Patreon May Have Violated Anti Trust Laws In Sargon Debacle
Patreon May Have Violated Anti Trust Laws In Sargon Debacle. YoutuberLaw and I discuss the issue of Anti Trust laws and whether or not there was collusion to shut down competition following the ban of Sargon Of Akkad, aka Carl Benjamin.There doesn't seem to be a reason for payment processors to shut down a deal with a Patreon competitor other than to protect Patreon from the damage it caused itself.Youtube Law is a tech lawyer who weighs in on the issue.Perhaps its an issue of social justice activists targeting Sargon but it could also be a greater attempt to stifle competition to their platform.
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Yesterday, a YouTube channel with over 1 million subscribers came out in defense of Sargon of Akkad by asking all of his fans to terminate their Patreon accounts and pull their funding off the platform.
His video was titled, Banned by Patreon, Let the Witch Hunt Begin.
This is from WranglerStar on YouTube, who, it's my understanding, he makes workshop videos.
Nothing too political.
The backlash from major creators is continuing, and it just spells more bad news from Patreon.
It would seem like the decision made by Patreon's trust and safety team is causing massive damage to their company.
They may not be losing tons of money, they may still be maintaining a lot of income, but there is certainly PR damage, and they are losing many subscribers.
Now, this is where it gets really interesting.
YouTuber Law, a channel on YouTube who talks about legal issues pertaining to technology and YouTube, said this could potentially be an antitrust violation.
Subscribestar is a competitor to Patreon.
Most of us that are involved in this, we kind of moved over.
Even Jordan Peterson created an account and announced it.
Shortly after, PayPal and Stripe terminated their agreements with Subscribestar, causing damage to that business.
And this is where it gets strange.
Why would they do it?
There doesn't seem to be a practical business reason to terminate a competitor to Patreon.
PayPal works with Patreon.
Patreon made a bad move, and Patreon was losing business to a competitor.
So in response, PayPal terminates, and Stripe, terminate their agreement with Subscribestar.
Now it doesn't, there's no evidence of any collusion or anything like that necessarily.
There's no evidence of any laws being broken, and it might not actually be a violation of the law.
But, today, I spoke with YouTuber Law about the issue, and we kind of break down why this doesn't seem to be just... I guess it's called a, you know, parallel action.
I'm not the lawyer, but YouTuber Law certainly is the expert, and this sounds like it may be collusion.
There may be some action here, especially when you consider the woman on the trust and safety team, who apparently made the decision, or at least the public statement about Sargon, actually used to work for PayPal.
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But now, let's jump into the interview with YouTuber Law.
There's a video that's being shared where you said Patreon and PayPal together with what happened to Subscribestar is potentially an antitrust or a trust violation or something.
I saw this video, people are sharing it, and I thought I'd be interested if you want to just kind of reiterate that thought and then I've got a bunch of questions about the situation we can go through.
We've spoken about it on my channel many, many times.
I've held many live streams about it.
Not everybody has necessarily been satisfied with the answers I give, largely because the way I saw it, a lot of times you see companies acting in parallel.
Legally, that does not mean that there is any sort of collusion, anything that would give rise to antitrust violation that we've gone through.
There's a lot of different causes, potential causes of action when you de-platform people.
And I usually have gone through many, many of them, including in the latest one in Sargon and say why they're really, I haven't seen any evidence that would trigger any of those causes of action, including antitrust largely because In law, you have a thing called conscious parallelism, where two competitors might be doing the same thing.
You know, a lot of times one competitor looks at what somebody else is doing, and he just follows them.
Somebody reduces prices, they want to reduce prices.
Sometimes they act disjointly.
They want to act in opposition.
But none of that is necessarily illegal.
None of that gives rise to it.
This time there was something different here, where you have one company, Patreon, that took down Sargon of Akkad.
That created a lot of kind of PR focus on a competitor of Patreon.
Now, competitor is kind of a hard sell.
