iPad turns 10, Apple's first quarter earnings, and what Google is doing with the Search design

Stories discussed this week: Former Windows chief reveals Microsoft's reaction to the iPad … Apple's iPad changed the tablet game 10 years ago today … The iPad is still finding its place ten years in Microsoft's Surface Pro X is the world's most extravagant ... Apple's iPhone 11 and AirPods help company hit a new … Apple reportedly working on tracking tags, high ... Google's ads just look like search results now How much longer will we trust Google's search results? Google is backtracking on its controversial desktop search … Google aims to unify its workplace tools and messaging apps into one service The Scroll subscription service is an ingenious web technology hack Scroll makes hundreds of websites ad-free for $5 per month … Pentagram designed a smart speaker that’s like HitClips for kids Here’s what you need to watch the Super Bowl in 4K HDR WarnerMedia takes $1.2 billion revenue hit in hopes that HBO ... AT&T tried to buy out the streaming wars — and customers are ... Comcast is raising rates for cable subscribers as it moves ... Samsung Galaxy Z Flip rumor roundup: everything we think … Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Nilay Patel?

  This weekend on Vergecast, we talk about Apple earnings, the iPad at 10, what Google is doing with the design of search, and a lot on the streaming wars. That's coming up now on the Vergecast.

• 0:09Speaker 01

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• 0:36Speaker 02

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• 1:05Nilay Patel?

  Now we can start.

• 1:10Nilay Patel?

  Hello and welcome to the Vergecast, the flagship podcast of web technologies. I feel like that's what it's always been. We just haven't, it's not a great marketing line. The last defenders of the open web. I'm your friend, Neelai. Paul Miller is here. Hello. Dieter Bohn is here.

• 1:25Speaker 03

  I'm that guy who you know you've met and you know his face, but you can't remember his name. That's who I am today.

• 1:31Nilay Patel?

  That's rough, Dieter. I want you to, we gotta, we're gonna pump you up. Figure out how.

• 1:36Speaker 03

  No, it's great to be that guy. It's like everyone knows you, but no one really knows you. You're mysterious.

• 1:41Nilay Patel?

  I don't, I haven't really experienced that in my life. I'm the person who vaguely remembers everyone, but can't remember their name. So I'm just full of gambits that are like, how do I get you to say your name?

• 1:54Speaker 03

  There is a Dieter Bohn doppelganger working in an Apple store in like 10 cities around the country and people will like just DM me about it randomly all the time.

• 2:01Nilay Patel?

  Well, cause you're, cause your face is in malls across the country.

• 2:04Speaker 03

  That's true. My face is in malls.

• 2:06Nilay Patel?

  If you don't know this, Vox Media signed a deal to syndicate our reviews videos to like a shopping mall TV network, which is great. I mean, I love it. I just like the concept of that is great. Again, you know, eight years ago, we had zero million uniques and now Dieter's faces in shopping malls across the country. But it means that we often get pictures of Dieter's face being like, here's a Chromebook in a shopping mall.

• 2:31Speaker 03

  No, it's in the shopping mall in my hometown. And so like, people that I literally haven't talked to in high school will just hit me up and be like, what the hell, man? Sorry.

• 2:42Nilay Patel?

  That's amazing. You know, I told you my great hope for AR glasses. I decided that AR glasses are fundamentally a terrifying technology.

• 2:50Speaker 03

  Yeah.

• 2:51Nilay Patel?

  But I want them. Because I like cool.

• 2:55Speaker 03

  So that you can see my face everywhere.

• 2:56Speaker 04

  Yeah, Dieter's face in all malls.

• 2:58Nilay Patel?

  Yeah. It's a great, yeah, the what AR glasses platform is going to be open enough for me to install that plugin into it. No, I want to be able to have glasses that show me everybody's name. That's it.

• 3:09Speaker 03

  Oh, yeah.

• 3:10Nilay Patel?

  It's a killer app for AR glasses. It's just reminding, like telling you who people are. So you don't seem like a jerk. To enable that, the one thing I want, you need a massive database of people's faces and names, which seems extremely problematic.

• 3:26Speaker 03

  Open real time facial recognition.

• 3:28Nilay Patel?

  Yeah, open real time. Like, okay, that seems like I'll get some benefit out of it. But every villain, like literally every supervillain in the world will get more benefit out of it than me.

• 3:38Speaker 03

  In Moscow, the police department just launched real time facial recognition across the city. So.

• 3:43Nilay Patel?

  Does everybody know each other's name? I mean, at least give the people that. You're going to surveil them to death.

• 3:48Speaker 04

  Like, there's like a push notification. The police are like, found this person, right?

• 3:52Nilay Patel?

  Yeah.

• 3:52Speaker 04

  That's my understanding.

• 3:53Nilay Patel?

  Like everyone's phone, like an Amber Alert?

• 3:55Speaker 04

  To the police. That we found this person because Neel I looked at them with his AR glasses. No, no, no. You meet the person, you meet them, they introduce themselves. At that point, your glasses and your glasses only learn their name and it is not shared, it's not exfiltrated.

• 4:13Nilay Patel?

  Yeah, but then you would need like, can you real quick grow a mustache and put on glasses? So that the next time I see you, the model is accurate. That's the problem.

• 4:23Nilay Patel?

  Speaking of people who've grown a beard, Neil Young. See, I did. I was gonna do a searching for a heart of gold thing here. That was what I was going for. So it is, I just wanted to talk about this for two minutes before we talk about all the news. We do an interview show every week. This week are the interview publishers with Neil Young. Two things I'll say. One, I had like half forgotten, because we record the interviews like weeks ahead of time. Yeah. Especially around the holidays and CS. Like, we just have lots of them banked up. That's why we've been doing it a couple of weeks lately. Because we want to be current, but we still, we don't want to overload people. So it's a hard balance. So I'd like half forgotten that Neil Young had yelled at me for an hour.

• 5:06Nilay Patel?

  I remember when it happened. Like, if you listen to that episode, I'm like laughing the whole time because Andrew, our producer, is like in the next room. And I was just staring at him the whole time. I mean, like, is this currently happening? Like, he was just like taken aback. Was he yelling or was he yelling at you? It's unclear from the audio. This is, well, this is the other thing I want to point out. Like, the problem with being the interviewer is that you have to be somewhat dumber than you normally are, because you need the other person to talk. Sure. So I'd read his book. I know what he wants to say, but I need to get him to say it to me because it's an interview. Sure, yeah. So a lot of my questions were like, how does sound quality work? Which, if you listen to the Vergecast, you know that I have extremely set opinions about sound quality.

