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Oct. 21, 2020 - Freedomain Radio - Stefan Molyneux
01:19:11
The Truth About the Department of Justice vs Google
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Hi, everybody. This is Stefan Molyneux from Freedom, Maine.
Hope you're doing well. What a ride we have to take you on tonight, my friends.
Just this morning, the Department of Justice in America unleashed all of its cannons in a lawsuit investigating anti-trust, anti-competitive practices at, of course, the giant search slash map slash MeToo for your data movement king of the internet known as Google.
let's go into a little bit of a history about this kind of antitrust stuff, where it came from, how past reviews and judgments are going to affect what's coming up, and what you can, in my obviously humble opinion, expect coming down the pipe, because this is pretty big.
This is pretty big stuff.
So the antitrust stuff is based upon a theory.
So the theory is that markets don't stay competitive because companies just get too big.
They get too big.
They can dominate. They can buy their way into new markets.
They can lower prices if anyone tries to compete with them.
They can just shut people out.
And that kills competition.
And that kills competition.
Innovation, entrepreneurship and so on, and things get stagnant and the customers end up being served badly.
Now, I have for most of my adult life been a big opponent of any kind of antitrust legislation.
I find that the reads of my resolution are bending a little bit in the giant semi-totalitarian whims that are coming out of social media companies these days.
And in fact, my woes with social media, which have really become quite considerable over the last year, In terms of de-platforming actually started when I gave a pretty big and powerful speech at the European Union against tech censorship.
I still don't regret it, but I'm just saying it was a little costly.
So that's the theory. So antitrust statutes, they use both civil and criminal penalties.
They seek to prevent or undo three classes of behavior from large companies.
So, of course, the collusion among rivals where, you know, the smoky backroom boys get together like two cell phone companies that serve a location get together and say, let's not each of us, let's make sure we don't offer...
Any cell phone plan for less than 50 bucks a month.
Let's stop competing with each other and so on.
There's almost no historical evidence of this.
I've done presentations in the past as to how this is kind of functionally impossible in the long run.
But anyway, so that's one.
The second is mergers that threaten to create excessive monopoly power.
So, for instance, Google is trying to buy Fitbit that's been sitting in regulatory approval for about a year, and they're trying to figure out whether they should have all your search history, your locations, your preferences, and your body metrics as well.
It just feels like there's no place to hide.
And, of course, they want to try to oppose these antitrust statutes' exclusionary practices, like predatory pricing that could hamper rivals' ability to compete.
I'm a free market purist, and I'll get into all of that at the end.
So I am generally opposed to this as a whole, but it's a bit more nuanced than that, which I know is not an argument, but just bear with me.
So you've heard about this stuff.
It came in 1890, and the Sherman Act had been a successive wave of antitrust legislations that have occurred since, you know, the Gilded Age, the robber barons, the Rockefellers, and so on.
And you've heard all of these kinds of myths before.
And where the italics are here is where I'm quoting from someone.
I'll put links below. In a groundbreaking study, Thomas DiLorenzo compiled price and output data on industries singled out during congressional debates over the Sherman Act as monopolized, right?
So these are the big, bad, evil robber barons just stealing from the population in a true squatting-the-earth-mom-from-the-movie-the-wall kind of Marxist way.
They were considered to be these evil monopolies.
What did he find? He found that between 1880 and 1890, which was supposed to be the heights of these predatory monopolies and so on, outputs in these industries increased an average of seven times faster than the increase in outputs for the booming American economy as a whole.
Now that is significant.
It's highly significant and very powerful.
So I've talked about this before.
Wherever, wherever, wherever you have free markets, you are going to end up with a lopsided market.
Profit margin, right?
So you think of music. Think of everybody you know who was ever in a garage band or thought they were really great at karaoke.
I put myself in both of those categories.
And compare that to people who make a fortune off music.
95% of the money goes to like 5% of the people.
It's the same thing in sports.
It's the same thing in acting.
It's the same thing on the internet.
Only 0.04% of YouTube channels gain a million subscribers or more, and they're responsible for a significant proportion of YouTube...
Watching, again, I put myself into that category as well, at least used to.
So when you have a meritocracy, there is going to be, you know, they call it an unequal distribution, like there's somehow a big, you know, big pie, you know, and some people get way too much, way more than they can eat, and other people start to equalize it out, you know, that kind of theory.
But that's the only way that you can get economic productivity and growth is to allow those who are best able to maximize precious resources, scarce and precious resources, to end up controlling most of them.
The best farmers can afford to pay the most for land and therefore can produce the most crops.
Land from productive people has happened in Ukraine during the Holodomor, the great famine imposed by the communists.
If you do this in the Chinese Marxist revolution, the communist revolution that occurred in the late 40s in China, you just end up destroying your economic productivity.
It's just like giving everyone a recording contract destroys the recording industry because most people don't want to listen to most people.
There's very few people that we really, really want to listen to.
So these companies are doing really, really well, right?
Industries increased an average of seven times faster.
The outputs than the outputs for the booming American economy as a whole.
Real prices in these industries also generally fell significantly during the same decade.
Increased outputs and lower prices are not consequences of monopoly.
For the record, it should also be noted that real non-farm wages were 34% higher in 1890 than in 1880.
Now, just picture that for a moment.
I mean, we're so used to this slow debt, quagmire, stagflation nightmare of the modern economy where most middle class and lower people haven't received any kind of real...
Raise in actual purchasing power in real wages since the 1970s.
Just staggering along, half being able to not pay your bills, 40% of Americans with $500 or less in the bank account.
The economy used to be like computers.
You know how computers get faster and better and cheaper and all of that.
The whole economy used to be like that.
Can you imagine in 10 years, in just 10 years?
Real wages increasing by more than a third, going from $60,000 of real purchasing power to $90,000 in just 10 years.
Well, this used to be the case when there was more of a free market, but here's the thing.
So if you're a competitor to one of these...
Mystery economic geniuses who has the Midas touch, except can have a better meal than a face full of gold.
Everything they touch turns to gold.
They just make amazing stuff and so on.
If you're one of the competitors, you get really mad, you get really angry, and you run to the government, of course, right?
It's not the customers who complain about getting better goods at cheaper prices.
It is the competitors who can't compete.
So that's sort of the genesis of antitrust stuff as a whole.
Because there's this idea, of course, you know, right?
That if you're a big corporation, you're just immune from competition.
You can't Be brought down, use David versus Goliath, but without the slingshot and all that, right?
And no, no, no, no.
So let's measure things by market capitalization, right?
So there were 20 of America's largest firms in 1987.
Just 10 years later, only 11 of those companies were still in the top 20, right?
So almost half of them dropped off the top 20 in just...
10 years. From 1967 to 1997, we're talking 30 years, right?
Only eight of America's largest firms stayed in the top, right?
For 60 years, from 1917 to 1977, it took an average of 30 years to replace half the corporations in the top 100.
Between 1977 and 1998, it took only 12 years, right?
So in less time, it's almost three times the turnover, right?
That's really, really important.
So having a large market share does not also grant immunity from market forces.
Look at Sears Roebuck. If you look back at old movies, the Sears Roebuck catalog was like the big Christmas story dream of the BB gun catalog that would come in the mail.
There was a place when I was a kid called ShopRite, which was you just went and filled out forms and they brought it to you from the warehouse and so on.
I don't think they're around anymore. So in just 10 years, C.S. Roebuck went from the largest to Walmart being the largest.
There is just a churn.
Think of hereditary talent in sports or music, right?
So, yeah, you know, Sean Lennon has a lovely voice, great guitar player, and Julian Lennon, great singer and all of that.
But, you know, generally there's going to be decline.
