« The Weeds

Why everyone hates Big Tech, with The Verge's Nilay Patel


Verge editor-in-chief and Vergecast host Nilay Patel joins Matt in this special crossover episode to explain what Section 230 of the Communications Decency Act, which allows platforms to circumnavigate liability for user content, really means. They also discuss Elizabeth Warren’s proposal to break up big tech platforms, and how it may or may not fix anything.

Recommended reading:

Why the internet's most important law exists and how people are still getting it wrong by Alex Castro

Facebook’s $5 billion FTC fine is an embarrassing joke by Nilay Patel

Subscribe to Vergecast!

Join the Weeds Facebook group!

Learn more about your ad choices. Visit podcastchoices.com/adchoices

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Yeah. This is Marquez Brownie Acre Amphibia hd, and this is Andrew, Manga Nellie. We will introduce you to our podcast way, form the new sedition to the Vocs media podcast network, so I've spent over ten years reviewing type Gregson consumer electronics, for millions of people on the incubation. to channel and now on. The way form part asked Andrew, and I use that experience to dig even deeper into latest tech for smartphones too. I max to electric cars. So if you're a gadget, lover or attack head or if you just want to figure out whether the latest gadget is worth your harder in cash, give us a lesson sacred fine way, formed the MTV Ftp cats on your favorite Pakistan every Friday
see over their technology policy is like a really fascinating area and it really sits at the intersection of what vocs covers a lot, which is politics in policy and what one of our sister websites the verge covers, which is technology itself. So we ve got a special crossover, podcast episode for you today, which I sit down with daylight, but tell us the host of the verge cast, and we really talk about a lot of the issues that are pending in Congress in the presidential campaign that sit at this intersection between politics and power.
The really interesting cross over. I think you can enjoy a welcome to another episode of the weeds, only box media podcast network. I met in places I'm joined today by Neil, I Patel, and this is a it's really. It's a box media podcast network crossover event. So the DE ventures that casts- and I would say I get asked on average- asked for this cross over more than anything because there we got so is that now is the editor in chief of the verge. He is host of the birds cast, which is a I'm told it's the flagship by your eye. I firmly believe that you can make things changed by saying them over and over again, and so I've set it up over again and now people think it's true. Ok, so speaking of things that people think they can make true by saying them over and over again
I have been hearing more and more from republican members of Congress about something called section: two thirty which they think is a big problem with technology companies right. So if you ve heard right, it's like this there's anti conservative bias on the Tec platform, according to many conservatives, Fernand according to any of the data, while budget, but according to them, and in section two thirty has something to do with it yeah. So somebody is that what is our section of section, two authorities, a section of the communications decency ACT itself poorly, aimed bill. It's the law that allows platform companies to moderate their platforms in the thing about session to thirty, in particular that I think this audience will find interesting is it is really easy to read
like, if you have just a passing familiarity with how legislation is written, is super easy to read its plain on its face: ok and then the people who wrote it are still around run, widened musical author still in Congress. So he's very happy you what he meant when he wrote very easy to read words so that the history of it and when it was meant to do was allow platform companies to moderator platforms to take down things that they didn't want there to promote things they want to see promoted. That is the heart that freedom is a heart of how every platform works, and this is back in that bag in the nineties wide communications decency. Yet the instigating event behind to thirty is a case called Stratton Oak might be prodigy strategy. I thought you might remember is the firm from Wolf. Of Wall Street Gas, prodigy ran a message board. Some
didn't you have prodigy, we weren't prodigy. I was not. I wasn't. I was always and ale over there I was. I was a huge prodigy guy and prodigy was the market leader from it in an Sears bought prodigy, be in the week. I would say the Sears Prodigy deal did not go how anyone thought it would. Maybe it sample over the regulators should step in anyhow so proud of you message boards their users on the project message board. He said stratum of mine is a sham. This is a bad company shouldn't do business, it's all fraud, although up and down the movie hadn't come out yet. So I think the other people knew about it in the strategy. on sued, prodigy and said: hey you guys, you'd moderate these boards, you remove some content of violets rules. You promote other content. You are exert editorial control over this information and thus your liable for it the same way a newspaper be so that's it not like a libel context tried. So I give me at box right an article that accuses strategy movement of being fraudulent,
we are potentially yet legally vulnerable like they can sue us now, as it turns out, they actually work fraudulent, This was true enough. I've met, so you know the truth is an absolute defence to liable but had not come out in order to Caprio had not yet exposed stride note one for what it was, but but so this is one of many reasons that we try not to publish inaccurate smears The ice is that you could get sued for a year and we are liable for the continent are on our side and timetable for life. Their position was because Prodigy is maintaining editorial control over these message. Boards. The company itself would presumably have deeper pockets. They like random message board guy is legally responsible for libel. that occurs yet, and the court agreed with him, which was not an entirely expected result. There is a lot of league.
