Why is the government suing Facebook? FTC Antitrust lawsuit

this video is brought to you by our new investor finder. get weekly investor matches in your industry, your company stage and your location delivered to your email for free. sign up with the link in the description. when both the republican and democrat parties agree that you've gone too far, then you have, in fact, gone too far, and that is the case for facebook. the social media giant has had a volatile 2020 and now it faces not one, but two anti-trust lawsuits. authorities have accused facebook of breaking anti-trust laws and monopolizing social networks. the possible consequences of these lawsuits are enormous and they might change social media for good, but facebook is confident that they have done no wrong, have they? in this episode of forensics, we'll explain where both sides stand and what could happen in the future. how did we get to this? you might already know how facebook came to be. if you haven't, i recommend you check out our video on facebook. this video also explains some of the past controversy surrounding mark zuckerberg and his company. the thing is, in short: by 2012, facebook dominated the world of social media. it had a billion users and half of them logged into the network daily. around this time, facebook made the first of two major business moves. in 2012, it purchased- acquired instagram for one billion dollars and, from the outside looking in, it was a move that made sense because instagram was booming at the time and now facebook could expand its portfolio. then, in 2014, it purchased whatsapp for 19 billion dollars and the amount alone was enough to shock many, and with good reason. with these acquisitions, facebook now had the four most downloaded apps of the decade. zuckerberg now had a disruptor in instagram, efficient messaging service, and whatsapp, its own facebook messenger, and facebook, the world's biggest largest social network. by the way, those apps add a billion users each, and people, of course, were concerned. simply put, facebook was just too powerful. almost immediately, the mergers raised red flags all over the world. in the uk, the competitions and markets authority warned that the uk had to implement stricter rules on giants like facebook and google. the federal trade commission, or ftc, insisted that facebook and other giants like google had too much power, so they went on to work on investigating these companies. for 18 months, the ftc dug deep into facebook's operations and then they attacked. the lawsuits begin on december 9th 2020. both the ftc and several states sued facebook. the reason was simple: it was too powerful. there's much more than that. the ftc firmly believes that facebook has illegally maintained its monopoly through anti-competitive behavior. for the ftc, buying instagram and whatsapp was just part of the problem. facebook also cornered developers with restrictive conditions. many developers worked with facebook to connect their apps with its billions of subscribers, but at a cost. developers couldn't create software that competed with facebook, nor could their programs connect with other social networks. all of these actions, according to the ftc, gave facebook unprecedented profit. in 2019 alone, the company had more than 70 billion dollars in revenue and earnings of 18.5 billion dollars. why are there two lawsuits and not one? well, they're basically twin lawsuits, from the ftc and from state authorities. besides the ftc and the district of columbia, 46 states and territories, including, out of all places, guam, are involved, but up until this point, we've heard a lot from authorities. so what does facebook have to say in all of this? well, the reply has gone down two main paths. first, facebook says that the ftc approved these acquisitions back in the day, which is true. so facebook claims: why change their minds now? i guess it is a fair point. and then the second argument is that people choose to use facebook. they're not forced to use it. jennifer newstead, facebook's vp, sent out a statement that read: people and small businesses don't choose to use facebook's free services and advertising because they have to. they use them because our apps and services deliver the most value. we are going to vigorously defend people's ability to continue making that choice. she insists that, if this lawsuit goes forth, the government is sending a chilling warning that no sale is ever final again. true, well, not quite. and here's where things get complicated: the back and forth and compromising evidence. first of all, let's dissect facebook's appeal that the ftc approved the instagram and whatsapp deals. yes, they did, but there is a caveat. there's nothing in us merger law that says an agency's decision not to challenge a proposed deal immunizes that deal from future reviews. william kovacic told cnn- and he knows his stuff, he was a former chairman of the ftc- it seems that the ftc has the upper hand here. then there's facebook attitude all together. for many, facebook is just too powerful. it's buyer berry attitude is overwhelming. according to the bbc, letikia james, new york's attorney general, has said that for nearly a decade, facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users. adding fuel to the fire, the ftc has produced several emails coming from zuckerberg himself and other members in leadership positions that show evidence of the company's relentless pursuit to eliminate all competition. zuckerberg knew they were lagging, especially against instagram. according to business insider, the ceo recognized that facebook would be left behind if they didn't stop instagram. in one email, zuckerberg told his cfo that buying instagram gave facebook time to react. within that time, if we incorporate the social mechanics they instagram were using, those new products won't get much traction since we already have their mechanics deployed at scale. the emails show that zuckerberg knew what the new significant threat was: whatsapp. whatsapp isn't precisely in the emails, obviously. instead, the controversial ceo recognized that messaging apps could become a springboard for more mobile and efficient social networks. aka a threat, and not just any threat. zuckerberg said this might be the biggest threat we've ever faced as a company. those are big words. so what's the solution? well, buy them, of course, but according to