Part 1 Video Starts 00:13: Biden Executive order reflect Executive branch cooperation to increase competitiveness in US
Part 2 Video- Starts 8:49: Does a declining Craiglist create an opening for NextDoor in classifieds?
Part 3 Video- Starts 15:33: Will consumers change behaviors when they know of increased surveillance?
Greg: Okay, welcome to near memo. Episode 24. Yeah. Um, where David, Mike and I, and Greg. Yes. Did Mike and I talk about it that the local and non-local news of the week, things that are interesting, compelling to us in one way or another, hopefully, interesting to you. Thanks for being here and the way we go, Mike Blumenthal.
Mike: So it struck me during the week was just the well. That article I wrote about the MTC followed up by the executive order from Biden, focusing on small business and workers in their sort of, uh, creating a number of executive orders across the executive branch to increase competition everything from making, hearing aids available over the counter, which Apple's going to love because AirPods are going to become hearing aids too.
Rolling out re or sort of resuscitate from the dead, the Robinson Patman act, which most of you are not familiar with. That was very familiar with, as I got my ass kicked by Walmart in the early nineties, it was supposed to, it was an act that was created during the during FTRs time. That was supposed to create fairness in distribution cost of savings could only be accrued due to.
Do to increase volume, but they're all sorts of special deals that Walmart was able to integrate. Anyways, they're resuscitating that act and it sounds like alcohol meat, packing, grocery industry. Uh, and so it it's interesting. That was, there was a good article in the guardian that sort of talked about how consolidated our food supply has become both groceries and alcohol.
Bush Anheuser homos, you know, Bush, I think owns 600 brands or something. Beer
Greg: eight AB InBev, I believe.
Mike: Yeah. And it, so it appears that at least in certain segments of our, of our society, the executive grants is coalescing behind the FTC and the justice department in an effort to increase competition. It was unusual to see.
The language about, you know, small businesses and workers, which has not been the standard language from Democrats since at least Clinton and the nineties. And it was surprising to see, uh, Biden handing the pen over to the FTC chair. So it, at least on the side of the executive grants, there seems to be a commonality of, and pulling on the same, or which is critical part of this succeeding.
Obviously the judicial board. It's still working under different rules. And the legislative branch has sort of has these six laws that have to pass. But if some of those laws passed, it would appear that this thing might have legs. It was just shocking to me after so many years of watching the sort of decay, you know what Biden called the experiment of art of allowing large businesses, free reign fail.
It's shocking to see that the tides are too.
Greg: Well, hopefully, hopefully that's true. I mean, I think that, um, you know, one of the big challenges is will the agencies be able to carry out these priorities? They're not uniformly, you know, they're, they're, there's often a mix of people, you know, that the FTC has two Republicans and three Democrats, which, who can overrule the Republicans.
But there's, there's, there's gotta be some friction in, in rolling this out, but I agree that it's a pretty, it's a pretty ambitious order. And. Striking and it's and its language and, and sort of, uh, explicitness of, of, of some of that discussion. Then also we have the courts, unfortunately, that are going to block some of the things that these agencies try to do.
I mean, recall the recent decision, uh, the name escapes me where the FTC was told it can't impose monetary damages. On on, uh, on companies, it can only, you know, use equitable relief, meaning injunctions, telling people to stop that behavior. But this is a major enforcement tool that was taken away from the FTC.
And, um, you know, so we're going to face a hostile judiciary, lots and lots. Of, uh, Republican appointees who feel who will, who will say, oh, the agency has overreached its authority. Only Congress can do this kind of thing. So anticipate those kinds of legal challenges and then those kinds of decisions, hopefully some of it will get done.
Mike: think that the Democrats are unanimous either. There was a conversation about a hearing other, uh, hearing the other day where the Democrat from California, opposed most of these antitrust laws. Yeah. You talking
Greg: about Don Feinstein or the new, the new.
Mike: I don't know if it was in there. I think it was in the house, uh, where she was receiving a lot of money from tech company.
So there's a lot of conflict within the Democrats as well. I don't think it's a done deal, but I think it's fascinating that from the president and much of the executive branch there's general agreement, the FTC has rearranged all three rules to facilitate this. And I think if a couple of those laws pass Congress, You you in some industries.
