i'm a man i'm a man i'm a video man
moving on our main story tonight
concerns the internet a world-changing
resource that was initially sold to us
like this
we installed the internet on our
computer just a short time ago and i
haven't been able to get the kids off it
ever since not only do they play the
typical computer games that all the kids
enjoy but their curiosity for learning
has skyrocketed peter is constantly
quoting sports statistics and he can
tell you the best surfing spots around
the globe not to mention the improvement
in peter's grades and dashes too
okay
first
peter was not checking surfing spots or
sports statistics peter was masturbating
that is what peter was doing but also
spare a thought for dasha there who just
gets also good grades you deserve better
dash i hope you grew up to be an early
investor in cell phones made millions of
dollars and never spoke to your weird
family ever again
specifically we're going to talk about
the fact that our experiences on the
internet are now dominated by a very
small handful of companies who are
getting pretty used to throwing their
weight around in 2020 the house
judiciary subcommittee on antitrust
released a massive 450 page report
detailing anti-competitive conduct by
apple amazon facebook and alphabet
that's the parent company of google and
the findings couldn't have been clearer
each platform serves as a gatekeeper
over a key channel of distribution
allowing these giants to pick winners
and losers throughout our economy and i
know for some
that's part of the appeal
apple's the empire of the smartphone
with all its attendant services
facebook's a repository of your identity
amazon's the online wall backed by cloud
infrastructure and alphabet is all
things search
now these companies have all created
incredible products that we can't live
without they're gargantuan businesses
that are for the most part loved and
respected by the most important people
they're customers are they a monopolist
i honestly don't care
i don't wake me up when someone else can
do it better
okay so there's a few problems with that
first in order to be woken up at some
point you do need to go to sleep
something that i feel jim cramer a man
who constantly exudes big running late
to my child's thing energy hasn't done
in the last decade but second a big
thing these companies are accused of
doing is suppressing their competition
so completely that we never actually
know if someone else could do it better
because they'll never get a fair chance
to try that is the problem here it's not
that tech companies are inherently bad
because they are big is that they're
engaging in anti-competitive behavior
here's where unusually i actually might
have some good news because there are
two bills before congress right now with
bipartisan support that could curtail at
least some of big tech successes but for
reasons that we will get into later if
they don't pass in the next month or so
they're not likely to pass at all so
tonight let's talk about tech monopolies
the hidden harm that they can do and how
best to address that let's start with a
tiny bit of history because in the past
the us has actually taken strong action
to break up harmful monopolies in the
early 20th century we broke up standard
oil and as recently as 40 years ago the
government took action against who else
but a t and t our business daddy who
left for cigarettes and never came home
they were actually the largest firm on
the planet back then and broadly well
respected and considered good which is
to say completely unrecognizable from
the a t and t of today
but crucially that popularity may well
have been because people had no
alternatives you had to rent your phone
from a t and they were in charge of both
local and long distance services which
as we now know were wildly overpriced
and when mci a much smaller company
tried to offer long distance phone
service at a lower rate at t was not
having it
mci which charges up to 50 percent less
than bill argued that a t tried to put
it out of business by refusing to
provide equipment needed for long
distance transmission a key exhibit
att's own notes of a 1972 florida
meeting by company executives in which
one said let's choke them off before
they get started now obviously at t
now and forever but
is that what that said
because the only bit of squiggle that i
can decode there are the words dangerous
to samantha's a dollar sign something
that weirdly might be covered and then
there is something that's definitely no
question capital b balls
the doj then actually filed an
anti-trust lawsuit which 18t fought
vigorously for a decade and when in 1984
it was formally broken up by the
government att's chairman warned the
public that we would come to regret what
had just happened
i've
had the conviction and taken the
position in more than one forum that
the country in the long run will be
sorry i find it difficult to believe
that difficult to believe that things
will work as well
uh in the in the future as they have
worked in the past yeah but he was wrong
things actually worked better because it
turns out ending a monopoly is almost
always a good thing whether it's att or
standard oil or literally any game of
monopoly
we didn't know it at the time but att's
dominance was seriously holding back
innovation but as soon as it wasn't
controlling the phone lines and what you
could attach to its network many new
products started proliferating from the
answering machine to the modem the