• 5:48Nilay Patel?

  So a lot of my questions were just like, do you think MacBooks are bad? I know what he. I knew, I knew what he was gonna say. So there's like, just like the little play acting component, and it's just, he kept getting madder and madder. I, I was just trying to calibrate, like, where do I, where do I agree with you? Here's what I will say about that interview, having said all of that. Right, I want to be respectful to the guests, want to let, he's Neil Young. He's, right, I want to be respectful to, literally a legend of the culture. But, he is extremely wrong. And I just want to put that out there. I want the audience to know, that I think Neil Young's idea, about analog audio always being superior to digital audio, is fundamentally wrong. Like, just on its face wrong. I get what

• 6:33Nilay Patel?

  he's saying about sampling, and, you know, quantization errors, not getting a hold of it, I buy all that, I understand it. But when he's like, a cassette tape, sounds better than any digital file, because you can feel it. I'm like, no it doesn't. It just does not, Neil Young. But, he was so mad at me, that I, I didn't, I didn't have an opportunity, to say that and get that across. And also, I don't, I don't think that he would have, um, listened, I think is the word. But I think, what he was getting at, what he continues to get at, and what I do believe, is that we often, especially in audio, because you

• 7:15Nilay Patel?

  cannot, there's no objective way for two people to compare it, the way that, I can show you a picture, or look at a screen, uh, you just cannot compare hearing that way, it just doesn't exist. He's not wrong that we often trade convenience for quality. I just don't think that, like, cassette singles represented any sort of peak audio quality. And, you know, like vinyl has actually a pretty low dynamic range, like, it's a physical medium that degrades over time, and you can only cut the grooves so low, and like, um, actually, the, you know, if you ever plugged the wrong thing into the phono input on a amp, like, it sounds all weird. Yeah. It's because, the dynamic range of a record is modified, so it can be cut physically into a groove, and then it goes through something

• 7:58Nilay Patel?

  called the RIA double A curve, inside the phono amp, in the phono stage, to come back to a normal one. Like, that's a lot of analog processing and compensation for the limits of the medium. You do that with digital too, you just do it in a different way. So, yeah. Anyway, it was very entertaining, I'm glad everyone had a good time. Many people have tweeted me about it. You know, I think a good, a sign of a good interview is, like, when half the people are like, Neil Young is right, and then half the people are like, you are a dummy.

• 8:22Nilay Patel?

  Sure, like, I'm glad we're all talking about sound quality again. For the record, I do not think the Mac Pro has Fisher Price audio quality. I think that's what you put in, what you get out. And I think the, on, like, Billie Eilish just won every Grammy, I think. It was every single one. Unprecedented achievement. But she, she like, made that music in her bedroom using consumer tools and Logic X. Like, you know, there's, there's good and bad. Neil doesn't agree with me.

• 8:50Speaker 03

  It's okay.

• 8:52Nilay Patel?

  But it's like amazing to wake up on like Tuesday morning and be like, oh, the Neil Young interview hit. Woo, here we go. All right, speaking of Apple, lots of Apple news this week. Do you want to start with history or you want to start with earnings?

• 9:05Speaker 03

  Oh, we should just start with earnings real quick.

• 9:07Nilay Patel?

  Apple made all the money.

• 9:08Speaker 03

  They did make all of the money.

• 9:10Nilay Patel?

  I would say there's two things. I mean, they set a record, the iPhone 11 and 11 Pro did really well. Sales records, numbers. I think the big news for me is that their wearables category is soaring.

• 9:23Speaker 03

  Yep.

• 9:24Nilay Patel?

  So the Apple Watch, AirPods are obviously a hit. The services line was a little down.

• 9:30Speaker 03

  That was the news to me, is you would expect after spending literally the entire year not being able to form a complete sentence without using the word services, that this quarter, or some, there would be some kind of major growth there. And instead, it's just sort of a shruggy. Now, a lot of this is, there's still like, I don't know how much money they're getting from Verizon for that Apple Music deal. I don't know if they're just not banking any revenue yet from people, everybody that's getting the free subscription to Apple TV Plus, you know, et cetera, et cetera. Maybe this stuff is sort of a, a slow build and then bang, it hits. But I was expecting them to be, be clocking in a lot more money.

• 10:11Speaker 03

  And one of the possible, I don't know, analyses here is the idea that Apple is going to be able to extract more value out of its current user base is maybe not obvi, maybe not obviously true. It may actually be harder than they think to get people to pay them extra money and when, you know, and when they're using a four-year-old phone or whatever. Yeah, so it's a...

• 10:33Nilay Patel?

  Well, it's harder for, the services is not an obvious slam dunk way for Apple to make more money with the same customers. But AirPods...

• 10:42Speaker 03

  Is.

• 10:42Nilay Patel?

  Yeah.

• 10:42Speaker 03

  Well, and Apple Watch two, actually. They couldn't make enough Apple Watch three, series threes. Right?

• 10:47Nilay Patel?

  Yeah, it's $200 and it's like the easiest gift in the world to buy. This continues to be my theory of Apple. Like if they can just make the thing at the holiday that you can buy a loved one that you don't really know anything about. You know, like, ah, yay, you're 15. Here are some AirPods. I love you. Right? Like, that's like, it's a slam dunk for them every time they pull it off.

• 11:10Speaker 03

  And if you really love them, you get a poop emoji engraved on it.

• 11:12Nilay Patel?

  Yeah, exactly.

• 11:14Speaker 04

  I just like, I was very impressed this year on TikTok that AirPods were the demarcation line between rich and poor.

• 11:22Nilay Patel?

  Yeah.

• 11:22Speaker 03

  Yeah.

• 11:22Nilay Patel?

  I mean, but that's like, that's been a meme for a long time, right?

• 11:25Speaker 04

  Yeah, but it's still a meme and it's very important.

• 11:28Nilay Patel?

  Yeah, but look, they have AirPods Pro, then they'll put out some new ones and we'll keep the old ones around, you know, at like 129. Like they're going to keep pushing them down to just destroy the market, which great, they should do it. I think that's just an easier side. Like historically, where are they strong? They sell hardware at a premium. They make a lot of money doing it. Every time they have a hit hardware product, it does really well for them. That's the nature of having a hit hardware product. The services piece, that is way more streaky. Like if you think about the bulk of their services revenue. Uh, we've written this, Heim wrote it a while ago. It's all like in-app purchases and free to play games.