And I also thought it was interesting that they were targeting farmers and agriculture and small businesses, which are groups that have historically not been democratic. And there isn't this some possibility of a realignment of American politics. If those groups find this of value to them, which it appears like they might
Greg: not always have, especially as we know from the vaccine, uh, situation.
Mike: True, but largely. American politics aligns around economic interests of strong capitalist groups. And, uh, one would one could think that possibly that could happen with this. Cause this is going to realign. Who's paying for whom in Congress, right? I mean, if the tech companies don't get what they want, they're going to shift their support someplace else.
And other companies will move in. I don't know it it's going to be exciting, whatever happens. Yeah. I, uh, I think I was just fascinated that Biden took such aggressive
Greg: stance. I think, I think it was actually after you saw your article that he wrote. Right, right.
David: I was just gonna say that the, uh, the, uh, alcoholics yeah.
InBev is kind of interesting. So I've, you know, just as a craft, beer aficionados have been sort of tangentially following it and they've bought, um, InBev has bought a big brewery here in Oregon, 10 barrel, uh, down in bend, as well as, um, hot valley and Elysian and, and, uh, uh, Ballis point was bought by constellation, which owns Corona.
Uh, this was all four or five years. Yeah. Uh, the interesting thing is I, I think that the biggest threat from, uh, from an alcohol in the alcohol industry, uh, that InBev is feeling is that okay, craft beer is simply a better product and is preferred by consumers. So it's actually not such a big deal that they're buying these sort of macro micro breweries, the bigger problems.
For consumers relative to competition and, you know, shutting out all these craft breweries is they're also buying distributors and alcohol being such a regulated industry. The breweries do not have the ability to go direct to consumer. I think where this may play a L you know, might have the potential to set a precedent around.
Some of the companies that we talk about on this podcast is, is Amazon, which does largely controlled distribution, as well as making its own. Um, and so if there is a sort of tie into the themes that we talk about in terms of tech, I think that Amazon might be the most at risk from the analogy of, of increasing competition in the alcohol
Well, w what struck me about what you just said is that the, that the craft breweries are the startups that would be competitors and the, and, you know, ABN Bev is, you know, is Google or Facebook buying the smaller startup to preempt the competition or the co-op the competition,
Essentially. Yeah. And also getting the benefits of scale. I mean, brewing largely has its benefits from massive scale to some extent. I mean, obviously there's issues of customer and tastes, but
David: there's only so many hops of a particular strain. So yeah, it's that the scaling issue is a little harder in brewing than in other industries.
Greg: Okay. So, um, just as my dog is starting to bark, it's, it's my, uh, it's my turn to talk. Um, in fact, David, why don't you, why don't you go, right. She's going to be barking and hopefully she'll come down here. Sure thing.
David: He heard, she heard craft beer and got really excited. Um, So I wanted to talk about an article.
You, you brought up Greg in, in, uh, one of the newsletters earlier this week around, I think it was called the aim group, a consulting firm that did this big analysis of Craigslist revenue. Uh, over the last, I think it was 15 or 20 years and the revenues for Craigslist are off 50% from their peak in 2018 at just over a billion dollars this year, they were, uh, I think, or this past year they were at 550 million, something like that.
Um, and. It's he, you know, as you highlighted Greg there's Craig, Craig Newmark is not in business to make money. Uh he's he's in business to kind of do his thing, uh, and the company is in business to do their thing. And they're sort of, uh, one of the few sort of holdovers from the, I don't even know if you'd call it a web one dot O aesthetic, but it's just, that again, they're sort of, uh, lovingly curmudgeonly.
Uh, antipathy towards good user experience. And, um, but nonetheless they've survived. They've built this big audience that, uh, this report suggests maybe, um, you know, not, not what it once was strikes me that potentially Google is, is no longer rewarding Craigslist with top search positions as better user experiences and better funded companies in some of the verticals.
Craigslist plays, whether it's, you know, uh, real estate with sites like Zillow and Redfin or, um, classified ads for services like Thumbtack potentially even Yelp. Um, it just strikes me that Craigslist has not, you know, sort of evolved in the same way that a lot of their competitors have. And I think that one of the real opportunities, I mean, I think most of us, at least, I don't know about you guys, but in my generation, You know, we, we basically, if we needed to find an apartment Craigslist was the default.