bloomberg, it wasn't just mergers. zuckerberg was ruthless in using facebook's power as an intimidation. when asked about the merger, former instagram ceo kevin systrom said: bottom line, i don't think we'll ever escape the wrath of mark. it just depends on how long we can avoid it. that's very. mark has said that it's all fair game. in an internal memo to his staff, he said our acquisitions of instagram and whatsapp have dramatikally improved those services and helped them reach many more people. we compete hard and we compete fairly, and i'm proud of that. and we haven't even gotten into the legal details. words of warning: yes, all the evidence is there: zuckerberg's emails, relentless aggressive attitude towards competitors and the company's ludicrous profit. it seems that the ftc has a solid case, but some experts say that it's anything but smooth sailing. according to the legal magazine arizona law review, business communications and anti-trust lawsuits are common and valid, but it has positives and negatives. these communications can provide valuable data for economic and business analysis. they also paint a general picture of the company that's under scrutiny, like facebook. but the use of business communications can also be inappropriate. anti-trust regulators might put too much weight on the language in these business communications, leaning too much on subjective perceptions, when the practike of antitrust laws should always remain rooted in economic analysis. a ceo's perspective might not be a clear reflection of reality. what happens if the subjective language is taken out of context? it's a valid question to consider. so is it the case with facebook and zuckerberg's e?

FACEBOOK UK EU ANTITRUST PROBE EXPLAINED // The Reasons & What it means for Facebook

so this week, on friday, we saw the eu and the uk both launching antitrust probes into facebook. the investigations themselves do not come as a surprise, as the regulators from both nations have been openly preparing for them for a while, but what does come as a surprise is that the regulators now announce that they will be working closely together in their parallel facebook probes, which is a rare move for both the eu and the uk. so in this video, we will be looking at what exactly is being investigated and what this could mean for facebook. the eu and the uk regulators have said that both the probes will focus on facebook marketplace, and facebook dating marketplace is a platform where people can post classified ads for sale, housing and jobs. as the name implies, dating is a digital dating product launched by facebook. while both products are being investigated, regulators seem especially concerned with facebook's unfair competitive advantage over the classified ads sector in the facebook marketplace. for some context, classified ads started off in newspapers, but easily translated to the digital sphere. like in newspapers, online classified ads are a form of ad that is short and text based, meaning that they do not rely on images like their counterpart display ads. such online adverts are often preferred by individuals and small businesses, as they are cheap and an effective way to advertise, especially since images and gifts cost more in terms of advertising space. classified advertising has grown into a massive sector, which facebook marketplace is now a part of. some of its competitors include craigslist, moodle, gumtree and ebay. returning back to our antitrust probe, the regulators suspect that facebook is abusing its dominant position in social media and digital advertising spheres through its collection and use of customer data. specifically, regulators are accusing facebook of gathering massive amounts of data on user preferences from its digital advertisers in its social network, as well as from its single sign-on option. having all this data available enables the tik giant to target specific customer groups and to tailor their own dating and classified ad platforms to those customers preferences. the uk regulator's chief executive, andrea koskelli, has said that this would give facebook an unfair advantage in the online dating and classified ad sectors, making it harder for small or new businesses to compete and reducing consumer choice. margareth vestager, the eu's executive vice president in charge of competition and digital policy, agrees with this. she also added that facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on facebook in total, giving it vast trolls of data on the activities of users. this gives facebook a significant competitive advantage, since it directly competes with some of the companies from which it collects data from when they advertise on a social network. the eu regulator also said that they will be investigating whether facebook ties its social network with its online classified ad service, the facebook marketplace, which would be in breach of eu competition rules. facebook did not seem partikularly fazed by this announcement. a facebook spokesman said that they will cooperate fully with investigations and demonstrate that they are without merit. they also said that facebook marketplace and dating offer people more choices and both products operate in a highly competitive environment with many large incumbents. but the ramifications of a negative antitrust probe from two regulatory authorities could be serious. if the company is found guilty of anti-competitive behavior, the competition and markets authority and the eu can both impose a maximum fine of 10 percent of annual global turnover. it is unclear whether the fines will be issued separately by each regulator in the joint investigation, but if they are, this could be twice as bad for facebook. the antitrust probe could also have reputational damage on facebook, but it could also impact other probes going on around the world, such as in the usa, but to some degree the stakes are also high for margareth vestager. last year, her anti-trust efforts suffered a huge blow when another tik giant apple successfully appealed a european commission order to pay back 14.3 billion euros in taxes. another high-profile defeat could be disastrous for the european commission and if the facebook probe does not work, it may put the vice president at risk of losing her position. as always. thank you for watching the video. if you enjoyed it, don't forget to leave a like, comment and subscribe for more great content.