Oh wrangling, in this phrasing I come back to haunt us. It maybe bury me personally but There'S- legal wrangling over a platform versus the publisher, exert this much control or are you a publisher? So the court said? Ok, you, you are liable to third and this is the important point- that everyone I think on the conservative side that is theirs arguing about away now is intentionally missing to thirty was written to overrule that case. So in the legacy of strategy, one is twofold: one great movie, yes, emergence of marker, obvious superstar in two to thirty right to thirty exists to overrule this case and say it in platforms should not be treated
publishers rights. If you, if you allow users to publish content on your platform, you are not liable for that content EL it it's just a flat rule, so only the person who actually rights the thing, yet only the person actually makes content. So, for example, we publish boxes agree to channel weary to channel also pretty good Youtube. Google is not responsible for Vocs video publishes rats. So if I go up on twitter and I libel people, the people who I have libelled can sue me, but they can't sue Twitter get right. So would you hear the rhetoric is what we have to recognise that such systems are out here for public and say? Oh no. These companies are acting as publishers, not as neutral platforms, which is the old lot right. The thing the two thirty was written to get rid of right. Ok, so because the idea there, the
illegal decision, I guess, was ok. The platform could be held responsible because they were exerting editorial control, so you wouldn't to say. No more were not moderating this at all. To obtain your immunity, but in fact so, like the new law says it doesn't matter Brian, so we weak ignore, and this is what I mean you can just go read it. I encourage ever Read it themselves. It is not complicated things going to read it here. Yeah stir, here's to third see. One no provider or user of an interactive computer service platform shall be treated as the publisher or speaker of any information provided by another information content provider. That's not literally all says how Cato provider should be treated as the publisher
Ok, that's it! I don't know how warm everybody's going wrong, but that's all it's so that this does actually that's pretty straightforward out, but what is the like? But what is the politics is going on behind the sweat like white? Why is it that Republicans in Congress are trying to accomplish here like what do they want? A total control of all animation disseminated on the far as I can tell, but that might be the over read that that's just me. I live in a world where talk about two hundred and thirty literally every day, but what they're after is. There are only a handful of giant information platform. Sneaker we're rapidly approaching the stage were there might just be like six, but if you look at Twitter, Google and Facebook, they can't
a massive amount of information and they all have rules, but how they moderate their platforms. Republicans think they are being over moderated, and that is a rich argument for their base, mostly because the hard right base engages in a lot of speech. These moderation policies, bands. So that's a lie. racism, that's a lot of sexism, it's a lot of transphobia it just bigotry and general hate speech and bigotry general. Then there's harassment which every platform wants to ban in one way or the other or moderating somewhere. The other If you are a republican and you ve got this base, where increasing It seems every day there's a new scandal, Racism or sexism or bigotry, I might add the president engaged in some overt racism just recently
these. These moderation decisions are are disproportionately impacting and so you're, like your biased against my speech in this, is that free speech area I mean I, I think you know this point need this was the the weekend before we recorded this, that the president was tweeting about how various democratic members of Congress should go back to their home country is. Most of them are american born Americans, all american citizens, vibrations stuff a little bit of an unusual day for Donald Trump, but not that unusual, and this is the essential problem right I mean, I think the progressive critique of the platforms on this score is that they don't apply these policies in a consistent way. They'll say, will weren't. I can have hate speech when I can have racism on our platform, but then you can't, or at least quarter quote, can't kick the present to the United States. After or sensor his communications and they're. Just isn't a incredible
farm line between what I at least would consider racist speech and what I would consider mainstream republican Party politicians saying things like like Donald from design, a free This figure yeah. So I think one thing everyone will agree on just universally is that these companies are not necessarily well run short. and even if they were perfectly run the the nature of writing and enforcing speech regulation? Is such that you're still going to do a bad job right, like with the United States, has been trying to develop a free speech policy in our courts for two hundred and twenty plus years and we're pretty bad at it, but like four guys and Facebook are going to do with it
when he s so there's the others that problem right like where it is the line cross from being a pretty funny drove to being overtly bigoted. It really depends on. We all understand that actually dependent contacts. It depends on who you think you are speaking too whether it's a group of your friends or whether suddenly twitters algorithm graduate empathize you'd it to millions of people like How many little twitter scandals are a throwaway comment that somehow went viral now summons crying like we understood, happens every day, the other problem, and I think this is where I come back to there's only this tiny handful companies. These companies are monopolies and their space. So you see Republican saying that you're violet my free speech rights, the president has said their violating a free speech rights. Recently there, not the government right there that there's no by their private companies. If you do whatever they want by statue, they are allowed to do whatever they want, but there is nowhere to go. So if you feel like tweeting is important in the present feels are tweeting is important.
and you are constantly being bombarded with moderation decisions for your base. It does feel like this come this. These companies are censoring, and then you might do over moderating of oversight. Forbearance model should be liable for everything away. Newspaper would be, even though the statue doesn't say we live with a lot of noise between the pings, the dings, the emails labelled urgent. That aren't really that urgent. It's hard to cut through the static zero when, on the things that really matter just like, we can train our bodies to be better running faster lifting heavier. We could train our minds to stay focused to all the noise. We live with step, one download head space. It's me and have loaded with guide you meditations, designed to offer a daily dose of mindfulness concessions for every situation like three minute s away meditation when you're overwhelmed by the day and even meditations. You can do what you kids, when you're all of run by the day had space has been like a really cool
to have during these sort of difficult pandemic in quarantine kind of times has been hard, sometimes till I get a little time for yourself a little space for yourself, and this is a great way to go some just like a little like isolation around myself do something that is cool that helps get me a little more grounded on more centred a little more ready to face the rest of the day. So it is truly a cut above other meditation haps because it relies on clinically validated researched help. You feel better, improve sleep, boost, focus, reduce stress, you deserved, feel happier and had spaces meditation me simple, good, ahead space, dot com, slash weeds for a free one month. Try this had space dot com, slash weeds for free month with access to had spaces, full library meditations for every situation. This is the best deal offered right now had to head space. Tat calm such weeds today, if you like, basically anyone listening to this right now, I'm willing to bet that you are you're dealing with stress. Maybe there's it