Um, and housing I think is a real, um, you know, probably still a very strong category for them. I think it's a huge opportunity for next door, uh, which you've talked about many times, Greg, in, in previous near memos, uh, to step into this classifieds. Um, that this lack of evolved Craigslist has sort of created the problem is, and, and I, I wonder if next door is going to see this as, as a real opportunity that the problem is you have to have an address in the neighborhood that you're joining in next door.
And it strikes me that the real opportunity for housing is people trying to move into a neighborhood. So I wonder if next door might have. You know, to some sort of guest guests, zip code plan or something like that to take advantage of this major opportunity, particularly around housing classifieds, as Craigslist sort of fades into the sunset.
Mike: just a quick question though, of, of sort of logic of this research. It's about income and Craigslist only charges in a very limited number of categories. Do we know that
David: traffic is jobs in real estate? I think are the two categories.
Greg: Exactly. Which is why it's so shocking that they were making a billion dollars in 2018.
That number is just
Mike: astonishing. Does this correlate with traffic declines and other categories? I mean, like, you know, my kids need a used bicycle or whatever, or they needed to sell something. Craig, this is still a common and apartments still are very common area for them to pursue
Greg: well, some, uh, some, some of this is clearly the coronavirus right?
Dependent. Um, but so we'll have to see what happens, but, but I mean, I think over time, Craigslist has seen some erosion obviously of its audience as well
David: in a lot of people moving out of cities and into rural areas. I don't think the pandemic has effect should have affected the two categories that Craigslist makes most of his money. That's true.
Greg: Well, so, so the, one of the, so Peter's Allmand is the guy that runs in aim group, uh, somebody that. Knew and have known, but not recently talked to, but I mean, he's been following this for quite a long time and classifies is their area of specialty.
And, uh, he, he points out that Facebook marketplaces is the chief, uh, competitor. According to them, I do agree that this is one of the big opportunities for, um, next door may be more than advertising. Um, and I do think that I agree with what you said that next door is going to expand geographically. Uh they're they're going to, they're going to enlarge this, the circles for people because they have to, because they have to create more reach, um, you know, and, and so can they do it, will they do it unclear, but I think that it's a major opportunity for them class.
David: Extra has going forward is that there's some there there's not nearly the same degree of anonymity that, that, um, you know, potential landlords have to deal with on Craigslist. You don't really know, you know, who's replying to a given post or
Greg: right. The psychotic killer problem.
David: Right. Right. Exactly. At least on next door.
There's a little bit of a sense of, okay, they've been on next door X number of years. They've commented. 52 posts. They have whatever
Mike: the psychotic neighbor problem,
Greg: which is a very real problem, as you know,
David: but there isn't, there is a little bit more, uh, sort of trust factor that next door has built up. I think even potentially relative to Facebook, um, that puts it in a better position.
Uh, in terms of the, I don't know, the sort of cognitive hurdle that you have to jump through to actually put something on Craigslist.
Greg: Yeah. I mean, think, think about, so Nick, I don't know what, you know, next door put out its equivalent. I don't think it put out an, uh, uh, uh, the, the pre IPO S one. I don't think they released one of those.
Maybe there, I think there was a deck that circulated that was talking about the revenues and so on and so forth. But I think they, I think they've got something just north of a hundred million in revenue, if I'm, if that's an from memory. So it may be in there. But, but, you know, Craigslist shows you in just to, if you just monetize two categories with enough scale, what the revenue opportunity is.
And this to me seems to be a stronger opportunity than SMB advertising. You know, I mean, I think you could sell enhanced profiles and tools and services. S and I think it's going to be a harder sell to get them into ads all at Google. And I think classifieds is a much better, safer bet. Next door. We'll see if they can, if they can do it.
I don't, I, I, I don't think there was any, somebody was telling me about it. I haven't seen the slides, but I don't think there was any discussion of classifieds as a monetization scenario in that, in that, uh, in that investor deck. But I didn't see a directory, so. Okay. Now, speaking of trust, Which is my segue.
