Part 1 Video Starts 0:13 - Google takes astroturf SMB emails to next level & spams Congress for support in anti antitrust fight
Part 2 Video- Starts 7:39 - Amazon, breaking out advertising for the first time, did $31B in ads
Part 3 Video- Starts 13:54 - Apple’s Tap to Pay turns every recent iPhone into a credit card terminal
- Google Automates SMB Emails to Congress to Plead Antitrust Case
- Amazon's $31B Ads Biz
- Apple unveils Tap to Pay on iPhone tool for merchants
- Apple empowers businesses to accept contactless payments through Tap to Pay on iPhone
Transcript: Ep 51
Greg: Hello, welcome back to the near memo with David, Mike, and me on the topics of come in again, search social and commerce. Uh, and what's happened in the week, uh, previous that we find interesting or controversial or compelling in some way. And, um, this. Uh, as always, there's quite a few things going on, but we've chosen three very different, uh, topics.
Um, Google's lobbying of small businesses, uh, anti antitrust, lobbying of small businesses, uh, apple tap to pay and Amazon's, uh, $31 billion ad business. And what that means for the broader ecosystem. So we're going to start today with you, David. What Google has been doing with its small business customers to try and marshal support for or against, uh, congressional antitrust bills that are pending.
David: really, uh, they took their AstroTurf game to the next level. Um, I dunno if they're there, they're in some sort of play off with Facebook for, uh, you know, who, who can, who can try to co-op small businesses the most aggressively, but, um, essentially Google sent an email. This week that, uh, that I received, I think Mike received it as well.
Um, creating all of this, you know, fear and uncertainty around, oh, there's this bill in Congress and your Google products. Aren't gonna work as well together. And you're going to lose visibility for your business, et cetera. So it's a lot of the same stuff we've heard from them before. But this time they added the sort of one-click, auto-fill a form that contacts your legislator directly to tell them.
They could deal. This is to you and, um, you know,
Mike: tours with an se context factors, your congressperson plus your two senators. So it sends to
David: three emails, uh, all on an automated basis. And so, uh, you know, Greg, you, you described it as anti, uh, trust lobbying of small businesses. I would say, no, this is actually a sort of mechanical Turk using small businesses as the Turks to actually be.
Uh, with, with your own representative. So, I mean, it struck me as incredibly offensive, uh, just, you know, terrible behavior. Uh, I don't, you know, there's no other, I can't think of strong enough adjectives to describe the sort of upset feeling in my stomach. Uh, as I saw it come into my inbox, but it's probably going to work.
I mean, they're probably going to get tens of thousands of small businesses. Click the button. Um, and you know, I don't know how many emails Congress typically receives. I was surprised Google didn't just, you know, take it all the way to the red light and say, Hey, we're also gonna add on a Google, Google, duplex phone call to your legislators on top of this, uh, and automate, automate, clogging the lines of your congressional.
Uh, Congressional staffers with, with, uh, automated phone calls. Um, you know, I, I just don't know where to go with this. Any, any more deeply than just to say it's, it's really disgusting behavior. Um, I hope it doesn't work, but I think it probably will get a significant response. And, um, we'll see if that impacts Congress's decision making.
Mike: Being the Gonzo type that I am. I took the time to fill out the email with a different subject line than they had. And it wasn't as Google friendly and the block they did give me the ability to fill in. I also filled that in hoping to make the representative's day and let them understand that this was all just AstroTurf.
You know, AstroTurf, AstroTurf. I have no idea.
David: We also got a good suggestion from one of our Twitter followers to build an app that does this, but instead of sending messages to Congress, it sends it to GMB support and see how they like their own medicine.
Greg: Well, what, what goes on in these kinds of situations?
I mean, this is just Google duplicating. What other political groups do routine. Uh, both on the left and the right. They pre-populate emails. They pre-addressed them to the relevant, uh, uh, representatives or senators. And then you just it's like a one-click thing. And so what happens when these are received is that they just do kind of tallies of Yanay, right?
I mean, I think maybe there's some sentiment analysis going on beyond that, but there's no, almost no. Way that the, the, the messages themselves get to the actual senators or representatives, they, they have staffers who do these tallies and then they report kind of aggregate numbers basically. And ironically, what works much more effectively as a handwritten note, you know, because then you have some sense that people are actually, there is a human behind this.