It's basically a startup with far less clients and patrons and money flowing through them.
Nonetheless, they received so much PR attention that within days, you saw PayPal basically killed
them. PayPal, immediately after that, Stripe as well, took away basically their payment capabilities,
which nowadays, given the strength of Oh, PayPal.
I think worldwide it's about 65% of the market.
In the United States alone, closer to 73% of the market.
You add to it Stripe, that's pretty much the entire market.
You know, third is like square with a couple of digit points.
So they're pretty much the market.
They generate a tremendous amount of trust when it comes to consumers.
A lot of people do not Pay or transmit money online unless they see those kind of trusted names.
So you don't have access to that.
It pretty much kills you now.
We've seen that kind of action before where where payment process and may want to take away like PayPal always truck wants to take away payment capability from a site and that pretty much kills this site.
But we've never seen a reaction like this, kind of a triangle, because if PayPal kills one of its customers, that's not necessarily considered an antitrust violation because they're not really competitors.
But what you saw here is Patreon banning an individual who then moved to a competitor, an enormous amount of PR being focused on that competitor, especially when the story kind of blew up and went a little more mainstream outside of the YouTube bubble, and PayPal then reacting immediately to kill that competitor.
And that is effectively what you would call collusion, what also can be known as group boycotting.
A group, more than one individual, not just PayPal itself, but with Patreon possessing market power, preventing an entrant into the market, that's collusion and that's an anti-competitive act.
Because there's one more thing that you did bring up.
Nick Monroe on Twitter brought this up.
I wouldn't necessarily say this is a strong point, but the woman who works the trust and safety team, who actually spoke with me on the phone, she was previously an employee at PayPal for eight years.
Now, this was eight years ago, so it's not like you could say that she was recently working there.
But does that add to the credibility that maybe they work together, that she has a direct connection with the company that has been terminated?
I mean, I look at it this way.
She is the woman who's justifying the termination of Sargon.
And then a company she previously worked at for eight years then terminates their business relationship because it almost sounds like to me if I was to be a conspiracy theorist.
And again, this is just a thought.
There's no evidence of this.
She made a mistake.
She hurt her company.
And this is bad news for her.
So then when everyone starts going to Subscribestar, all of a sudden a company she used to work for acts to defend the company she currently works for, almost like her friends at PayPal are trying to protect her from the mistake she made.
CEO levels sit around lunch every once in a while discussing, you know, we have problems online with a lot of hate speech.
We should all, if not in concert, nonetheless, you know, try to exclude some of these individuals.
It could be a lot of reasons why.
That is just an indication.
You're right.
But it could be a lot of reasons.
That's why I have no idea what's happening.
But this is the first time that at least I saw where there were actions that are not in line with business practices, meaning you can say that argue or not that that when uh more and more people started
to move to gab gab had a certain history gap being a social media platform i wouldn't call
it competitive to youtube but basically more classic social media platform which a lot of
people posted on it i posted on it uh i didn't think anything of it really but when paypal when uh
gab was uh taken down essentially there was this argument that it was a hive of hate now
regardless of what you think of that argument gab had a somewhat of a history that they can point to and
say you know what this is the reason why And that's so they can justify based on business practices, whether or not you agree with it or not, or more likely free speech, because those companies have a right to disassociate themselves with expressions that they do not agree with.
But when it came to something like Subscribestar, it was a complete unknown.
It's a company that started out that obviously wanted to compete with Patreon but in a market where Patreon was pretty much the only player and everybody else are not even secondary players in that market.
Patreon really dominates that market.
It's not a monopoly because the market is not really just that tiny little segment but in its own little segment which includes a one feature style application, it dominates.
So there would be no business reasons that I would have known that would justify PayPal
killing that client over there.
There's no even expression of free speech because it wasn't as if the company was developed
enough to represent a certain point of view.
All that happened was a certain amount of focus, a lot of focus, especially when this
story went mainstream, where people like Sam Harris started to talk about this issue.