• 12:03Speaker 03

  Yeah.

• 12:03Nilay Patel?

  That's the money. That's all the money. It's like the, there are two Candy Crush whales out there that Tim Cook like keeps an eye on.

• 12:11Speaker 04

  Wait, App Store revenue counts as a service?

• 12:13Nilay Patel?

  Yep. Yep. The App Store and in-app purchases in the App Store is by far the bulk of Apple services revenue. So that's great. Right? But when you think of services or your instinct there to react that way was.

• 12:24Speaker 04

  Upselling me on iCloud storage and this mythical Apple television thing that I haven't really.

• 12:30Nilay Patel?

  Yeah. So I think they've got everybody thinking of iCloud, maybe not even iCloud storage, but they've got everybody thinking of Apple News, Apple Arcade, Apple TV, Apple Music. That's not it yet. Like, Apple TV is not even real. It's like, everyone has a free year. They're not even banking any money yet.

• 12:47Nilay Patel?

  It's in-app purchases.

• 12:49Speaker 03

  Candy Crush whales.

• 12:50Nilay Patel?

  One thing. And then, if you think about just the cost dynamics of the other stuff, in-app purchases are just free money for Apple.

• 12:57Speaker 03

  Yeah.

• 12:57Nilay Patel?

  No one has to make anything. Like, game makers just have to irritate you into pushing a button to do something, right? So, there's no cost of production. So, it's like 100% profit. But, Apple TV, they gotta hire Jennifer Aniston and Reese Witherspoon. They gotta find an elephant. They gotta follow the elephant around. Not Jennifer Aniston, that's another... You understand what I'm saying? The Muppets have to show up. They have to throw the Muppets a party for the premiere. They have to...

• 13:26Speaker 03

  Jason Momoa has to scowl. That's not free.

• 13:29Nilay Patel?

  That show is so bad. Someone has to pretend to Jason Momoa that his show is good. That's probably very expensive. And they gotta do it again. And they gotta market those shows. They gotta do the Oscar screener. They gotta do a whole thing that's very expensive for TV shows.

• 13:43Speaker 03

  They gotta hire Richard Puppler.

• 13:46Nilay Patel?

  Yeah, they gotta hire the ex-HBO guy. For music, right, they don't own the music, so they gotta pay a bunch of license fees back out to the labels. They gotta do the advertising for Apple Music. For Apple Arcade, no one knows how that works.

• 13:59Speaker 03

  Yeah.

• 13:59Nilay Patel?

  Zero, except for the game makers, and none of them are talking. So, do they pay upfront? Do they pay per time spent? But, they still have to pay. They have a product that isn't just like, you pay them five bucks a month, but they have to put new games in it over and over and over again to make it worthwhile.

• 14:16Speaker 03

  And they just tried to push a Fortnite competitor that's kid-friendly, which is really fascinating because Microsoft, in its earnings, specifically said Xbox revenue was down because of Fortnite.

• 14:26Nilay Patel?

  How so?

• 14:27Speaker 03

  Because people were spending so much time in Fortnite, which is a game wherein Microsoft doesn't make money selling you games or selling you Microsoft services, Xbox Cloud services or whatever, that they made less money than they expected to in their Xbox division. And their suspicion was it was a third-party title, which is code for Fortnite.

• 14:46Nilay Patel?

  That's amazing.

• 14:47Speaker 03

  Yeah.

• 14:48Nilay Patel?

  That's not a suspicion. That's like, they have absolute telemetry to know.

• 14:51Speaker 03

  Yeah.

• 14:52Nilay Patel?

  And they didn't... Yeah. Their average dollar per minute spent on the Xbox was down.

• 14:57Speaker 03

  Yeah, so there's a there's a confluence of like two things that we have been obsessed with in two different tracks. So on this show, we have been obsessed with the question of will Apple compromise user experience in order to make more money on services? And in processor and within, you know, the newsletter and also on this all this iPad stuff, I have been obsessed with the subtle ways that your behavior changes because of the way the user interface is constructed. And it all sort of crystallized for me with this new version of Fantastical that just came out. Because if you just think about the way that apps work, they are constrained in very specific ways by the rules that Apple has set up for the App Store. People getting pushed to subscription services, everybody

• 15:42Speaker 03

  knows how in-app purchases and games are, you know, constructed in a certain way. The way that Apple doesn't allow you to admit that there's another way to subscribe to something outside of the Apple Store inside your app. All of that stuff is a pressure that changes your experience that is completely invisible to you unless you are like really paying attention. And you have very few levers to actually change it or work on it. With an Apple TV Plus, you just choose not to subscribe. But with, you know, your apps and like what games are actually made in the first place, that's like a third order of effect of a change that, you know, decision Phil Schiller made two years ago. And that's a much harder thing to track down.

• 16:21Speaker 04

  That's really interesting of how many apps are like, okay, let's think of what app we can build. And like, well, no, there's no business model for that. There's no business model for that. There's an obvious business model for that. Okay, let's make a Candy Crush.

• 16:33Speaker 03

  Yep. And I think what's what's you brought the TV one. What's particularly interesting about all of their services, but TV especially, is they know what the business model for the TV Plus service is. They're just not confident that it's gonna work. So it's not the default. Because what they really want is for the TV app to be the home screen of the Apple TV. And then you open it up and it shows you a bunch of shows you can watch. And you subscribe to HBO inside of the TV app on the Apple TV for however much a month, and Apple takes a cut.

• 17:08Nilay Patel?

  Right, and then every month HBO gets billed and Apple takes a cut. And then you're like, oh, I want to watch this whatever's on Showtime. I'm gonna subscribe to Showtime on my Apple TV and Apple gets a cut. And every month Showtime bills you and Apple takes a cut. They have that 100% profit button built into it. Right, it's in-app purchases in the TV, but instead of getting the next level in Candy Crush, you get HBO. And HBO bears its cost of making HBO shows or whatever. That is the model of the Amazon Fire TV, that's what it works. If you kind of zoom out and squint, you're like, oh, they're just making it the cable box everybody wanted. Right, where you plug in your cable box, you tell it exactly what channels you want, it bills you per channel and off you go. They're just not confident, because not everything is there, that that can be the default interface of the TV.

• 17:51Nilay Patel?