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What Google, Facebook And Apple Can Learn From Microsoft’s 1998 Antitrust Fight

If you've paid attention to anything tiknology-related recently, you've probably seen headlines like these. Antitrust regulation is gaining a lot of traction in the media as well as in the Department of Justike, But in general, we've started to see what has been broadly termed a 'tiklash': A lot of concern about the role of tiknology as well as the size of these companies and the impact that they may be having on individuals in society. Since May 2019, the DOJ has opened antitrust probes into the likes of Apple, Google and Facebook. The last major antitrust action against a major company occurred more than two decades ago. Remember Internet Explorer? Microsoft's browser has since been eclipsed by the likes of Google's Chrome and Apple Safari, But it was once so powerful the federal government had to step in. Here's what happened: In 1994, Microsoft was on top of the blossoming tik industry. Its operating system was fast becoming the go-to software for professionals and casual computer users alike. But if you wanted to get on the Internet in the early 90s, you were using this Netscape Navigator Software, which makes it easy for people to connect the global computer network called the Internet. Netscape Navigator was the king of Web browsers at the time, but there was a downside: You had to pay $49 to install Netscape on your computer, the equivalent to about $85 dollars today. You could also choose from AOL or Prodigy, but those cost $9.95 a month. But these options were still light years ahead of Microsoft at the time. Microsoft didn't even have internet connectivity built into its software until the mid 90s. But the new wave of popularity surrounding Navigator was reason enough for Microsoft CEO Bill Gates to pen a letter to the company in 1995 titled The Internet Tidal Wave. With this document, Gates laid out his vision of the Internet. He wanted Microsoft's development teams- to quote- go overboard on Internet features. Gates also laid out seven broad examples of the ways the company could conquer the Internet. One specific example: Microsoft needed a Web browser. Fast forward to the second half of 1995, and Microsoft released its brand new Windows 95 operating system as well as Internet Explorer 1.0. But they were separate. They weren't bundled until 1996 as part of Windows's first major update, and this changed the game for Microsoft. It was a new way to get online without any extra installation. It came with the operating system And, best of all, Microsoft had the advantage of being a massive company that could offer its software for free, And it was a massive success. In just over a year Microsoft gained 10 percent market share. This of course, sent other companies revenues plummeting. But I eat success might not have been purely from the popularity of Windows. Allegations that Microsoft began making it incredibly difficult to install other Web browsers began to surface. The allegations were enough to spark a DOJ antitrust probe into Microsoft in 1998.. The antitrust case against Microsoft was a bit different to how the law was used in the past. Before, cases were based on. one central issue Was a dominant company charging super high prices without anyone to compete with. But this case changed that. The DOJ argued that Microsoft stifled competition by using its sheer size to barge into the browser wars. It could offer Internet Explorer for free, included in the OS, and Netscape would be cut out of the business from the very first time the computer was turned on. If you suppress your competitors' innovation and you're the only game in town and you keep suppressing innovation, surely that's the harm to competition. In fact, it's one of the biggest harms to competition and it's been known in economic field for all these years that suppressing innovation is even worse than raising prices, because you're preventing the progressive movement of the markets. On top of that, if a person wanted to install Netscape on the computer. Microsoft allegedly made it incredibly difficult to do so. Microsoft, on the other hand, argued that people chose to use its operating system because it was simply better than the competition. But Microsoft lost. The court ruled that the company had to split its software and operating system divisions in order to abide by antitrust regulation, at least at first. That decision was later thrown out in appeals court, right as the Bush administration settled into the White House. By the time a settlement had been reached in 2001,, Microsoft's position in the browser wars was already being eaten away by competition from the likes of Mozilla Firefox, an offshoot of Netscape. Internet Explorer wasn't the only antitrust battle that Microsoft faced. Novell was a company specializing in network computing and software. in the early 80s and 90s, The company was also known for its