This Week in Startups - All-In E6: Big Tech antitrust aftermath, potential effects of an M&A clampdown on Silicon Valley & more

Episode Date: August 1, 2020

Follow the crew: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://bio.fm/theallinpod

All right, everybody, welcome back. It's another episode of All In Podcast. The podcast, that is racing up the charts, despite the fact that we recorded every three or four weeks. There's no marketing. There's no ads in this podcast. It's just four friends who play poker together who've decided to talk about the most important issues in the world. Welcome back to the podcast, David Friedberg, the queen of Kinwa himself, obviously climate.com, eats a and an undisclosed beverage. startup that I'm not supposed to talk about it. Sorry about that. I know a lot of people were tweeting about this beverage startup. You're still not ready to talk about the beverage startup. Thank you, Jake, Cal. Yeah. Welcome back to the show. I always appreciate your promotions. But when will the beverage startup? By the way, do you guys want to talk about, do you guys want to talk about Jason's home address? Because I have that, I think. Please, no. I want to ask, is that a picture in the background? I love space, by the way, as you know, but is that a picture of Uranus or what is that picture? I think that's Saturn. It's Saturn. It's

Saturn. It's Saturn. It's not a ring. It's not Saturn. Freiburg, obviously, taking the first Virgin Galactic flight, Chamath Polly Hoppetia, of course, with us here. The Prince of Spax calling in from an undisclosed location that is not burning down like the United States.

How are you doing on your vacay? Doing really well. Thanks. I've given you the three-button salute, as I've told you. Yeah, thank God. The microphone is perfectly positioned. not have to look at your chest hair, all six of your chest hairs. Oh, my God. It's like a $1,000 suit that's missing all of its buttons or shirt, rather. I mean, they couldn't afford to put

buttons all the way up on your like, probably $2,000 shirt. Austerity measures. When I get back to the United States, as Jason said, my habitasher will meet me at plain sight and slow the three buttons. When he leaves for Europe, they removed the three buttons. He comes back. The habitash will put them back on each shirt. He does that for the entire. wardrobe. And of course, chiming in his rainman himself, David Sacks, professional blogger, and the fund manager of craft ventures, of course, before that working at PayPal with Peter Teal, Elon Musk, and a bunch of other famous people, two of which have gone on to have demonstrably more success than Sacks. But Sacks having, of course, more than success, demonstrable

success than the other 72 rocket scientists from. PayPal in between. He did a little company called Yammer, which Microsoft bought for a billion dollars. Speaking of big companies and big tech, we had a big tech hearing this week, and Jeff Bezos, Sundar, and Zuck himself, as well as Tim Cook, two founders and two hired guns, people who were hired for their positions, defending themselves from what I thought was some pretty good questioning. My expectations were very low that anybody on that panel would know what they were talking about. For me, I thought Jeff Bezos did the best job.

He had a great opening statement, and he was the most candid, and I think least likely to get broken up. Going around the horn here, Chimath, who did the best job in the hearings? I don't know if you saw all of them are just clips, but who do you think shined? I only saw, to be honest with you, your recap, which I thought was frankly really, really good. We should probably link to that in the show notes so people can listen to it. I saw a couple of answers. The thing that jumped off the page to me was I read a little bit of Bezos's statement. I thought it was pretty fire. I thought he did the best job, kind of positioning himself. But the reality is, you know, it's kind of what I said a few days earlier on CNBC,

but I just thought going in, this whole thing was set up to be kind of performative theater. and it basically was that, you know, the, just like the level of questions are just so poor, the level of understanding is so bad. And then, you know, people just use it as a way to grandstand. And everybody did. So, you know, I wasn't completely blown away by any of it, to be quite honest. What do you think, Friedberg? Who had the best showing in those hearings?

I think Zuck was the most kind of eloquent in the on-point responses. He was super, super well prepped for this thing. I think Bezos and others were obviously, you know, they had great kind of prep work done for their statement, but in terms of like warding off the attacks, I think Zuck did a great job. You know, it was weird. It didn't feel like Tim Cook should have been there.