  You cannot subscribe to just full freight ESPN on that thing yet. Because Disney launched Disney Plus. Right, Disney Plus won't give up the interface to Apple that way. It'll show you the shows inside of it, but it won't give you the like actually subscribe here. So there's just like a lot of that going on. But you see at least the, the model is there. We'll, we'll, we'll promote the morning show enough so that you open this app. Now we've shown you a bunch of other stuff, maybe you're gonna hit subscribe in HBO and we'll take some money. And that's actually a direct money.

• 18:23Speaker 03

  That is the business model for Windows 10 now. We will give you the OS for free, uh, and we will let, we will let it work with as many apps as possible and, you know, blah, blah, blah, blah, blah. We just hope that when you happen to open up Windows to do your computer stuff, you will subscribe to OneDrive or Microsoft 365.

• 18:40Nilay Patel?

  Yeah, but like, okay, that at least it makes sense. Like I can, I can explain to you how Apple intends to make money.

• 18:46Speaker 03

  Yeah.

• 18:47Nilay Patel?

  Even though it's like, it has Oprah on the payroll, right? Like, that seems expensive. How do they even make that back at five bucks a month? It's like, oh, there's this other thing they want you to do. They want you to buy this other stuff that costs them no money, or that is pure profit for them.

• 18:59Speaker 03

  Yep.

• 19:00Nilay Patel?

  But HBO is fronting the cost. What is that for the arcade? Like it implies that at some point they're just gonna ruin Apple Arcade by asking to buy stuff inside of it.

• 19:08Speaker 03

  Well, unless, unless games are just cheaper in some way, and so they actually can cover the cost with the five bucks a month. Or maybe they believe there's a spillover effect just by dint of being, you know, being in Apple Arcade, you might get something outside Apple Arcade. It is a little bit unclear. Like, there might be a second order effect there. You're, you're not wrong.

• 19:26Nilay Patel?

  And then the other one is news, which seems like an unmitigated disaster. Like, it didn't, it just didn't play. No one likes it.

• 19:33Speaker 03

  Yeah.

• 19:33Nilay Patel?

  It's like, kind of too expensive, but if you're in the media, like, this isn't expensive enough. I'm probably not gonna make enough money here. Like, that's why The Times is in it. Um, that's why The Post is in it. And I think that's just one of those where it's like, what is the, they're gonna split all this money with all these publishers. The publishers are just sort of cautious about it. Is it a real business for them, or is it just a thing they felt they had to do to complete this bundle? Like, that, I think, Paul, your point is like, when you were surprised about it being the App Store, that's the service, that's still the bulk of the services line. All this other stuff they've launched is totally unproven.

• 20:07Speaker 04

  Right. Well, and Arcade, it's interesting. Arcade is, in a sense, implicitly critical of, like, at least the games revenue.

• 20:15Nilay Patel?

  Yeah.

• 20:16Speaker 04

  That they're getting traditionally.

• 20:17Nilay Patel?

  Yeah, there's no, like, massive upside, right? The, the one person who's playing a Farmville who's gonna spend $10,000 this week.

• 20:24Speaker 04

  Yeah. There's no arcade whale.

• 20:26Nilay Patel?

  Yeah. Yeah. Like, all you can do is cost them money by buying and playing all the games. Right? And like, splitting that even more financially. But to, go ahead.

• 20:34Speaker 03

  Sorry. The thing that undergirds all of this, or I don't know, it's like, ambiently around, is this all sounds like, ah, well, screw Apple Services. Well, on the other hand, like, you get trackless when you play an Apple Arcade game than when you play a regular mobile game. You get trackless when you watch Apple TV than when, if you use another TV app or your smart TV. You get trackless if you use Apple News than if you use the web. Uh, so there, there are, like, these really, there are these privacy benefits and tracking benefits that, um, Apple really wants to push and really are real. Uh, but it's unclear, you know, the, is, is Apple doing it because it's the right thing? Or because it also happens to hurt, like, Google's business model? And the answer is basically both.

• 21:15Nilay Patel?

  Yeah.

• 21:15Speaker 03

  Yeah.

• 21:16Nilay Patel?

  Um, you know, I think implicit in that is, it's like, good to check our assumptions, right? And I think everyone's assumption is, Apple sells the most phones. My assumption is they're gonna ruin the user experience of the phone by pushing its services. Uh, and they're gonna, it's gonna be a juggernaut. Right, and that's sort of just like always, it's my, it's, it's just sort of my default assumption. Apple will be successful. It's a pretty safe default assumption. Like, if you control the user interface of the phone and you want everyone to open your news app, you can probably get them to do it. Right, and they'll send you a million weird pop-up notifications that are like, "The senate has reconvened", and it's like, I don't, I, I know, like, I actually wish I knew less, right? Like, but fine, and then you end up in the news app.

• 21:58Nilay Patel?

  I think the narrative is like, maybe it's not working as well as we all assumed. Right, maybe that services revenue isn't, didn't grow the way that you thought it would this, this quarter, because it's not as easy as they assumed it would be.

• 22:09Speaker 03

  Yeah.

• 22:10Nilay Patel?

  And that, I think, is a, we're just gonna have to keep checking it, but it's, it's good to, it's a good reminder to me that, you know, the monopoly doesn't just always get what it wants. Which is, many people constantly remind me of that, but it's, to actually see it play out, I think, is, is, is useful.

• 22:25Speaker 03

  The important thing to keep an eye on is, if we're right and these things aren't doing as well, will Apple just sort of go, huh, and let them limp along and then they'll eventually die like Mobile Me and get replaced? Or will they like, try to force it? And if they try to force it, that's the nightmare scenario.

• 22:42Nilay Patel?

  Yeah, great. You just took my positive and you turned it in. Literally, you literally said it's the nightmare. Okay, Paul, to your point about business models, this is a good way to segue into the iPad. Because the iPad turned 10 this week. Dieter wrote about it, Tom Warren wrote about it. I thought the most, the two most unexpected pieces I saw were from John Gruber, who said, "The iPad awkwardly turns 10", and then Ben Thompson called it a tragedy. And both of them were pointing at the fact that the app ecosystem of the iPad has never had a, has never had a shot. Right, and it's because of these weird business model problems. It's because people think mobile apps should be cheap or whatever.

• 23:22Nilay Patel?

  But Dieter, I'm curious, I mean, you, you've thought the most about the iPad as a computer of anyone in the world, I believe. I'm curious for your re- on it.

