charge of the land, and Terry really wanted trees in the sphere. And so briefly, an executive proposed starting a tree farm around the sphere. to grow the trees for the sphere and then sell the trees to recoup some losses. But they were trees that wouldn't grow there. Right. They were supposed to be tropical trees of some sort. In South Eastern Wisconsin.

I'm just going to tell you, it's very cold there. Kind of like a fundamental question before we get into more of the hilarious and also terrible and sad parts. How much of this, what percentage of this is a story about incompetence and what percentage of this is a story about grift? Like, how sincere was Foxcon in the beginning of building something?

How sincere are they now? And how much of it was, well, they never actually intended to do anything. This was always some kind of scam in the first place. It's really hard to pin down. And I think a lot of it comes down to just organizational dysfunction. And so you have Terry saying, build a factory, make this thing happen. and he's clearly getting a lot out of it. He's getting regular access to the White House.

When they say they're not building a factory, Trump calls them. So he's invested in that sense, but you have all these subsidiaries that are responsible for their own profitability and don't want to be cost centers. And when they're told to go in there, stall and refuse to spend money and don't improve expenses, and do you have this cycle where various Foxconn people

promise great things? and then see how much they cost or it gets vetoed somewhere up the chain and then nothing happens. It's just kind of a mess. It's not, I don't know that they ever set out to deceive, though they certainly haven't been transparent about what they're doing and are continuing to insist they're doing what Terry said they're going to do, but it just every single thing they try implodes. So the one, it just, I kind of come back to this year.

can't stop talking on the sphere. It's my favorite. Just more inside baseball. So Josh has been working on the story. We always knew we wanted it out in October before the election. And it felt like we were racing the sphere. Like I don't know. Josh, that's how I felt like we're not done. We had this lengthy fact-checking process. It had to go through our lawyers. Our creative director will had to design the thing. We had to just all this work to do. Josh had to finish writing it. And every day we're like looking at the Twitter feed of the guy who flies a drone above Foxcon to be like, how close is the sphere? Yeah, we knew that the sphere was related to this Trump event that was supposed to happen. So we knew something big was going to happen.

Reporting could become out of date was my big concern. I felt like we had to beat the sphere. And so they're, they're racing to get the sphere up. We're erasing the story to finish before the sphere is up. and every day his drone goes by, and there's another level of glass on the sphere. Kim Mahoney, who's the one person who refused to get relocated and lives now sort of in the factory zone, lives next to the sphere and would send pictures of the sphere. This is very funny.

If you go, if you look at our photos, I think we have some aerial photos. You go to Foxcon Aerials, and you look at that factory site, it's like the three big empty buildings and the sphere, and then one very nice Midwestern suburban home, just sort of like in the middle of it, like just next to the sphere. So, I mean, that is, again, I keep saying it's sad. 80 houses got torn down for this project. People got relocated.

Those people seem increasingly upset, even though they got paid and everything, they seem increasingly upset that they were like dislocated for a project that hasn't come to fruition. Yeah, it was hugely disruptive to lots of people, and there was not really any reason to it because Foxcon, build something that's 120th the size of what they were supposed to. I know Kim's upset. I know I've seen other homeowners who are upset about it. I know people who have put up with the traffic

from all the highway construction that was supposed to be needed for all the workers who want to come work in this factory are upset about it. A lot of people upset that the state went so all in on something that was not real. The other thing I want to talk about is the golf carts. I mean, there's like everyone should read Josh's story. It's it is full of story after story. of micro scale nonsense. I think you would, like, everyone coming to work and just watching Netflix all day is, like, incredible. But I just, I want to stay on the disruption, the actual people whose lives were, were altered

by this thing. Is there any way out for them? I think everyone, I mean, it's kind of a remarkable mess in that I don't think it really worked out well for anyone, including Foxcon, I think everyone is sort of stuck. I mean, the state keeps saying they'll renegotiate the contract if Foxcon tells them what they're doing. Foxcon refuses to tell them what they're doing. So you don't know what they're doing. That's like a very obvious like solution.