I mean, everybody knows what's going on. Uh, the, the con Congress, people know that this is all astroturfing, whatever the source. And, um, I, I suspect in this case, it's going to be substantially disregarded, but Google will want to be able to point to numbers 150,000 small businesses objected to, you know, the open markets act or whatever it is.
Um, I think what's particularly representable here is Google's use of. Scare tactics. I believe the language was you could, I don't have it in front of me, but I believe they were also saying, uh, you, you could lose money, small business. Now it's not. I think they, they say it's going to impact your business adversely.
It's not just, you know, these tools may be inconvenient for you to use going forward, which is debatable. It's you're going to have it. You're going to see a financial impact from this. I think that was the implication or explicitly.
Mike: They also stated in the, on the lower down the page, it's going to impact privacy negatively and security negatively.
And they were going to have to share your information inappropriately with other companies. You know, I don't know how any of that is true, but
Greg: this is what's known in the law is the parade of horribles right. All the scenarios that are hypothetically possible. If the, if the action being, uh, discussed is undertaken and, um, It's it's, uh, you know, we had this whole, we had this whole debate on, uh, on Twitter MC this week about, this is something we should have talked about.
We had this whole debate on Twitter about, was Facebook evil or, and Google evil. Are they merely responding to the incentives in the market? You know, and I think this is, I think this is a case where it's not simply the market, but it's somebody making decisions about, you know, really manipulative, uh, Hardball decision-making going on.
You know, I mean, I know they see their financial results being potentially impacted, but this seems to be, you know, really self-conscious bad behavior, not just response to the incentives
Mike: in the market reflects their opinion of themselves as an important political player though, as opposed to just an important.
It says to me that they think that they have the right to influence society and the behaviors of society. I mean, we know they do this all the time, but this is such an overt sort of positioning of them as a savior of our culture and our economy. It's like gag me with a spoon. Yeah.
Greg: Same with same with Facebook, but maybe to a slightly less degree of.
Yeah. It's, you know, hubris, narcissist, corporate, narcissism, whatever you want to say, whatever you want to call it. Um, speaking of narcissists, we can shift over to the Jeff Bezos owned company, Amazon. That was a good segue. Wasn't it? That was pretty good. Yeah. Um, when you all saw the blue origin, uh, uh, press conference with, uh, William Shatner, he went up and he was, he was AUSTRAC, you know, when he went into.
Uh, captain Kirk, he comes down. I mean, the guy is like 90, early nineties, which is kind of remarkable. And he's talking about this, you know, hyperbolically sort of waxing effusively about how mind expanding this was, and it was an emotional thing. And then Bezos would comes into the picture and, you know, appropriately with the champagne just sort of takes over this.
Which is kind of reflective of his self-importance. Um, anyway, all right. Back to the topic at hand. So Amazon last week announced that they had, uh, um, annual ad revenue of 31 billion. Um, the revenue from Q4 I think was like 9.7 billion. And it's a really impressive number. The first time they'd been so clear about it, that they broken it out.
Um, But that compares to Google's 200 plus billion. I don't remember what the number was. It was closing it on to, to the, the revenue numbers was like 2 47, but the subset of that as advertising and then Facebook had about 115 billion. So Amazon, this, this was, this
David: was at all related to Facebook's announcement of its numbers a week before and sort of twisting the knife, uh, as Facebook was declining.
Okay. Well, now's the time to finally start breaking this out as. It's online
Greg: in our earnings report. Yeah, it's pretty, it's pretty impressive, but it's still quite far behind where Google and Facebook are. They're the number three player in the segment and they, and they stand E the growth, you know, growth had decelerated from Q1 to Q4.
Um, but they still stand to benefit and there's still a lot of growth opportunity for them. Um, you know, I think especially as the industry recognizes, that's where a lot of consumers start their product search. So I think with. You know, those numbers go up, but perhaps they won't get into the ballpark of, of Facebook and Google, but it's, it's a, you know, it's, it's an impressive, it's an impressive number.
I think. Um,
David: I certainly think they have the mind share of plenty of small businesses. I mean, you guys know, I work with the, um, sort of startup entrepreneurs of traditional businesses, not software companies, uh, as part of the prosper Portland. And I've had two people in the last, uh, cohorts say, I need help getting on Amazon as a seller.