• 23:32Speaker 03

  Well, so with regard to John Gruber's piece, I hate to say this, but I told you so. I've been writing about how weird and awkward the multitasking is on the iPad for a year or more, especially with iOS 13. I've written about how it's unintuitive in my particular definition of the word intuitive, which is easy to learn. I've written about how it mixes the metaphors of time and space, you know, like all of that stuff. But nevertheless, I'm still interested in the iPad because it's the only OS that's really trying to do something new with user experience, user interface on a screen right now. It really is. So I'm not as angry about the foibles of how slide over works on the iPad as a lot of other people seem to have been on Twitter.

• 24:16Speaker 03

  But I am super worried about it as a computing ecosystem because the thing that kills the iPad that actually makes it a tragedy is the value that you get for pushing through and learning all the weird ways that it works when you try and become an advanced user isn't high enough. The return on your investment of learning and time isn't enough to make it worthwhile. You might, you're better off just using it as like a Netflix and reading machine and not trying to turn it into your computer. I think for a lot of people, people that have pushed through it and have gotten that return, I'm not saying you're wrong. If you are, if you have made the iPad your main computer, good on you.

• 24:55Nilay Patel?

  I say you're wrong. I'm putting it out there.

• 24:57Speaker 03

  Well, there you go. And then, you know, with the app ecosystem, I think the iPad got kneecapped by the decisions that were made early on to price apps at 99 cents, right? It's very, very difficult to convince people that they should spend a lot of money on pro apps for the iPad, especially when, you know, there's all these other like UI things in front of it. And then on top of all of that, the truth about the iPad is you get 96% of the experience by buying the $330 iPad that you do when you buy the $1,300 iPad.

• 25:31Nilay Patel?

  Yeah.

• 25:32Speaker 03

  You're like, for most people, there is functionally no difference between those two iPads.

• 25:37Nilay Patel?

  And I think that's when I, when I think of the word tragedy, that's it, right? There's no app ecosystem that leverages the faster processor in the iPad Pro. So we just bought Max, who is not yet two, an iPad and put it in one of the big cases. Because it turns out, baby, it's easier to feed the baby when they're watching YouTube.

• 25:58Speaker 03

  Yeah.

• 25:58Nilay Patel?

  Do that. And she says, fishies, and we play Finding Dory. It's a great. And at $300, this is a perfect solution to a wide variety of parenting problems. So like, okay, there's that, but we, like, within the same month, we acquired the cheapest iPad that is destined to be destroyed. And then I got an 11-inch iPad Pro. And like, yep, one swipey and one has Face ID and one has whatever. But like, at the end of the day, they, you could hand them to people without the home button. If you just took away the home button disparity.

• 26:33Speaker 03

  Yeah.

• 26:33Nilay Patel?

  And you said, which one's which? It would be really hard to tell them apart, right? Like, really hard from just, I'm using this thing, I'm seeing apps open and close, like, almost impossible. And I'm, like, I try to push my iPad, I try to use it as a computer. And like, the, the app ecosystem of things that are hard to run is like, kinda not there.

• 26:52Speaker 03

  Yeah.

• 26:53Nilay Patel?

  But, at the same time, it is a great computer for the plane. It has almost entirely replaced my beloved 12-inch MacBook, which was my plane computer of choice for a long time.

• 27:02Speaker 03

  Yeah, I don't enjoy using any computer more than I enjoy using an iPad. I just hit that wall.

• 27:08Nilay Patel?

  Yeah.

• 27:09Speaker 03

  In the same way, yeah.

• 27:10Speaker 04

  The stand-up write-up for me was Stephen Sinofsky talking about the Microsoft reaction, which is really actually kind of in line with what you guys were talking about. Microsoft thought that Apple, one, that Apple had to create a response to a netbook. And he has this amazing line about the origin of netbooks. We knew that netbooks and Adam were really just a way to make use of the struggle, struggling efforts to make low-power, fanless Intel chips for phones.

• 27:38Speaker 04

  So Microsoft's over here, like, covering for the fact that Intel can't make a phone processor by making, you know, very popular but very cheap, low-power netbooks possible.

• 27:50Nilay Patel?

  That is a significant revision of history. And, like, that is a, you have to, you have to have lived in Redmond and only seen the world through the filters of Microsoft to believe that that is 100% what happened.

• 28:03Speaker 04

  Right. So, but, so, but through these filters of Microsoft, they're like, oh, Apple is gonna make a tablet that will run Mac apps and have a PIN. And we're ready to compete with that.

• 28:14Speaker 04

  And Apple came out with a thing that is not exactly a computer still and definitely wasn't when it came out. And I've talked a lot on this podcast. I don't have to rehash it. Like, I have a reason to use all the processing power that's possible, like for, for, on an iPad, because that means I can add like more audio effects to my tracks and I can, you know, record more things simultaneously. You know, the music ecosystem is this amazing ecosystem where people pay for apps and the apps are amazing and they work together and it's wonderful. And it's very different than using a computer. But yeah, as, as far as iPad replacing a good number of people's computers, that is definitely not happening.

• 28:55Nilay Patel?

  So can I just address the revision of history there? First of all, if you saw the iPhone and then you heard Apple is going to make a tablet and you're like, they're definitely just going to make a Mac with a pen, you are on drugs. Like, what? There's, that's, how did Microsoft miss mobile? They saw the iPhone and they're like, they're definitely going to make a Mac with a pen. That makes no sense. Everyone knew it was going to be a giant iPhone and that's what it was.

• 29:23Speaker 03

  Maybe inside Microsoft, they all did what I did, what a ton of people did is they got a Dell Mini 9 or a Dell Mini 10V and then Akuntoshed it. Remember that?

• 29:32Nilay Patel?

  Yeah, those are great. So that's the other revision. The Atom and netbooks did not launch with Windows. If you will remember, the first netbook, the Asus EPC, where at one point I had just the, the flat specs memorized because they put out a new one every day and that's what Engadget did. We're like, here's EPC 1009, mostly the same specs. This one's blue. 20 minutes later, the EPC 1011 has been released. The same specs. This one comes in a Seafoam. Like, that's what we did. Like, I, I had macros for the spec line of, of those netbooks. But they launched with Linux. And remember, they had the EPC operating system. It was like a custom version of Linux and like the

• 30:14Nilay Patel?