Like why won't Foxxon say what they're doing? Because they tried to build an aquaponic fish farm and it didn't work out. Yeah. So I don't know what happens now. They started manufacturing servers, but it's a pretty small operation. Maybe they'll do that in one of the buildings they've built. they have a lot of buildings now that they could use for something, but for all the reasons, the project never really made sense. It doesn't make sense to do a whole lot in them, labor costs,

supply chains. So I don't know. I don't really know what happens. It seems like maybe FII works out of there for a while and hires engineers, and it's just sort of a small company in Wisconsin that has more land than it knows what to do with. It's a tree farm. So I want to talk about, the golf carts, but I want to, it's just like there's so many memes that we've created out of this company over the past two years. I want to talk about the golf carts in the context of AI 8K plus 5G, which is the ecosystem that Foxxon was building. If you'll remember, I received a very upset email. I'm guessing, I think I know who the Foxxon executive sent it to me was, but a very upset email, insisting that we leave them alone and then explaining what AI 8K5 is.

Well, we can just play the song. Jackson Hayes wrote this beautiful song. We can play it. meant new generation, mobility and self-driving cars. Wait, is that the story we were running, Jeremy? Okay. AK means smart safety and security through AK technology. I mean, come on, Neil, you should know this. 5G means pioneering. Wait, medical solutions?

The crap is that supposed to mean. On some health cloud network. Okay. But that seemed very connected to what they did and were seen with smart cities. where they were going to have like surveillance golf carts with cameras all over them? What happened there?

So it's pretty emblematic of everything that went wrong with the project. So you had this executive, Ellen Young, who was sort of running around, he was supposed to be paving the way for all the other subsidiaries that were going to move in and make things, but was always sort of running around

starting these pretty buzzwordy side projects like the innovation centers, smart cities, things like that. So he was shopping around the smart city idea, which was, I mean, just like other companies have smart city initiatives, sensors, AI, things that are supposed to make municipalities run better, and worked out a partnership with the city of Racine, where they would have, you know, they would install 5G, they would have self-driving golf carts that would, you know,

in one capacity be sort of these security, like sort of drone security vehicles that would drive around and do surveillance. In high crime areas. In high crime areas. Like quite problematic on its own. What? And then also ferry workers to Fox Guns wonderful campus. But when it came down.

And so they submitted for this award, Racine won the award. And so he was like, all right. let's start making this a reality. And then Foxconn, you know, couldn't get clear answers about what technology it had access to or costs or timelines or anything like that. And then killed the project. I said, no, we're going to spend money on this. And so Allen got as far as ordering a bunch of golf carts, which were quite low quality, according to several employees. And they had nothing.

They couldn't make them autonomous. They just put them in a building that they built that had. no purpose. And so it was just an empty warehouse. People would go race them around. I mean, that's like, I was texting with some of my friends in Wisconsin. And they're like, yeah, great story. And one of them was like, this sounds like a dream job, if I have to be honest with you. Like, you go to work, you watch Netflix and YouTube all day. And then you can race around in a golf cart if you want. What's the problem? It's a good argument. I don't, I didn't have a great response to that one. There's ever so much more, but I think we have to talk about

blaze by Foxconn, if only because I think my single favorite line that has ever been published on The Verge, which is WeWork as WeWork itself would prove is not a good business. What is what was going on with Blaze? Because it's connected to the empty buildings. Yeah. Yeah. So, okay. So the the first big Foxcon story I was trying to figure out what was going on. I went to Wisconsin and they announced all these innovation centers that hadn't opened. So drove around to all the innovation center addresses and saw they were empty. And so we sort of ran a series of stories saying innovation centers are empty. And Alan Young would say they're not empty.