word processing software, WordPerfect. The company complained in 2004 that Microsoft intentionally made it difficult to install its software, just like it did with IE, But Novell's case spent a decade bouncing around the courts, Unlike the United States v Microsoft case that came before it. Novell lost. An appeals court said that Microsoft's actions didn't constitute antitrust behavior, And the Supreme Court declined to take up the case in 2014.. Those two cases are really in great tension with each other because the US against Microsoft, as I would say the opposite point of view- that a firm with market power does have a duty to deal fairly, and not anti-competitively, with those who want to use its platform. Novell was acquired in 2014 and by then had left the word processing business. It's unclear whether an antitrust case brought against tik giants today would rule in the same vein as United States v Microsoft, or more like Novell v Microsoft. If US against Microsoft is giving credence above Novell against Microsoft, it has a lot to say on controlling the almost unaccountable power of the Big tik firms. Accusations that Apple's App Store stifle competition resemble arguments that Microsoft prevented downloads of other applications And Google Chrome is now the king of Internet browsers. Big tik companies are also swallowing up startups and smaller firms left and right. The tik world has become a winner-take -all affair. tik mergers have faced partikular scrutiny, especially in congressional hearings. When a company owns four of the largest six entities measured by active users, We have a word for it, And that's monopoly, or at least Monopoly power. The Big tik executives might beg to differ. We face intense competition for all of the products and services that we provide. to name a few examples: Twitter, Snapchat, iMessage, Skype, Telegram, Google, YouTube and Amazon are for photo and video sharing, messaging, advertising and other services that compete with Facebook. There's also concern that antitrust regulation remains too broad to tackle tik's problems. Antitrust is a sledgehammer where, even if you have some concerns about specific policy issues such as privacy, what you really need is more of a scalpel. So it is this very powerful tool, And breaking up could result in things like breaking up teams that make innovation more difficult. So, as Congress, the public and Big /tik itself start calling for more regulation, Microsoft's past antitrust troubles could hint at what's ahead.

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What Facebook, Google and Others Can Learn From Microsoft’s Antitrust Case | WSJ

- [Narrator] In the summer of 2019, the United States put Silicon Valley in its crosshairs. - Only a small number of the nearly two billion apps in the app store are made by Apple. - We have rolled out many innovations over the course of the history of our product. - For every $3 of advertising spent online, a business would have to spend an equivalent of $5 offline to get equal prominence. That is a tremendous savings for the US economy. - [Narrator]. To some, these hearings recall another major antitrust case: a showdown between the Justike Department and Microsoft. The year was 1998.. Microsoft controlled more than 90% of the PC operating systems market. At the heart of the case was a new product, the Internet Explorer web browser. Prosecutors argued that Microsoft used its market power to stifle the growth of competing browsers. At the time, many computer networks relied on software from Microsoft. This gave the firm lots of power and influence. Today, leaders from Facebook, Amazon, Google and Apple are studying big cases like Microsoft to prepare for their scrutiny. Here's what they could learn from watching Microsoft's case. Lesson number one: how not to counter an antitrust probe. Ahead of the trial, the Justike Department deposed Microsoft's CEO Bill Gates. - [Questioner]: Mr Gates, when did you first become concerned about the competitive threat that Netscape posed to Microsoft. - Bill Gates' behavior, his body language is contemptuous. - The product that didn't include Internet Explorer was called the Windows 95 upgrade. - [Kovacic] Arrogant - IS that the full breadth of your question? - And evasive. The Department of Justike played pieces of that video in its opening statement to the judge on the first day of the case, and the judge later said: "Microsoft, you lost me on day one". - [Narrator] Gates was deposed. well after the government sounded an alarm over his company's behavior In 1995, Microsoft was served a court order for its anti-competitive activities and software licensing. Another case opened after the Department of Justike argued that Microsoft violated that court order. The repeat violations in Gates' behavior did not play well with the judge presiding over the case. After viewing the tape, Judge Thomas Penfield Jackson expressed negative opinions of Gates and Microsoft to journalists. In