And it's, you know, even before it sort of goes, you know, th th their, their sort of, uh, priority list prior to talking to me and sort of Instagram, Amazon, everything else. Um, and I think that that's, um, indicative of, you know, the, the, uh, the presence in the mind of consumers that Amazon has sort of created for itself as a default shopping destination.
Um, I mean, I personally am really eager to see a Shopify shop, a marketplace rollout, even farther. I think that does have real potential, especially, um, if they can get some of these logistics dialed in to more or less compete with prime, which you noted, Greg is now going up in price, uh, to a point where it may not be quite the bargain it has seen in the past.
Um, so I dunno, I'm optimistic that that they're going to be. E-commerce competitors to Amazon. But right now I think that they're still probably undervalued, uh, by the market, by marketers as the place where a lot of consumers are starting their, their journeys to buy a product.
Greg: Yeah. I mean, the numbers are all over the place, depending on the survey, but it's generally speaking north of 50% or very close to 50% starting.
Product search on Amazon versus versus Google, which is in the number two position. And I, and you know, the conventional wisdom has been, I mean, I'm not inside an agency, but the conventional wisdom has been that Amazon is benefiting it's ads are benefiting at the expense of Google more than Facebook, for example, but it's siphoning money away from Google.
Uh, because you know, these are direct response, average advertisers who, who think Amazon is going to be a sort of an, even a better environment. Then Google, uh, for those, for those ads, but Google, you know, had a great quarter and there didn't seem to be much evidence of them losing revenue to anybody. So it's, it's, it'll be interesting to see, you know, where, where the budget is coming from, if it's just increasing or if it's at the expense of somebody.
So. And you have to wonder where the
David: 10 billion of Facebook dollars went that they lost. Right. I mean, theoretically, those didn't operate. They went
Greg: somewhere. I think that's over the course of 20, 22. I thought, I thought that was for, I thought that was forward-looking that they stand to lose as much as, um, I could be wrong about that, but that was my reading of it.
But yes, that's, that's exactly right. Is, is where is that money going to go? Uh, You know, will it go back into search? Will it go to Amazon? Will it go to tick tock, for example, um, or snap, which recorded
David: re reported its first profitable, uh, was a quarter or a year,
Greg: quarter, quarter, quarter, first quarter. I think, I think it was the quarter.
Yeah. I mean, snap is really interesting because they've kind of been the red headed stepchild or whatever for a long time, but there a
David: lot of ginger friends just watch it.
Greg: Well, whatever the expression is, the, the neglected, offspring, whatever the, but, um, they're, they're, they are really out in front of a lot of, uh, AR innovation around social commerce.
And I think, you know, for them, it's not just experimental, it's actually happening. It's actually driving sales, it's driving brand uplift. And so they're, they're very, very interesting in the, in the realm of social commerce and how. Driving purchases, but using new technologies or relatively new technologies, like AR in that, in that scenario.
And speaking of new technologies, Mike Blumenthal, apple introduced a tap to pay this week. It was anticipated, but what's it all about? So
Mike: 2020 in July, they bought a company called Moby weave out of Montreal that had developed. Develop technology that allowed the newer I-phones to be used as a payment terminal without any hardware.
So you don't need a square box or a PayPal box attached in the port. You just take your new type card that David likes to use so much, and you're bumping up against an iPhone and you've made a payment. And it's just so interesting. It's very interesting to me because. And the, as David pointed out in the payment side of contactless payment, while apple is far and away, the most used and the.
There isn't a huge use case for continuing growth of that use because of the advent of smart cards. But now apple has figured out how to get on the other side of that equation to become a terminal, which at this point in 15.4, the next version of the operating system, it appears that there are API APIs available to this, which will allow companies like Stripe to push their payment system out into the real world, which is where I think that.
Really meets the road. I don't think the micro merchant aspect of it is all that important. I think it's interesting. And I think that having more micro merchants with the ability to process payments is interesting, but I think the real rubber in this is those API APIs replacing, even working with square and replacing the little dongle that square needs.
It positions Apple's iPhone. Processing device and sort of, they're going to use it in their store. So you'll be able to pay right? When you talk to an associate, rather than going to some, you know, other things, you can do it now. What they're using a physical
David: bike on a couple of. There isn't a cashier
Mike: at the apple store.