  CEO of Asus, Johnny Shee was like out there being like, this is a revolution in computing. And we had the moment of like, Linux on the desktop is here. And then Microsoft panicked and let Windows go on it. Like so, I would say just a significant rewriting of history there. Where like, everyone thought they were gonna make a netbook. Like, Microsoft didn't even make a netbook. They panicked and allowed Windows to be on netbooks. And then they held that spec line down, which is why it was flat. Because they didn't want to eat the margin. They didn't want more powerful netbooks to steal, steal share from the mid-priced PCs. I'm saying, like, I get it. Like, I'm sure that is basically how it went down.

• 30:59Nilay Patel?

  I'm just saying, at the edges. Like, you really saw the iPhone, you're like, they're definitely gonna make a Mac with a pen. Anyhow.

• 31:06Speaker 03

  Yeah.

• 31:07Nilay Patel?

  Alright, do you know what happens to the iPad next?

• 31:09Speaker 03

  Man, I don't know. We need to, we need to publish another review with like, specific, clear asks, so that the next time Apple holds an iPad keynote, they respond to them one by one, like they did with the last one.

• 31:22Nilay Patel?

  What would your ask be?

• 31:27Nilay Patel?

  By the way, we said netbook a thousand times, we didn't mention Joanna's name. Joanna was the best netbook reporter, Joanna Stern was the best netbook reporter in the world. I will ask her if my version of history is correct. Anyway, what were you saying? The ask for the iPad?

• 31:39Speaker 03

  I think they need to clean up the gestures and make them a little bit easier to understand in iOS 14, or iPadOS 2, or whatever they end up calling it. I think that they need to open up even more for what apps are allowed to do in the background and what they're, and what they're allowed to talk to. Because this sort of layering on functionality on top of functionality on top of functionality, I think is, it's been great that they've been giving us new stuff that we can do, like Hooray USB drives. But eventually you hit a point of diminishing returns. And, this isn't a perfect analogy, but the original Mac OS had features laden on to like, a pretty basic core, until eventually it broke and they had to go to OS 10, right?

• 32:22Speaker 03

  And, that future, I think, might be in the cards for the iPad in a weird way. Again, this is a very imperfect analogy, do not yell at me.

• 32:30Nilay Patel?

  Yeah, they're not gonna change the kernel of iPadOS. Right, but but just layering on, oh, people want to do this thing. We'll find an API. We'll make an API for that. Oh, people want to do this thing. We'll make an API for that. Is great for security, but it's not great for creating a general computer platform that people can do new and imaginative things that you hadn't thought of. With computers and even with phones in some in some ways, but definitely with desktop PCs, people thought up of things to do that the company that made the PC hadn't thought of. And with the iPad, if you want to do something with the whole thing and not something just inside an app, you don't get to think of that. You have to wait for Apple to give you permission to do it.

• 33:09Speaker 04

  Like, well, and one of the worst cases in my experience with the, you know, music, especially like if you have samples, right? A very file-based workflow. So there are a ton of file accessing in, there is a ton of file accessing in all these different music apps. And so basically, everybody either rolled their own or they'd like point you to like AudioShare or something like an app that had custom file stuff. So there's like seven different UI paradigms for working with files. And then now there's a real files API. And so that that whole ecosystem, like trying to recombine is is a total mess.

• 33:50Speaker 04

  So anything where app developers have found a way to work around the fact that Apple wasn't providing an API, they're almost in a worse spot now that Apple has an official API for it because they they kind of have to support both methods.

• 34:03Nilay Patel?

  Yeah, you know, it's funny. I'm always complaining about, you know, Apple building special hooks for its own platform or like lifting features from the third-party ecosystem and building them in and then not letting other people do it like, right? So the the big example is like AirPods. So you cannot build an AirPods competitor because you don't have access to the OS. The worst example is like the flashlight app ecosystem like went away one day, right? Like, Apple's like, we we just, we should have a flashlight. You can use it from Control Center. Like, here it is. And like a bunch of flashlight app developers just like disappeared. Like, is that a problem? Like, does the antitrust engine of this America needs to start? So somewhere in there is the right answer. Like, I think that's the spectrum.

• 34:47Nilay Patel?

  But if you don't enable people to build those new experiences or to modify the user interface or to add functionality that is totally unexpected or not foreseen. Then actually you have nowhere to steal from. Like you don't even get, you can't even get into the trouble. Right? Like you can't, you're just like, well, we, I guess, I guess no ideas are forthcoming, except the ideas that we have. And that is like a real death spiral for a platform. So that's one thing is allow extensibility to the platform. I think that's a big ask.

• 35:17Speaker 03

  That's, that's the one that I would want. And they, they've tried it several different ways. You know, you look at the share sheet and you can just like every icon in the share sheet is Apple's like huge attempt to like have extensibility in the way that it wants inside its garden. Siri shortcuts that, you know, they bought the workflow thing and they're doing that. Same thing. I just think that all that stuff is just not as developer friendly as, as it ought to be. Like it's great for writing macros, but you know, you gotta write macros on macros on macros to do anything interesting there.

• 35:48Nilay Patel?

  Yeah. I think my big ask would be that they, so I do use this thing on a plane all the time. I use the multitasking. I'm sort of in your camp, Dieter. Like if you figure it out like 25%, it'll like, it'll be fine. If you have any interest in going beyond it, you're like, this is a confusing nightmare.

• 36:06Speaker 03

  Yep.

• 36:06Nilay Patel?

  Right? I can get two apps on the screen at once. Like I have Slack and Twitter open at the same time. Like, okay, that's like, I'm good. On a plane, I'm good. Fine. The second I'm like, oh, I need to open a browser and everything goes away.

• 36:18Speaker 03

  Yep.

• 36:18Nilay Patel?

  And you get one single, and like, I would have preferred this to open where Slack was and leave Twitter alone. Like if you're gonna make it insanely complicated, just let it be insanely complicated.

• 36:27Speaker 03

  Yeah.

• 36:28Nilay Patel?

  Right? Like let that windowing paradigm just be way more free form than you want it to be instead of trying to control it with metaphors. I think they'd be way better off. It's the imposition of their metaphors that just blows the whole thing out of the complexity curve entirely.

• 36:45Speaker 03

  Yeah. This is how Windows 10 does it. When you open up a new app, it's like, which side of the screen do you want to put it on? They don't let you have multiple like spaces and like unless you want to, you can enable a bunch of spaces. But that's their tablet mode is like basic and straightforward, but it totally works. And if it's not enough for you, you just turn it off and you got Windows.

• 37:03Nilay Patel?

  Yeah. Maybe they should make a Mac with a pen.

• 37:08Nilay Patel?