of it like an overwhelming amount, or maybe it's more like a low but steady, drumbeat background stress. Remember how you are experiencing stress. It's likely effect. Moods you energy in so many other areas of your life. You feel, like stress, is starting to take over stranger relationships and shorten your temper partly tend to unload and better help is perfect. For that better help is customized online therapy that offers videophone and even live chat sessions. Whittier therapists should hope to see anyone on camera feudal onto its much more affordable than in person therapy, and you could start communicating with a therapist none forty eight hours and distress using its unbiased feedback. You be pretty surprise when you can gain for it see if it's for you, the weeds, sponsored by better help and listeners get ten percent off the first month, better help dot com, slash weeds, that's, b, e t, T r, E, lp dot com, slash weeds. You know we were joking, roundabout, prodigy, verses, ay awhile, but is to read in the nineties, you had a bunch of different sort of
nascent internet platforms, and you would dial into them and there was prodigy numbers copy and there was America online, and I think there are a couple more and I think the vision that people sort of had at that time of how this would involve is it. This would continue to be a rich space of competition in which consumers would probably subscribe one or two of these pick them, and so then different companies would have their own moderation. Policy is, and you know they just there would be a variation right and part of the basis of competition would be trying to pick an approach to moderation that people liked and different people would have different tastes. Different people participate in different way
is, and it would be sort of all good right, but instead we live in a world where there's a conversation on twitter that does not have any close analogues. Anyplace else Youtube is where people, fine video sprite, like all people who get short internet videos, a get it from Youtube. So if you can't publish to Youtube, you can add a lot credits like everybody cares alot about these companies policies. We see it it having big, systematic social impact and not just be kind of like while I don't like this, I'm gonna go elsewhere. If you're heavy twitter user, which pressure be you're very more impacted data day by a random twitter policy decision, did by any decision your local government makes where that is crazy scenario to be, and what is more, we are it if, if you are a Youtube creator and you're the verge covers you, two creators very,
Thirdly, there always kind a mad at you to Russia is the gateway to their economic freedom and Youtube is not great handling its creator so you see the enormous amount of power. These companies have any see this sort of lack of market competition. So if you're a youtube. I hate you too, where you gonna go where's the other performance going. radio career, the way that you to raise your career so then of Youtube, says: hey you crossed this line right. We may this moderation rule in six months ago. Enforce it this way, but in times of need, in a word and enforce unsightly tighter were democratizing. You now we're doing a channel all the sunny like wait, a minute that was my livelihood. That was my business use ticking away from his cause. You decided to
and there's there's not again. These families not lower and there's not a lot of transparency in that process is on appeals decision. If the state did that kind of thing we're we're looking like a decade worth lawsuits ran Youtube, does it you're just done there's no one again haven't. Conversely, if you think about you know how Google sort of ranks different articles and searches,
or how things propagate on Facebook right both of you, you know where we're writers are so high. I want my articles to perform well on these platforms, but not just as somebody interested in public affairs right like there can be a big news event. You know, there's a Supreme court justice being nominated and lots of different people cover it and which of those articles is widely disseminated in which aren't you know. Plausibly has a big impact, and not just on the economics of the businesses that depend on these platforms, but on like society as a whole right. The distribution of articles that are favourable or unfavourable to your point of view is something that you know: people care passionately about with with good reason right, a big social implications to what what happens here, and it's really Josh Holly Right of Missouri has, I think, been the sort of bleeding republican guy on this and his
As far as I understand it is the big technology companies are suppressing conservative speech, similar to a sort of classic republican criticism of media by us, except now with maybe more more sort of legal and regulatory Tief. He can bring to bear so Holly was the attorney general of misery. One would soon he can read a statute and divine what it means, but he he's insistent that The platform. Publisher dynamic exists for two thirty he's called to thirty gift to big tech companies that they They get to build big advertising, businesses based in user content and not for the users. I think that framing is A little is wrong. A little bit of a gift document? Don't gimme mistaken, It is the thing that enables or business you, not run a user generated content platform, if you, if you are liable for everything, you use your past that these businesses would not exist
in that sense. Yes, it is the enabling policy. For Google and Facebook and Twitter, and some were his proposal I think, goes completely off the rails, especially fewer conservative is his ideas. If you are a company of a certain size, your big enough, you will then have to submit to the fore we'll trade Commission every two years- proof that your moderating and unbiased way, the fragile transmission Walter on a majority line, this heading, it's it's just five commissioners, you once forums you! Why don't you want appeal won over ok from the other side to say that you're you're, unbiased and then you get to thirty protection, but if he don't proof, that you're, unbiased the protection goes away so would unbiased mean in that context, that's what sort of
you know this is one of the things I mean you know. If you know politics right nobody's, going to stand up there and be like no biases good Reg his, but by definition like it is good to be unbiased, but also what products are unclear undefined So that's that's some work. Last year, these photos, regulation motto is not staffed to write a bunch of speech regulations and handle a bunch of combined. Next year. The next part of his bill is it Any user has a complaint. They can take its the FCC and say it's bias in rearing its ugly head and anti see we investigate independently be pulling this protection away in holding a revival of moderation decision happens under the Holly proposal. That's wrong: the company to get a jail free card if they name the employee who took the biased moderation decision and immediately fire them. So that raises the stakes in this matter is just like ever higher because they will be publicly shamed and then fired. We have covered a lot of near how moderation works at the verge Casey
It has been running a lot about Facebook operators in the conditions at work. In his manners, MC fifteen dollars an hour. They get nine minute wellness breaks as they washes like flood of horrifying video. They get separated Facebook to hold them personally responsible. On threat of the entire business collapsing. they are named and fired, isn't insane policy outcomes, but that's part of Holies bill whole goal here is a lot about one. I think he he is not wrong in saying these companies are not transparent, we're going to hold them to a massive transparency standard. So we understand the rules we understand other unforeseen, then there's a check on those rules that their unbiased. How are you wanted to find that? And if they make mistakes they have these actions are faced consequences that all seems right. So this is about formal moderation that, like I look at this video- and I say like now- you can have this on Facebook, it's not about d like out Ghip, Ghisizzle, algorithmic wade.
