The Near Memo, Episode 13

Is Apple being paternalistic to not allow advertisers to provide ATT incentives? Can Yelp make their way with transactions? Amazon, amazing profits, amazing (& ruthless) efficiencies

The Near Memo, Episode 13

Referenced Articles


Greg: Welcome again.  I'm here as always with Mike and David.

Say hi everybody.

Mike:Hi everybody.

David: Hi everybody.

Greg: All right and as usual, we round up and discuss the week's most interesting stories that pertain to SMB, SAS, Google, and other things of societal and philosophical import.  Today we're going to be talking about IDFA paternalism and Amazon. And  Yelp's outlook.

I'm going to start off, I think, by talking about something that came out this week, which is,  Apple's,  expanded guidelines around what developers and publishers can and cannot do,  around the, the IDFA opt in the tracking opt in app tracking transparency. And one of the things that.

Was a little bit surprising is that they're denying publishers the ability to offer financial incentives to get people to opt in and they also are trying to get people to avoid the so-called dark paths,  tricking people.  That's definitely something I think we all agree that is not a good thing. the dark patterns business.

But I think that it was a little bit of surprising to see them say,  we're not going to allow anybody to offer any deals or discounts or points or financial incentives because surveys indicate that that's one of the primary things that people would go for in agreeing to opt in.

And I think that's sort of Apple overstepping a little bit and not treating people like adults.  you know. So I know David, you were in agreement with.

David: I totally agree. While I will not [personal] divulge information in exchange for currency or other perks,  it's a decision that should be left up to every individual.

And if a company is willing to fork over such a compelling offer, that people are willing to give that information up, I don't see how it's Apple's place to, to step in.  and I think the timing of it is interesting given all of the app store,  antitrust scrutiny that they're under in the EU in particular,  at the moment.

So, it seems like it's a transaction that should be made between the consumer and the business, and that Apple needs to be a neutral third party player, but we'll see if any,  lawyers or courts or commissions agree with that.

Mike: I would take a contrary position to it. I think that Apple would effectively be creating a new marketplace and commodifying something that's been commodified, but never been explicit that shouldn't ever be commodified.

It's like commodifying air or water. And I think that there are some things in our society that should be free from the marketplace. And I think that Apple's stance, while perhaps self-interested,   but also I think a statement that something shouldn't be commodified is an okay statement to make.

David: But you're okay with the private corporation arbitrating,  which items should or should not be commodified? To me that's the role of the government.

Mike: So, well, unfortunately though, in our society, we have abdicated that role from government to business.

And there is no, there is no moderation of that in any effective way. And so I don't have a problem with Apple saying, look, we just draw the line here as opposed to there. It’s their business,  their sandbox.

Greg: Let me clarify if I can, one thing with you, Mike. I think I know what you mean, but just, just in case people don't understand when you say they're creating a new marketplace;

In a sense, people would be offering monetary, placing a value on data on personal information, and that in fact creates a marketplace and then there would be some set of standards or benchmarks or whatever created.

And then people would effectively have a sense, and publishers would have the sense, that you can get people to opt in for $10 or a hundred dollars or whatever equivalent that's, that's what you're referring to. Right?

Mike: Exactly. And to me, it's like air, our privacy should be such a fundamentally protected aspect of our beings that there should never be a discussion about commodifying It

Greg: Well,

David: I feel like my location data, for example, in my browsing history should be my property and it should be up to me what value I placed on that?

Mike: I don't see property in the same way.

Greg: So there is an app Kili,  and a data marketplace. I mean, people have tried to create data marketplaces in the past.

This is, in theory, empowering to the consumer because the consumer can make money off of or choose to make money or not off of their personal data. And,  you know, my issue with this is just people need to understand the consequences of their decision. They just need to understand that if they're opting in, this is what it means in exchange for the points or the data.

Mike: I don't see it as an equal power relationship though. And so when you don't have an equal power relationship, you have Facebook on one side and individuals or groups of many, many individuals on the other. I don't think that there is both the awareness of how they use the data.  It's just that I believe that aspects of our society should be outside of financial consideration.

Otherwise everything becomes financially considered; it include privacy, health care,

David: Privacy is not a shared, privacy is not a shared asset though. Privacy is a personal asset.

Mike: It's a personal asset that should not be commodified.

It shouldn't have economic value associated with it and I can see why Apple wouldn't want to be the company that initiates that. What I'm saying, that they don't want to be the first company to create that reality, you know, it may happen but they're not gonna be the ones to make it so

Greg: start. I mean, I think, I think their position is “we don't want to allow people to circumvent the intention of this rule”. And  I share, Mike, your concern that some things should be outside of the sort of financial commodification commoditization, but I'm in agreement with David on this  particular case that people should be given the choice provided there's kind of informed consent.

That's my criteria, if people understand what they're getting into and they freely choose to do it, then I think that it would be okay in this particular, situation, because there is a, there is a kind of bell curve, you know, I mean, there's like people who don't care and are going to opt in, then there are people who are never going to opt in.