  All right, we're gonna take a break. I'll be back to complain more about product design shortly.

• 37:17Speaker 05

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• 38:17Nilay Patel?

  All right, I promised that we would complain about product design. Do you want to talk about this Google search thing? It's a big deal. It's another one where I feel kind of like my assumptions got checked. But tell people what's going on.

• 38:27Speaker 03

  So, Google rolled out a redesign, and Google's claim is that they want to enable more trust. And so in order to do that, they put the URLs above the title of the webpage, and then they put the Fabicon for the website next to the URL. And while they were doing it, they're like, "Well, we've already got this whole framework of what a search result looks like. Let's just do that for the ad." And so there'll be a big ad word, and then there'll be the ad URL, and it'll blah, blah, blah. But it turns out that it made the ads less visually distinct than the rest of the search results. And the entire internet went, "What the hell, Google?" And within a week, they are like, "We're going to experiment some more." And they basically rolled it back, or they just started moving Fabicons around. And now they're messing with the way

• 39:12Speaker 03

  that Google search results look. And... You know, I have many feelings about a lot of this, but the, the thing that blows my mind, the more I think about it, is this is the company that tested 4,000 shades of blue and to figure out what was the right thing that would work. And did they really just roll out a redesign to their most important product by far, the thing that makes the most money, the thing that the most people look at, and they're just like, oops, and then within a week, they start screwing with it? Did they not really actually test this thing up the wazoo?

• 39:46Nilay Patel?

  Yeah.

• 39:47Speaker 03

  It's, I mean, they must have.

• 39:48Nilay Patel?

  And so their argument was, this is how it's looked like on mobile for a long time.

• 39:52Speaker 03

  Which

• 39:52Nilay Patel?

  Right. is a horrible argument, because Google results on mobile are just a landmine of like, UI corners that make Google money. Or like, you know, we needed the answer to be simpler on mobile, so we're not going to send you to a page, we're just going to scrape the data and put it here in a card, right, and give you like, the one true result, and like, oh no, is that the correct result? Is Yelp gonna get mad at us today? The answer is yes. If you're wondering if Yelp is mad at Google today, the answer is, uh, yes.

• 40:22Speaker 03

  Yes, it is.

• 40:22Nilay Patel?

  Yep.

• 40:25Nilay Patel?

  They always are. So I think, like, did they test it? I think they did. I think what they got was, more people click on the ads, and that makes more money. And so this is what I mean by my assumption being checked. Google's at the point where they're by far the dominant search engine, at least in America, but everywhere. No one else has any meaningful market share, right? Like, uh, what was it? It was, um, David Heinemeier Hansson at the trial said, if we lose our DuckDuckGo placement, nothing happens. If we lose Google, we lose our business.

• 40:55Speaker 03

  Yep.

• 40:56Nilay Patel?

  Right? So that's like, that's a big deal for them. So now you're out of market share to conquer, you're out of, your incentives to capture more users are gone. Your incentive is, how do we get more money? And you're like, well, if more people click the ads, we get more money. Like, we'll just make the ads look more like the results. And then more people will click the ads, because they won't be like, oh, this is that. I should look, I should continue scrolling 14 pages down, past all this crap, to get the results I want. What checked my assumption was, there's an outcry, but they don't have to do anything, because they're still Google. Where are you gonna go? You're gonna go to Bing?

• 41:29Nilay Patel?

  But they reacted and they rolled it back, which means they still kinda care a little bit, which like, that's nice.

• 41:35Speaker 03

  Can I give you an even worse scenario? You just described the scenario where they're like, "Ooh, this makes us more money. Let's do it." "Ha, ha, ha, twirl my mustache." What if they just didn't see that it was worse? They weren't twirling their mustache. What if they were just naive? Because this is the thing that I, when I saw it, I was like, "Oh, this makes sense. I get it. I understand how URLs work. I understand what FAVICons are. I actually look for FAVICons. All my bookmark bars are FAVICons. That's how I identify it. This is how I use the web. I get it." What if everybody at Google is like, that far out there and like, engineer web land, like me, and they didn't realize this would be a problem?

• 42:13Nilay Patel?

  Let me, let me answer that question by flipping this for you.

• 42:16Speaker 03

  Okay.

• 42:17Nilay Patel?

  What if I said all those things, but it was Facebook? I realize that your wife works for Facebook. Just say the disclosure, then you can answer the question.

• 42:24Speaker 03

  My wife works for Facebook, for Oculus, a division of Facebook. Even with Facebook, I don't know. Do you give Facebook the benefit of the doubt? Do you give Google the benefit of the doubt? Which is worse?

• 42:33Nilay Patel?

  The answer is that most people are like, "Facebook did this because they're evil." Right? "Facebook optimized for revenue. That's what they do. They're always doing that. Facebook is bad." Google, still to this day, has a reputation of like, a bunch of lovable idiots, who just wanted to make a map. Right? And by accident, they scraped everybody's wifi addresses, and put a camera on your face, like, yeah, right? Like, that's their rep. And I think it is just time for that to be over. Yeah, like, we know a bunch of Googlers. They are, by and large, like, sincere seeming people. There is no way that you roll out a change of this scale to your largest revenue product, and someone has not modeled the revenue impact of the change.

• 43:15Speaker 03

  Of course.

• 43:15Speaker 04

  So, one, I use DuckDuckGo. I just, I don't know what, where these points lie. I just wanna say some stuff.

• 43:24Speaker 04

  I use DuckDuckGo. It has fabicons on it. So when I saw these articles, I'm like, doesn't search already look like that? Two, in my experience of watching people use Google over their shoulder, everybody clicks on the ads. Like, I wonder if it's even possible for Google to get a bump in ad click-throughs because they already do get a click-through, like, for every single, every single search. That is not like, because the other thing that I think about with Google a lot is that Google is sort of like a, it's not just a search engine, it's also kind of a launcher. Google is kind of how you navigate to, you

• 44:04Speaker 04

  know, how do you go to, um, what's, I don't know, what's a website that is non-confrontational?

• 44:11Nilay Patel?

  News.

• 44:12Speaker 03

  News, KDWZ.

• 44:14Speaker 04

  How do you go to news, right? You Google news and then you click the first link. That's just, that's just user interface, right?

• 44:20Speaker 03

  Yeah.

• 44:21Speaker 04

  So, so I don't know, there's an aspect where I wonder how big of a blip, how big this actually did, how, how much this actually did change Google's metrics.