or of some kind of in. I don't understand what it is but like clearly, some stuff goes like higher in your search results. Other stuff goes lower. Some stuff is judged more credible and not a bit. But that's is that, like a different subject, it's all. It's all part of the same litany of conservative complaints, a trump just had the social media summit. If you read the remarks, God Speed, but in the middle of videos in I used to tweet and the non I'd watch the numbers like Iraq, any just like rattle off a list of numbers and he's like. But now I see these numbers rattle lost a list of slightly smaller numbers. There's some complaint there that their being shadow band thing? Is it a favor term that they publish nobody, can see them or that are being denied and the rankings none of that has to do with moderation. Radon of that has to free speech, but it's all part of the same should litany of complaints, and so, if you make it more transparent, you make the algorithms more transparent. The argument
ok. Well, if you be forced to come clean about Europe, horrible, liberal, biases and the fact they are all just in big democrats pocketing curiously well, organised, unified goals of the Democrats will come together. None of that is true, and if you just want to really state that clearly, if you look at the stats, we gotta crowd tangle, which is a resource that Facebook, if you look at, HU. The most important politician on Twitter is, it is not is, though, conservatives are being suppressed anywhere, can service species being suppressed anyway news is routinely. The most shared thing out on on Facebook, bright Bart is still routinely cited across the conservative universities and the social forms you just see over and over again evidence that conservative speeches actually amplified by these platforms not suppressed right, so that the red of truth in all this is that these companies are incredibly powerful right and are not facing the
kind of market competition that we might have. You know maybe originally thought that, like online boardroom words what we're going to face- and that seems like you know beyond this- like esoteric of this communications decency- act- rule nobody understands or has heard of that. This is what we traditionally had anti fraud policy for right, yeah, so antitrust serving as an Ex bigs fear of regulation, and I think it is its extremely related to sort of the Holly proposal. If you look at Josh always proposal, he wants to make the effort he see in charge of content, moderation for big platform, he wants there to be a compliance regime, regular votes by unelected, official behold that is a lotta regulation. It is not what you would expect from. A conservative You have Elizabeth Warren saying where these are just too hard to regulate, break him up. Let's make him smaller and no compete with each other, and you know, maybe Instagram only better privacy than Facebook, or you know what's Applebee,
better messaging than instagram incentives. Have these sort of world scale companies that even like I've billion dollar fifty see fine seem like a drop in the bucket for them. So you see your see, there's to argue. like either you can have a bigger government or you can have smaller companies and the Maybe an interest argument is what we should have small companies when Emily is like for big fans of american economic history. This was like disagreement between Teddy Roosevelt and Woodrow Wilson hundred plus years ago was like do we need to have tentative. Do we need to accept that the modern economy just requires these kind of big sprawling trusts and then regulate them intends
Lee or do we say? No. We can't trust the government to basically tell companies how to run their businesses, but we need to do is break the big companies up and then let them slash force them compete with each other and end. So why has a proposal to do this? That has some, I guess you. She brought some specificity to this conversation, which had been percolating around in a slightly vague way. Other recent totally obvious to me how it would how it would address these. These speech concerns right because her big thing is a kind of like vertical separation of that the elements of a technical yeah. So I interviewed her at supper. South West right after she rolled out this proposal. Our proposal has effectively like one big rule, that's important and then let's make a facebook right and are not necessarily relocated. There are very important parcels in things.
Big rule. Is your company over certain size and you operate a marketplace. You cannot put your on products that marketplace. right, so, if your Amazon, you cannot preferentially tree Amazon products in the Amazon store if you're apple- and I think is very interesting- that in all of her messaging about this proposal related to this rule, she doesn't talk about apple When I sat down with her, I said you there's one company you out naming before it even finished the questions like apple therein, and I think that has to do how popular apple, his amongst the general population and how media unpopular with like say it's developers and income is exploited by its apple runs? The app store apple routinely gives preference to its own products in the app store or routinely says all kinds of. You can't make that we're gonna reserve for ourselves and why went beyond actually saying neutrality right, so her proposal is it you actually wouldn't be allowed yet too to participate at all in that kind of marketplace. So if you're too,
about so Amazon right, big stuff, like Amazon, essential stuff. They have these like fate, clothing brands are all these other things and also obviously like it's a big store right yet so this would essentially say, like Amazon, can't make first party stuff at all right, which is confusion in the history of house. Brands is very hot, like very long right leg. It dead. That's a weird situation. Indian bet, you'd the Amazon Store and it's sort of like Kindle business would have to get split up now. That is a big round. It is again like to give you just think about the candle business, if you can't sell Kindle hardware in the store because Amazon's both but the kindles tightly integrated with a bookstore right, right, that's what you're really by his accesses bookstore, that's where the Kindle so cheap. What are you gonna break that up to look? How does that? How does
panic about work is, is really hard and for the modern digital economy apple, as a great argument with the app store which is we need, is highly control the store because it keeps are user safe and we keep malicious offer out of the store we. last week where you use a video conferencing, abbot advice, media called zoom zoom. Had this like crazy security hole where they are installing a web server on MAX that he's senator right request to legislate at your camera, which is the disaster scenario. You can't do it I found, but you just can't- done. So that's apples like winning argument as we tightly controlled by form, because people want to stay because I don't want their cameras to turn on middle and I ran Emmy when it when I talked at apple executives at me. This is what they were like really really vehement. On that we we sell the phones right and we want people to like the phones and to that end we want to make sure that their not accidentally exposing themselves.