So one of the things, there were a lot of items this week that we're putting in. Interesting.
Mike: I think if you have to announce that it's a segue, it's probably not strong enough. Okay.
Greg: All right. Well coming again, nobody expects the Spanish inquisition. Um, uh, all right. You've thrown me off nearby. So, uh, the, the, one of the things that caught, caught my eye this week, uh, that we, that I read about, uh, I guess it was Wednesday, maybe it was Monday was the New York, the new biometrics law that went into effect.
So it was passed in January, went into effect in July. And basically the law says, uh, if you're doing anything sort of to collect biometric related data, which is facial recognition or other things, you know, I don't know what that would include, you know, fingerprints or voice or anything. That's sort of biometric, even though people aren't getting things.
Um, you can not sell that data to anybody. There's a hard moratorium on it. Um, on transferring that data. Um, there's, there's also a requirement that you have to post signage prominently at the entrances of the building. I believe that says we're collecting, you know, we're doing facial recognition here, for example, or we've got surveillance or something.
And, you know, of course these, these notes closed circuit, TV surveillance notifications have been around for a long time, but, but I'm, I'm interested in this because it's something that people are uncomfortable with from fundamentally, uh, police and financial institutions are exempted, but it's something that people are fundamentally uncomfortable with, but will their behavior change in any way?
And is the law through, it's sort of what I characterize as public shame. Trying to dissuade businesses from, from, from adopting, you know, for example, facial recognition. So these are sort of the interesting questions to me. What do you, what do you guys think about this?
Mike: I mean, it's hard for me to imagine it functioning at a city level, as opposed to.
State or national level. So there's that it's like if you have a business, if you're a multi location chain, it's hard to have different policies in place to the next. So I can't imagine business likes it very much because of that. I wonder if the notice, if it's prominent enough would act like the notice on your iPhone.
Gee, Facebook wants to check here.
Greg: Well, that's what I'm wondering. That's precisely what I'm wondering. Would you stop at the door? Let's say you're going into a retailer, right? There's some, some, some retail store to shop, you know, the north face or some, you know, whatever REI, someplace like that. Um, and, or, or, or grocery store for that matter.
And, and it says on the front door, we're using facial recognition technology. We're going to capture your image. Would that give you pause or cause you to shop somewhere else? That's the interesting question.
David: For an hour to get to a store and they've got that on there. Am I going to eat that hour round trip? Um, we're just going to pull a
Mike: bandana up over your face and drag it down. COVID
Greg: works, right? I suppose.
David: Um, no, I just, you know, the public shaming is yes, it will probably dissuade some people in some situations, but I think your earlier point.
You know, how much do people really care about this? I think I, you know, CCTV has been everywhere forever and it's just sort of a fact of life. Yeah, exactly. Um, but I think it's even worse. Certain other countries abroad brought in the UK. It seems like their cameras are absolutely everywhere, uh, at least in greater London.
Um, so I, I don't know that it's going to have a huge impact. I think, I guess I'm generally supportive of legislation and policies that. Society more aware of all the data that's getting collected on them. Um, but in this particular case, I don't know that it's going to be hugely impactful.
Mike: So does it require disclosure of how they're using the facial recognition data?
Greg: not in the, not in the signage. I don't think everybody
Mike: at this point. I mean, you, look, you see there, you know, we're doing facial recognition as a line on the door. I mean, without context, I don't imagine you'd make, it would change behavior. People have been using their apps for awhile. They've heard about tracking.
They know they're being tracked. So now that apple is asking, it becomes an issue. I think it's similar with this. I think most people aren't aware of the implications of, of facial recognition broadly. And I think as that awareness increases, the response will become more, more.
Greg: Some, some municipalities are outlying it or trying to outlaw it, um, because of the potential for abuse, I guess.
Um, but, but this, this sort of race is a larger point, which is interesting to me, um, which is the, the way in which people are kind of reconciled to using these tools and capabilities or, or, or complying with policies that they fundamentally oppose or make them uncomfortable. And so the, the, the, uh, Uh, w I think at some point in the past, we talked about the Edelman trust barometer that found people fundamentally trust.