It's called regression to the mean, right?
somebody super high in talent is going to have kids or super high in intelligence or singing ability, whatever it is.
They're likely to have a kid above the average, right?
So really smart parents have kids above the average in intelligence, but usually not quite as smart as they are.
Like super tall parents will have tall kids, taller than the average, but not usually as tall as they are.
And the same thing goes with short.
Short parents will often have taller kids, but maybe not all the way up to the average.
So, you know, if you don't like the economy, just wait half a generation and it will toast, right?
I mean, there's the biggest and oldest department store in Canada was Eaton's and then four brothers inherited it.
And as far as I remember, they kind of ran it into the We're not going to have sales anymore.
Like, hey, well, now you find out why people have sales, right?
This is, I guess, a little bit of interesting personal story here.
I hope it's interesting.
Spice it up with some StephBot history.
So, Digital Equipment Corporation went from top ten, not just in computers or software or hardware, but out of all corporations.
And it was the second largest computer company in America after...
IBM. And I actually worked there for a while, and they had some amazing technology.
They had this thing called the Alpha chip that was just incredible, the Alpha XP. And I was in meetings, and I remember saying...
Guys, you've got to get this into small computers.
You've got to get this into gaming devices.
You've got to get this into – I knew this from the Amiga, right?
You've got to get this into MIDI chips.
You've got to get this – musicians will use this at home and people would love to play games on this and they'll use it to develop stuff and maybe they can make movies at home.
I remember just hammering at them and I was like looked at like I had a shoe growing out of my ass, right?
Yeah. And I ended up getting one of the only jobs I ever got fired from in my life.
And I also remember I was running a mailing list and I got complaints from the customers saying, you know, I don't really want these mail outs.
I don't really want these pamphlets and so on.
And I went to the boss saying, you know, this is probably negative because they're getting a negative association.
It's something they have to throw out and they feel bad about it.
So maybe we can just review this.
And he's like, well, you don't know anything about marketing, young man.
I was 25 or something at the time or something like that.
And yeah, we just, it was very top-down, very aggressive.
They didn't really listen to customers.
And for those of you who weren't around in the deck days, holy crap, late 1980s, it had $14 billion in sales.
You know, that's been $14 billion could buy you more than four bitcoins, right?
And it was among the most profitable companies in the entire U.S., And there was this guy in charge, Mr.
Olson. I never met him, of course, but he set the tone, right, which was you don't listen to young people.
And he said the personal computer will fall flat on its face in the business and regarded them as toys used for playing video games.
And, yeah, so the board forced this guy to resign as president in July 1992 from DEC and it just didn't work.
I have, like, I don't know, 15-plus years as a software entrepreneur, so I know this...
Fairly well. I call it the fifth.
It's the fracking idiot factor, which is that no matter how successful the company is, at some point an idiot's going to end up in charge and it's just going to drive the value down.
So that's important.
And we can think of things like New Coke was a huge rollout that fell flat on its face.
The Windows phone would get to it a bit.
Edsel was a famously tragic car that just fell apart and so on, right?
So being big does not shield you from these kinds of things, right?
And we will...
Get into Google.
I want to dip into IBM and Microsoft, which were the two big antitrust cases that I followed quite a bit when I was younger.
I can't say young anymore.
Why is it young? Anyway. So the Microsoft probe, in the Google complaint that was just filed by the DOJ today, they specifically talk about The Microsoft probe, and the plaintiffs wrote that in that case, the Microsoft one, the D.C. Circuit, quote, recognized that anti-competitive agreements by a high-tech monopolist shutting off effective distribution channels for rivals,
such as by requiring preset default status, as Google does, and making software undeletable, as Google does, were exclusionary and unlawful under Section 2 of the Sherman Act.
And we'll get into what that means, but basically...
If you enter into exclusive deals with a wide variety of distributors and shut out everyone else, you can only buy from me.
The government doesn't like that very much.
And if your software is installed and defaulted to and can't be uninstalled, they don't like that either.
So we'll get into that.
But let's dip into this because this was truly an astounding situation, right?
So There's some that are four decades that the DOJ has been hovering around IBM for anti-competitive stuff.
But IBM, International Business Machines, I, believe it or not, it's like everything came together for this presentation in my life.
I worked at IBM as well before I started my own business.
Software company, and yeah, it was pretty rough.
You know, it was pretty rough.
It was very muted, very suited, very serious, and they just didn't have that Nerf gun to the forehead kind of fun that we had at my software company.
But anyway, May 19, 1975, the federal government's antitrust suit against IBM went to trial.
So if you're just listening, and it's probably worth watching, but if you're just listening, how long do you think this lasted, right?
So, the complaint for the case, U.S. versus IBM off-site link, had been filed in the District Court of the Southern District of New York on January 17th, 1969.
So, first filed January 17th, 1969, six years later, you go, only six years.
The suit alleged that IBM violated the Section 2 of the Sherman Act, the same thing that Microsoft and Google are accused of, by monopolizing or attempting to monopolize the general purpose electronic Digital computer system market, specifically computers designed primarily for our business, of course, international business machines, right?
So, check this out, right?
After thousands of hours of testimony, they had testimony of over 950 witnesses in this case, 87 in court, the remainder by deposition, and the submission of tens of thousands of exhibits on January the 8th, 1982!
It's like the court case described in a Dickens novel, right?
The anti-trust case, U.S. versus IBM, was withdrawn on the grounds that the case was without merit.
All right, quick math for you, everyone.
1969 to 1982.
That is just horrendous, right?
That is just horrendous.
30 million pages of documents were generated in the course of this antitrust case.
IBM had to retain 200 attorneys.
So I'm bringing this up because it's truly jaw-dropping and also because this could be the kind of stuff that Google is going to face.
And so that's kind of important as well.
So there was an article a little while ago.
The Justice Department ended an early chapter in computing history by announcing plans to terminate a 40-year-old antitrust regulation of IBM. The department entered its consent decree against IBM in 1956 to prevent Big Blue, which was the nickname for it, from becoming a monopoly in the market for punch card tabulating.
Believe it or not, I'm not actually that old, but my very first computer course in high school was punch card assembly.
So anyway, it doesn't hugely matter, but yeah, that went on 40 years and they still took five years.
So close to half a century of regulation.
So IBM was mired in antitrust issues for more than a decade after the dismissal, right?
So it was 13 years to get it sorted out and did not recover from the legal quagmire until the mid-1990s, almost 25 years of this, a quarter century.
So Microsoft, this was pretty rough too, right?
In the 90s, U.S. federal regulator sued Microsoft, the world's leading software company at the time.
The question was Microsoft trying to monopolize the PC market.
The federal agency soon ended its investigation.
However, the DOJ brought it up again in 1998.
So, real sprint past this one.
So, Internet Explorer was not part of Windows originally, of course, right?
There was a program called Netscape, which was the first browser, not the first browser, but the first sort of commercial successful browser.
And then Microsoft responded to that by bundling Internet Explorer into the Windows operating system, and it was free.
And so all the people who believed the hype and invested in Netscape lost a fortune in this kind of situation, right?
It was really, really bad.
And of course, the people, in my particular view, right?
The people who lost all their money by investing into Netscape got really mad and decided to go after it.
But Microsoft, and to convince the government, I think, it's just my personal opinion, I think that it comes more from people who've lost money than the customers.
I mean, if the customers, hey, here's a free browser that you used to have to pay money for, most customers are like, well, that seems good.
So this did lead to the eventual downfall of Netscape.
So, the DOJ's case argued that Microsoft was intentionally making it very difficult for consumers to install software by other companies on computers running Windows, and that's obviously not great, right?