Really there was just focus on this tiny little company that might represent a certain point
A threat to Patreon.
PayPal acted.
And this is so anti-interest to PayPal.
This makes no sense from a business perspective, and it makes no sense from a free speech perspective.
What is PayPal trying to say when it kills a company?
It wasn't as if it said, you know what?
Subscribestar and everybody out there, we do not want to deal with Sargon of Akkad.
We don't agree with what he says.
We wanted that to stop.
That'd be an interesting statement, but they've basically killed a company that is not a competitor of theirs, but a competitor of Patreon.
So there seems to be some arrangement here that we're not aware of.
We can talk about it, but we're not aware of that might raise real issues.
If Square did that, I would see no real issue in it.
Even if Stripe did that, because they are less than 20% of the market at best, PayPal being a virtual monopoly, not monopoly in the market share, but they have an enormous amount of power, especially within the United States alone, a massive amount of market power, their ability to exclude somebody down the line is subject to antitrust violation.
Now, the one There's two things that can trip them up because it's not an absolute.
It's freedom of speech.
Is this a question of speaking based on their own expression of what they think is appropriate or not?
Or is this basically a commercial endeavor to try to hold down competition?
Let me stop you right here because I think you brought up something really interesting that is going to bring us another question I have.
If it is an issue of speech, right?
They said we don't want to be associated with Sargon.
I actually have a list and evidence of other much larger and more famous podcasts who have said things, overt racial slurs for minutes on end.
There's a podcast where they do, there's one podcast where they make jokes about Asian people eating their pets and did a mock Asian voice, like really racist stereotype, mocking Asian culture directly.
And so then I have to wonder if it was an issue of PayPal saying to Patreon, we don't want to be associated with this person's speech, and we don't want to be the processor for them, you have to get rid of them.
The reason I don't see that making sense is because Patreon has much more famous in the top 15, the top 20 podcasts that are known.
There's news articles I've pulled up where they say this podcast is known for extremely offensive, racist comments.
So if that's true, that they are more prominent, more famous, and more talked about in the media, that's contradictory to the idea that they oppose the speech of Sargon, right?
It really sounds to me like my, my conspiracy theory that if I was a betting man, I don't, I'm not saying this is true.
And by no means, I just, it just feels like this woman, you know, they're in Silicon Valley.
They've got friends, these companies, she screwed up.
Patreon is bleeding.
There's like, there's like a YouTuber who has over 1 million subscribers who made a video saying, I want all of you to cancel your patron accounts.
Sam Harris cancelled his Patreon account.
The fifth biggest account.
Sword and scale.
Nothing to do with politics.
A crime podcast said, we are looking to pull off the platform as soon as possible.
This means the woman who made this decision is in trouble.
She's in trouble.
She used to work at PayPal.
All of a sudden, PayPal starts acting in her personal interest by banning Subscribestar, which no one knows about.
You know, the only prominent person on Subscribestar was this tech blogger.
Naomi Wu, her name's Naomi Wu, she makes technology videos.
Right, I've heard of her.
Right, the Gab thing's interesting because there was a lot of press about Gab hosting these extremist views, whether that's your position or not.
And so they understand PayPal saying, look, you know, Gab is its platform.
But Subscribestar had nothing.
They actually had, I think, like four or five people on the platform.
Naomi Woo made a video saying, why are they doing this to me when no one else is on the platform?
And it's interesting.
One of the other really interesting things about this is that an article came out from the Daily Beast where they called Sargon of Akkad right-wing.
And if that's your opinion, fine.
I understand that.
But they called you too, right?
They haven't called me right-wing, though activists certainly try to, you know, smear me that way.
I'm actually omitted from most of these stories.
They don't talk about me, probably because my political opinions, which I do espouse, are pretty left-wing, so they ignore me.
But the interesting thing is, they used to call Sargon alt-right all the time.