his decision he called for Microsoft to be broken up. but on appeal a panel faulted the judge's conduct as well as some of his conclusions Throughout parts of the ruling. Microsoft narrowly escaped a breakup In the aftermath. the two sides agreed to settle with some changes to how the software maker did business. According to Kovacic, the legend of the Gates tape haunts today's tik reps when they testify before Congress - I think the approach that especially the tik leaders have been urged to take is humility, What their inside and outside lawyers will tell them, because this is deadly serious. and if you don't take this very seriously, you expose yourself, your company, everything you've done, to real hazard. and if you don't believe us, watch this one. - [Narrator]. Precedent number two: free doesn't always mean better for consumers. At the heart of any antitrust investigation lies the standard of consumer harm. - [Kovacic] Three key elements: price, quality, innovation that improves business performance over the long term for the benefit of consumers. - [Narrator]. These three factors have been interpreted by the courts for decades. In the modern era, courts have spent the most time grappling with the price dimension of harm In Microsoft. Internet Explorer was bundled with Windows 98 at no charge, which meant that the case would require a different kind of analysis In the view of the courts. Microsoft made its browser free, but still abused its market power by favoring its products and shutting out rivals. - The government's theory was that those steps taken, the forestall the emergence of an alternative to the Windows operating system, was improper exclusion and for the most part, the district court and the court of appeals agreed. - [Narrator]. Which means that companies can harm consumers even if the products they're offering are free. That's important because in today's digital economy, free is in: You don't pay money to use Google search, Maps or Translate, but you do pay something of value access to your personal data -. Certainly in the modern tik environment. an important dimension of quality is what they do with your data, and the treatment of privacy is a variable of quality that the consumer is increasingly concerned about. - [Narrator]. Precedent number three: the US government isn't the only test. An array of state attorneys general submitted comments to the FTC on big tik antitrust violations. They recommend that the Department move its philosophy away from under-enforcement. Many from that group are expected to launch their own investigations Across the pond. the European Union already has fined Google 8 billion euro. European regulators also opened new investigations into Facebook and Amazon. In its day, Microsoft also had to defend against a variety of challengers. In 1998, 20 state attorneys general joined the Justike Department in suing the tik giant, and in the 2000s, Europe's Antitrust Commission launched two investigations into Microsoft. Those resulted in 1.6 billion euro in fines against the company - I think one needs to put it into context, Microsoft makes profits of about $1.5 billion per month. It's not all that large a fine. Neither competitors nor consumers of Microsoft are out after fines. Fines don't really do them any good. It's competition that does them good. but we'd rather have compliance and competition than fines. - [Narrator]. According to Kovacic, the European Union has broader criteria on which to bring an antitrust case - The EU's position in dealing with high tik companies- leading firms- has been much stronger than the US. They arguably came out with a stronger remedy than the US did in their Microsoft case. If you ask which jurisdiction plays the leading role in setting global standards and influencing the way that other countries think about competition law, it's unmistakably the European Commission. - [Narrator]. All told, Microsoft's tangle with antitrust law stretched from 1995 to 2011.. In Silicon Valley, that's a lifetime. According to Kovacic, you can expect the tik companies to argue that a lot will change in their sector as the government attempts to make a case. -. One thing that the companies will argue is: let's take account, for a second, of how we got here. Where was Google in 1998? Where was Facebook? It didn't exist. That's years later. Where was Amazon, Another nascent enterprise with an interesting idea. - [Narrator]. In the final years of Microsoft's case, the Windows operating system that Microsoft fought so hard to protect lost ground to the pantheon of web-based applications that we enjoy right now. Today, the operating system commands only a 35% market share. Meanwhile, Internet Explorer enjoyed a dominant share of the web browser market through 2012,, but eventually a new browser, Google Chrome, overtook Explorer. How the Justike Department presides over these investigations just might cause another shakeup for companies on charts like this: (airy music).

