Dozen Worthy Reads 📰 (No. 156)
This week: Quibi's demise, DOJ v. Big G, Twilio <3 Segment, Tech responsibility, NYT's brilliant strategy, Tech and Audio, Amazon vehicles and platforms, Tech and the government.
Hi All,
I hope you all are doing well and welcome (if you aren’t new then again) to Dozen Worthy Reads. A newsletter where I talk about the most interesting things about tech that I read the past couple of weeks or write about tech happenings. You can sign up here or just read on. As a reminder this newsletter is now bi-weekly (once approximately every two weeks). I don’t want you to think that I am AWOL …
The death of Quibi
This week Quibi announced that they were shutting down. I guess none of the options I presented in “What should Quibi do?” made sense for them. Sad to see this happen but I kinda anticipated it and so did others:
We have so many SVODs (Subscription Video on Demand), AVODs (Ad-based Video on demand) and free options today. Think Netflix, Hulu, IMDB TV, YouTube and even TikTok and I am sure if you ask yourself “Do I really need ONE MORE SVOD” , the answer likely is no. Matthew Ball has argued otherwise in The Flaws of "Subscription Fatigue", "SVOD Fatigue", and the "Streaming Wars" that Quibi is focused on a new type of need and that it can build a defensible position. He has argued that we’ll all say no to yet another SVOD (in fact I don’t even use free AVODs!) I really do love Matthew Ball’s argument and he is way smarter than me but I think he might be wrong.
From their announcement:
And yet, Quibi is not succeeding. Likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing.
BigTech : Targeting the low hanging fruit?
The Justice Department finally filed their lawsuit against Google. The lawsuit basically states that a company is under violation of antitrust law if they have used restrictive contracts to protect their dominant position and undermining competition.There are obviously two things that are part of this:
One is bundling Google Play services only with a restrictive MADA agreement. As I wrote in “Is Big Tech Hyper Competitive or Anti Competitive”
As a side note, remember that any device manufactured had to sign and adhere to the Mobile Application Distribution Agreement (MADA) which was leaked in 2014. In 2018 after a $5b EU antitrust fine Google made favorable changes which allows a device maker to “fork” Android and still be able to access “Google Play Services” and “Google Play Store” (in other words a default browser can be anything).
The second reason is the DOJ accuses Apple and Google of cutting “a series of exclusive” deals that thwarted competition in the markets for search advertising and search. This is obviously referring to Google paying Apple $10-$12B a year to be the default search engine on Safari. What is interesting is the point that the DOJ cited internal Google documents that call the Apple search deal a “significant revenue channel” and losing this deal would be a “code red” scenario. This is because nearly half of Google search traffic in 2019 came from Apple. This is an extremely interesting point. It is well known that the best (lucrative in terms of $) users are iPhone users. I wonder if this results in Google earning a lot more $ from Apple than previously anticipated? In “Should Apple get into the search engine biz” I anticipated the below and OMG how back of the envelope it was!
A simplified way to think about this (and this IS back of the envelope and not meant to be accurate and there are lots of nuances which I have NOT considered) is the total revenue from pure search engine ads on Google and not on “Google Network Member’s properties (Google Network Members' properties consist of revenues generated primarily on Google Network Members' properties participating in AdMob, AdSense, and Google Ad Manager) is ~$98B (see 10k below). This means that approximately each % share of ownership of the default browser search engine is worth ~1.16B (at least in 2019). So this means that Google earns ~$20B from Safari (being the default search engine) but pays them $12B.
There are several articles pointing to how similar this is the lawsuit the Justice Department filed (and won) a lawsuit against Microsoft. In that lawsuit the government accused Microsoft of illegally tying Internet Explorer to Microsoft Windows by restricting OEM’s. This is indeed quite similar to what Google does with Android (Part 1 above).
For the second reason above, there are many ways to fix it, but the real question to ask is can anyone else pay Apple that much ($10-12B). Even if they can, should Apple allow the experience to be less optimal for an iPhone customer by default because as we all know Google is light years ahead in search. The more people use it, the better it gets. How do you break that cycle? Force a bad product (search engine) on the end users? One potential option is that Apple during device initiation (or first time the browser is loaded) ask a user if they’d like to setup a search engine and what their choice would be. But why should they do that? I think it is entirely possible that the DOJ will will on point 1 above. They did already agree and pay EU a $5B fine and offer less restrictive agreements in EU.
Google’s response : A deeply flawed lawsuit that would do nothing to help consumers
Ben Thompson’s take : United States v. Google – Stratechery by Ben Thompson
There was also a rumor that the Justice Department was Targeting the Chrome Browser for breakup (or rather was planning to target Google Chrome). This is interesting and in a lot of ways similar to MSFT’s bundling of IE (fan antitrust lawsuit which they lost back in 2001)...