But this controversy shows that Sargon actually started off, he was banned because he was arguing with the alt-right and insulted them.
And now these news articles are actually saying Sargon is right-wing.
arguing with the alt-right, so it's changing the perspective too. I don't want to go off on a
tangent though because that's an entirely other issue. I've got some other questions here,
and so maybe won't get to all of them, but one other issue that's important.
Patreon can take pledges from people directly through PayPal.
So it's not just about paying people out.
It's that when you look at Graftreon, which is a website that shows the public data of Patreon, how much money they're getting.
I would say it's fair.
A decent amount of money that transfers through Patreon per month is actually people who have PayPal accounts directly charging their PayPal through Patreon, which gets a cut.
So that means if PayPal said something to Patreon, like ban this person, And then Patreon said, well, if we don't ban them, PayPal's threatening to cut us off.
We're going to lose a million dollars per month, right?
Well, so the question that I would take to get from that is, is PayPal allowed to do that?
To basically, because they control so much of the business coming into Patreon or other services, essentially force Patreon to take action at the risk of them shutting down.
And I think it's important to know, too.
Actually, I have another question, so you can comment on that.
No, I mean, Cord, well, I mean, This kind of coordination, because PayPal holds what we could call a monopoly, even though it's not an actual monopoly, it's not, you know, the only player in town because it possesses such enormous market power.
It's it's.
It collaborating with other people downstream of upstream from it could be problematic.
Not necessarily.
There are times where you are allowed to enforce rules.
I mean, we can go even back.
We can say that how much of this is being actually enforced by Visa MasterCard that are pushing it onto PayPal and PayPal really is just enforcing it downstream from them.
I don't know the storyline here, which is why I think that this is where the government needs to step in because you can just start asking questions that individuals cannot.
But none of this is—the way it works in law, very few actions are per se illegal, meaning they're automatically illegal without really having to think about it too much.
And in the United States, it's all about pricing.
So in the event that there's a price fixing, that would be per se illegal under antitrust law.
So nothing you're saying is per se illegal.
The question is, what's the impact on the competitive nature?
Whether it's about competition to PayPal or competition to one of the people that are involved in the collaboration, you know, so that's what's going to look for.
So here's another interesting thing is that a lot of people are setting up PayPal accounts actually, right?
So, I don't want to name anybody specifically, but when when Patreon first banned Lauren Southern, many people set up subscription services directly through PayPal.
And I think that that is it fair to say then that PayPal and Patreon actually compete with each other.
They are, because I mean, I've never used that feature of PayPal, but I know that people, when they started saying that, look, we're not, we're going to stop sending money through Patreon.
Maybe you should start using PayPal.
They have a competing business.
So my understanding that there were competitors, but.
Is that really a competitor?
Yes.
The differential profits earned by PayPal may be different whether or not it's their own product or Patreon, but based on the facts that you're saying that, I don't know, that PayPal makes money with money going into Patreon as well as money leaving Patreon, it's not really losing money if it's between them.
So I guess the reason I bring this up is I feel like, I think it's fair to say that, at least to a certain degree, PayPal and Patreon do compete with each other, as well as, you know, PayPal is a much bigger service, but I don't have to use Patreon.
I can use PayPal or Stripe.
And so the question then becomes, if PayPal is putting pressure on Patreon, like, look, we know PayPal terminated its agreement with Subscribestar.
Subscribestar and PayPal are also competitors, right?
I mean, in response to the shutdown of Subscribestar, I resort back to PayPal.
So is this not only a collusion between these companies, but is PayPal actually shutting down its competition because it's taking ground in this market as well?
Right, so I didn't think of that because I didn't think about that one feature, but technically you would be correct that PayPal is also a direct competitor with Subscribestar.
Now, the argument would be that The size differential is so large and that is it really motivated to kill a competitor here?
Where as, you know, it has control over something like a Patreon, where while it is a competitor, they have a certain amount of control.
So yes, you're right.