Right? And so they're pushing that the iPhone as this sort of cashier list solution to larger partners, which I think is interesting and it's timing is right. The, the purchase of that company was right. The, the COVID impact on contact with this payment has been, you know, up into the right and apple is going to insert themselves successfully and useful.
In the payment process. Now, whether they become payment processors themselves, at some point where they could get a cut for this, none of that's clear whether it's going to be available on the iPad. That's not clear, but it certainly positions the iPhone as a device, as a terminal in many situations. And I think it speaks to iPhone sales and the growth of this whole industry.
And they're going to be playing an interesting role.
Greg: If it's, if it's, if it's, um, built into the next O S release thigh it'll work on the iPad. I'm sure.
Mike: Yes, but they made no mention of it. And it does require like 10 X, like the 10 XR or above phone. So there's something about the secure enclave on the phone that's needed to support the privacy trends of the transaction.
So it doesn't work on any phone. So I don't know which I pads or if they all have that feature. No. But it positions apple well for the whole terminal business, right. For Shopify, which I think uses Stripe, um, et cetera. So I think it's a, it's an interesting play and that they're coming into it right at the right time.
I think I read that 50% of Americans have, are using contactless payment cards at this point 51%. And that's only going to grow. Interestingly in United States, a very low percentage of debit cards are contactless. Clearly that's going to grow as well.
David: It seems interesting to me as well, from a developing world standpoint of, you know, all of these micro merchants in stalls, in whatever marketplace around the world, just being able to, you know, have their phone as their, as their point of sale.
And, um, I don't, I haven't looked at the numbers in a long time. I'm sure you're, you're much more up on this, but it feels like this is where apple is more disadvantaged relative to Android. Then here in the. Uh, in the developing world. And if this is a way for them to sort of, you know, increase the adoption of the iPhone in markets where they've slowed or stopped growing, it seems like a huge, huge impact there potentially.
Mike: Yeah. Well, India is a good example of that. They did have actually have a great quarter in India this last quarter, first one in a long time, but there they've shifted manufacturing to India to get sort of favored positioning there, but their average price for a phone in India is $900 versus the average price.
You know, most other phones, about 200, 150, $200 and many come in cheaper. So you're absolutely right. I think it's a huge, it could be a huge play in that market for the direct let's just transact here. And that gives apple the opportunity to become a payment processor, which is another cut of every dollar and other subscription fee.
That could be very lucrative.
Greg: It, a number of things strike me. I mean, one, one of which is like this just adds sort of incrementally to the perception. And, and many Android users would disagree, but this adds incrementally to the perception that the iPhone is just a better phone than Android devices. You know, you've got privacy, you've got, you know, payments now and other features, um, that, that just seem to elevate it, uh, uh, versus the run of the mill Android phone.
What I was struck by was, um, you know, the peer to peer. Kind of dimensions for this, like the Venmo style transactions. I mean, I, I don't know, that's, that's not a market that apple is going to make any money off of, but it will reinforce potentially reinforce, you know, just like the, the blue bubble green bubble messaging, a cultural thing.
I mean, this may, this may be appealing to young people who do a lot of Venmo ING, you know, when they, when they go out to eat or whatever. There's a lot of peer to peer payments, uh, activity going on and this, and this may, uh, you know, may maybe play into that, uh, as.
Mike: I wouldn't mind it I'll turn it to Venmo.
I periodically in my Venmo stream, see every transaction from somebody I've done business with. Cause they don't know to shut off their, it changed their privacy settings. All of a sudden I'm looking at my plumber who doesn't want to be a business. He wants me to pay him. I'm seeing how much he paid his daughter, his wife this last week.
That's really TMI. Yeah. That's really
Greg: unfortunate. That's that's the big problem with Benbow. It's just the prep. The privacy dimension that's owned by PayPal.
Mike: Right? So apple cash
David: has of, of actually caring and putting privacy first and a lot of their, uh, their implementation of new technologies. So
Mike: I'd be curious to know with apple cash and apple cash, like surprise.
How much money just sits there before it gets transferred. Cause I never, you know, it comes in when I may do a credit card purchase. It comes in little bit here, a little bit there, but a little bit here, a little bit there by millions of people ends up being a lot of money sitting in Apple's bank.