It was like kind of a random thing that he was there because everyone had an axe to grind. And the axe that everyone had to grind. that everyone had to grind was a little bit different. It wasn't like this was a true objective discussion about, you know, antitrust. And so the acts that people had to grind were kind of pointed at Google and Facebook and Amazon in different ways. Tim Cook was kind of, you know, hey, yeah, this is cool. You guys go ahead and give your responses. I'm going to go back to work. And do you think that's because Apple does not have a monopoly position on a numbers basis in

anyone era and or and or because their products are so loved and universally, you know, used. Well, I think it's actually a function of what these companies do. So if you look at the Jim Jordan rant, I don't know if you guys watch this, but Jim Jordan did this big rant at the opening. And he went on and on. And the first thing he said, he's like, big tech is out to get conservatives. And then he went on and gave all these examples about how Twitter has been pulling down Donald Trump's tweets and flagging them and Facebook's been, you know, canceling. people on the platform. And his whole ax to grind was really about censorship on social media platforms, which has fucking nothing to do with antitrust and has nothing to do with Apple's business.

And so, yeah, I guess my point is like, and then other people have issues with Google's dominance and ads and Amazon's impact on local business. And so there wasn't much of an axe to grind, frankly, with Apple. At the end of the day, as I said, I just don't think that it was a function of, you know, a true kind of objective anti-trust approach. And it was just more about like, hey, we've all got different things we want to address. And we finally got these guys here. Let's beat them up. And, you know, Sacks, what do you think? You with Friedberg, that it was performance art or do you think that, or performative rather, do you, or do you think that there are actually substantive issues that came up during the hearings that we should discuss here?

Well, you know, it was both. You know, certainly there was a tremendous amount of grandstanding in political theater and the politicians on both sides wanted to take shots at the companies for various reasons. I mean, I think they have a slightly different hierarchy of hate. I think the left sort of hates Facebook the most because they blame it for Trump's election, which I think is kind of a ridiculous scapegoating, which we should talk more about. And then I think the right is most suspicious towards Google. But I think there are, you know, legitimate issues here that were brought up.

And I think the congressional hearing did score some hit points. And your previous pod did a good job showing some of those. These hearings were teed up apparently over the past year by a series of subpoenas of records that the committee, this is the, this is the House subcommittee on antitrust, had teed up. And so there were some moments where I thought that, you know, the representative scored some hits on, you know, Facebook and Google. What do you think the big? Who took the biggest hit in all of this? Who do you think has the most putting aside all this performance, obviously, and the politicization of everything in our country? And Jim Jordan, who, to me, is like the, he's like the dad at the baseball game who, like the Little League League game, who runs on the court and pushes the empire and gets banned for the season.

like he just yells over everybody for no reason. But what is the actual, what was the punch that landed that is the most valid as we go around the horn one more time here now that we got our initial thoughts about it? What punch landed the squarrest in one of these companies' faces? Well, let me set this up. I think there were three big areas of concern where just about all the companies with maybe the exception of Amazon took hits, although even, you know, Bezos took hits. think one is with respect to anti-competitive actions that these platforms are taking, particularly with respect to the applications or small businesses that operate and are dependent on those platforms. I think all of the companies were interrogated about that.

Bezos took a hit when he had to admit that were concede that the company may not have always followed its policy with respect to using its third-party sellers data to figure out how to compete with them. You know, Google was interrogated about snippets. There was news today, actually, just out of Australia, that the government's going to order Google to pay small businesses for the use of its content for snippets, which, you know, so the regulations are kind of heating up on this. But the sort of the first area was sort of anti-competitive. And I think Facebook took some hits with respect to the Instagram acquisition, which, you know, Congressman Nadler really went after him. And then I think

Jayapal as well. And that's a tremendously threatening issue for Facebook, because if it is forced to divest Instagram, it would just be crippling for the company. We should talk more about that. Yeah, let's take. Just, Jason, just set the table. Two other issues that I think came up, I'll just very briefly. Number two is sort of cozying up

to China. I think Google is the one that's most vulnerable here. And then the third issue is sort of this issue of censorship and bias with respect to content and politics in the election. Which has nothing to do with, which has nothing to do with antitrust, the censorship issue. So let's table that one. That one. I think you're hitting the nail on the head. This was not about antitrust going in.