And then there's the middle, which is maybe 60%. And those people will opt in and serve in certain situations. And that's what the survey data seemed to indicate.

So let's move on. I mean, this is an interesting topic topic and we could go on about it, but let's move on to the second item, which is yours, David,  and Yelp. There was an article,  talking about how Yelp is turning to transactional services,  in an effort to sort of revive itself.

What are your thoughts on that?

David: Yes. I thought the article, which you shared, I think in our most recent newsletter from modern retail,  did an incredible job of encapsulating. Every problem that Yelp has right now.  Certainly Yelp is, as are many other publishers, at a huge disadvantage, due to,  Google, zero click search results and Google's adjustment of algorithms and all of those sorts of things.

I don't think any of us would disagree that they're at a disadvantage there, but they also haven't really innovated on the product side in quite a long time, if ever since they came out.  and they are now not only just competing with Google, but they're also competing with a whole range of reservation and pickup and delivery platforms that have each grown substantially,  and a consumer population that has now defaulted to those platforms,  due to COVID-19.

And so they're sort of getting pressed on, on a couple of different sides and meanwhile, they've built up virtually no Goodwill with the customers that they hope to recruit to their version of Open Table or Tock or,  anything like that. And they actually sold Eat 24, which was one of these platforms to grub hub a couple of years ago.

So they could have theoretically kept a foothold in this space, but chose not to. So,  I just think it's a really tough time for Yelp. And,  I thought that this article really did a great job of laying out, with some anecdotal data interviews with actual restaurateurs,  exactly the problems that Yelp is facing

Mike: and I've documented elsewhere the tremendous decline in traffic that Yelp has been experiencing since 2017 and not just a decline in traffic, but a dramatic decline in the rate of growth of their review corpus, which has largely flattened out.

Those are the two things that they need. And they're both heading down and to the right, NOT up and to the right.

Greg: So on that point about the review corpus, there was a study that we covered in the middle of the week that showed that Google now is just overwhelmingly dominant in terms of the volume of reviews that they have. And also it's the top,  single, putting aside Amazon, which is a product, you know, a different sort of different animal.

Google is just far and away dominates all the other platforms in terms of where consumers go to get review information. AndI think that it's very, very hard for Yelp to find a way out of this.

Mike: they gave up the restaurant industry unfortunately. It would have been one of the niches they could have succeeded if they'd focused on it almost exclusively, but they gave that up. TripAdvisors moved in. And Google is now moving in. So the one strength they had, they've lost.

David: AndI would say they also would have needed to take the side of restaurateurs in the way that Tock has in order to succeed in that industry.

Which they have never done. And,  seemingly never will do while Jeremy Stoppelman is running the show.


Greg: I consumers don't seem to really, I mean, we've talked about review fraud,  off and on periodically throughout the series, but consumers don't really seem to. Well, first of all, they don't know where, where the fraud is concentrated, but they don't really seem to see Yelp, which,...My belief is that Yelp could market itself as a more trustworthy review platform.

You know, “our reviews have more integrity” (notwithstanding the review filter thing.  and, you know, there's more direct spam and fraud out there) but they haven't done anything like that. I mean, do you think that that would even be viable for them at this point?

David: No.And not in the, not in the restaurant category where GrubHub and Postmates and Uber Eats all have validated, you know, they know if a customer has placed an order and it's been delivered, so they have a validated set of reviews them

Mike: and where Google gets so much review volume, that the percentage of spam in the restaurant industry in their review corpus is very low. It's typically as the FTC research pointed out, the spam was most frequent in low quality businesses. And when you explore Google deeply, it's typically in low quality, high churn businesses like home repairs, home services, locksmiths. So you see a massive amount of fake reviews there but much, much less than restaurants and everything else is sort of in between.

So I don't see it as a way out for Yelp. And I think that Google can knee cap them by making their review algorithm better pretty quickly. Or if they put curators on it, Google has solved the problem.

Greg: Yeah.

David: And that will be a good segue into our final segment, which is I see. And I know we all agree that one of Yelp's only ways out is likely through an acquisition by Amazon,  depending on how far Amazon wants to extend into the local business world. So with that, I'll turn it over to Mike for our third discussion.

Greg: but just a quick comment on that before we go.

Cause I know Mike is going to talk about some slightly different angles on this, but, you know, Amazon has had various local products throughout the years. they had the A9 ssearch engine and they had a thing called Blockview before Streetview, and they had an Amazon A9 Yellow Pages and they have Amazon home services.

So they have flirted with local services and the local space for a long time and in various ways, but they never committed to it. So it'll be interesting to see whether they see this as an opportunity.  that they want to commit to.

Mike: I think part of the issue there is that Google has largely been able to define what the local space is.

And I don't think most people, Amazon, Facebook, feel they can play by Google's rules. They're always going to be playing catch up if they'd play by those rules. And that's a problem.  but I think where the fight gets interesting will be in local product delivery, which I see Google leveraging their tremendous lead in local into products.