breakup of atm t was actually a key step
in producing the internet revolution
giving us the web as we now know it and
peter the ability to look up sports
stats surfing spots and what we all know
he was really doing there
the point is when harmful monopolies end
innovation flourishes and i want you to
bear that in mind as we talk about the
monopolies of today tech companies and
tonight we're going to focus on just one
way that they use their monopoly power
something called self-preferencing it's
when companies unfairly favor their own
products on their own platforms which
have now become so big that most of us
have no choice but to use them this is a
particularly big problem with these
three companies and we're going to start
with apple specifically its app store
which is basically the only place to
download software for your iphone which
is already a little bit weird when you
think about it right you can download
any software you like to your desktop
computer but if you have an iphone apple
has set it up so that its app store is
the only game in town and apple has been
accused of unfairly pushing its own apps
to the top of search results now the
company denies doing this but the wall
street journal found apple apps that
generate revenue through subscriptions
or sales like music or books showed up
first in 95 percent of searches related
to those apps but regardless perhaps
more important is the stranglehold that
apple has on developers who want to get
their apps onto your phone because they
are required to use apple's payment
processor which takes a huge piece of
every dollar that customers spend on
those apps and any digital purchases
within them
apple takes a 30 commission on sales of
apps and in-app purchases
so if an app costs 4.99 upfront apple
collects a dollar fifty same goes for if
you use an app to buy digital goods like
virtual weapons or sign up for a
subscription to a monthly service it's
true and that was pretty shocking to me
because it means that every time someone
spent money on the jeremy renner app
something real people actually did to
boost their post about him so they could
hashtag be seen by jeremy renner again
something human beings wanted in amounts
ranging from 199 to nearly 100 actual
dollars apple got a cut of that and that
is blood money right there apple makes
literally billions and billions every
year just on commissions on app store
purchases and some app developers have
tried to find ways around this tinder
for instance charges a higher price if
you subscribe through the app than if
you do it on their website and if you
open netflix on your iphone and you
don't have an account you get a message
reading trying to join netflix you can't
sign up for netflix in the app we know
it's a hassle after you remember you can
start watching in the app and you can
see why netflix would do that it doesn't
want to lose a third of its subscription
revenue to apple because it needs that
money to promote its netflix pride month
collection which is absolutely great
simply scroll by the dozen stand-up
specials mocking the trans community and
it's right there
shine with pride guys
and while apple will say that it's
lowered its commissions for certain
small app developers and and now even
allows some apps to link to an external
website and bypass commissions a key
reason that happened is that they were
put under extreme pressure from lawsuits
and from regulators overseas and if you
are thinking well apple is not the only
game in town right what about google's
app store they charge similarly high
commissions to developers and the fact
is over 99
of smartphones are part of either
google's or apple's app ecosystem let's
actually talk a bit about google now
because their app store is clearly only
a small part of their story as i'm sure
you know they absolutely dominate online
searches
last year google conducted 90 of the
world's internet searches when billions
of people asked trillions of questions
it was google that provided the answers
using computer algorithms known only to
google they have this phrase they use
competition is just a click away
they have no competition
being
their competition has two percent of the
market
they have 90
exactly people use google to the extent
that googling something is now a verb
you can't say that for any other search
engine no one has ever said i'm going to
bring it except
for maybe bing crosby announcing he's
about to masturbate but that's it
and google has exploited their market
dominance in subtle ways having to do
with the search results that it shows
you because it used to be when you
googled something you got a page that
looked like this a series of blue links
to various pages across the internet
that google's algorithm had determined
to be the most relevant and that was the
company's goal at the time as its
co-founder larry page said in 2004 most
portals show their own content above
content elsewhere on the web we feel
that's a conflict of interest we want to
get you out of google and to the right
place as fast as possible but
when you search for something today you
get a lot of google content before
anything else appears in fact the markup
found google devotes 41 of the first
page of its results on mobile devices to
its own properties and what it calls
direct answers meaning that a user would
have to scroll nearly halfway down the
page before reaching the first organic
result in that search now google