Chrome’s market share is ~70% and of course bundled with Google’s search engine (duh!). In a world where lets say this does happen and Google has to pay the “new” chrome owner TAC (similar to how they pay Apple for the same privilege on Safari) this could be disastrous for Google’s search ad business. I’m really unsure how this would look but there are two lenses from which I think this is interesting …
Google can’t really increase ad prices (its based on the customer’s bid)
Google customers love the results (I used DuckDuckGo but sometimes have to switch to Google for better results)
Does Google have enough loyalty that if this does indeed happen that customer will switch from whatever default search engine won the bid to Google? I mean it is likely that Google has enough $ to win the bid but then what happens to profitability? I’d be scared if I were Google. Also what happens to Chromebooks?
Technology and Government : How should the American government (or any government handle the lack of control?)
I’ve written before that technology is the next frontier of war. Stealing information is not a new thing. Whereas in the past one would have to “physically” steal information today one can just sit at home and try to break into the information they want to steal. This of course poses problems (no one likes information to be stolen) but more than that this poses real threats to a lot of people/entities. The premise of this article is that the government is vulnerable and they are without question. Most software used by the government is made by the private companies (hard to find a breakdown) but even if the government makes their own software the developers will rely on API’s, cloud computing, open source code/libraries -- all of which could have vulnerabilities. Modern governments should spend more funding on incentivizing private entities to find/fix bugs (not that they are not doing it already). The one interesting dynamic here is what if software starts getting made by other countries. Ben Evans has written about the end of the American internet but what happens if it is the end of American software? What happens when your OS is built by a private company in an unfavorable country? This problem is real and it is a NOW problem.
Tech Strategy : Twilio and Segment. What is the likely end game?
Twilio and Segment announced that Segment will be acquired by Twilio. So what the hell do they do? Segment is what is known as a “customer data platform”. The core use of segment is to capture any kind of activity from your apps/website and send that information to multiple other parties. You can read more what Segment does here.
Why is this good?
Twilio offers API’s that allow companies to send text messages/voice messages -- and also email with the 2018 Sendgrid (email API platform) acquisition. Twilio used to for most of the part be the dumb pipe (and an extremely important one at that) but with Segment its a pipe that has intelligence; lots of it.
Prior to this acquisition Twilio sat right at the end of the below value chain (simplified)
[iOS App (with segment API’s) ] → [Segment] → [ 3P destination that uses Twilio’s API] → [Twilio API’s]
This essentially means that Twilio only had visibility into what was being sent out (the message or voicemail or the email with Sendgrid) but they had no clue why. For example if you placed an order and that finally ended up in a marketing tool (such as Mailchimp) and you were sent a discount coupon, Twilio would know that you were sent a discount coupon but not why. So I think this play is purely to attack more of the marketing stack. This will likely be problematic for Segment’s partners (companies that Segment sends this data to) since it is likely that Twilio intends to play in the middle. Overall, I think this is a great move for Twilio who now has the option to become much more valuable than just being a data pipe (SMS, voice, email)
Tech Cycles : The Boom and Bust of tech
This Vimeo video on Gartner Hype cycles was super interesting. As we all know some technologies never cross the trough of disillusionment but yet others take extremely long to move into the slope of enlightenment for a variety of reasons - too early to market, complexity that will take very long. As Chris Dixon has written everything starts out looking like a toy; some things remain just that.
As an example, I know that most people are not bullish on Crypto, but I am one of those that are bullish. Money in and of itself is nothing but technology. Granted its “old” technology. In other words it isn’t technology as we envision it but it was a technological change (supported by the government). As more and more government’s start to see the value crypto currencies will no longer be a toy. That transition is 10-15 years away.
Where does tech responsibility end?
The recent fiasco about the NY Post article on Hunter Biden and Twitter’s handling of this there are some lessons to be learnt …
First, who held NY Post accountable so far for posting something that may or may not be factually verified? Isn’t it their responsibility to factually verify this story?
Every piece of content has the actual content and the delivery channel. So if I post a fake news link as a publication (reputed or not) is the delivery mechanism responsible for that? Isn’t that like saying that the post office was responsible for delivering hate mail to you?
There is a slight counter point here which is delivery is addressed but notwithstanding that point ..
As Ben Thompson has put it, the best story needs to have a viral channel. This could have been a NY Post article or me posting (here on Substack) and on the off chance that I get (un)lucky and my fake-news/false-news/unverified news link goes viral Twitter. Is Twitter responsible or me?