And we'd point out they're still empty. When I say that I've been torturing Josh for two years, I hope you can hear that in his voice. I mean, it's a pretty evergreen story. I'd always been really curious what the plan was for these. And so I finally found out that the plan was to turn them into we works. Apparently, Alan had been a big admirer of wework and wanted to start a wework business that was called Blaze, in which Foxconn would run co-working spaces in various points in Wisconsin. And these are just random buildings that they bought during Walker's political campaign. they're not particularly strategically well located.

They all needed major renovations. And so the company wouldn't approve funding to renovate the buildings. And he kept trying to make Blaze happen and hired people and had people start working in design plans. And then they never were given to go ahead. And they just sat there empty. I just love the fact that WeWork was a bad business when they owned. like they were the biggest landlord in Manhattan. Like they owned some of the most prime real estate

and one of the most bustling economic cities in the United States and they collapsed. Alan Young is like, I'm by a building at O'Clair, Wisconsin. O'Clair's a nice town, man. It's a nice town, but it's just like, and the building they have there is, we have a picture of it, it's empty, but it's like on the waterfront.

It's like a very nice spot. It's just, I don't think that if we work, can't do it in Manhattan and San Francisco and Los Angeles and all the places they are. I don't think that Foxxon could do it in Wisconsin. Okay. Last one, Josh. I got to ask you, what is your favorite of the little Foxcon debacles? Probably the fish farm.

That was that was the most surprising tangent that I'd found. And, you know, it makes a crazy kind of sense. They had a bunch of cheap water that the state had provided for LCD manufacturing. And there was an aquaponic fish farm business in northern Wisconsin that I guess Alan thought was a good idea. And so there was a plan to run an aquaponic fish farm in the park. And it just kind of just kind of wonder about the Foxtown project that could have vetted to spheres and fish farms and stopped pretending they were making LCDs. You have to bring those together, right?

Like the sphere is a fish farm, like giant floating aquariums. it's funny because that you know we go through these like long edits i kept on like making the paragraph about the sphere like way meaner and josh kept on being like you have to not be so mean i think the sphere sucks i'm just going to be honest with everybody if you look at the sphere like amazon's headquarters in seattle are spheres they are architectural marvels there's go look at a picture of them apple just built giant sphere retail store in singapore at marina basement Like, go look at it. It's a, it's literally a floating sphere in the water.

It's like an architectural Marvel. And then Foxcon built this like disco ball. And so I kept on writing things like, in comparison to Apple and Amazon spheres, Foxcon sucks. And Josh would be like, no, you got to turn that down a little bit. No, it's sphere looks a lot like the biosphere from Expo 67 in Montreal that was, it caught on fire. I pointed out that when I was a kid in Wisconsin, my parents would drag me. My mom loves botanical gardens. They would always drag me to the Mitchell Park Observatory, which is three biospheres.

There's like a desert one. There's a tropical one. And I was like, oh, we got to say the sphere sucks compared to even the Mitchell Park ones. And then I googled the Mitchell Park ones and they were built in like the 50s and 70s and concrete falls from the ceiling. And they've hung nets under the same. spheres to catch the following concrete and they might tear them all down. So I had to take that out of the story. I was like, well, it's better than that sphere. So I kind of sort of asked you already what

happens next. But it does feel like the next turn is the election. We talked about Alan Young a lot. Alan has gone just full MAGA on Twitter. Like all day, every day. He's just like retweeting MAGA stuff. It's like very obvious that they're tying their future to Trump being reelected in some way. What happens if that doesn't play out the way they wanted to? I don't know. I mean, yeah, I think there was a sense among employees that what Foxcom was going to do hinged on the election and kind of got that from Terry's statement where he talks about how we never even really considered Wisconsin until Trump told us to go there and we enjoy working with Trump and look forward to working with Trump but not saying, you know, the presidential administration, given that

There's an election a week away. I don't really know. I mean, to some extent, Foxconn is might be stuck there. They're contractually obligated to keep paying Mount Pleasant as if they built what they said they were going to build. I don't know how solid that contract is. If Foxcon decides to leave, there are other forces at work. Foxcon does need to expand internationally. And if it's just seen as burning places that it expands to and falls short,