Antitrust Problem: Risks Facing Google, Facebook, Amazon and Apple - Part 2 (Ep. 78)

hi, this is Dave. welcome to my channel. a few days ago, I released a video on Google. it was part 1. I'm kind of the bull case on Google going forward. however, in the past few days, as I've been researching for part 2 of this video, I've been looking at more of the risk factors for Google and my views on Google have changed over the past few days, and this is part of the process of researching and investing in companies. the big problem with Google, and with Amazon and Facebook and some others going forward, is the possible antitrust action the government's might take against these companies. in this video, I'm going to give kind of an overview on some of the risks I see and also I'm going to be answering some questions regarding Google from some viewers. hope you enjoy the video. Thanks, alright. so we have a possible antitrust problem here with Google and Facebook and Amazon and even possibly Apple, and a lot of times people tend to just take one angle. they say, oh, this is just a minor risk, forget it, it's not that important. and the other side, people say, oh my gosh, this is a huge risk and this is gonna wipe out all the companies, and I think there's something where there's the validity in both sides. however, we need a balanced look and we take a deeper dive into this issue, alright, so this is kind of a first look at this issue. now going forward, I think there could be much bigger, kind of deeper analysis regarding this. so, anyways, I want you guys to do your own research regarding this issue as well, alright? so a couple days ago, Wall Street Journal on Friday released an artikle saying the Justike Department and state attorney generals are likely to bring antitrust lawsuits against Google. now, this isn't the first time we've heard about this- and this was kind of the number one risk factor that I shared in my previous video- and Google. however, this story was actually kind of new in the sense that it's saying that the Justike Department is starting to kind of wrap up their investigation and they are going to proceed with antitrust action or a lawsuit. further, they're looking to get the state attorney generals on board, and 48 of them have already right initiated their investigations last year. so let's take a deeper look into what the story is all about. so the watch. The Wall Street Journal is saying that, yeah, the Justike Department and state your state attorneys will likely file antitrust lawsuits and the Justike Department might bring a case as soon as this summer. so it's already like May, right. so June, July, August, maybe within two or three months. so this is actually coming up pretty soon and they're saying at least some attorney generals are likely to file a case, probably in the fall, or they could join together in the Justike Department. they're saying that no final decisions have been made and is unclear whether an agreement could be rate can be reached right to settle this before it goes to court. now there's a lot of open factors here and they bring a different set of risks. this lawsuit could be among the most significant antitrust cases in US history, alongside the government's antitrust case against Microsoft in 1990s, and there could be a whole host of different outcomes for Google, but also for some of these other companies are being investigated. it could be a change of business practikes or it could be a breakup of the company. all right, The Wall Street Journal also said that last June they reported right, the Justike Department launching an antitrust investigation of Google and then a couple months later they expanded their antitrust investigation to Facebook, Amazon, Apple and Google. so they're investigating basically the big tik giants, right, and these companies in a lot of ways, have amazing business models, have great revenue and they're being investigated for different parts of their business and we're gonna look into some of the risks more. all right, the new york times later on, on friday as well, came up with the artikle saying that collaborating- basically a Wall Street Journal's artikle saying that, yeah, this is going to be joined perhaps with the just Justike Department and the State Attorney's. Google controls around ninety percent of the web searches globally and, yeah, in the past the US had investigated, let's say, from the FTC, and they didn't faced a Google didn't face any charges. but this time around it could be different. all right, let's take a deeper look and look at this risk factor from different. here we have big tik, or these big tik giants, as targets and back in July 23rd 2019, the US Department of Justike announced they're investigating the big for tik companies- Google, Facebook, Apple and Amazon- and I think over the past year, as this investigation has continued, there's actually increased politikal risk because the politikal environment in the us is becoming more polarized right and more extreme indifference in different ways. a few things. first, there's growing vitriol, or actually not just dissatisfaction, but I'm not dis complaining, but actually like real hate toward billionaires and to some of the big tik. further, you've got a politiks of scapegoating right on both sides of the aisle. people are scapegoating different people or groups of people or companies for problems that the whole country is facing, and this big tik is becoming