I think people were, you know, kind of confused. Even Jim Jordan, just, I don't think he has any clue what he's talking about. He doesn't know the difference between regulation and antitrust. He doesn't know the difference between the Sherman Act and like, you know, Section 230. I think they're all kind of making it up as they go. long. So in many ways, I think personally that the companies that were the most at risk going in were the same companies at risk coming out. And so, you know, if you had to stack rank to risk, I think Facebook is number one at the top of the list. Then I think it's Google. Then I think

it's Apple. And then I think far, far, far down is Amazon. In many ways, Amazon is the most inoculated simply because the end market that they operate in is so massive. and the market that Facebook operates in is so new yet so constrained with very few competitors. So in many ways, I think that's how the risk cuts. I really think that the antitrust legislative framework that exists today isn't enough to touch any of these guys. Instead, I think what really happens is more regulatory. And if you really think about what these guys are very concerned about, it's more that Facebook, largely, and then Google to a smaller degree, essentially can be king-making. with respect to popular opinion and sentiment.

And I think that they want to have regulations. And I think that there's a good historical precedent for a bunch of industries that have had to come under regulation when they effectively get to 100% distribution. You know, whether it's meat or airplanes or radio or television, you know, agriculture writ large, automobiles and transportation, whenever a market basically serves 100% of the total addressable universe. governments step in and they don't necessarily legislate

and trust bust they fundamentally regulate and tax and I think in many ways that's just as bad and frankly in some ways it's worse because if you do that to a tech company you're basically crippling the one thing that they're supposed to be very good at which is to innovate and that's the only thing that they can

use to basically keep their stock price high which is then the only thing that they can use to get people to continue to work for them so that's the sort of circular loop that breaks if you regulate them. And I think that the risk coming in was the same as coming up. So Facebook, let's take them one at a time. Facebook, I thought, had the worst performance because it was pretty clear that Nadler was setting them up not only to not be able to buy a company in the future, but in that clip, he was sort of teeing them up that maybe the Instagram acquisition

should be unwound and they should be forced to spin that off because they were saying over and over and over again that Zuckerberg put in emails with his management team that they were going to buy these companies or kill them or copy their feature sets. And even though that may not be explicitly illegal, the fact that they've hit, as Chimov is talking about, such incredible market share with billions of users and because of the track record of Zuckerberg, you know, which may not be at all related to this, but it sets the table. No, but Jane is, Jason, in fairness to Mark, that decision wasn't made when Facebook had market dominance. That decision was made when Facebook was still fundamentally at risk, and there was a large

period of time where a lot of other people, had they been left to their own devices or properly capitalized, could have actually become a relatively, you know, important competitor to Facebook. Instagram could have been at that point, but then Snapchat was the opposite. Snapchat, they were at scale, and then they were going to buy it and threaten them, either you sell to us or were you going to copy the features? I think what a more logical and defensible reaction. Like, I just think it's not defensible to say, oh, you know what, Facebook? I didn't like the acquisition you did 10 years ago, basically because it worked.

Yes. And so I'm going to punish you 10 years later. That's crazy. That's stupid. Yeah. In the review mirror, no, no good. Yeah. A more reasonable place to be is to say, okay, this thing, meaning communications writ large,

has become a critical piece of societal infrastructure. and we are trying to figure out now what the rules should be. And rules shouldn't be brittle. Rules should be evolutionary. They should map to the moral decisions and ideas and frameworks of the time. And so, you know, we have to figure out, for example, number one, interoperability. So how can you message across all these multiple networks? You know, another simple example.