Greg: Well, certainly they don't need, they don't need the cash.
They don't need the money that they don't. But, um, Uh, it's just another, it's just another, because they can kind of thing. There's probably some sort of FinTech master plan behind all this. Um, it's, it's, it's not entirely clear, but I think it's, I think it's an interesting development. It doesn't seem like something that, I mean, you, you point out that maybe third parties will take this into the enterprise or take this to the mass market, but it doesn't seem like an enterprise thing.
If you're, if you're a major retailer or a restaurant chain or any. In that category, you're going to have existing kind of hardware that you're invested in and associated
Mike: software. Although I could imagine a restaurant equipping people with a waitress, waitress, wait, people with phones and payment at the table with the phone.
Greg: Well, that's, that's what happens in Europe. You know, you don't, you, you just, they bring those devices. They're awful. Well, they bring the, they bring the little calculator, whatever the hell it is. You, you get the, you know, you get the receipt right there. Nobody goes up to a register. Uh, I mean, it's no, it's really no different than taking the card back to some central place, having them process it and bring bringing back the receipt.
But it's just the way that it's typically done. And so that is very plausible. What you said, Mike, about the, the sort of, um, another interesting enterprise scenario is this idea of, of, of, of the apple store kind of no cash wrap. Central place where you have to stand in line and, you know, having people wandering the store, being able to check you out on demand, I think is a really interesting thing, especially with what's going on with Amazon and it's kind of just walk out technology.
So that's, that's an, an enterprise retail use case that, that I think is pretty interesting and would be welcomed by a lot of customers, you know, can I help you buy something? I mean, that also might increase sales, right? Are you ready to buy? I can take care of you, right.
Mike: So, which does seem to be the case with apple pay.
Anyways, people spend more, you know, every ticket on apple pay is above. I mean, obviously it's a well-heeled clientele, but it appears to be even above average ticket for that, that group of people anyways, with a credit card, even apparently from what I read, I don't know that, but so that's,
Greg: that's pretty interesting because to me it's identical it's because it ultimately backs onto a credit card.
I just like it because it's faster than the credit. But it doesn't necessarily make me think, oh, I'm, you know, I'm not paying it all, which is the psychology, you know, removing there's no real payment happening here. Let me just get the extra thing that I have in my,
Mike: um, where I live is it's so erratic.
Right? Maybe they don't accept American express at this particular place or this place has it, but it's not working right. Portland
David: and it's very erratic. So that's, that's why I've still with the physical card. Yeah.
Greg: Every, every single grocery store that I shop at. Six of them takes, takes it. Now they all have terminals to take it.
David: I think only one of them takes it here. Then I think whole foods is the only one
Greg: that whole foods trader Joe's, Safeway, lucky, you know,
Mike: my favorite grocery store takes it, but they don't take American express, which is my preferred right. Apple pay attempt to pay cars. And so, so that's, that's part of the problem is American express.
Why, why is that? Why are you there? Well, because, because why American express charges more to the merchants? So many merchants don't like it because
Greg: why, why do you prefer American express to visa? For example?
Mike: Um, it just happened to be the cause I flew on Delta a lot. You have a loyalty card, you have a loyalty card, which I'm going to get rid of, but that's where it's been.
I'm not particularly loyal to American express, but just happens. That's where
Greg: it's, it's a very, not Mike Blumenthal kind of position. I think.
Mike: Right. Well, there was a period where since flying on Delta Delta's car,
David: I guess to explore that thread, Greg,
Greg: uh, so,
Mike: okay. I know I have a quarter million frequent flyer miles.
I don't know I'm going to do with them.
Greg: Well, you'll go somewhere at some point. I mean, this isn't going to last forever. I I'm sitting, I'm sitting on almost 600,000 frequent flyer miles. Wow. So it's, you know, enough, enough trips to Berlin and you, you start accruing. Um, okay. So we're, we're out of time.
Anybody want to say any last words before we adjourn for the week?
David: No, thanks for listening again. Uh, thanks to those of you who took our reader survey, uh, really has helped us, uh, sort of advance some of our ideas for where to focus in 2022. And we hope to follow up with a more formal survey, uh, hopefully equally brief, uh, here in the next week to 10 days.
So thanks, uh, for those of you who already participated and who will participate on.