At that point, there are rules as a monopoly that forbid you from refusing to deal.
That's separate.
PayPal alone, without anybody else, if it's refusing to deal with Other competitors that might nonetheless need its services because it's an essential service what they're providing is then guilty of antitrust.
It happens in railroad and stuff like that and refusal.
It can happen in phone line if there's a refusal to allow competitors to use your line and it's the only way to reach a city or town or something like that.
So you're correct.
I mean, that could be a case in and of itself, saying that PayPal as a monopoly is not permitted
to exclude competitors from using an essential service.
And since the PayPal credit processing is essential service nowadays because of its
size, it's not permitted actually to exclude them.
I don't want to say this is true, but there is some people believe that the reason Patreon
takes people down is because PayPal pressures them too.
So the question then is if that's the case.
Because PayPal and Patreon do compete at a certain level, is PayPal as a monopoly allowed to pressure, use its market power to force Patreon to make decisions?
Yeah, so I think we've basically hit the nail on the head.
I guess I have one more question outside of any of this.
Someone brought up an interesting point in a comment thread about Gab, and they said, Google Play removed Gab from the store, but Google as a company is in the social media space.
Is that a similar function if Google has an interest to remove its competition?
Now, there's a problem there, but you always have to go back to the concept of free speech, that these companies in and of themselves have free speech rights similar to you and I.
A lot of people don't like the idea that corporations do, but we have about 200 years worth of history that say that those corporations have.
And it's not an excuse, but these companies do have a right sometimes based on specific things.
We do not want to deal with people espousing certain ideas or allowing those kind of ideas.
So up until now, we saw those stories.
But the way it works in court, a lot of those kind of cases don't make it far at all.
Basically, the lower level judges dismiss them very quickly saying, this is a free speech argument.
And these companies, even though they have monopoly rights, are entitled to not work because these other companies are very expressive through their actions.
The kind of people they bring in, the kind of, let's say, content creators in this case, that they are relying on their platform.
So Google is permitted.
I see the problem. The question is, could you really make a case out of it? That's why this is somewhat different.
Because you see action that's not in line directly. You don't have to argue that Subscribestar is a competitor of PayPal.
It just doesn't make sense in and of itself.
You know, why would you kill that company?
Trust me, Subscribestar is not a threat to PayPal.
Well, I guess the main argument I've heard is that PayPal simply says, no Sargon.
And so Patreon says, okay.
And Subscribestar said, no way, we're not going to ban him.
So PayPal said, we're not going to service your business.
But the reason, that's the main argument I've heard from people.
Well, maybe it's just PayPal saying, we don't want Sargon.
But if that were true, I believe it would show it's not a speech issue, in that PayPal is still servicing much more egregious accounts who make more money.
I don't think it has anything to do with the views of Sargon, just because there are some top podcasts bringing in 50 to 100k per month who regularly use racial slurs, to an extreme degree.
And I've got the evidence.
And I know for a fact Patreon knows about this.
I don't want to get into the specifics because it will lead people to realize which podcast I'm talking about, but Patreon is fully aware of the things espoused by these platforms for public media reasons.
These things have been talked about.
It sounds to me, then, that PayPal doesn't care what Sargon says.
They just don't like him personally.
Or Patreon.
I don't want to blame PayPal.
We don't know.
We don't know PayPal has any involvement whatsoever in what happened with the banning of Sargon.
We do know they de-platformed Subscribestar.
But it sounds like Patreon, specifically, targeted Sargon of Akkad.
And they allow these other, more egregious channels to function with no problem, so it sounds personal, actually.
Well, the one point I always want to make, because there's a lot of people who don't seem to understand, you know, I got a message from someone saying, how could you, you know, some of these podcasts are making jokes, how could you compare a joke to Sargon's direct statement in which he made an anger?
And I said, look, I don't agree with what Sargon said.
I don't like that he said it.
I understand the context of what he was trying to do.
It's very similar to what Sarah Jong did the New York Times.