two different kinds of things on the store and that's what we need to own the store, but at the same time she doesn't name apple because apples, not it not a strong argument. I think for her particular point of view on this, but I think you have heard a lot of complaints that Google right would sort of start as ok, there's a great tool to search the internet, but then starts move into a kind of like squeezing out its own information providers? So now you're getting you know you go to Google Search and what you get is Google MAPS and you get Google reviews of things. The Europeans have find them a bunch of times for this idea that they are like loading, the dice against other technology companies, which I guess you would think, could light. Squelch innovation deprived people choicest
tat. The key example: there's yelp the open Google hate each other, or at least the Alps. Google and Google is indifferent, which many words so you know Google had had some listings for restaurant reasonings. Of that they were scraping, helps Data Europe's it. Don't do that, like just point to our pay is afterwhile. Google just started promoting its own listings, however caught them overreacts listings and helplessness went down with it. There was not a great outcome, it's not great for Gould, say: okay, we can see the most popular categories of of searches. We can see, the providers are search. Engine is sending people to. We can just integrate whatever information. That is in point them to our own products: right in that now we're going to destroy this business now on zero dollars and one cents. If there were a million competitors for search engines, he would say who cares right, like okay, Google's competing or differentiating
and so like that. One company is in charge of like this massive set of lake interlinked economic engines and that's not great, and so you shouldn't have the the restaurant reviews. Industry should not really be a Google search, optimization industry. What may yet? That's where we were. I mean I'm sure you, you ve, heard the phrase that competition is. Is there clickaway yeah, and I is it that mean that is, Google. Are you into Europe? I think Google employees until like a hundred lawyers, you just wander the streets of european capitals. Ten competitions is but a click away. But like one of martyrdom rustles, everything is french fries and Google lawyers. It's true. It's very Change is really change. The tenor of the European Community Beer is we're gonna sorted out he's being like. Is it really a click away? We have in our inner twelve for kitchen here and the desire of, as we have a cup of the old school gold mugs, yet that mark pen made when when
is working for being so that was our if, if Microsoft, and so that the ongoing technical arguments. There are other ways is not so hard to understand. Its Google has such a commanding store of data about user intent that it is impossible to building better. You cannot build a the better google at this moment, because Google will do a better job of searching, because that store of data is action of the valuable asset riots in the search. Algorithm is not the asset that the matter
data, the date that they have collected over the years about user and tat. What use are Watts is, is the asset and know about you can't buy that asset you can only collected over might so so. Google continually optimize is its results, based on its backward analysis of users. Behaviour like as eight they see what you click on, to try to understand what it is. People are really searching for with particular phrases, and so the argument is basically the more people. Google, the better Google is, and if you can't compete with that, readied has such a big first, the rendition, of course like they do a good job ride like the last smart people work at Google they're not fools or anything, but it there's no way to beat them because you would be switching off when inferior product, unless everybody switched off- and so this is like network of facts- is there I guess that economic seaward, not only everyone switch off that everyone's, which often some are switched off for ten years right, red or whatever. It is
you could move your data and you can't so how you do that. So I think that network effects. that, is the underlying economic concept that we haven't reckoned with inside. That these are all absolute winner takes all markets. There are not a lot of other industries like big american industries that have been winner takes all markets like this. Unless you go back to railroad railroads and oil companies. Written, so Ben Thomson, Rosemont Analyse here, it's blockheads trickery He has a very small reform is called aggregation theory which I am sure you are familiar with yeah. I know I understand why he calls it that instead of network effects, which was the official name from my economics, textbook and other issues so the narrative act, I'm sure everybody needs it. Smart listeners, negative attitude
The products more valuable, the more people that is rising by one fax machine, does the classic example. If one fax machine- it's useless, you know one other person, faction in its moderately more useful. You know a million people, a fax machines, I fax machines and greatly title and then just like that the vaccination goes away. Stick, that's the classic, example than I would have asked why we would you know it's actually interesting, but let's talk about fax machine, they re looking back the crazy thing about fax machines is that they were interoperable right. So the more people who own fax machines, the more vow while the idea of owning cordon quote a fax machine became yeah, but nobody actually monopolize the market by saying no right like this one particular company cells thing machine and you need another one from that brand to interconnect with right. If you had done that, you could have this like powerful, fax machine network login type thing, but instead it was like we were
facts into each other, like like Willy nilly effort he was ever gets, was like email right like a sailors game like nobody, makes money of email yeah in. So even if you look at fax machines immunity, this progress is called the weeds. I feel very cultural going here. We all get fax machines, it's exactly the same as any other standard with, tension on top of it. So you have to fax machines for patents on if they might transmit and receive a little bit faster than the standard you might get color capabilities le faster. We always fell back to total interoperable, and that is just the same. Right now is airports. Bright apple makes airports there very popular their blue headphones, it can work with anything. But if you happen to have an apple phone, they work a little bit better than the next set of booty headphones. If you haven't even apple watch now, you can sort of like easily connect everything if you have an apple laptop even better, and you keep going going going in and by the time want to buy a new car you're like shit,
have to buy a new watch, headphones phone and laughter, and that, like I don't know, if that's a good outcome right that you take the plunge ability, it s the reason Ben calls it aggregation theory. Is it's a rift on that network effects such that he's the power in the market is no longer demand. Its aggregating supply so like most Things aggregate demand right. You everybody wants to buy The new Ford like for a lot of power in the market. They control the man. He sang. Google controls supply way right. So, if you want to get to a consumer, Google has all the can Mars soon? Our were offered work. We ve inverted the market with aggregated supply. That is, it is a powerful theory, he's written about it a lot. I think that's one excellent framework for understanding this modern moment like why can there be a competitor renewal? We'll google already has all the people in the EU, not adding a new products to mark you trying to get all this