one of the scapegoats and one of the main scapegoats. and then you've got a growing ideological movement against big tik. for example, I'm recently Elon Musk tweeted, replied to Robert Reich as an attack and basically this guy, Robert Reich, he's out of Berkeley as a professor. he used to be it, I think, the Secretary of Labor under Clinton- but he's been preaching a concept of ideology called socialism for the rich and harsh capitalism for the rest, and what he's saying is that for the rich, he's claiming that is socialism because the government keeps on bailing out the rich- right, these big companies- and they're these rich people have all their money right in these companies and they're getting bailed out and the rich don't have to worry. but for the rest of the people, the working class, he calls it harsh capitalism because they're not getting bailed out or as much as press the rich. and he's targeting a lot of the billionaires. he's targeting a lot of the big tik as part of the big problems and the corruption that supports big tik, and this movement, or these types of ideological movements, are gaining steam in the US and that's what makes this whole antitrust action or or risk actually even greater than just year ago. all right, in the past few months, we've been hit with the worldwide pandemic, and you would think that in this pandemic, big tik gets more goodwill because, for example, people rely on Amazon, more, they rely on Google and YouTube, and you would think that, oh, these antitrust lawsuits would just be tossed out or people wouldn't want them to happen. however, I think, in different ways, this whole crisis has highlighted some of the income disparity even more. right, you have Apple, you have Google, you have Facebook, you have Amazon, all these companies right, going back to their close to their all-time highs. and you're starting to see, like you know, with this pandemic, not all people are being hit equally right, those who are associated with tik, who have incomes- high incomes with that type of economy, are not, are doing pretty well, right, and so I think it highlights the that the income disparity, and actually could increase the discontentment, and then it just not only increases the discontentment, for you know, the income inequality, but these extreme ideologies right on both sides and lastly, I think I'm big tik- becomes an easy target because they have extremely high market cap. so you have these companies a trillion dollars or more in market cap and they really do have in some ways like great power and they look like monopolistik powers right where they control search or they control video or they can control social networking or control entire operating systems right on mobile devi.

Winner Take All #20 | State Probes, Apple Stealing Apps, Opendoor Buys OS National, Apple EMR Access

hi, I'm Alex Mazetti and we're here on winner-take- hall where we tok about how tik Manolis and the incumbents are battling it out for today's domination and in the business environment. today we're gonna tok about recent antitrust probes launched by States to look at Facebook and Google open door, which buys homes and then flips them. just made an acquisition and we're gonna dive into that. in the real estate market, Apple's an artikle came out recently. the Apple is copying popular apps on the App Store, emulating their features and then doing them themselves. we're gonna jump into that, as well as a recent announcement from the medical device arena about opening up medical devices for patients and making that process much more seamless. and then looking at Union Square Ventures and and where their priorities are in investing these days. so you may have heard that a a number of states now have launched investigations into Facebook and Google and there's two different probes here: one probe led by New York, second announced by Texas. so I guess the New York one has seven states, the Texas one is 40 states and and basically what it seems like. it seems like these are all kind of piggyback probes. we saw a Facebook settle with the FTC for a few billion dollars, maybe four, six weeks ago and, and you're seeing now, YouTube settle a small claim with with its its advertising to children, and I think what you're seeing now is that, since these companies have settled with the federal regulators, now the states are trying to get a piece of the action as well. is this gonna materially impact Facebook or Google's business? no, it's not. is this really? I think this is more of just kind of a shakedown. the states have seen that Facebook and Google have a vulnerability and that Facebook and Google are willing to settle for big sums of money to make that lawsuit or that those claims go away, and the states now are gonna try and play a similar card. this is around privacy and and Facebook and Google abusing consumers data and and and playing games in the ad market. but look, at the end of the day, as we've said many, many, many times before, this really doesn't harm the consumer. these companies are giving away way more value to the consumer in just the use of free software, free services and all the value that these consumers are getting for free, and these consumers are voluntarily giving their data to these platforms. I think the average consumer understands the trade-off when they're using a Facebook or Google. if you don't want to use them, then you can choose not to, and there's plenty of people, partikularly