Now, one of the biggest arguments that the Microsoft lawyers made was fascinating at the time, even now, right?
And I'm sure Google will be taking this as well, right?
So, the problem, Microsoft said, is, look, We operate in the United States and the United States has these crazy antitrust laws.
The rest of the world generally doesn't.
So if you cripple us with antitrust Investigations and lawsuits and legal actions and so on.
You're killing us. You're killing us as a company.
And all that'll mean is that all the jobs will go overseas and all the other companies around the world who don't have to deal with these kinds of laws are going to end up going ahead, right?
So that was one of their big arguments that you're not going to deal with the problem of monopoly.
You're just going to put it overseas instead.
So, what happened?
So, Microsoft was formally charged with constituting a monopoly because they made it difficult for users to install competing software and they made it difficult to uninstall Internet Explorer, now rebranded as Edge.
The company argued that these practices were non-coercive.
They're not forcing anyone to do anything.
Also, they were freedoms for consumers because there was Macintosh, there was Unix, I think this was pre-Linux and all that, right?
The government also found that Microsoft threatened innovation in the software industry by stifling competition.
Microsoft was also forced to share its data with other third parties, and they were forced to release what are called APIs or application programming interfaces, which are little code holes that you can poke through to get information from the operating system and speed things up and so on.
Right now, the courts initially ruled that Microsoft should be broken into two separate companies.
So this, you're guilty, and here's the punishment.
Your punishment is you're going to get hacked in two, right?
So one half of Microsoft was supposed to be just the operating system.
The other half of Microsoft was supposed to be everything else, right?
Like Office and all the other software that they produce.
And Microsoft was really critical of the ruling.
They said there was bias in favor of the prosecution.
And... It's kind of funny.
So Bell was broken up, and some of the older oil companies were broken up.
So you know the oil company S-O-E-S-S-O? That actually stands for Standard Oil, which is one of the companies, the parent company it was broken away from.
So there were baby Bells, right?
When Bell was broken up, there were baby Bells.
And of course, because Bill Gates was the CEO, the breakups were going to be called Baby Bills.
I guess that's what pundits do with their time.
So the ruling was challenged by Microsoft and the appeals court did overturn it.
But even though Microsoft...
It was kind of a draw, right?
So they got that overturned.
They didn't have to break up. But...
The settlement that they made did impose a strict set of restrictions on Microsoft, so they couldn't force PC makers to work exclusively with Microsoft and they had to share their APIs, as I mentioned, to make applications that worked with Windows.
If you are a Microsoft programmer and you can hook into pre-compiled code buried in the guts of the operating system and nobody else can, like nobody's not Microsoft, then you can just make better, faster, more efficient, lower memory footprint software.
It's like turning your coders into superheroes, so to speak.
It's like juicing or blood boosting in sports and so on.
I mean, you can consider it unfair or whatever, right?
But also, there were two things that came out of this lawsuit as well, which were really fascinating.
The first was that it really contributed to Gates' early retirement, like so that he could go around and scare the world about vaccines and stuff, right?
And he also said that he totally messed up on Microsoft working on the Windows smartphone because he was so distracted and absorbed and frustrated and baffle-gabbed by the DOJ lawsuit against Microsoft, this antitrust stuff, that that's why Windows phone never really went anywhere.
So there's big outcomes, right?
Okay, so I guess the slight prequel to what happened today is that the U.S. government antitrust subcommittee argued in a recent antitrust report before the DOJ complained today.
Google has created a wide-ranging monopoly, they said, that includes favoring its own services and demoting others.
And again, sources to all of this will be below.
The House Judiciary Subcommittee on Antitrust stated that Google has maintained its domination in markets, search, advertising, maps, etc., by favoring its own services and demoting third parties, often at the command of executives.
So they produced a report of almost 450 pages, and it was overseen by the Democratic majority on the committee, and it included information gathered through hearings, interviews, and 1.3 million documents.
The conclusion, they said, Google and Amazon, Apple and Facebook enjoy monopoly power.
Suggestions were made that Congress take up changes to antitrust laws that could force big tech corporations to split up their businesses into parts and make it harder to complete acquisitions, such as Google and Fitbit, as I mentioned earlier.
So this is a couple of quotes from the report.
The overwhelmingly dominant provider of general online search is Google, which captures around 81% of all general search queries in the US on desktop and 94% on mobile.
They say Google abused its gatekeeper power over online search to coerce vertical websites to surrender valuable data and to leverage its search dominance into adjacent markets.
Google used its search engine dominance and control over the Android operating system to grow its share of the web browser market and favor its other lines of business.
Now, Google has got some good and interesting defenses, which we'll get to here.
But briefly, Google shot back and said, Google's free products like Search, Maps, and Gmail help millions of Americans, and we've invested billions of dollars in research and development to build and improve them.
We compete fairly in a fast-moving and highly competitive industry.
We disagree with today's reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other companies.
And they said Americans simply don't want Congress to break Google's products or harm the free services they use every day.
So we get more on Google's defenses a little bit later.
So what do they mean by favoring?
Okay, so according to this report, Google has promoted its own services by putting them at the top of search results, as well as actively demoted rivals through, and I quote, imposing algorithmic Penalties, right?
So that is always an interesting question, right?
So if you develop a search engine that turns out to be really popular and you search for popular search engines through Google, is Google going to give you a competitor's search engine or a competitor's mail program or a competitor's cloud service or a competitor's map?
You get the idea, right? So some major public companies, as well as those Google-considered competitors, told the subcommittee that they, quote, overwhelmingly The report claimed that in search advertising, where Google holds, quote, significant market power, end quote, Google blurred the distinction between paid ads and organic listings.
This could be considered a violation of Section 5 of the FTC Act, which prohibits companies from deceiving consumers.
And that's, uh...
That's pretty interesting. So, I mean, the question with search engines for me, just sort of personal aside here, the question with search engines is, am I getting organic results or am I being led around by the nose, 1984 style, to usually woke conclusions favored by the HR department in the company, to be honest,
right? Fairly well known for showing and hiding various things based upon a kind of lefty agenda and you can just do a search for all of these using whatever search engine you prefer, DuckDuckGo, and you can go from there, right? So companies also complained to this subcommittee that they were forced to spend more on Google Ads because the company had made it harder for their products to appear in, quote, organic search results.
So that's important stuff, right?
I mean, I was doing Google Ads, gosh, 18 years ago, 17 years ago, I was running Google Ads as a marketing executive at a software company.
I went from tech to marketing, and A, it was really expensive.
B, you kind of had to get on the first page, right?
So 75% of people never scroll past the first page of search engines.
Not like rarely, never go past the first page.
So getting on that first page is the mecca.
It's the gold standard, right?
And so... I want to know with search engines, are they accurately reflecting what people search for?
In other words, are they just passively absorbing searches, trying to tailor it to local or particular or individual preferences?
Or are they, you know, if you search for...
Hillary Clinton, did we want to show the emails right before the election, even though it's really, really highly searched for term?
You know, you just want to know.
Now, for me, if they say...
We, and not Google, but if they say, we are the leftist search engine, if you want pro-leftist, pro-woke, pro-social justice warrior, pro-democrat, pro-laborer, pro-liberal, whatever, right?
Pro-NDP here in Canada.
If you want those results, man, if you're a leftist and you want to search for stuff and have all of that ooky, nasty, right-wing conservative stuff filtered out, this is the place for you.
Leftsearch.com or whatever, right?
Oh yeah, that's fine. That's just perfectly fine.
I don't go to Mother Jones and do a search and expect to find...
A lot of articles praising Henry Hazlitt or Milton Frieden, right?
I get that. Then that's fine.