You know, we legislated the ability for emergency services to be able to send a message on your mobile phone line and your landline. You should probably be able to have a backdoor into all the messaging network simply for that reason. So the point is that, you know, there are all kinds of things you can do today to make this infrastructure layer of society operate in a more predictable way on behalf of... What was your best... Have you thought about a regulation? Then let's stick to Facebook and then we'll go to Amazon. Chumath, have you thought about a regulation that would make sense to Facebook, whether it's divesting an asset or maybe a certain person?

percentage of usage or allowing Facebook Messenger to work with iMessager to work with, you know, Twitter DMs. I'll answer it in a different way. So look, I mean, for 20 years, I've run these kind of businesses, like from Winamp to AIM and ICQ to then, you know, at Facebook. And so, you know, I remember at AIM and ICQ, we, you know, did all this hand-wringing and all these meetings between us and Microsoft and Yahoo to make our messaging networks interoperate. and you know eventually we were basically just cut off at the knees because other people just moved around us

and eventually it all just morphed anyways away from uh these sort of brittle messaging networks my my kind of view is that i think what's best for facebook is a status quo and so you know uh if if they can basically and by the way i think the strategy is and mark wrote this in his manifesto but a couple of years ago you know this is sort of what led to chris cox resigning if I'm playing, you know, sort of like conspiracy theorist, if you read Zuck's manifesto, what he was basically saying is, listen, we're going to take all these product, and we're going to take all that code, and we're going to mesh them all together in such a complicated, convoluted mess that if and when somebody ever tells us to rip it apart, it'll take another

five or ten years to do it. And that's effectively the technical read on that manifesto. It's just like you're going to make it technically impossible to unthread these things as independent. And your thesis is that's a strategy against an antitrust breakup. I find that. No, I just think it's a really smart strategy. I mean, he wrote it and he published it online. So it's not like he's hiding anything. He made it. I mean, this is the beautiful part about it. He made it completely in the clear. Now, so that's the strategy is to basically make it one monolithic code base. So that if and when, I think, I don't, I'm not sure if this is the intention, but frankly, if and when somebody knocked on the door and said, hey, you need to strip a part

WhatsApp and Messenger and Instagram, you can say, well, look, it's one monolithic code base of, you know, 50 million lines of code. It'll take me 10 years, but sure, I'll figure it out somehow. So, you know, I think what's good for Facebook is a status quo. Now, that's different from what's good for politicians and then what's different for consumers. I think what's good for consumers is fundamental interoperability. Now, this is then what touches, you know, Android and Apple as well. like the idea today that you cannot have a group text message that can only include iPhones. You know, on the off chance, one of your friends is an Android phone. You're basically fucked.

Which happens every six months on our group that Freiburg, what do you think in terms of Facebook and any potential action that could be taken or any possible solution to them having such a dominant position? Because they are the only one of the four that has a dominant position. I would think about the, you know, how these businesses are kind of built, right? In all these businesses, there's an infrastructure layer. The infrastructure layer in the case of Google and Facebook is reasonably similar. It's a bunch of data centers and hardware and software infrastructure to run all of their services on top. And then on top, there are consumer products and then there are advertising products.

and the customer base for the consumer product is obviously users and customer base for the advertising products is these advertisers that pay to access these consumers and give them ads and get clicks from them and sell them stuff. And so if you think about what do you pull out, it sounds like on the Google side, there's concern both on the advertising and on the consumer products that are being offered and the scale and the leverage that Google has

and how they make those products kind of come to market. And with Facebook, it's really about this absolute kind of monopoly on, you know, on social products and services, whereas Google's got this great monopoly on search products for consumers. So you could kind of take a layman's view and say, hey, like rip out WhatsApp and rip out Instagram and, you know, then Facebook is good. But the problem is in that infrastructure layer, they've created the social graph and this connection between, you know, all the people that you know, and they've got all the stuff sitting

on the same servers and Chimov points out, all the same code base, and there's a lot of commonality there. So the reality of like ripping something out from there is a lot more nuanced and a lot more challenging than just saying, hey, you've got to get rid of WhatsApp or you've got to get rid of Instagram. And it's more likely some sort of Chinese wall situation where you end up with a negotiated exit, continued ownership and control. But, you know, almost like what happened with the banks in the 80s, you kind of got to separate one side of the business from the other. That could be one way that this goes because, you know, it's really hard to kind of break apart given the way that these businesses are built.