Jordan, that might be more difficult. On the other hand, it's a company that's so lean, it doesn't give people off the supplies. And so I don't see it just forking over millions of dollars to a small town in Wisconsin for the years and years it would need to in that contract. So I don't really know what they do. It's possible they eke out a small manufacturing presence there and keep paying their bills or they could just throw a fit and leave. I don't really know. I'm like, I'm betting on throw-a-fit and leave. That was the vibe I got to Terry's statement. By the way, Terry isn't even in charge of fuck.

He's on the board. Yeah. But he's retired. He's not, and yet it feels like he's still running this company. That's the way it felt to me, too. His exact influence was hard to pin down. I mean, he was still a major shareholder and on the board and holds a lot of sway. And he was very involved with the project.

He was frequently, you know, popping over on his way to and from the White House. I don't have a ton of insight into the exact. decision-making processes in Foxcon leadership. So I'm not really sure if he throws a fit if they'll leave or how that will work, but certainly seem from his statement that that's what would happen. This all just reminded me of the last thing I want you to talk about, which is the expense approval process at Foxconn. Yeah, so this is a recurring thing,

a recurring explanation for the many problems in the project is that it never really had a budget. people would always have to send approval approvals back to Taiwan and via many different levels and sort of anyone, it was always changing. And if anyone along the way said, oh, I never heard of this expense. It's denied. And so it would take months for anything to get approved. At one point, everything had to run through someone that was only ever referred to as money

mama. No one could tell me her real name. They speculated that she was related to Terry, but even at the, you know, quite senior level, they said everyone called Money Mama. And so that a lot of, you know, from the innovation centers to like printing business cards to hiring people, many things fell apart in that process. Someone would be to, you know, I heard from people who never got paid back for parking, for travel, for whatever. You had people bring in their own computer. pencils, their own, you know, IT equipment to help the building run because Foxcon wouldn't pay for things.

It's incredible. Also, you know, early on, there was no, they had no, like, software. So they had, like, a free trial account of Office 365, and they would either sign up for fake emails to get new free trials or be given new free trial codes by people. That's incredible. I think I keep threatening Josh to yes to write an entire second story of things. is that the story is like 10,000 words long. So we cut a lot.

We really had to ratchet it down that keep her from being 20,000 words. There's a lot of condensation that happened. All right. I say this every week. We've gone over. We just have. This show, by the way,

is supposed to be an hour long. It's never an hour. So technically we've gone over again. Josh, thank you so much. If you haven't read Josh's story, the eighth one of the world, it's on the site. It is two years of effort,

four months, a very focused effort. It's one of the more ambitious things we've ever published. So please check it out. Addie, thank you so much for giggling at dumb jokes. That's really what I wanted from this. What I'm here for. And thanks to Julia for being on earlier. We'll be back on Tuesday.

I know we didn't talk about the iPhone 12s at all. Joanna Stern is going to join us on the Tuesday episode. And we're going to go deep into those reviews. There's also just a bunch of other reviews. I should call out. Deeter reviewed the iPad Air. Dan reviewed the M. The Echo, which is a sphere.

Yep. See? A well executed sphere, it sounds like. Yeah. Well, it's complete. And it actually is connected to a data center because it's Amazon. And Chris Welch reviewed the Beatsflex. So just like tons of reviews on the site. You can tweet at us. I'm at Reckless on Twitter. Teeter is at Backlund. Addy is at the Dexterarchy. Josh is at Josh Jeza, D-Z-I-E-Z-A. And Julia is at Loudmouth, Julia. We love to hear from you. Once again, we'll be back. on Tuesday. I know it's a little bit later. And if you came for the iPhone, just wait a couple days. Tuesday off interviews with Joanna Stern. That's it. Rock and roll. Vote.