But to me, if it's like, we are a neutral search engine, we scour the internet, we get all the data, we've got 100 billion terabytes worth of data, and we're neutral and we'll give you the best search results.
That's all I want to know.
I just want the policies that are actually going on to be up front.
If you're going to favor leftist candidates, if you're going to favor rightist candidates...
I just want to know.
You can go to Breitbart and search and expect to find a lot of really, really pro-leftist articles.
That's no problem. I just want that to be upfront.
And to me, if it's not upfront, that is a huge, huge problem.
So yeah, the truth.
The best place to hide a dead body is page two of the Google search results.
Yeah, that's kind of true.
So, organic?
The report said several market participants told subcommittee staff that their ad spend on Google has increased largely because Google has made it more difficult for businesses to obtain organic traffic.
Partly this follows from Google's preferencing of its own products, which compels demoted firms to pay Google for ad placement as a way to regain visibility, right?
So... That's important stuff, right?
So obviously you want to be on that first page.
If you're doing something that may overlap with or compete with Google, if Google pushes you down to the second or third page, then you have to, to get back on that first page, you have to pay Google for the ads, right?
Because otherwise you're just not going to be visible to, again, most of the people.
The report also stated that Google used data collected from its Android operating system and Chrome browser for use in other areas of business.
And I quote, perhaps most critically, Chrome serves as a way for Google to control the entry points for its core markets, online search and online advertising.
The report also noted Google's 2007 acquisition of advertising tech company DoubleClick, alleging the company merged data DoubleClick had collected on Internet users with that of Google's products, including Google Maps and Gmail, after promising it wouldn't.
So Chrome, the browser, right?
The report alleges that Google executives encouraged employees to use Google's dominant search engine to promote other products, right?
So, like I said, the Holy Grail was the first page.
That's not really the Holy Grail. The Holy Grail of Internet visibility is something on the homepage of Google.
Not on the search results, but on the little window type-ahead thing where they have all of those...
Graphics or pictures, right? That is, number one, I imagine, the very, very best place to be on the internet.
So, of course, if Google starts saying to people who just come to search for stuff, hey, you should really check out Chrome.
It's a faster, better way to blah, blah, blah, blah, blah.
Well, nobody else can buy that.
I don't think anyone else can get up there, no matter how much money they offer Google.
So, is that a bit of an advantage?
Well, sure. In 2009, Sundar Pichai, who's now the CEO, was leading the development of the Chrome web browser.
According to the report, he encouraged the Chrome team to continue to, quote, promote Chrome through Google.com and to, quote, push users to set Chrome as their default browser.
The subcommittee reports that when the company began promoting its Chrome extension on its home search page, several Google employees raised concerns internally from an email between a Chrome employees in 2009.
Quote, I find the very, very high-profile promotion of Google Chrome on Google.com, quite frankly, startling.
And of course, if you are trying to get people, if you're searching for best browsers...
You know, there's lots of browsers out there.
A lot of browsers out there.
Brave, I think, is great.
There's a lot of browsers out there.
And what happens in Google when you try to compete with Google?
That's an interesting question, right? So, today, we finally arrived to the starting side.
20th October 2020. Okay, so, after more than a year-long investigation into Google's business practices, the DOJ has filed its long-expected antitrust lawsuit against the Alphabet-owned company.
And there's some reports that the DOJ lawyers wanted more time to build a stronger case, but there are concerns that maybe Trump or Barr wanted it out before the election or whatever...
Now, if you know the history of this stuff, which is kind of what I tried to encapsulate, I'm sorry I wasn't quite as short as I was hoping, but if you know this kind of history, what happened with IBM, what happened with Microsoft, IBM barely survived this.
We barely survived this.
Microsoft staggered through but lost its CEO and lost the phone market, which has been pretty catastrophic in many ways because it's turned into such a huge market.
And, of course, Bill Gates was smart enough to see that back then, but he just couldn't put the focus on where it needed to be.
So I think this is a huge issue for Google.
I get, like, Google makes $160 billion a year.
So, you know, let's say they get a $1.6 billion fine.
Oh, no, right? What was that, 1% or whatever?
So... So, Google's stock barely moved after the news of the lawsuit came out.
Shares were up more than 2% during afternoon trading.
So, what's the allegation of the current one?
Now, I'm going to go through this in more detail another time because I've been reading through this I think it's 64 pages or something like that.
So the allegation briefly is that Google has unlawfully maintained its monopoly in search traffic by cutting off rifles from key distribution channels.
So that's really a boring way of basically saying you got an Android phone, you need a Gmail account, and Google's your default search engine, and almost nobody changes their defaults, right?
Number one, you get an Apple phone.
You go into Safari, you type something in the search.
Well, Apple doesn't have a search engine, right?
As far as I know. Safari is just a browser, not a search engine, right?
And so if you type something with a space in it up in the browser, up in the command bar on Safari, the address bar, well, it's got to go search someplace, right?
And... It goes to search Google by default, and you can change that.
I think that's more recent, but...
So, basically, it's Android plus Apple, both default, as far as I know, to searching through Google, and the vast majority of users never change the default search engine, though I would strongly recommend it if that's of interest to you.
So, U.S. Deputy Attorney General Jeffrey Rosen said, quote, Google is the gateway to the Internet and a search advertising behemoth.
It has maintained its monopoly power through exclusionary practices that are harmful to competition.
The Justice Department claims that Google has, and I quote, foreclosed competition for Internet search, end quote, through exclusionary agreements that deny rivals the opportunity to achieve more than a toehold in the search business and challenge Google.
So this is from the DOJ. They say, look, Google holds 88% of the U.S. search market, with 94% of mobile searches occurring on its services.
The department claims that Google's business practices have harmed consumers by lowering the quality of search services and reducing choice.
And as I say, I don't think a lot of average people, people who don't sort of follow this stuff, a lot of people, they don't know...
How, in my view, subjective some of the searches that come out of Google are and how curated or manipulated or whatever it is, right?
So they just think it's a search engine and it's just kind of neutral.
Hey, you know, I just asking for the search engine, right?
So to me, you know, here's an analogy, right?
So let's say you go to Tokyo.
You fly to Tokyo back when you could or when you can soon one day.
I hope you fly to Tokyo, right?
You get off and you're starving, right?
You get off the plane, you get your luggage, you go get a cab, and you say to the cab driver, I'm starving, what's the best restaurant around, right?
And he says, ah, you know, it's a long drive, but it's really fantastic, it's the best place I know, blah, blah, blah, blah, blah.
And then he drives you, and it takes forever, and you're starving, and you're a long way from your hotel, and Then it turns out that it's his brother's restaurant or it's a restaurant he's invested in and so on, right?
Okay, well... It's not bad that he took you to his brother's restaurant.
It's not bad that he took you there.
But I think it is bad that he said, it's my brother's restaurant.
Because then you could say, okay, well, if it's your brother's restaurant, it's kind of a conflict of interest, blah, blah.
To me, the conflict of interest stuff is really, really important, right?
So you see this in financial websites all the time, right?
So what happens is somebody says, I like this stock.
This company is doing well. And at the bottom, it says, oh, by the way, I... I have some of this stock and, you know, just be aware of that and so on.
So you can gauge that.
It's really, really important to know.
If the cab driver in Tokyo says, I'm going to drive you for an hour to get to my brother's restaurant, you'd be like, you know, I'm sure your brother's got a great restaurant, but I don't want to wait for an hour.
So just get me something closer, right?
Because you don't know if it's subjective or not.
I mean, you probably isn't, right?
And it's all the more suspicious if he doesn't tell you that, right?
If you just kind of find out later, right?