disputes their methodology but think
about what it is like when you search
for something let's say you want to look
up dolphins so you google dolphin animal
and you get this a bunch of pictures of
dolphins on google images a bunch of
buttons up top like sounds that mostly
lead you to videos on youtube also owned
by google by the way a section on the
right side that's mostly links to
related google searches like orca or
amazon river dolphin and a box of direct
answers to questions that people have
asked about dolphins like what are five
interesting facts about dolphins or is
dolphin a friendly animal or can a
dolphin love you and while you you've
never even thought of that as a
possibility suddenly you're curious
alright so you click on it and it says
dolphins have also shown loving emotions
towards humans and your heart kind of
flutters for a moment because who knew
there was room in a dolphin's heart for
love maybe there is room in one for you
and then you see more questions like do
dolphins protect humans which they must
write after all we now learned they can
love us but the answer is there just
isn't any reliable evidence that it's
true what the does that mean
that they're willing to love but not
protect us they're just gonna throw our
love away and as the feeling of
betrayal starts to creep in you see that
others have searched are dolphins evil
and the answer is dolphins have a huge
capacity for evil which of course they
do they're monsters with no
understanding you might have opened up
to them for the first time in a long
time and they'd abandon you like you're
nothing and then you see what do
dolphins think of humans and you can
barely even breathe as you open this one
but you know the truth before it even
appears dolphins are essentially bribed
with fish to interact with humans
and even though you hurt at least you
can accept that it's not actually you it
was never you it was the dolphin
and the point is throughout that whole
emotional rollercoaster you never even
left google
in fact one analysis found that
two-thirds of searches on google ended
without ever clicking to another web
property and the thing is information
that google feeds you in searches like
that may have been copied from other
sources sometimes without their
knowledge or consent and if thinking
well you know it's free information why
does it matter if i read it on google or
on the site that they took it from site
traffic is one of the major tools that
many websites especially free ones use
to sell ad space so taking away visitors
to their site is essentially taking
money out of their pocket and when yelp
explicitly refused to have their data
scraped google told them the only way to
have their site's content removed was
for it to be removed from google's
general results entirely and as the ceo
of yelp explains that is basically a
death sentence
how important is that first page
it's not even just the first page it's
the first few links on the page is the
vast majority of where user attention
goes and where the traffic flows so if
you're not at the top of the page or the
bottom of the first page or on the
second page that's going to affect your
business
yeah if you're on the second page forget
it you're not a real business
exactly i'm putting the merits of yelp
aside google's algorithm shouldn't
determine whether or not someone's
business is real frankly that
distinction should only be withheld if
someone's business includes the words
instagram influencer because that is not
a job you're not a business you're just
attractive independently wealthy and
it's sunny outside that is all that is
happening there
and before jim cramer says who cares
build a better product and you'll land
on the front page the top results google
feeds you may not be the best ones take
google flights it used to be that if you
googled nyc to boise your top results
will be links to sites like these but
now you'll almost always get this google
flights widgets at the top of the page
already set up so that you can stay on
google and find a flight without
clicking anywhere else and while you
personally might scroll down past that
many don't and the industry has felt
this as one travel analyst wrote the
fact that google is leveraging its
dominance as a search engine into taking
market share away from travel
competitors is no longer even debatable
and google might say that it's at the
top because it is the best but the
markup found that google flights did not
always display the cheapest fares or all
available flights so i guess that does
kind of explain why google fights banner
image is a woman and a child hiking
somewhere while pointing at an airplane
that they are not on seemingly saying
what the there are flights here
google told us our best option was to
walk to denver
now google like apple will quibble with
a lot of what i have just told you they
will tell you that they send billions of
clicks outside of google every day and
that they don't preference google
flights in searches which
okay
okay google
they will also tell you that yelp and
other companies now have tools to
specify what information gets scraped
although that only happened after
serious pressure from the ftc and if
you're noticing a theme here that these
companies only do the right thing when
they're pushed up against the wall
that's a little bit the point
but arguably the company most guilty of
self-preferencing is amazon founded of
course by a man rich enough to buy