And this is a slightly different issue. This is not privacy. Exactly people, fundamentally trust, uh, traditional media print, broadcast radio, and they distrust digital media, but the audience is in the exact opposite place. People are using digital media data. They're not using traditional media quite as much.
And so they're using these tools with a corresponding lack of trust, which is also part of the privacy piece. So one of the reasons why people don't trust Facebook or don't trust Google or Amazon to whatever degree is because of the perception that these companies are taking their data without really their knowledge terribly or their consent and doing things with it that they don't really understand.
And so it's a very curious. Situation where we're dependent upon all these platforms and tools in our daily lives, but, but we're less and less trusting of the more and more ambivalent about them. And it's, it's, I think it's a kind of a major problem. Um, but we don't see, but nobody seems to be doing anything about it.
Nobody has quit Facebook really, in terms of, uh, uh, you know, sort of mass,
Mike: uh, a lot of people have clicked. No, don't try it.
Greg: Yes, because it's so simple. And so it's just very intuitively understanding and they give you a tool, right? They give you
Mike: this a third party benefits from that. In other words, apple is benefiting from offering you that choice and gaining trust while increasing distrust of Facebook.
So it's a third party that's benefiting. So there's sort of. Yeah. I mean, it's just me interacting with Facebook. It's very difficult for me to feel like I have any power, but if it's apple giving me the choice to kick Facebook in the shins, that seems a little easier to do. And I wonder if there's no analogy to facial recognition in that power relationship.
I mean, I choose to use apple exclusively because I use apple TV. I use apple phones because I don't want people snooping at me all
Greg: the time. This is a very important point, essentially. Another way to look at what you're saying is that unless you have a surrogate acting on your behalf, that's of equivalent power in the market, you really don't, there's really no recourse for you.
So, you know, the notion that the individual consumers. You know, the burden has been placed on the consumer to take total control of their privacy historically. And this is really the first opportunity that people have, uh, have, uh, have some sort of powerful company in their corner, even though the Apple's motives are clearly mixed.
And so this is, this is sort of bust the myth of, you know, individual choice in a certain way. Right.
Mike: I agree. I mean, it feels powerless frequently and that's, and so in that powerlessness, you end up continuing to just do what's good. Well,
Greg: I mean, on the other end of the spectrum is China, right? With its, with its total surveillance of its population.
And, you know, we're sort of creeping toward that, even though these tools are, are being rolled out for business purposes, extensively, there's a way in which they then contribute to this sort of larger surveillance. Uh, phenomenon that, that exists in China as the most extreme example.
Mike: So, you know, is it be interesting?
It's hard to assess is centralized surveillance worse than Google, apple, Facebook, Amazon, Samsung, Microsoft surveillance, you know, is it, how do you, how do you, how do you put these on the same scale and assess them? One is worse than the other. I mean, there's. Pretty invasive and they're all. And it may be that it's worse to have five companies or 10 companies or 20 companies.
Greg: So private industry versus the government.
Mike: Right? Aye, aye. Um, possibly in this, I'm not saying I know the answer to this question, but it, it, it's hard to, it's hard to even judge the crest. So much of it goes on that we don't know.
Greg: Well, you, you you've seen all the movies, right? I watched all the Jason Bourne movies where they, you know, they're trying to track them down and it's like, show me that all the CCTV, show me all the cut me out of the cell phone records, get me, you know, just this sort of perception of, of, of a huge instantaneously available information in
At least in all the police procedurals about England. It's like every block they can follow people through like excepted.
Greg: No invariably, they don't, despite the prevalence of CCTV and variably, they don't have the footage. Right. That's what happens in the show. It's like, is there, what about CCTP now? We don't have it, you know, Stu to enable the drama to sort of build and create uncertainty.
Mike: um, back to David's, uh, handkerchief and hat.
Greg: Okay. Yeah, exactly. So, um, on that dystopian note, I think we're at the end of our end of our time today, but. Exactly. I say, say it with a smile. Um, so, uh, thank you again for listening, you know, subscribe to the blog, give us feedback, come back again. Um, we love you.
Uh, so have
David: a great weekend or week, depending on when you're listening,
Greg: right. Or if you're in space and if you're a space tourist now enjoy that experience. Okay.