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The new model. 

Starting this week, there are Premium and Free editions of this newsletter. Premium has more analysis and goes out on Sunday evenings; Free goes out on Tuesdays. You're getting the free edition - to see everything, upgrade here.

My essays

I wrote about the regulation of technology. We regulate lots of industries, from food to banking to airlines, and now, increasingly, we’re going to regulate tech. But that means global platforms collide with local regulators, with complexity, trade-offs and mutually incompatible demands. Tech is going to become a regulated industry, and this will be expensive. Link

I did a podcast (Reaction) talking about tech regulation. Link



Tiktok M&A drama. Trump is talking louder about 'banning' Tiktok, last week we heard that some shareholders and bankers are trying to work out how to spin it off from the Chinese parent Bytedance into a 'non-Chinese' company, and now Microsoft is looking at buying it, to add to its social games platforms Minecraft and LinkedIn. Lots of moving parts here: 

  • US internet companies are mostly banned in China (as is Tiktok!), so there's a straight trade reciprocity point (though China mostly bans them for censorship rather than protectionist reasons), and there are lots of reasons why Chinese intelligence agencies being able to mine the entire database (and decide what you see) could be bad, even without asking if the app itself can steal other data on your phone (on iOS, mostly not). This is not comparable to Facebook, or data brokers, or even to the NSA getting targeted data from Facebook. 
  • However, there's a pretty vague strategic rationale for Microsoft - Tiktok would be a big customer for Azure (but Tiktok signed a big three-year deal with Google Cloud last year) and a piece of mass in advertising, but so what? Is this just strategy-by-powerpoint? 
  • Getting the entire tech stack and database out of China (how much is on Google?) and onto Azure, and building a whole new not-in-China engineering team to run it, would be a huge task, and how do you manage the product at the same time?
  • And what about the next Tiktok? The US needs a repeatable framework for thinking about all popular Chinese apps, and actual privacy and data management laws that apply to everyone, without relying on Apple to be the privacy and security regulator by default. Link

US congress tech hearings. There's a (five hour) video and, much more useful, a lot of PDFs of internal emails and discussions going back a decade. There's some gotcha quotes but also a lot of insight into how very well-run high-intensity companies operate. Link. This was the subject of my column in the premium edition: upgrade to read. 

Nvidia buying ARM? Last week we heard Softbank was selling (so much for the 100 year vision) and now, apparently, Nvidia might be buying. This would put both of the two strategic megatrends that Intel missed into the same company - GPU/ML in Nvidia and mobile in ARM. (Also this week, Nvidia's market cap passed Intel's). Link

Movie windowing finally unlocks? We've been talking about 'day and date' releases for at least a decade, but the short-term money from putting movies in cinemas first was too good for studios to give up, and the theatres had bargaining power. Now cinemas are closed, probably until next year, so Hollywood is starting to collapse the theatrical window - Universal has done a deal with AMC to put films online after 17 days instead of 70. A lot of consumer habits and entrenched business models are being broken right now. But also - what movies can really be made right now? What does next year's pipeline look like? What happens to summer tent-pole blockbusters if we skip not just one summer but two? How does Netflix do a Bezos on the studios? Link

Google WFH until next summer. Google plans for staff to carry on working from home until the summer of 2021. Add to your file of 'when do we get back to normal?' Link

Australia makes tech subsidise newspapers? Australia has a draft plan to tax Google and Facebook to subsidise newspapers, on a 'public good' rationale. There's some sense there, but they've made this nonsensical by constructing a theory that they should be paying to link to newspaper content as a business relationship, and the only reason they don't pay is their monopoly. This idiocy also crops up in Europe. The real reasons they don't and can't pay: there are generally few or no ads on news links, and if they paid a share of all revenue to anyone they link to that wouldn't just be newspapers - it would also be anyone who got traffic from them, so Google would have to pay anti-vaxers if they got get enough traffic. And how would advertising itself work, if Google had to pay Expedia to send it organic traffic? If you think Google should be taxed to subsidise news as a public good, fine, but call it that - don't invent imaginary, irrational business models. Link

Apple's rent-seeking. Airbnb is filling the gap in lockdown by building an online events business, delivered through the app, and Apple wants to take 30%, under its long-standing rule that digital experiences in an iOS app have to use Apple's payment system (see my column below). This is, I suppose, consistent with the rules it wrote - Apple doesn't get a cut from offline activity (Uber, Amazon, Airbnb bookings) and does get a cut for stuff you consume in the app. But rules that are just hard commercial terms when you have 5% of the installed base stop being OK when you have market dominance. In the USA, it does - over 80% of US teenagers have an iPhone and well over half the total base - and it's very clear that the EU is going to take a hatchet to Apple's rules as well, whatever your own view of this. Link ($)

Twitter hackers caught? The US says it caught the people who hacked into Twitter a few weeks ago: three teenagers who used their own names for their bitcoin accounts. Worth reading for the police work. Link (PDF)



All the CEOs provided written statements for the anti-trust committee, but the one by Jeff Bezos is really worth reading, as a great piece of writing about creating and building a business. Link

Important NY Times primer on the shifts happening in EU regulation. They're not just looking for broken laws and fines, but to create regulatory frameworks that alter competitive dynamics permanently. And no, this isn't really about protectionism - this is how they treat European companies too. Competition is seen as an absolute good. Link ($)

Tiktok's new American CEO has a blog post saying attacks on the company are self-serving and chauvinist. Well yes, obviously, but that's not the real issue. Link

Michael Jacobides of LBS on the outlook for tech competition policy. Link

Detailed academic study of how the discussion of the Chinese Communist party conference was moderated on WeChat. Link

What's going wrong at Intel? Link

Travel after lockdown? Robert Randall, the former CEO of American Airlines, says a third to a half of business travel will never come back. People said that after 911 too, but that was before the cloud and Zoom. Link ($)

Clubhouse (buzzy voice-based social app) explains the vision. Link

How to compete with the New York Times - the monopolist of US newspapers. Link

Information from Google on updates to the Apple/Google COVID exposure API. More telemetry, more scope to alter Bluetooth sensitivity, and a plan for it to work even without users turning on location access. Link

Nice piece from Maniv summarising the sensible bull-case for Tesla (there are un-sensible ones). Link


Interesting things

The diffusion of tractors in American agriculture. Link



ComScore has a report on the state of streaming video in the USA. Link

Shopify did more GMV last quarter than eBay - $30bn. Link

Hulu has a report on streaming behaviour in the USA. Link

Roblox now has 150m MAUs, and will pay developers $250m this year. It's the new Minecraft (or the new Club Penguin). Link

Also in the premium edition: trust and antitrust. 

I watched all five hours of the US government GAFA hearing. Much as one would expect, there was a lot of posturing, canned talking points and 'have you stopped beating your wife?' questions, but we also got several hundred pages of intermittently fascinating internal documents from these companies, and questions around some crucial points.

There's so much that's interesting (and so much that isn't) that I've tried an experiment and made a digest for premium subscribers - a PDF with best bits, and the key passages highlighted. Hence, you can read the email threads behind the acquisition of Ring, Youtube ("guesstimate - $10-15m?") and Instagram, and the Google PM who thought he could crush YouTube with 'just one more UI engineer'.

This is a glimpse behind the curtain of some very well-run, aggressive, fast-cycle businesses... You're getting the free edition - to see everything, upgrade here.

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This is the free edition of my weekly newsletter. It was sent to you on 4 August, 2020.

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