What do you think about a solution, David, in which they conceded, hey, we're not going to buy any more of these competing social networks, which I think would be kind of hard for them to buy one right now. I think that's done. I mean, like, you can even see that Google Fitbit. I mean, Fitbit is, you know, what is it, a $1.2 or $3 billion acquisition? it's going to take almost two years to close, and Google's already making concessions,

antitrust concessions to the EU. This is a $1 trillion company trying to buy a $1 billion company. So I think large acquisition and M&A by the Big Four, it's impossible. Is that good for society, Chumot, or bad for society? Is it good for our business of investing in startups, or is it bad for us investing in startups? Well, I think it's good in one very important way, which is that it forces the capital markets to support.

these companies. And what I mean by that is, you know, I told you guys a couple times, but in the year 2000, there was 8,000 public companies. In the year 2020, July 2020, as we sit there, August 2020, there's about 4,000. So we've seen a shrinking of 50% of the number of public companies. So the idea that there isn't an M&A on ramp anymore means that more capital and the capital markets will become more fluid and we will support emerging growth companies in the public markets, is my suspicion. If only there was, yeah, if only there was an easy way for these companies to get public. Go ahead, David, respond.

Well, I was, I mean, I think that, I think you're raising the right issue, which is the chilling effect on M&A that these hearings are going to have, even if Facebook has never broken up or that deal is sort of retroactively challenged. the big four tech companies have to be looking at these hearings, and now they're going to be second-guessing every acquisition they want to make, and it's going to have a chilling effect. And I think that's a disaster for Silicon Valley, because we know that most of the startups don't work. And there's really only, you know, most of them go out of business, and there's only two good exits. One is an IPO, the other is M&A. And if you take the M&A exit off the table, because it's no longer,

sort of feasible from a regulatory standpoint. Not all those companies are going to IPO. Yeah, but David, what you're saying doesn't make logical sense because if those companies are shit anyway, they should be going out of business and who cares about an aqua hire or some mini modest hire that gets you two times your money? There's a lot of acquisitions where the acquirer is picking them up because they provide an important component or technology or product, but that that startup would not have been a great stand-loan public company. Would Yammer be worth more today? Would you be worth more money?

Would your investors be worth more money if Yammer had spacked? Yes or no, David? Absolutely, yes. Okay. So, David, your argument makes no sense. I think you're playing to lose. It's not that it doesn't make sense. I think David does bring up something that's important in the following way, which is there's a lot of companies, Jason, that get to a certain amount of scale and then they basically start running out of oxygen, whether it's because they've overbuilt or they've over-hired or they've over-spent or whatever.

Or there's a natural audience for the product. Yeah, maybe, but I think a lot of it is just sort of more overbuilding and just kind of distracted capital allocation. But then, you know, you need somebody to come in. And this is the problem with Silicon Valley. And I think what David speaks to is the following. If big tech M&A is off the table,

the single biggest thing that will change is valuations by late stage privates. Because if you know that you can't get a 2x mark to market from the last post, guess what will happen to your post money? It'll go way down, right? Because that was always the understood assumption. You know, all these guys, these late stage money can come in and say, well, sure, I'll put, you know, a $2.5 billion post, a $3 billion post.

Because in their mind, what they've been taught is that immediately sets the mark to get acquired as 2X. And in many ways, Facebook started it because Facebook can't. to buy Instagram, literally weeks after that growth stage round at $500 million, that's why they paid a billion one. They double the valuation. But wouldn't it, hold on a second, wouldn't it be healthier, though, for the entire ecosystem, if we weren't building those late stage companies to be flipped to a major company, maybe merging

them with medium-sized companies are slightly stronger, and then taking them public. To your point, Chimoth. The point is, if you don't have a fucked up cap table, you can do all of those things. It's the fucked up cap tables that prevent. that? Who needs this late stage capital coming in and doing these faca crazy rounds? Why not take the company's public earlier? Well, because look, you don't always know what's going to happen. I mean, this is the reason why Instagram sold is the reason Yammer sold is you don't know exactly what's going to happen. You don't know what the outcome's going to be. And in a lot of those cases

that you're saying would become IPOs if they weren't acquired, well, a lot of them just, you know, aren't going to work. It's crazy to be taking those exits off the table. when both the startup and, you know, the acquire or the big tech company, you know, want to do the, do the transaction. And, and, and, and, and, and, and, and, and, and, and, and, and, and, and the reasons why I think these, you know, there are a lot of these M&A type outcomes is, you know, in any category, uh, in any new product development. Uh, and so what they've done is, they've outsourced a lot of their R&D budgets to M&A. And so they let the startups run the experiments, you know, in any category, uh, in any new. area, you end up having a dozen of these startups get funded. You know, we make fun of it because