Because there's all these scams sometimes you've heard about where A hotel or a restaurant will tip drivers for dropping people off from the airport to that hotel or that restaurant and so on, and it's not great because you think you're getting an objective piece of information, but you're not, and that's kind of important.
So the DOJ also claims that Google owns more than 70% of the search ads market and has used its monopoly power to charge more for lower-quality services than would be possible in the face of robust Now, just remember, of course, understand, this is the DOJ. I'm not a lawyer, so I'm just reading the stuff and giving you, I mean, okay, I got good marks in my philosophy of law class in university, but just be aware of all of that.
And this is just all my opinion, and it's definitely a non-legal opinion.
So this is from the DOJ complaints.
Very interesting. So this is one third part, right?
For a general search engine, by far the most effective means of distribution is to be the preset default general search engine for mobile and computer search access points, right?
You boot up your new phone, your new tablet, and what do you do?
Well, you've got a little window there, and you type into it, you search for whatever you're going to search for, and up come the results, right?
So if you are set as the default search engine on Android, on Chrome for desktop or Android or wherever, right?
And if you are set as the default search engine for Apple, for the iPhone, the iPad, the iPad Pro, you name it, right?
Well, that is...
It's about the most powerful thing that you can get, right?
So this is also from the complaint.
Even where users can change the default, they rarely do.
This leaves the preset default general search engine with de facto exclusivity.
As Google itself has recognized, this is particularly true on mobile devices where defaults are especially sticky.
Right, so I know on Windows, right, I use a bunch of different browsers.
And they'll say, do you want to set me to be your default browser?
Here's how you do it and so on.
But... And mobile devices too, like if you want to, if you're on an Android device, I have one Android tablet, and I think Google Hangouts, I couldn't uninstall it, I had to just disable it.
And, you know, it seems a little, you know, it's not essential to the operating system or anything.
So the DOJ complaint goes on and says, Google pays billions of dollars each year to distributors,
including popular device manufacturers such as Apple, LG, Motorola, and Samsung, major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon, and browser development such as Mozilla, Opera, and UC Web to secure default status for its general search engine, and in many cases to specifically prohibit Google's counterparties from dealing with Google's competitors.
Some of these agreements also require distributors to take a bundle of Google apps, including its search apps, and feature them on devices in prime positions where consumers are most likely to start their internet searches, right?
So remember, let's roll back to Microsoft in the 1990s, late 1990s, right?
The issue was that they bundled Internet Explorer in with Windows.
And it was kind of tough to get rid of and all that, right?
So... Well, they're bundling.
Bundling apps in, bundling default search engines and all that kind of stuff in, and you can't go to competitors.
This is continued from the DOJ complaint.
5. Google's exclusionary agreements cover just under 60% of all general search queries.
Boom! You know how powerful that is?
Because, and this is why they're spending billions of dollars to get in as the default search engine on a wide variety of devices, and of course, as Chrome.
Just under 60% of all general search queries are based upon these exclusionary agreements with manufacturers.
To continue with the complaint, nearly half the remaining queries are funneled through Google-owned and operated properties, e.g.
Google's browser, Chrome.
Right. So that's quite interesting, right?
So let's do a little math here, right?
60% is your status default on Android, your status default on Apple products, and this isn't, of course, just phones, but tablets as well, right?
Everything that runs on iOS and Android, right?
So that's 60%, right?
Now, the remaining is 40%, nearly half of that, so 20%, give or take, right?
A funnel through Google-owned and operated properties such as Google's browser, Chrome.
So you've got 80% right there.
Now, I won't say without lifting a finger, because they did develop Chrome, and they've got all these arrangements, but you're starting, you're starting at 80% market dominance.
I remember when I was doing business in China many years ago.
I went from Morocco for Y2K New Year's to China for a couple of weeks to do business out there.
And I remember talking to a guy out there who was saying, oh yeah, it's crazy.
Like everyone says, oh, the Chinese market is so huge.
All I have to do is get 1% of the market and I'm going to make a fortune.
And it's like, dude, getting 1% of anything is really tough.
It's really tough. So boom, this is what they're saying.
80%. It starts at 80%, right?
I mean, it's a lot, right?
So the DOJ goes on to say, between its exclusionary contracts and owned and operated properties, Google effectively owns or controls search distribution channels accounting for roughly 80% of the general search queries in the United States.
Largely as a result of Google's exclusionary agreements and anti-competitive conduct, Google in recent years has accounted for nearly 90% of all general search engine queries in the United States and almost 95% of queries on mobile.
And yeah, I did give Windows Phone a try, and I actually thought it was pretty good, particularly how it could output to a TV. I just think it's kind of cool, right?
So it's interesting.
To me, I mean, this is my particular business philosophy, which is I always resisted exclusionary agreements because, simple reason, Exclusionary agreements lower your dedication to quality.
Because if you start off at 80%, you just don't have to work that hard.
Like, how much do you have to train in a race?
Let's say it's the 100 meter dash.
How hard do you have to train if you get to start at 80 meters, like just 20 meters from the finish line?
You really don't have to. Nobody's going to beat you.
You can be Chris Christie and you can win that race.
And so I always avoided exclusionary deals.
Because I wanted competitors to come in.
When IBM entered the market space that I was programming and developing and managing in, I was thrilled.
I'm like, great, fantastic.
Let's get IBM in here.
Let's get everyone in here in this space because they'll advertise like crazy, which will raise awareness of this.
I was in environmental software to reduce pollution and emissions.
So they'll draw lots of people into this marketplace.
And they'll get interested in buying one of these systems, they'll do a search, they'll find my system, and boom, you know, we'll just, we'll blow them out of the water, and we did.
Man, this software, the first version sold for $5,000, and later on we were selling for...
Probably about 1.4 million Canadian.
I added a lot of value to that software as a coder and as a research and development manager.
But that's because I was out there.
I was one of the few tech people with really good social skills.
I was always out there presenting and negotiating on behalf.
And so I really, really knew the clients very well.
So, yeah, I wonder, I always sort of wonder if Google didn't have these advantages, so to speak, Now, we can argue whether they're just or unjust advantages, and I'll sort of make a case for that a little later.
But if Google didn't have this advantage, it would have to work even harder at being the very best possible search engine that it can be.
And because it has this advantage, it's really tempting to tweak those results to fulfill some sort of political or social agenda.
So I'm a big...
I'm really... This is why I don't sign exclusive stuff for my videos, and I'm all over the place, and I don't take ads.
I just want to just be you and me and philosophy.
That's it. That's it.
Six, says the DOJ, Google has thus foreclosed competition for internet search.
General search engine competition competitors are denied vital distribution, scale, and product recognition, ensuring they have no real chance to challenge Google.
Google is so dominant that the word Google is not only a noun to identify the company in the Google search engine, but also a verb that means to search the internet.
Yeah, like Kleenex, right? Just meant for a long time, just meant tissues, right?
So these examples, this is from CNBC again, links are below.
According to the lawsuit, Google requires phone manufacturers who use its operating system to agree to strict limits on their ability to sell Android devices that don't comply with Google standards.
It then gives the manufacturers access to its vital proprietary apps in exchange for their agreement to take several other Google apps and prevent users from being able to delete some of them.
The complaint says Google has used its revenue-sharing model for distribution to expand its dominance.
One senior executive allegedly told in Forces that revenue sharing in Google's App Store, quote, is a bitter pill for carriers, and a generous revenue share is the sugar that makes it go down smoother.
Google's revenue-sharing agreements extend to rival browsers and device manufacturers, including Apple, according to the suit.
Google reports traffic acquisition costs in its quarterly financial filings that amount to billions of dollars.
There's billions of dollars paid out to make sure they're default search engines and so on.