fires all the people who are already optimizing their businesses to reach people through Google, you gotta move them. That's real! It's a really hard hard thing. Ask then there's this like just very obvious: ok we're what if we do have a the winner takes all companies. What if we are in this moment, where there's only ever gonna, in over in a western, no third competitor. Is only going to be a Google ping. I guess any inveighing doesn't count. If there are only ever gonna beat you operating systems where do the challengers come from and how did they win? I have yet to see. In answer to that question, it doesn't We cover a lot of consumer products. There are not out of new consumer products on the market that are not extensions of an existing ecosystem. That's ok, Where's are just getting locked it more and more into the products. This episode is brought to you by fan door. Football is back and the best bet can make. Is downloading the fan dual sports book app? It doesn't matter if
new to gambling or an old pro fan. Dual has something for everyone and, as an official sportsman, partner of the NFL. You know you're bad you safe, there's, also never been a better time to use fan do because right now you'll get up to one thousand dollars back, if your first, but doesn't when you can even too the small wager into a big payday with the same game, parlay that just sign up with a promo code, spy five to place your first bat risk free on fan, dual sports book Download Vanderpool today, twenty one plus and present in Slovenia first online, real money wager only refund who does not withdrawal side, credit that expires in fourteen days. Restrictions apply, see terms at sports booked out fan. Dual dotcom gambling problem call one eight hundred gambler. People. Often ask me of prosecuting the mob, is like the movies. Well,
There is violence he cracks disguised over their head and a pop. Just like a melancholy. There are heads, so wasn't just permission to take em apple permission to take out his own nephew. But after taking down over one hundred mobsters, I can tell you this is the real thing is much more interesting. NL! We wholly former mob prosecutor and host of the new pod cast up against a man up against the mob lists. bail on the world's most secretive criminal organization, La Cosa Nostra we'll talk to process. Peters, former mobsters, an undercover agents, and- and Hollywood, all these stories are true, new episodes drop every Wednesday starting September. Eighth, listen and follow up
Hence the Bob on Apple podcast Spotify or your favorite podcast app. Ten years ago right, it felt, like I don't know, we technology felt to me like those really wide open hyperspace, whereas more recently when it's like Africa, otherwise right is like the ring the doorbell come. He got bought by one of these conglomerate Amazon by, zone in Nassau up by Google, and that feels like the inevitable outcome right like that's. What success would have to be for technology products? These days is people like it and they like. Ok, there's a good team behind this, their good it designing things, and so therefore, some kind a conglomerate is gonna, buy them up because otherwise it wouldn't it wouldn't. Work cried like everything is built around extensions of these platforms cause you want your stuff to work with the other stuff he's got so we are again
doing right now and on the first day of Amazon Prime Day prime days now to two days, and then you can buy on sale from Amazon. Today I can echo device like twenty two dollars night nodes, it's nothing! It's like Amazon's like marginal cost of echo devices. His pride twenty bucks rather make an aim. I think but they get one in your house, and then it is way more likely there. The next smart, something you guys, don't work without an exit device right. So now, you're like which light bulbs should I use, I gotta get some Alexa ones which door locked up They make us to watch a video cameras and put it did the depend now. Yours, like fully in this Amazon ecosystem because you bought one twenty two dollars speaker in that's going to affect your purchases on an infinite timeline is remarkable. I'm not saying that needs it like the girls in good competition within Apple, has a competitor and that eco system, and not saying like
the other governments should send its lawyers right away. I'm saying that is it. That is not what happened when you bought afford in wet nineteen seventy five, we're not like. Ok every purchase. I buy related to transportation for the next ten years, like cats, to be reproved by Ford that was not the case. I think we're moving that funds ability for market, as is led to some extremely distorting effects in Nepal These companies not only drive what you by like DR your purchase, decisions but effect. What you see is where you get there
publicans, a conservative sides, and we need to regulate these companies way. Ethel deafness interesting to me is that there seems like not just two different diagnoses. Righted Sancho site. Wilson arose about trust, busting or regulation, but there's an interesting like disconnect right we're. So it's like wines, anti trust idea, would do a lot to this kind of like interconnectedness and how do the different levels of vertical integration relate to each other, but I think not addressed at all illicit sounds to me this kind of basic concern that it's like look people go to Google and they want to large for, like news articles about something right? They want. You know trumps tweets bright and what people see, unlike how the democratic dialogue move forward, is heavily shaped by which articles Google chooses to make available to people, and that's like up just a lot of a lot of power to concentrate in a kind of black box, algorithm
some guys in mountain view or wherever, and even even the ones proposal seems like so dramatic. In some ways it it doesn't really address the core source of power it. It seems to me a dozen having that's the the key criticism of the proposal. If what you're trying to solve for is Facebook should do a better job of privacy, Google should be more transparent and how it search results. Her are put forth the EU to show a better harassment, Halsey, there's nothing specific, connecting breakups to those policy outcomes right, there's just a belief in the market that
If Facebook screws up people will switch to an independent instagram or that independent Instagram will be remain beloved, while Facebook series of scandals will lead its users to decline or an independent, what's up will not put advertising in what's up, which is fast risotto doing or not, read your messages or whatever knots matters are concerned. What's up, they'll go back to charging a two dollar feeding is what's up or main private, but also of the just to clarify this right. So this is like the other side of warrant, yet also adds a one is like the separation of marketplace, owners from marketplace participation and the other is like very specifically Facebook. Now it owns Instagram and also ons. What's up and I think a lot of people, I think I'll bet Ben Thomson we referred to before right as like. I think