they're all, you know, there's so many competitors in every little space. But those startups are the laboratory where all these experiments are taking place. And then, you know, the big company comes in at the end and sees which experiment did well, they acquire it. Freebird, what do you think? I mean, I think the advantage of being a platform business is you can plug something in and immediately gain a lot of scale from it. So, I mean, you know, Instagram and YouTube are perfect examples. they were, you know, reasonably fast growing, had millions of users. But once they were plugged into the engine of the bigger platform, they were worth 100 times as much over a few years because of all the usage and the infrastructure and the

distribution, et cetera, that was provided. But, you know, it looked insane at the time to pay a billion dollars and a billion six for those two businesses. Each of them are easily worth 100 billion plus today, probably some of the last. of that. And so I think it's, Sachs' point is right, is like, I'd rather as a, look, I worked in M&A at Google for a couple of years early in my career. I left Google in 2006. And a lot of the infrastructure that makes Google's, you know, revenue engine was acquired. You know, we bought a company called Applied Semantics for 100 million bucks or 100 something million dollars at the time,

which ultimately became AdSense. And applied semantics could scan a web page. and basically determine what keywords that web page represented and then match ads from AdWords onto that web page. That acquisition was $100 million. I mean, I don't track anymore how much, but tens of billions of dollars of revenue are generated by that ad sense system today. You're bringing up something really important, which is at the time Google was not a trillion dollar company. So the point is that Google had access to enough capital market scale where nobody's going to get in the way. of a $5, $10, $20 billion company trying to buy a $100 million business like that.

I just don't think you're going to see any regulatory body take that seriously. Wait, so didn't we just paint the perfect picture, Tom off? There'll be a trickle down. Wait, isn't that the perfect picture? No, in fact, I think what it means is the $20 billion company

now probabilistically can act you in. So, for example, like look at this Intuit Credit Karma transaction, right? The question is, you know, could a smaller company have bought Credit Karma? Probably. But not at the price that, you know, Intuit is willing to pay.

Now, if Intuit gets big enough where there's a chilling effect and regulators say, okay, you know, you're above a magic threshold and, you know, no Bueno on the MNA anymore, now Credit Karma has two choices, which is maybe they sell for $4 billion to a very different company, right? Or maybe they sell, actually, let's take a different example. PayPal. PayPal is now a top 20 business in America, right, by market cap. So if PayPal isn't allowed, for example, to buy, you know, a bunch of sort of like

you know payment rail payment companies maybe what happens is like a you know a medium tier business is allowed to buy them and now all of a sudden those meeting to your businesses can compete with PayPal that's what I think that's actually seems like the best solution that we've we've kind of stumbled on here can't slack then become or Dropbox or Uber or any Airbnb now they can become the acquirers of these companies and then they can compete so why don't we just say hey if you're over a trillion dollars where if you're over

500 billion you can buy one percent of your market cap. I'm just throwing a number out here. Jason, let me jump in on this. That's not what Nadler was arguing for. It's not like Nadler was saying that if you're a big fork tech company, you can't do these deals, but everyone else can. The standard that Nadler and the precedent that he was essentially setting in that hearing is, you know, 2020 hindsight bias. You know, if a company acquires a company that- I agree with you on that. But putting that aside, if we were going to come up with the rule, because we know the rules that as they currently exist are inadequate to do any type of regulation for these companies because none of them have 95% market share. So if, in fact, we need a new solution, how about this for a solution?

I'm just putting it out here. You can acquire something that is under 5% of your market cap. So if your market cap over the last year is a billion, you can buy something 50 billion or less. if you're under $250 billion, you can buy whatever the hell you want. But Jekyll, let me, let me ask this question. You know, the points we made earlier about YouTube and Instagram, they were successful because of the scale of the user base of the platforms that acquired them

and the work that had already been done. And so they could plug in. They would have both been totally successful without. They would have been successful? But would they have been worth $300 billion like they are today? Maybe more. Maybe more. But Instagram was 13 people.