absolutely anything including seemingly
the rights to pitbull's identity
amazon reportedly controls 65 to 70
percent of all u.s online marketplace
sales it hosts about 2.3 million active
third-party sellers from all around the
world and to those sellers like this man
who sold sporting goods it is close to
the only game in town you've got to be
on amazon
you have to be there because that's
where everyone is
that's 100 million prime subscribers
amazon executives have told us
that there are many other options out
there there is walmart there's alibaba
as a seller you've got options
i've heard that response from amazon
executives before
and we did that we were listed we listed
all of our products on every other
online marketplace all of the others
that were non-amazon combined did about
10
of what we were doing on amazon exactly
amazon basically is the marketplace it's
essentially the only place to sell
anything on the internet unless that is
you're looking to offload some human
teeth because then it's craigslist all
the way baby
and for a third-party seller the most
important thing in the world is
something called the buy box it's that
little box that shows up on any amazon
product page where you can instantly
click to buy so when we search for
duracell aaa batteries we got this page
and here is the buy box right here where
with just one click we could buy a pack
for fourteen dollars you might assume
that that is the best deal but if you
click on this little box below you can
see multiple other sellers who are
offering the same products many at a
lower price the problem is most people
aren't going to see that because an
estimated 80 percent of amazon sales go
through that first buy box and it's even
more for mobile purchases because if
we've learned anything so far tonight
it's that nobody ever ever wants to
scroll down
so only one seller gets to be in that
box and nobody except amazon knows how
its algorithm picks the winner but it
sure seems to consistently favor amazon
with one analysis finding that the
company chose itself for the buy box for
about 40 percent off products while the
next highest seller got in just half of
one percent of popular products and even
when the buy box did go to a third party
seller nine out of ten times it went to
those that used amazon's shipping
service fulfilled by amazon basically it
is amazon's playground they make the
rules and they do seem to win a lot of
the time and as this expert points out
if they are competing with you you're
basically dead
third-party sellers have told me that
once they see that amazon is telling
selling the same good that they're
selling
they liquidate their inventory they know
it's impossible to compete against
amazon on amazon's own platform of
course
think about it of course it is you don't
stand a chance amazon is to retailers
what dolphins are to the human heart if
they take an interest in you you are
going to wind up absolutely devastated
you flipper
and the thing is
amazon isn't just a marketplace or
indeed a shipping company it's also
started coming up with its own products
now because it currently has
approximately 158 000 private label
products across 45 in-house brands and
it has been accused of preferencing them
over its competitors or even worse
making clear knock-offs of products that
have been successfully sold on its
website take a small company called peak
design it made this camera bag and when
it noticed a suspiciously similar bag
being sold by amazon it made this pretty
decent snarky video in response
this is the everyday sling by peak
design and this is the everyday sling by
amazon basics it looks suspiciously like
the peak design everyday sling but you
don't have to pay for all those needless
bells and whistles like years of
research and development recycled blue
sign approved materials a lifetime
warranty fairly paid factory workers and
total carbon neutrality instead you just
get a bag designed by the crack team at
the amazon basics department
yeah
and it does sure seem that amazon is
putting out a cheap copy with
essentially the same name and design and
it's pretty weird that one of the
biggest companies in the world seems to
be using the same strategy as knockoff
dvds designed to confuse parents hey
kids we got you the movies that you
asked for ratatouille transmorphers and
chop kick panda why are you crying it's
what you wanted
and amazon has a huge advantage over its
competitors because it runs the
marketplace and has access to all the
independent seller data like
hypothetically what bag is proving
popular and look amazon denies that they
prefer themselves their own products or
sellers that pay for their logistics
services and they also deny ripping off
products based on internal data though
when jeff bezos was asked about that
directly his answer wasn't great let me
ask you mr bezos does amazon ever access
and use third-party seller data when
making business decisions and just a yes
or no will suffice her i can't answer
that question yes or no what i can tell
you is we have a policy against using
seller specific data
to aid our private label business
but i can't guarantee you that that
policy has never been violated
not great jeff
we have a policy but i can't guarantee
you it hasn't been violated it has got
to be one of the more incriminating ways
to answer a question it's right up there
with answering did you break the law
with which law look
it is pretty clear self-preferencing
stifles competition hurts small business