That figure represents, says the DOJ, sorry, says the CNBC, that figure represents the payments Google makes to companies like Apple to be the default search provider on their platforms.
The suit says that as a practical matter, consumers largely do not shift away from default settings.
Okay, so let's talk a little bit about Google's defense.
So Google has actually learned from Microsoft.
So this is from the complaint itself, right?
So back then, Google claimed Microsoft's practices were anti-competitive, and yet now Google deploys the same playbook to sustain its own monopolies.
But Google did learn one thing from Microsoft, to choose its words carefully to avoid antitrust scrutiny.
So just to break the flow of text.
So back in the day, there were particular phrases that were used in Microsoft communications that We're pretty much considered to be murderous to the competition and it showed like this, you know, compete till they die or you die or whatever.
They're really, really harsh language.
So this is what they're talking about here.
Referring to a notorious line from the Microsoft case, Google's chief economist wrote, and I quote, we should be careful about what we say in both public and private.
Cutting off the air supply and similar phrases should be avoided, right?
So this is a reference to a notorious line from this Microsoft case, where Microsoft referred to a competitor, we're going to cut off their air supply, you know, whatever, right?
Although stopping squeaky voice love singers, not bad.
From the complaint, moreover, as has been publicly reported, Google's employees received specific instructions on what language to use and not use in emails because, quote, words matter, especially in antitrust law.
In particular, Google employees were instructed to avoid using terms such as bundle, tie, crush, kill, hurt, or block competition and to avoid observing that Google has, quote, market power, end quote, In any market.
So don't use these words and things aren't happening, I suppose, right?
Let's have a quick look at Google's response, right?
Because it's important to hear what they have to say as well, obviously, right?
And sorry, I can't zoom this, right?
So Google search, this is from Kent Walker, Senior Vice President of Global Affairs.
This just came out today, I assume as a response to the So he calls it a deeply flawed lawsuit, right?
He says, Google search has put the world's information at the fingertips of over a billion people.
Our engineers work to offer the best search engine possible, constantly improving and fine-tuning it.
We think that's why a wide cross-section of Americans value and often love our free products.
Now, just to break the text a little here, because Kent is a very positive and friendly-looking fellow, there's no such thing as free.
If you can't see the product, you are the product, right?
It's not free. You're giving up information for people to target you with ads.
And if you buy things because of those targeted ads that you wouldn't otherwise have bought, then you are spending a lot.
You are spending a lot. You're spending an enormous amount of money to be targeted because then you'll be like, oh, I want to buy this stuff.
And you wouldn't have bought it otherwise, right?
So it's not free at all. So he says, today's lawsuit by the DOJ is deeply flawed.
People use Google because they choose to, not because they're forced to, but because they can't find alternatives.
Now, that's interesting, though, right?
Do they choose to?
So if you're set up as a default, and again, most people aren't technical.
Most people don't want to mess around with default settings.
They're alarmed or scared or don't care or whatever, right?
Is it really a choice if you just get a little search box on the homepage of your device and you type in there and go straight to Google and you don't even know you can change it and all that?
Is it really a choice?
I mean, philosophically, that's an interesting question, right?
So, of course, nobody's putting a gun to their head, right?
But are they aware that the hardware manufacturer, the cell phone and tablet manufacturers are...
Are they taking unbelievable amounts of money from Google to make that the default?
Are they aware of that? Are they aware of how much data is being stored?
Are they aware of how it's being used?
I don't know. It's interesting.
Do they choose to, if you're presented a default and not presented an alternative or it's hard to find an alternative and so on, is it really a choice?
It's an interesting question. I mean, we can sort of debate that back and forth, but...
So, Kent goes on to say, this lawsuit would do nothing to help consumers.
To the contrary, it would artificially prop up lower quality search alternatives, raise phone prices and make it harder for people to get the search services they want to use.
Now, artificially prop up lower quality search alternatives.
Yes, you could certainly make that case.
Although I would say that if you require exclusive deals, it's because you don't have faith in your product.
That would be my argument. So raise phone prices?
Yeah, for sure. That's without a doubt, right?
Because the phone prices are subsidized by the billions flowing from Google to hardware manufacturers and make it harder for people to get the search services they want to use.
Sorry, Kent, I can't go with you there.
I can't go with you there, right?
Make it harder for people to get the search services they want to use.
So if you were fully confident that people wanted to use Google, you wouldn't need to pay billions of dollars to make it the default everywhere, in my humble opinion, right?
I mean, that would be like if you, right?
So the department's dubious complaint, he says.
But let's be clear, our competitors are readily available too if you want to use them.
Our agreements with Apple and other device makers and carriers are no different from the agreements that many other companies have traditionally used to distribute software.
Other search engines, including Microsoft's Bing, compete with us for these agreements.
And our agreements have passed repeated antitrust reviews.
Yeah, they have been investigated before.
Apple features Google Search in its Safari browser because they say Google is the best.
*kiss* Well, again, you know, Kent, all due respect, smart guy, nice guy, it'd be great to break bread with you one day, but if they say Google is the best, then I'm not sure you should be paying them for that.
Just a thought. You know, if you have to pay someone to say that you're the best, I'm not sure I could take their...
Opinion as really objective.
Just my thought, right? He says, this arrangement is not exclusive.
Our competitors Bing and Yahoo pay to prominently feature and other rival services also appear.
Except that, well, Yahoo, if I remember rightly, they actually pay Bing for search results.
Anyway, so Bing and Yahoo pay Apple to be featured in Safari, okay?
Changing your search engine in Safari is easy.
On desktop, one click and you're presented with a range of options.
Apple's iPhone makes it simple to change your settings and use alternative search engines in Safari, and it's even easier in OS 14, where you can add widgets from different providers or swipe on the home screen to search.
Well, OS 14 is pretty new.
iOS 14, right? Google doesn't come preloaded on Windows devices.
Microsoft preloads its Edge browser where Bing is the default search engine.
That is all a very valid and very fair point, except that they are not 95% of searches, right?
So yes, absolutely correct.
And by that standard, You should be in the clear, but the standard is not what do other companies do.
The standard is how much dominance do you have and are you using legal methods to maintain those?
And of course, we don't know as yet because we'll have to wait for the whole lawsuit to roll its way through, right?
So the Google guy, Kent, says, on Android devices, we have promoted promotional agreements with carriers and device makers to feature Google services.
These agreements enable us to distribute Android for free.
So they directly reduce the price that people pay for phones.
Well, again, technically it's true, but it doesn't reduce...
The price that people pay for stuff as a whole.
So let's say that you save $100 on your phone because Google is subsidizing it in order to get the search result.
But because the search result keep tickling your buy button because the advertising data they have on you is so specific.
So you save $100 on your phone, but you keep getting hit with ads that tickle your buy button and you end up spending $500 on stuff you otherwise wouldn't have paid for.
Well, I'm sorry, you haven't really saved any money.
Rival apps and app stores are often preloaded onto Android devices, so they're talking about Samsung Bixby Assistant, Galaxy Store, Browser, Facebook, Microsoft Outlook, email, and so on, right?
Look how easy it is to add a different search app or widget on Android.
Yeah, that's...
But again, whether it's easy or not is interesting, but...
You've got to know there's an alternative.
You've got to go search for it.
You've got to find it and all of that, right?
So here he's saying, oh, you can go to Android.
You can go to the store.
You can search up Bing, and you can install the Bing search.
Yeah, but almost nobody's doing that, right?
So, yes, true, but anyway.
So let's see here.
He says, the bigger point, the lawsuit misses.
The bigger point is that people don't use Google because they have to, they use it because they choose to.