YouTube was a couple dozen people. it doesn't matter. The story is a small group were brought in with an interesting platform that was kind of working at the time, and then they became these $300 billion platform. So that's one scenario. And a lot of money could be used, and Google and Facebook used a lot of money to be the best acquire or to be able to acquire those businesses. And that's the argument for this, hey, they're at such a scale right now. No one else can compete because only they can pay this fee, as Chimov points out with Intuit and Credit Karma, only Intuit can buy Credit Karma at that price. Now, the alternative way to think about this is what if there is vertical expansion?

So instead of leveraging their existing platform and their existing dominance, what if Google, in this case, is trying to get into the cloud business, right? And they're competing viciously with Amazon and Microsoft and others in this enterprise cloud business marketplace that is continuously evolving, changing every year. There's a different kind of lead and a different company that's suddenly growing faster than the others. And Google spent $2.6 billion to buy Looker. Buying Looker for $2.6 billion does not advantage Google's advertisers. It does not advantage, to some degree it might. It does not advantage Google's users. And it is not about platform dominance in their traditional ad business.

It's about vertical expansion into a new market. Okay. So here's how I'll rewrite the law, David. If you have over 70% market share in your vertical, you cannot make additional acquisitions in that vertical. If you have— But they're buying into a new vertical, right? That's my point. And so then the caveat is, if you're buying into a new vertical, you don't have to hit that cap.

We already have that. We already have, I mean, that's basically the way the rules work today is that you look at market share. I mean, Coke cannot buy Pepsi. Facebook cannot buy Twitter today. But what we're talking about is at a much earlier stage, are you going to interfere with the M&A? Or are you going to retroactively go back and unwind these transactions? Unwinding transactions makes no sense. Yeah.

I think the point is this is all water under the bridge. And but the incremental M&A for these big guys, is very unlikely. Now, David does bring up a good point, unless it's in basically a do nothing, not that important, you know, in the positioning category relative to the core business. And so this is why, you know,

it's again, go back to like why did Looker close faster than Fitbit? It's half the price. Looker is twice the price, right? Fitbit is half the price. Yeah, new market completely. Yeah. Yeah.

And so there is a fear that there is going to be a compounding advantage that regulators have a responsibility to stop. So I think it goes back to once you get to a certain level of scale, the thing that we're missing with online businesses is this kind of like, you know, there's like a great original sin here that we're not admitting, which is that the internet is now a pervasive and critical part of human infrastructure. As such, there needs to be people that regulate and manage the internet, the same way the FAA manages and regulates planes and wind turbines. Think about the FAA. Let's just take aviation. It is impossible for you to go and just go into your garage, build some random thing to carry people from point A to point B in the absence of some certification. Okay? Take agriculture.

It is impossible for you to basically go and build up a farm and build up, you know, uh, livestock or whatever and all of a sudden just supply it into fucking sobies and safe way without any sort of like checks and balances similarly and the reason is because it's simple human infrastructure that everybody relies on and and i just think that we have to admit that now the internet also those are life and death this can be too i mean like what about the guy that read the post about like the pedophiles and the pizza joint came up with an AK-47 yeah i mean it's quite an edge case compared to flying on a plane. This stuff is life and death at some level, but even more than life and death, it's the anointing of power that then determines life and death. And that's,

I think, the key is that it's power. Yeah. Chamath, do you think that there should be an internet regulatory body that decides how businesses operate and how content is censored and managed on the internet? Is that what you're kind of suggesting? Yeah, so let me be very specific. So I think that there are very specific kinds of businesses and business models that should be overseen. Specifically, I think the first and most important thing is a body that oversees the collection of user data and how it drives targeting and identification. So privacy concerns around that. That's a no-brainer.