and often results in serving consumers
and inferior products so what can we do
here well that brings me back to the
good news that i mentioned earlier
because these two bills are currently
before congress and would address some
of the problems that you've seen tonight
among other things they'd stop massive
companies that operate app stores like
apple and google from requiring
developers use the company's own in-app
payment processor and they ban
advantaging a platform's own products
services or lines of business over those
of arrival and unsurprisingly tech
companies are fighting these bills hard
making basically the same arguments that
att made 40 years ago that if you tamper
with them things just won't work as well
in the future as they did in the past
although this time they also have trade
groups running ridiculous ads like this
washington is full of problems not
solutions
every time they get involved in a new
area of our lives they just seem to make
things worse
and now politicians are boasting about a
plan to control my devices and how i use
them
their silly ideas could ruin some of the
services i rely on
if i need directions i simply click one
button and it gets me straight to where
i need to go in their search for
popularity and power dc doesn't care
whether they mess up what i need from
the internet
my message to washington
focus on fixing america's real problems
and leave my phone alone
what is going on with that unsettling
man
focus on america's real problems like me
and whatever my deal is because what is
going on with me what's that thing in my
truck is it a trash can taped to a desk
a jab with a hot barge taped to a
chimney also what did i just do to it
and why
my broader point seems to be that i'd
like government to pay less attention to
whatever weird that i am definitely
up to basically to leave my phone and
whatever obviously incriminating is
on there alone or i will lunge at you i
will lunge right at you washington
these companies have pushed some wild
arguments from claiming the bills will
help china to say they'll somehow hurt
people of color and we don't have time
to go through every boogeyman
that they have come up with but none of
them really stand up and some have
fallen apart spectacularly apple for
instance claims that they have to have
exclusive control of the apps you can
download otherwise it would expose users
to serious security risks ignoring the
fact that these bills have explicit
carve-outs for that if apple can prove
that those risks genuinely exist now as
for amazon and google they've been
arguing that small businesses would be
harmed by these bills funding lobbying
groups like this one the connected
commerce council which supposedly
represents 5 000 small businesses who
all oppose antitrust regulation but when
politico reached out to its members
nearly all of the businesses that they
contacted said they'd never heard of the
connected commerce council and i do get
why amazon in particular wouldn't have
filled them in about it because when it
directly asked its third party sellers
to oppose these bills one of them wrote
back any informed seller is going to
support massive action taken against
amazon in the antitrust arena we are not
morons and know how to read and think
for ourselves which is basically a
polite way of saying you and the
spaceship that you rode in on
the truth is these bills are narrow
arguably too narrow but that is probably
why they do have broad bipartisan
support both bernie sanders and josh
hawley want to pass these bills that's
basically the only thing they have in
common apart from the fact that both
their smiles are exclusively upper teeth
no lip
so why haven't the bills move forward
well some believe that it doesn't help
that at least 17 members of congress
currently have children who work or have
recently worked for four of the biggest
tech companies including crucially chuck
schumer's daughters one of whom works as
a marketing manager at meta and one of
whom is a literal registered lobbyist
for amazon and the reason that is
interesting is because chuck schumer is
the person who needs to call these bills
to a vote and while he has certainly
said that he will do that he also hasn't
done it yet and if he doesn't do it
before congress leaves for his august
recess the bills are probably dead
because in the fall everyone's going to
have moved on to focusing on the midterm
elections where as we all know the
democrats will be absolutely annihilated
so we have a very small window right now
to actually do something about this and
if any part of you is thinking who cares
things basically work fine for me right
now it's just worth remembering people
thought that things worked fine with att
before they were broken up because they
literally did not know what they were
missing the problem with letting a few
companies control whole sectors of the
economy is that it limits what is
possible for startups by and if i may
quote att's incoherent memo choking them
before they can even get started an
innovative app or website or product
might never get off the ground because
it could be surcharged to death buried
in search results or ripped off
completely these bills would crack the
door back open for innovation and nudge
the internet back towards what it was
supposed to be from the start a
revolutionary tool that expands global
access to information and the absolute
best place to research surfing spots
get yours peter get yours