I truly think there are not two important things here but three (the content, the delivery channel, and the storyteller - and how controversial they are)
You need all three to go viral.
Imagine me posting some false-news, aint gonna go viral since I’m not a master storyteller
In the NY Post story case, the content and delivery mechanism were there but the storyteller was not. Facebook slowed the spread of this story v/s censoring it and by doing that they avoided being the storyteller
Twitter on the other hand my censoring it became the storyteller
Did you see that Twitter blocked the NY Post article? This is politically charged blah blah
So the story that went viral was not the story about Hunter Biden, but rather the story that Twitter took down the NY Post story.
I sympathize with Twitter in this case; it's a damned if you do and damned if you don't and every situation is different.
Twitter is adding friction to their product (in fact Casey Newton wrote about that just 2 days before the below article - The platforms spy a hack-and-leak)
Twitter, Responsibility, and Accountability – Stratechery by Ben Thompson
The platforms spy a hack-and-leak
Tech Turnarounds : New York Times is as much a Spotify as Spotify is
OK that title is a bit clickbait-y but this read is anything but. I’m sure you’ve read the news that newspapers are a dying industry, content is not worth paying for. The same content is everywhere. NYT completely turned things around and boasts 6.5MM subscribers.
NYT focused on content and technology
They realized that the boundary (ie a physical delivery route) is no longer an advantage but they also realized that not having one for the internet is an advantage for online subscribers
They were the first to, uh well, wean themselves off Facebook and take a stand
They invested in high quality journalism and to date has brilliant content
They made you want to pay for the content bundle (or at least targeted the kind of folks who don’t mind paying). Current subscription prices are $2/week!
Tech : Audio, Technology and the opportunity
This article from Matthew Ball on Audio’s opportunity has a lot of really interesting facts on how audio is measured (as a play on Spotify) and how royalties are paid. The royalty business is quite complicated so I won’t cover it here because as I promised you all, what I’ll cover here will be the tech! I highly recommend reading the article but audio’s opportunity is only coming of age
Online “live” concerts
Technology like the Apple AirPods
Social Audio experiences on Discord and Clubhouse
Podcasts
The number of avenues for voice is being enabled by technology.
Amazon, products, and platforms
Amazon announced their first “custom” delivery vehicle recently. This announcement is interesting for several reasons:
Amazon looked at options in the market and realized that nothing suited their needs for a delivery vehicle. Think of that for a second. The whole world has been using delivery vehicles for decades and Amazon found that it didn’t suit their needs!
Amazon thus productized their needs (with Rivian) and Amazon doesn’t spend so much on productizing unless they need to sell.
Amazon is too smart to sell an advantage to their competitor (and they haven’t announced that they will sell these
Rivian probably can sell these vehicles to other companies after 2022
The article also speaks about “helps create a sense of urgency in the industry to think big about embracing sustainable technology and solutions”
“whether you're a package delivery company, a logistics company, an ice cream manufacturer, or almost anyone else with vehicles on the road”
So this means they plan to sell this tech/vehicle
The interesting question is could Fedex ever have imagined to sell their “no-left” routing technology to anyone? My guess is no! (I could not find anything about it)
That being said, what is the product innovation?
We already know that Fedex prefers that no left-turns are made unless not avoidable and we know it saves a lot ...
Here is what this new vehicle offers
State-of-the-art sensor detection, a suite of highway and traffic assist technology, and a large windshield to enhance driver visibility.
Exterior cameras around the vehicle that are linked to a digital display inside the cabin, giving the driver a 360-degree view outside the vehicle.
Alexa integration for hands-free access to route information and the latest weather updates.
A strengthened door on the driver's side for additional protection.
A "dancefloor" inside the driver's cabin for easy movement inside the van.
Bright tail lights surrounding the rear of the vehicle to easily detect braking.
Three levels of shelving with a bulkhead door, which can easily be opened and closed for additional driver protection while on the road.
I’m sure Amazon has done the math on this and this will probably lead to significant savings (not just being an electric vehicle)
Tweets : Agree or disagree? I disagree …
Reads this week :
Nikhil Basu Trivedi write about the consumerization of healthcare which was a great read. I am half way through writing an article on tech for older people and I think its a huge market : The Consumerization of Healthcare
Why you should vote no on Prop 22 by Li Jin : Uber and Instacart don't represent Silicon Valley. Why we're voting “No” on Prop 22
Thank you for reading. Stay safe, be well! If you enjoyed reading this please consider sharing with a friend or two (or sign up here if you came across this or were forwarded this)