It's the first time where I feel like Google actually has a shot at the product search world. And I think that's a fascinating battle too. Coming up. Right?

Greg: Well, except that they killed Google Express, which was their local delivery service that was working with all these retailers, not small businesses, but you know, big brand retailers in an effort to compete with Amazon.

Mike: And Amazon's been in the news a lot lately, been in front of mind for me, obviously their quarter was incredible.  One of the interesting factoids in it was just the $7 billion generated from just advertising, which is a fascinating number. It's a huge number.  but I have been exploring Amazon's behaviors for a long time.

And a number of articles came to my attention over the last two or three weeks. And.  motivated me to write this article that I titled Amazon's Ruthless Efficiencies and how in those Amazon often cheats some of their low level workers or where they have tremendously difficult work rules, where they've been expanding their delivery infrastructure to, to the last mile, to building warehouses, to buying planes and renting ships all the way to China.

And then now most recently we reported on them talking about having drivers assemble furniture in the home and there was another interesting article in the New York times about a woman, an economist in the thirties who developed modeling with Keynes that indicated that monopolies by their nature effectively keep wages down. Which is a point of view of monopoly that I'd never quite ever thought about.

And when I looked at all of that together, I just thought this is just sums up the contradictions of American society.

We need efficient delivery. We need companies that have solved the distribution problems. Unfortunately, we live in a society that allows them to do so unchecked in terms of labor relations, unchecked in terms of incredible profits and low taxation, regulations, they're able to avoid road insurance.So they're able to avoid some of the social cost of what they do.

But we, as a society need it. And yet it's an unsustainable position. So if you go and read my article, you'll have the pleasure of seeing the first cartoon I've ever created,  with the help of Fiverr (no irony there  although it was many times five to get it done) but I thought it was a very, I had fun creating the cartoon that captured this sort of contradiction in one frame in New Yorker Style.

So hopefully they'll get, you know, get some “Enjoyment”, those are air quotes,  from the cartoon.

David: I did get a kick out of it, but I don't think it was your first cartoon. Didn't you commission a series for GMB or at the time, maybe even the local business center. It was that long ago

Mike: This is my first one in the New Yorker style.

David:I would say just wanted to get that point clarified

Greg: So, I mean, in one form or another, this question is like the impact of these giant global, internet companies on our lives and on competition and on jobs. I mean, these are the central questions that all these antitrust authorities are grappling with around the world.

Congress is having all of these hearings in one form or another on Section 230 and you know, this one and that one and the other one. And,  you know, it strikes me that there are really, I mean, we're not going to solve this in the last two minutes of this podcast, but these are just very, very, very difficult problems to solve.

And there are no easy solutions. And Americans seem to be addicted to low cost products that they can buy that are manufactured in China or elsewhere Southeast Asia, that have a negative environmental impact and so on and so forth. And it's just, it's, there's some really intractable cultural set of cultural knots here that are very difficult to untie, let alone the regulatory stuff. And I don’t know what to say about it.

Mike: And there's a certain dialectic though. What happens is these companies. Capitalism is very powerful and externalizing costs the cook, the environmental costs of shipping products from China, the human cost of having such low cost production.

All of those things, capitalism is very good at externalizing them. If, I know you're a reformer of capitalism, for it to be reformed, it has to internalize those costs so that they get built into the product costs.

Greg: Well, then that's the government. That's the role of government, obviously,

Mike: Obviously that's assuming it can be reformed.

I am not that sanguine about it, but we'll see. It will be the challenge of our lifetimes and our children's lifetime.

Greg: I mean, Yes, indeed. I mean one of the articles that,  I think David, you pointed out in the Washington Post was this sort of catalog of all the acquisitions that the big companies had made over the years.

And this is a system that works very, very well for everybody right now. I mean, entrepreneurs start companies with the expectation that, and VCs invest in them with the expectation that they'll be acquired by these big companies. These big companies have enormous amounts of money to pay the 10 X.  you know, prices that everybody wants,

Mike: Hold it 10 X is a dream for most.

Greg: Yeah. All right. Yeah. Okay. But I mean, that's the fantasy, right?

Mike: That's the fantasy and as I know the article for some lucky few, a reality,

Greg: But it's, but it's very functional. The whole ecosystem right now is very functional for everybody involved in it, except for companies that don't get acquired that are forced to try and continue competing, which is the position that Yelp is in, for example,

Mike: and for our environment,  the world and a few other minor sort of sidelights.

Greg: All right.  and do you have any solution David before we go,

David: I don't, on that note I think we should call it a week.

Greg: No, I should just mention we're getting a lot more subscribers. We're very excited,  for sure that you guys to see that activity happening. We'd love your feedback.

We'd love your feedback on this podcast and on the, on the articles we're doing and on the newsletter.  We're just trying to make this interesting and a place for discussion and, and to keep people apprised of what we think are the important things happening.

Mike: Where we can disagree and agree to disagree

Greg: as well.

Okay. All right, everybody have a great rest of your week and or upcoming week whenever you're listening to this.  And we'll see you next week for Episode 14.