hard letting that Facebook instrument merger go through like the biggest Vienna interviews Policy mistake, yeah generation, no one thinks it was a good except from our second, where even the founders of Instagram who quit we're like. We are regiment like our reality. I this is so you are saying to me when I remember when Facebook bought Instagram. I was more of a business comest for slate at that time, and people were incredulous about the amount of money that the Instagram guys made where's. In retrospect, it looks like it was like a joke. Cried that deal a century. They got a billion dollars her snuff, in go about you do for far less than that with a century right. So you know the theory here is that you, have, if you too, was spun off. If Instagram was spent off, what's up with spun off
then you would have more sort of competition between these companies, even though I don't quite do the same thing yeah. What's the first thing you do? What will you do right now? Is the second largest search engine only read the first one is Google, you spin off. You do what's the first thing to do, spanned the nature of their search engine. What's the first thing, Google? Does they build a video business right right certain there? Now? either directly in competition with each other you're an unhappy You tumor weathers. company there trying to rebuild Youtube, maybe go there, you spin off, what's up from Facebook, what's the first thing they do. They build a photo sharing service right. What's the first thing face, what does it read it in investing messenger instead of trade shuffle people are
It's it's three platforms, so the optimistic story about that would be that you would then have a stable basis of competition and wide that Instagram would add, features behind photo sharing to its like basic social graph, while Facebook, but also try to do you, know Photoshop, and then you would have these two different companies, and you too would have non video stuff in it and Google or build a second video platform and a course Instagram. It will be
I told you expand into video, and so you might have like five or six different companies cannot all em. But then the experience of Snapchat like makes me sort of dubious about this fight like Facebook, did not buy up Snapchat and eliminate a potential competitor there. Instead, they just sort of they copy it. The basic at some of snapshots, major basic functions and then took advantage of the fact that they, both Ike, employ a lot a smart engineers and they already had this huge user base and they just kind of those kind of crushed. Yeah aim for essential famously were robust. Facebook said, first of all that the competition point. It really relies on the notion that the people in the market are gonna, choose privacy rights which is not true. Like people often pick convenience are a privacy, it happens every day like they use Google. They continue to use facebook they're not such away like.
The absence of competitors is but one factor, but then we are all installing microphones and cameras slick left, nor so like the idea that the market will reward this privacy signal it's a little bit on faith, but it's there. The second party statute- and that is really an advertising dilemma, which is ok, snapchat exists. Its add targeting is not as good as is facebooks or Youtube's its audiences and his big and its audiences, very young. So it had the money. Yet they will have the money Sunday rightly yadda yadda. They got hold onto the like all these teenagers. They gonna grow up, withstand chat, they gotta get some disposable income and then then you can like solemn car. That's a longer snapshot is successful there. Just not successful on this EL the Facebook, and I think that is another distortion in the market right where you know apple, spinning what
fifteen billion dollars in episode for it. This tv shows making we're all commands blind very confusing. They can make a hundred episodes that show a fifty million dollars apiece they wouldn't take a percentage off their cash reserve right, like that's, crazy, that's an incredible scale and it distorts everything and it makes everything else feel small when, if you just took that stuff off them access. You would see their actions and credible variability way and if you believe in aggregation there, if you believe in the power of network of facts, then I think you're gonna get. You gonna think that these mergers, that happened in the Facebook Universe, are sort of incidental read that the market place just tens toward a winner takes all thy now and that you are going to have because Facebook know so much about so many people already. It is going to be an
damn all targeting platform, and you sort of can't beat that right, just like, like Microsoft, was not like a like a helpless little guy when it tried to get into web search. I bet it just doesn't work anyway rate and that so, like that's, a tougher question right like if the basic economics of the situation, ten toward monopolization I'll, let you think they do with electrical utilities right, and I think we we ve given up on the idea like there's, not gonna, be seven different companies running power lines down your street connecting to single persons house, and then you pick which utility you're gonna. U swayed like it's, it's called a natural monopoly and either they are owned by the government or their regulated by public utility commissions. And you know people complain about it a lot, but that just gonna is what it is and any need to learn to accept yeah it we had, that seems your natural monopoly, hundreds
broadband lines red should they be regulated in the same as fell minds under title to, should we impose net neutrality? It e ass one. Good argument that argument I make a lot during for no ill will look different. Infrastructure it as a matter of eventually wireless we'll take it anyway, so on and so forth, everything's fine right and then you look at the internet access companies and they are there not do not ruling out like tonnes. New access products are busy buying content. So, like eighty owns game affirms now's a very strange outcome in this world, one that can a loop his back to two, where we started right that if you go back just a few years ago right there was a big conversation about network neutrality and it was like liberals,
Well, I really wanted ass. An conservatives were saying this was a bad idea and it feels like were now having the same argument about digital platforms, except somehow the the the sides have gotten worse. It is deeply confusing right The conservative position on the lines on the ground so think about the classic way. Think about. Networks is in layers, it's like weeds engineering thing, but the other Yvette you're like physical Larry, but your network Larry application layer and on an uncle so that conservative position a jeep pies, the republican charity ass. He sees as this. That the physical and network layer should be totally unregulated. We can trust the I s. Peace, don't worry, Att and Verizon they're never going to block or throttle or prefer their own services and send you know. Att is not going to send you time Warner content faster than it sends you Disney contact. She was fanciful