in older generations that, I think, prescribes that theory. but is this gonna cause Facebook and Google to get broken up? absolutely not. the real thing that Facebook and Google should be concerned about is how they are regulating their producers and how Facebook and Google are either banning content creators on on YouTube or an Instagram or Facebook and, you know, wiping away years and years of work. for many content creators doesn't matter. I'm not toking anything politikal here, but there are a myriad of stories on both sides of the aisle in the us of just content creators that are being, you know, saying that they violated the terms of use from Facebook or Google and then they don't have any recourse, they don't have any alternative forum to go and take their complaint to, and this is what Zuckerberg and June, at the aspen festival, basically came out and said: hey, we need to be regulated, because i'm not going to be a facebook is not going to be able to get this distinction correct. we aren't going to be able to figure out what is a violation of free speech and what is appropriate or harmful or abusive content or speech online that we should be taking down and penalizing content creators, for that is the purpose and role of government and so far the FTC and the and the DOJ have not really tackled that issue. so instead, you know the states are trying to drum up, I think, a lot of hoopla here. maybe they get some money out of Facebook and Google, but again the markets didn't react. yeah, and the markets actually reacted positively to Facebook's settlement with the, with the FTC. I don't think this is gonna really cause many waves other than the media loves to tok about it, because the media has been destroyed by Facebook and Google and the media has a clear bias in reporting about all the bad things that Facebook and Google are doing and how they should be broken up. and did it because the media is basically the archenemy of Facebook and Google and they've destroyed their whole business model. so just a little bit of bias there going on. this threat of platforms do compete with producers and really that is the vulnerability of. where are the lines of competing with producers and your suppliers? and, if you want to tok, antitrust, if you want to tok about actually being able to break up the tik monopolies, which is obviously kind of the big holy grail of threat to these companies. the only way that those claims have actually worked out is if you can show that you are putting the customer at a disadvantage and when you look at the producer being a customer, which is true. so what's interesting about Apple? just maybe, a month or two ago, the Supreme Court ruled that Apple's contracts were actually violating antitrust law with their app developers because what Apple was doing was having the money go from the customer to Apple. Apple takes its cut, it's 30% cut, and then gives the money to the app developer and, as a result of that- since the money wasn't going from consumer to app developer, and then Apple takes his cut after the fact, the, the argument was made that the consumers- the, the, you know people that owned phones and are buying apps- are disadvantaged because Apple is is essentially passing on a 30% fee that the consumer is having to pay for, and that kind of set off a bunch of alerts from the antitrust standpoint. now the dissenting opinion. it was a 5-4 ruling on the supreme court. the dissenting opinion, written by neil Gorsuch, basically said that this case is kind of- is basically inconsequential. all Apple needs to do is rewrite its contracts with its app developers, stating that the money is going to go from the consumer directly to the developer and then Apple can take its 30% cut after the fact from the developer, as opposed to being the literal middleman from the flow of money. all that means is it's not anything, any antitrust judgment. that antitrust judgment isn't gonna stik on Apple, and rightly so. but this story, this is where Apple should really be concerned about. okay, because what this story is about is how Apple uses its App Store to copy the best ideas. and there's a story in here about this. app called clue, a popular app women use to track their periods, has risen to the near top of Apple's health and fitness category and now, basically, Apple's health app has has copied a lot of those features. I don't think this specific example is Apple really doing anything wrong. look, that's the reason we have patents. and if, if clue has something that they could patent, then they can enforce that in a court of law and they could say: hey, Happel, we patented this and you can't copy it, but otherwise it's fair game and that's just the way the world of software works, right is? you know, you make an innovation in your app and I copy it and improve on upon it a little bit and that's just. it's literally exactly what Facebook did via Instagram to snapchat. so snapchat had stories long before Instagram and stories, and now Instagram stories are arguably way more popular than snapchat stories, but snapchat didn't try to sue Instagram or Facebook because they knew they would never win that lawsuit. so this is not something that's gonna bring apples specifically into antitrust crosshairs. however, the stuff that we have spoken about in Prior episodes where, say, Apple favors Apple music and gives Apple music preferential treatment or access to api's on the iPhone much sooner t.