This isn't the dial-up 1990s when changing services were slow and difficult and often required you to buy and install software with a CD-ROM. Today you can easily download your choice of apps or change your default settings in a matter of seconds.
Faster than you can walk to another aisle at the grocery store.
The lawsuit claims that Americans aren't sophisticated enough to do this, but we know that's not true.
And you know it too.
People downloaded record 204 billion apps in 2019.
Many of the world's most popular apps aren't preloaded.
Think of Spotify, Instagram, Snapchat, Amazon, and Facebook.
Okay, counter to that would be that this is a category error.
So the fact that people download a bunch of apps is not particular to are they really choosing to use Google if it's The default, and they may not be aware of alternatives.
Obviously, Google's not going to tell them about alternatives and so on, right?
So, Spotify, you install because whatever, right?
You want to listen to music or whatever.
Instagram, because you want to share photos.
I know my Snapchat, Jazz.
Amazon, you want to buy stuff. Facebook, you want to...
Complain to family members or whatever, right?
So these are not Google competitors.
None of these are Google competitors. So saying, well, it's easy to install apps that don't compete with Google and therefore people choose to use Google, I got to tell you, I'm not wildly impressed with that one.
The data shows that people choose their preferred service.
Take Mozilla's Firefox browser as an example.
It's funded almost entirely by revenue from search promotional agreements.
When Yahoo paid to be the default search engine in Firefox, most Americans promptly switched their search engine to their first choice, Google.
Mozilla later chose Google to be its default search provider, citing an effort to provide quality search and its focus on user experience.
It's also trivially easy to change your search engine in our browser, Chrome.
And he's got a little video here of how to do it.
And the question isn't how hard is it to do.
The question is, are people aware of the option and pluses or minuses to do with it, right?
And, yeah, setting a search engine on Chrome Desktop, you can go to Edit Search Engines, and you can do all of that, and so on.
But, again, the majority of people are not, you know, like, I'm the kind of guy, I get a piece of hardware or even a piece of software, first thing I do is go through all the options and see what's available, but that's me.
I mean, I would get up at 6 in the morning to write screensavers for the Atari 800 when I was a kid, right?
So... He said, uh...
table recommendations on Instagram and Pinterest.
And when searching to buy something, around 60% of Americans start on Amazon.
Each day, Americans choose to use all these services and thousands more.
So I would push back on that a little and say, well, yeah, like Google itself is a general search engine as a whole.
And so its primary competitors are other general search engines.
It doesn't mean that nobody else searches for anything in any other way, for sure.
So he said, we understand that with our success comes scrutiny, but we stand by our position.
American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favor of particular competitors.
I wouldn't have phrased it that way myself.
Again, I'm not a lawyer and this guy knows what he's doing, but I'm just telling you from my view.
Tilt the playing field in favor of particular competitors.
So, you know, if you're paying billions of dollars to end up as the default search engine, a lot of people could look at that and say, well, that is kind of tilting the playing field in favor of particular competitors such as Google here, right?
Or make it harder for people to get the services they want.
We're confident that the court will conclude that this suit doesn't square with either the facts or the law.
In the meantime, we remain absolutely focused on delivering the free services that help Americans every day, because that's what matters most.
So, that's the document.
I think it's very, very interesting. There's a lot of good arguments in it, and I wanted you to be aware of that.
Okay, so let's wrap up with a couple of final thoughts.
I'm going to follow this story. I really find this stuff very interesting, but let's meet on the big screen and go over the conclusions.
Okay, so... Let's figure out what's really going on here.
So first thing to understand about the search engine business is it's ungodly expensive, right?
I mean, the amount of hardware and storage that you need to store the internet and prune dead stuff and constantly web crawl your way through sites and follow the links and make sure everything's indexed and so on.
It's ungodly just how much hardware and technical expertise is required.
In my particular view, Getting organic search results is kind of easy, right?
I mean, you just keep track of what people are searching for, compare it to the data, and just float that stuff up, right?
Curated search results, well, that's very expensive.
And to me, that's a huge and unnecessary and morally dubious way to approach data, unless you're being completely transparent with the user about how you're curating results to fulfill some political or ideological agenda or whatever.
So the cost is absolutely enormous.
So how can you possibly get it for free?
Well, because you can't do microtransactions like three cents per search because only crypto would be able to handle that and most people don't have it or can't deploy it or whatever, right?
So what you do, of course, as you know, is you store massive amounts of information about people and then you allow for ads to use that information to target people at a particular point of purchase to influence them buying stuff, right?
Basically, you're gathering information, selling it to advertisers, and that's how you make your money.
You are paying for search engines through your increased purchases in general.
So again, it's not free at all.
So if you want a search engine that doesn't collect massive amounts of information, then what you're going to end up with is a search engine that advertisers don't want to use.
Like, you know what it's like if you've ever done this kind of stuff.
You can say, I don't know, I want people in San Diego with six toes on their left foot and a dolphin fetish.
It's coming right up, right? Whereas most advertising is a complete scattershot, right?
I mean, you put something in a newspaper or something and you don't know who's read it and you don't have much demographics and you can't target it very well.
I mean, you can target some, you know, the American Association for Retired People is going to have a slightly different and probably less SDD-ridden audience than, say, Cosmopolitan or something like that.
So you could do a little bit of it.
But that's the issue, is that...
You can only run a search engine by targeting people's information, right?
Gathering people's information and so on.
And that is a value.
Now, that's not specifically related to the DOJ issue, but it does mean that competition is going to be a big challenge.
Because, of course, the information that you're sitting on, if you've been gathering it for many years, as Google has, is pretty intense information, right?
There's a lot of history there.
There's a lot of preferences being stored in there.
You kind of know where people are in the whole cycle of their life and so on, right?
So that, to me, is a big issue.
And to me, what is necessary for...
Just my personal opinion, the very highest standard of business ethics that I've always tried to work on is transparency.
All you want is transparency.
So if certain companies are Big on Democrats.
If they're big on social justice topics and so on, just say that.
Just say that.
If you talk about certain topics on our website, we're going to ban you.
You need to know that up front.
That, to me, is the transparency issue that is very key.
Now, when it comes to competition, The horse and buggy manufacturers didn't have a huge amount of fear from other horse and buggy manufacturers.
What they had to fear was the car, right?
It replaced the horse and buggy for the most part, right?
And so it's not other search engines or other mail programs or map programs or whatever that are a primary threat to Google or other companies.
The primary threat is something that you can't see coming that is going to change everything, right?
That is the big question.
So in a kind of funny way, companies kind of want to draw you into their business and then suppress you, right?
So that to me is kind of interesting.
So if a search engine says, As part of their agreements, and they make it real clear and upfront, it's not like, you know, 14 pages in two-point SquintoVision lawyer text, but it's kind of upfront.
It says, look, if you want to create a product that competes or overlaps with any of ours, we're not going to feature you in search results.
We're not going to let you float to the top.
Now, I don't know if any of the companies are doing that.
This is part of what's alleged, I think.
But that's just transparency.
Because then what can happen is...
See, here's the thing, right? If you've never gone through the joyful process of going to investors and saying to investors, I want to start an X, right?
Well, they're going to say, okay, well, how much is it going to cost?
And what's the barrier to entry?
And what are your competitors? And what's the market share?
And what's the blah, blah, blah, right? What's your business case for payback in ROI? Although I've done...
So many of these presentations, it's ridiculous, right?
So if a social media company or a search company or whatever puts out something that says, okay, if you do something that competes with one of our Products, we're not going to feature you.
You're going to be pushed down, you're going to be suppressed, whatever, right?
Or, I don't know, if you criticize immigration or mass immigration, or if you have issues with diversity or something, we're going to push you down, blah, blah, blah, right?