but ok, but trust them through good. Even though, is not a lot of competition here, and your one layer up. It's the application, we're we're. Google and Facebook live in Europe and servicing their biased against us. We must impose fairness regime on them to make sure there transparent the FCC has to monitor every two years, and I wait a minute like if you think monopoly at this layer is bad. Most Americans have one or two access layer choices. Why are you? What do you think it's bad there and I've? Never. There is not one place where even pie again. The chariot you see is like don't worry about the broadband providers. The real problem is Google and it's like no they're all public up and down the stack. That's a prop up here, but if I could, if I some in budget pie here think what he would tell you is that we have plenty of experience with the network
restructure and they are not in fact like favouring liberal or conservative new sources, whereas the reason we have these complaints about you tube is that like they they really are. Google has demonetized, certain people show sprite. Facebook does kick certain content are afraid, and if Comcast did that right, they would be like a huge hue and cry if Comcast made certain websites suddenly in excess. So there would be hasn't happened yet so that a child he went away about a year ago. It's amazing. We started to thirteen Gus net neutrality when I pray promised the audience tall. All the same sort of conferred Invite Comcast when they bought NBC. By contrast, is an investor and our companies like we have to disclose useless anniversary. Didn't like you very much, but I'm disclose. So
ass, when they bought me see they made a deal with the activity in the US. He sees it. You cannot favour and mrs content on your services, which they would have done. They absolutely would have made it so that a Comcast subscriber could have streamed MSNBC and out and free from the data cap, but Fox NEWS would have hit the data cap right. That's that's putting a toll on Fox NEWS, well, you can t just part time Warner tomorrow on CNN you're, like every eighteen t phone is gonna, come with seeing an app that doesn't hit your mobile data cap like it within minutes like it's, obviously gonna Then there are definitely with HBO. So now you now I have an immediate sort of information bundling with access, and that is the net neutrality problem. Cnn will be free and eighteen databases and Fox NEWS will not. You ve arrived at just sounds about right. Just like that, isn't The nightmare is another thing that there were like a liberal.
We're saying: without neutrality, they will favour some viewpoints over others, and then they bought a viewpoint. However, it is the only reason it hasn't happened yet is that there is a lawsuit filed against the S cc for repealing that neutrality, rules and still pending before the Dc Circuit in everyone's waiting for that too, to TED and no one knows in the second the other rules, war against your will begin to see his bundle happen so begin. This seems to be like the shoes on both feet. Right that, like I hear Liberals saying: will we want more aggressive sort of moderation? I think a lot of times from these technology platform companies like why aren't you getting rid of the harassers twitter? You know why aren't you like getting disinformation off Facebook?
things like that, but these are the exact same people who were warning about. You know, violations of net neutrality and ensure it feels in my bones right that the difference is is that when people are thinking about the physical infrastructure companies being non neutral, they are assuming business strategy non neutrality right. Oh, it's like we're. Gonna, give preferential access to each be oh and to see an end, because that is the country that we owe right or Comcast is gonna, give preferential access to vocs media websites, because, where an investor in vocs media, full disclosure death, I regret for us- I wrote transparency fell. The awesome right figures, do not well, you see, invest, invest regrettable, but where is white?
being envisioned with Facebook is like not that Facebook will or should favour like properties at Facebook owns, but that Facebook should do essentially editorial judgment. Writer and like should promote like good, reliable new sources? I not bad ones, but theoretically the broadband companies could do the same right I won T Mobile T Mobile could maintain like a black list of like unreliable disinformation, websites and block them from me, or something absolutely and an old zoo, like
both feel uncomfortable with that idea of like a broadband infrastructure, company censoring websites, but also kind of feeling, it's bad, that Facebook promotes a lot of disinformation. So I guess I'm the hypocrite agree with you. It is. I have regret the question hackers. Well, my work is done here now, it's it. The question is where to where it is the regulation where where's the check on the power right in its the same question for net neutrality is the same question for platform moderation. Decisions same question for should be CUP Amazon, who's gonna check that out increasing power. These companies with net neutrality. The answer generally is: will the government should regulate these companies right? There are natural, Oh, please you're, not gonna lay more fiber in the ground, even if you had fifty companies digging up the city till they fibre. That's probably a bad outcome for a variety of reasons. The try I know, you're a proponent of of zoning, converse
missions is probably giving GLONASS local zoning debate to be had about that. Like that's inefficient, we can recognise its inefficient just what's it lay once at a fiber, unregulated, heavily and Mitchell as accessible, yes, a platform. I welcome its way harder, ending its waste sticker right who going to regulate the platforms as the platform themselves and are they competitive enough? We could break em up, maybe they'll be more competitive and better moderating. Should we impose some sort of privacy while the GDP are here to say this is her privacy should work. There is a massive finds associated with it because you are so big. Should we just admit that Now it affects us. Aggregation theory has created a new kind of economy in total, and just let me It's alright rules for it cuz I come into a fresh eyes. That's a good idea. Where is the check on this power? And I think the answer is these companies are not so big and so powerful that everybody feels it and wet in the I think, on the conservative side.
I feel, is their base regularly engages in toxic speech, and so they complain about its likin costly, throw them this bone, and that's just reality like there's a lot of racism on the hard right. There's a lot of sexism on our right. There's a lot of bigotry engine, in another laughed, what you see is hey. We like less nazis, please write and theirs in an increase. Well, I mean, I hope everybody reads. Cases stories were visible readers that has a cost Oda actual human costs. These people get PTSD, they are permanently stressed there not paid very much. They should get paid more than I do that. I worked for companies or contractors, so if you want them to fix it, you're going to incur some escalating on scalable cost and that's a really hard problem. I thank you very much. I know it Patel the verge,
calm, verge, cast on the box media podcast network thanks flagship flagship. I guess absolutely thanks, as I always do our producer generally held, and that we will be back on Tuesday.
Transcript generated on 2021-09-10.