When she made all of these anti-white statements, they said she's using the language of her harassers.
That's what Sargon did.
I don't agree with either of it.
But the issue is, nowhere in the terms of service does it say Sargon wasn't allowed to do these things on obscure random live streams where he was defending himself from, you know, a harassment campaign.
It's not in the rules, and what they've basically said to me, Jack Conte said he understands the rules aren't clear, so now they know it was a seemingly unclear or arbitrary enforcement.
The main issue here is if Patreon is enforcing rules they've never written down and never expressed to us, it's not a safe place for a business.
That's the last point I want to make, and then I want to just ask you if you have any final thoughts, any other things you want to add before we wrap up here.
Right, but in my defense, I listened to you before that.
I was probably before that.
It's just my little defense there, but you're pretty much the only one.
Politics don't interest me here.
So people ask, so what, from all the stuff we're talking about, what is that interest?
You said free speech, right?
That's the one thing I don't care.
I don't follow Sargon.
I know a little bit about him because I follow a different case, the one he has against Akilah Hughes.
So I've watched some of his videos in preparation for those.
But otherwise I don't follow it because the topics don't interest me personally.
It's not something I care about.
None of that really matters.
This is purely a free speech argument whether or not anybody whether or not is right of center or left of center is permitted to speak and whether or not companies with enormous market power can then decide whether or not you are permitted to compete in a marketplace of ideas.
That's the only thing that matters and that's why Literally I went, it was a live stream, it was like two and a half hours and I shut it down and I said back and I'm thinking... Why didn't anybody ask me if I think of myself as a hypocrite here, right?
If I'm talking about free speech, if I'm saying that Patreon is doing something wrong here...
Why am I still, as I'm speaking, there's a little thing at the bottom that pops up that says thank you for supporting me on Patreon.
I said, you know, that is hypocritical here at the end of the day, you know.
We can talk about it all day long, but as long as I'm enjoying collecting funds based on Patreon, what I'm saying is nonsensical.
That's what it comes down to.
I've learned by now in social media that while it's good to respond to people, it's just as good sometimes to completely avoid reading comments as well.
You know, people make comments about, you know, if you support Sargon, you might as well be wearing a white hat and all this kind of white pointy hat, all this kind of nonsense.
And it's so frustrating how I've interviewed people, and I talk with people, and whatever these activist groups are, they want to associate you as having the same political views of even a YouTube channel you've watched, right?
That's ridiculous.
But I guess, just final question.
I know I was going to wrap up before, but do you think anything's going to come of this legally?
If it stays, if this ends with Sam Harris and it doesn't grow beyond that, then probably not.
Patreon will take the loss, but it has pretty much a protected monopoly within its marketplace thanks to Stripe and to PayPal, so it will get its money back over time.
and time will move on.
But if this catches on and more people like Sam Harris actually follow up, or if people, larger people,
podcasters and YouTubers actually speak about it, it's basically unspoken about.
unidentified
Outside of channels that deal in politics and law, maybe some philosophical discussion, nobody... Well, no, there's a guy, his name is WranglerStar, I believe, I could be wrong, I've never heard of him.
I went to his channel to see what kind of videos he made, and he's doing, like, power sanders or something.
He made a video completely off of his channel's topic saying everyone go and terminate your accounts right now because you know so it is to me it's not necessarily about Sargon it's about the fact that Patreon lied to me personally they gave us all these assurances last year that aren't true and it's an unsafe place to do business if they can arbitrarily remove you and they will right so Now I've got people totally unaffiliated, and I mean, there's another guy I know, his name's Luke Rutkowski, he's got over half a million subscribers, just announced he was pulling off the platform.
And it's not a big channel by no means, but it's another ripple.
When his patrons get canned, they're gonna get angry, and it's gonna keep, you know, so maybe a cascade effect.
I don't wanna go on too long, because I said I was gonna wrap up, so do you wanna just mention your channel, where people can find you?