Well, that's transparent.
That's welcome. That's honest, right?
That's thou shalt not bear false witness personified.
That's a great thing. Because then what happens is, let's say that you go to your investors, right?
Or potential investors. And you say, I want to build an X, right?
And then they say, oh, okay, well, what social media companies that say they're going to suppress competitors does that overlap with?
And you say, oh, this, this, and this.
They'll be like, eh, you know, sorry. It's going to be too expensive for you to buy ads to promote your product because you're going to be suppressed by X, Y, or Z company, right?
Sorry, that sounds like the alphabet, but I'm not referring to alphabet, right?
You see what I mean, right?
So what annoys people, and I think where a lot of this stuff comes from, what really annoys people is when companies, like maybe a search engine, is going to suppress you, but they don't tell you up front.
And you just kind of find that out after people have invested, after you put out a third mortgage on your house, after you sold your left kidney for seed capital or whatever.
After you've put all of the stuff in on the assumption that you're going to be organically blah, blah, blah in the search engine, if it then turns out you've been suppressed, people get really pissed off.
Really pissed off.
Because you just invested five years of your life to build a company just to have it undercut by something you weren't even really aware of.
That is the really, really tough thing.
If it's not an organic search, if it's a curated search, if it's got business goals, if it's got ideological or political goals, fine.
No problem. Just tell people.
Just tell people.
If you're going to drive someone to a recommended restaurant, you've got to tell them that it's your brother.
Because, you know, investors, entrepreneurs, workers, they all invest these crazy hours on the expectation of fair and transparent dealings.
And that is, people get really pissed if the physics of the universe they believed in turned out to change.
You know, I can imagine building a house and then someone dials up and dials down the gravity.
I can't build for that.
Nobody can build for that, right? So I think that's, you make decisions based upon expected outcomes.
And if a search engine says, well, we don't curate, we're neutral, you know, it's made the best search win or whatever it is, okay, fine.
Then you'll just say, okay, I'm going to work really, really hard and I'm going to SEO optimize.
I'm going to work really, really hard to make sure that I can float to the top to the 75% of people who never go to page two, blah, blah, blah, right?
But if it turns out it's impossible to do that and you were never told that, Oh, I'm just like, I'm just telling as a human being, human to human being, I'm telling you that is going to piss people off.
Really going to piss people off.
And that's the issue, right?
Now, the other thing I wanted to mention as well, and this is sort of a wider social media thing, right?
Because there's a lot of stuff out there.
Suddenly the leftists have become all kinds of corporations are virtuous and we've got to have property rights and they can do what they want and blah, blah, blah, right?
Right? So the issue, just for those of you who don't know, and as a seriously deplatformed guy, I can tell you this with great, vivid personal experience.
One of the major issues that occurs is changing standards, right?
So imagine that you put in a swimming pool and it's perfectly fine.
You know, you comply with all of the regulations, all of the red tape.
You've got to put a swimming pool in. It's totally fine, right?
And let's say that...
Eight years later, the rules change about swimming pools, right?
Now, generally, what happens is you're grandfathered in, which means that, okay, you built this before the rules, so it's fine.
They don't apply to you because it was legal when you did it, and now it's not legal, right?
So that is a fundamental principle.
I mean, not just of law, of morality, but of civilization itself, right?
But if you build a perfectly legal swimming pool and then what happens is the regulations change in eight years and you've got to rip out your swimming pool, if that starts to become the way of the world, the entire value of economics, of investment, of building, of predictability, of entrepreneurship, of everything is going to completely grind to a huge freaking halt.
Would you buy a piece of land and build a house knowing that the previous owner could just revoke your ownership and it would revert back to him if he just didn't like something?
Well, you wouldn't. You would never invest in the building of a house if your control over that house, your ownership over that house could be revoked at any time ex post facto.
And, you know, it's like if you raise taxes 10%, you can't go back 10 years and prosecute people for not paying the increased tax you just passed.
That's ex post facto law, retroactive law.
You can't have that. You can't have that.
I mean, if you're at a casino, right, and there's a card table, there's blackjack or something, they say, oh, you get a natural 21, we'll give you $1,000.
It's right there, right there.
Right there. And you say, oh man, this is the one I want to play at.
I'm pretty... And then you draw a natural 21 and you say, where's my $1,000?
They point you over to the cashier.
And then over the cashier, it says, you don't get $1,000 for a natural 21.
Well, what would you do? You say, well, that's terrible.
That's wrong. That's deceptive.
I entered this game and I played this game because the rules were the rules.
Now, you can change the rules later, but you can't apply them retroactively.
That's the problem. That is the problem that is, I think, existing at the moment.
That rules are changing.
And then those rules are cast backwards through time.
And things that were permissible in the past are now deemed not permissible.
And this goes back in time to when they were permissible.
And that can be the reason for banning or deplatforming.
And that is...
That's wrong. I mean, hey, you can change your terms of service.
I get that, you know? Like, I mean, if you get into a contract with a cell phone company, they can change that contract, but they can't change it on the fly, and they certainly can't change it and retroactively hit you for it, right? So you sign up for $40 a month, and then they say later, you know what?
It's now $80 a month, and we're going back $10 a month to charge you $400, right?
Because of the extra $40 a month, right?
It went from $40 to $80, right?
Well, no, you can't have an economy.
You can't have a civilization. If that's the way things work, and myself, of course, and lots of other people invested tens of thousands of hours building up a platform and were complying with the rules at the time, and there were supposed to be all these things like, oh, well, if you're not in compliance with the rules, you'll get a warning, you'll get a this, you'll get a that, and right? But that's not how it plays out for a lot of people.
You just get nukes.
Which means that the new rules are going backwards, I think, sometimes in time.
That's my particular perspective, right?
Now, fundamentally, last thing I wanted to mention.
So fundamentally, the issue is not Google.
The issue is state power, right?
So if you are a search engine like Google and you have the capacity To sway an election?
I mean, that's huge.
That is a massive amount of power and having that kind of power.
And there are studies out there that say search engines or social media companies had significant effects on, say, the 2016 election, right?
I'm sure they're going to have an even bigger effect on the 2020 election that's coming up in two weeks or so.
The problem is state power.
I have no particular interest in antitrust stuff in a truly free market.
Like in a meritocracy, no government, and Kapistan paradise, right?
I have no problem. I don't care about antitrust stuff.
When you have companies, we didn't even get to sort of Section 230, which requires neutrality, right?
Section 230 protections of liability for content, right?
You can't be sued for content as long as you're neutral in your platform.
If you're not neutral in your platform, if you're like a magazine or a newspaper and you've got editorial control, then you are liable to lawsuits for content.
But social media companies as a whole are not liable for content because they claim to be neutral.
If they're not neutral, well, that's a problem, right?
But it really is the proximity to state power that causes these problems.
And we can, of course, play whack-a-mole with all of this stuff.
And it may be interesting to see how this plays out.
It may be interesting to see how this plays out.
I think there are a lot of people who would be pretty fascinated to know what kind of potential tweaking may be occurring under the hood at social media companies in terms of searches and stuff like that.
I think a lot of people would be very interested.
I don't know if we'll get that out of this, but I think that'd be pretty fascinating.
But fundamentally, the issue then comes down to this, which is...
As long as you have this kind of concentrated power in the state, where an election holds trillions of dollars in the balance going one way or the other, as long as you have that kind of power, we can play whack-a-mole with the DOJ all day long.
But until the power is cut off at the source, until the dealer is no longer in the neighborhood, we can't expect any reforms from the addicts.
This is Devan Molyneux.
Thank you so much for watching.
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