That's the first one. And then I think the second one is something that essentially, tears the fig leaf off of internet companies and says, you know what, you are the equivalent of a publisher and a platform, some weird hybrid that we didn't think could exist when we wrote these rules. And so we're now going to adapt these rules. Because, you know, if you think about it, nobody is happy with the internet publishers today. You know, the left thinks that it skews right, the right thinks it skews left. Everybody's confused. Nobody gets what they want. And so I think somebody has to step in and kind of sort of all up. Well, I think this is a good segue to Sachs's point.

then I guess we have a fork here now in the discussion. Do we want to go and talk about censorship and that specific issue across Facebook or do we want to get into Amazon for a second? Which way do do we want to go, Sacks? Go to censorship. Well, I mean, let's jump the fence here. Should there be, to Chimot's point, Sacks, a regulatory body that decides what people can and cannot say on social networks, yes or no? No, I mean, let's think about that. What we're saying is we need the politicians to set up a regulatory body to control how the people talk about the politicians. I mean, that seems like a recipe for disaster. What about specific lies and intentionality to frame debates incorrectly?

Saxy, that's not what I'm saying. I'm saying like, like, you go to a movie and, you know, there's a little blurb here that says who can go to the movie and who cannot. You know, you buy an album and it tells you whether there's explicit lyrics or not. Like you, before you turn on the TV, there's like some rating agency that tells you whether your kids should be watching it with you. My point is, what is the equivalent version? We all need to think about what it is. But to say that there should be nothing, I think is crazy. Sacks?

Well, I think, I mean, those ratings are mostly about, you know, standards related. to kids, you know, and the big internet companies already have a lot of child safety features. I don't know that you need to create laws around that. And I don't think that's what we're talking about anyway. I mean, I think the big debate about Facebook or Twitter is whether they're engaging in censorship or bias, right? And that goes way beyond this topic of child safety. So, okay, let's unpack. I don't think that they're censoring. All, All I'm saying is I think you need to label and you need to more clearly designate what this content is so that people can choose.

Like, for example, on Twitter, you know, I follow a bunch of people on the right. I follow a bunch of people on the left. I follow one or two QAnon accounts only because, like, I just want to see it all. And then I want to judge. And I feel like if I can see everything, I can sort of like lay it all on a table and figure out where the rough center is and kind of move to that, you know? So you feel you're intelligent and mature enough to do that, Shamath, but the rest of the world isn't. No, not really, but I try to do it because I think it's important for me.

Would you rather the platforms or some regulators come up with what you could see on those platforms tomorrow? Again, not what I can see, but there has to be a simple way. For example, you know, you could have something. And again, this, this, this, all of this does is it breaks business models, which then breaks monetization and it breaks the market cap of these companies. But for example, let's just say you had a new kind of job, which was, you know, all these, you had, you hired 500,000 people. And these were a combination of lawyers, journalists, you know, academics, all kinds of random people, artists, everybody, okay? Normal folks, blue-collar folks, and you paid them full time to basically read stuff and kind of like,

you know, you know, wisdom of the crowd style. Tell us where this sat in a spectrum. Okay. This is on the left. This is on the right. This is kind of center. This seems laughable. This seems unbelievable. This seems relatively incredible. And I think that you would get, you know, very quickly. And I don't think the latency would be that high, but probably minutes where, you know, 40 or 50,000 signals would tell you whether something is, you know, where something is in the spectrum of, you know, how to understand it. And then that system, that system will get paid, get played, though.

It'll get game, right? Like someone will figure out a way to turn all of Chimot's tweet labels into super evil tweets. and, you know, now everyone will meet you because you're super evil. Yeah, I think we just define George Orwell's 1984. Or cancel culture, right? If you're being 500,000 or a million people, if Facebook and Google and these guys come together and Twitter, and they pay a body of people to do this work, and so you don't know who posts it, you just see the content, you read it, you label it, it's a classifier.

So, Chimot, what do you think you would get classified as? And then what if you disagreed with what you were classified as? No, but David, like, what I'm saying is, you know, what I'm saying is, you, You wouldn't know it's me. Like, if I wrote an article on Medium, right, and I wanted to publish it in Twitter, that article first hits a queue, 50,000 people read it, they human classify it, and then it gets published. And now what if you don't like the way it's classified? And you don't want those tags attached to it.

And you want a place to publish freely without classification without tagging. Then there will be a company that supports that too, and you'll see how much people care about them. To hear the rest of All In episode 6, subscribe at bio.fm slash the all-in pod.