• 44:30Speaker 03

  So, this is the theory that Jonah Peretti, CEO of BuzzFeed, said to Peter Kafka and Peter Kafka's Code Media Podcast, which you should subscribe to. He's like, you know, what if Google Ads are actually bad? What if they're not, like, evil geniuses lords of the universe? What if people just click on them because they're at the top and they're actually not that effective? What if they're like, you know, just, what if they're just kind of bad?

• 44:55Speaker 04

  Yeah.

• 44:56Speaker 03

  In terms of their, like, efficacy?

• 44:57Nilay Patel?

  I don't, I don't buy it for one second. And I think, like, if they are kind of bad and they're kind of ineffective, like, Google can't sell them anymore because people can measure the return on their, their dollars spent. So Google has every incentive from their actual customers to make the ads perform better. And the best way to make the ads perform better is to make them look like real results. Which is why they've gone from having a colored background to not having a colored background, to not being set off, to suddenly having this, like, tiny little fab icon, to, like, just looking like results.

• 45:26Speaker 03

  Yeah, anytime anybody wants to, well, you should give Google the benefit of the doubt. Just show them that picture of what the ad separation has looked like over the years. And it's like, it's so obvious.

• 45:36Nilay Patel?

  Yeah, Google is full of very smart people. And I like, I love the notion that Google is mostly lovable nerds who just like want nice things. But the more we like learn about how they run Android as a platform, the more we learn about how they run Assistant as a platform, the more we see things like this. It's like, oh, you're as ruthless as anybody. You're just, you're logo's primary colors and then we think that makes you a little bit dumber than normal people.

• 46:01Speaker 04

  Okay, wait, but this is half, this is half ruthless, half Google's. Uh, cause I'm testing out this wild product called Google Search that I rarely use. I just search for news.

• 46:11Speaker 03

  There's no better radio than Paul using Google for the first time.

• 46:14Speaker 04

  Search for news, first result, an ad for news.com. And it's got then the breakout like business, national, you know, those ads with a bunch of stuff.

• 46:22Speaker 03

  You just search for the word news?

• 46:24Speaker 04

  With K, with a K.

• 46:25Speaker 03

  Oh, with a K.

• 46:26Speaker 04

  Then news is the first result, but it's an ad. Then it's top stories, right? These are Google News results, I guess.

• 46:34Speaker 03

  For news. This is the most confusing search in the world.

• 46:36Speaker 04

  Then below the fold is New York Post's news story about Canews, right? And then it's canews.com. So if canews.com doesn't buy this ad, then they are literally below the fold. And then a little bit more to be clickable.

• 46:56Nilay Patel?

  Can I, can we just take one quick break for the audience? I just want to help everybody understand what happened.

• 47:01Speaker 03

  Okay.

• 47:02Nilay Patel?

  News Corp.

• 47:03Speaker 03

  NEWS.

• 47:04Nilay Patel?

  NEWS, which owns Dow Jones, which owns the Wall Street Journal, which owns the New York Post, which owns a bunch of stuff, like Rupert Murdoch's thing.

• 47:12Speaker 03

  Yeah.

• 47:12Nilay Patel?

  News Corp.

• 47:13Speaker 03

  Uh huh.

• 47:13Nilay Patel?

  They launched what I would say is like a, like if Techmeme and vox.com had a panic attack together.

• 47:22Nilay Patel?

  An aggregator, it's a tech name for regular news, but it looks wild.

• 47:27Speaker 03

  Yeah.

• 47:27Nilay Patel?

  Called news, K-N-E-W-Z.

• 47:30Speaker 03

  Yes.

• 47:31Nilay Patel?

  This is, this is like the talk of the media world yesterday because it looks wild. And it's called canoes.

• 47:38Speaker 03

  They had a press release that literally broke my brain.

• 47:41Nilay Patel?

  It was, so Paul's like, what if I was searching for canoes?

• 47:45Speaker 03

  Mm-hmm.

• 47:46Nilay Patel?

  And those, that's what you get.

• 47:47Speaker 04

  And what I'm saying is if they weren't paying the Google ransom.

• 47:51Nilay Patel?

  Yes.

• 47:51Speaker 04

  To, to have an ad, then they wouldn't even show up above the fold on a Google search result.

• 47:57Speaker 03

  So, Google's argument to you is, the way that the algorithm works is they made some changes to foreground news and foreground newness, novelty. And, uh, this is also a brand new URL that nobody's linking to, and so, um, it, the, there's not a whole lot of information for Google to go on. Over time, canoes.com will be one of the top results, although it won't necessarily be the top result because of an ad that might be, they pay for it, or maybe someone will try and conquest it. And it might not be, if it continues to like be a thing that makes canoes, uh, they might still be stories about canoes. But it not being the top search result is a factor of how the algorithm works, is Google's claim.

• 48:41Nilay Patel?

  Sure, okay, so the, the real example is Hannah Myhans, David Hannah Myhans, the guy from Basecamp, at the, at the hearing, the antitrust hearing, he's like, you search for Basecamp, you get ads from Monday.com above Basecamp. And so it's a tax. If I want to be the first result, I gotta pay Google the money to just be the first result for our own company name.

• 49:01Speaker 03

  Right.

• 49:02Nilay Patel?

  And, uh, which is fine, the conquest thing like that has happened forever. The real thing is, if someone's violating your trademark and like doing like a bad one, Google will clamp down immediately for its own products. And everyone else has to go through some like Byzantine bureaucracy. Because they don't care, because it's all this money coming in. Anyway, Google search is a confusing landmine of problems. But it's dominant. And so like, what we have not said here is we should all switch to DuckDuckGo.

• 49:32Speaker 04

  Or Yes.

• 49:33Nilay Patel?

  Bing. By the way, if you look at Bing, Bing is Bing has turned into such a near perfect clone of Google. Like, I'm not even sure switching would do anything. Like, you would just have a worse experience with a worse search algorithm. Like, it doesn't matter.

• 49:48Speaker 04

  DuckDuckGo has three news, any WS results on the top, then the news, which is apparently a band in Buffalo, New York, then the Facebook page for that band, then canews.com above the fold.

• 50:03Nilay Patel?

  Well, I just searched for DuckDuckGo on Google, and the first result is an ad that DuckDuckGo paid for itself.

• 50:09Nilay Patel?

  So Google's winning, coming and going. All right. Speaking of web technologies, Dieter, I would say that you went through a roller coaster of emotions the other day when Scroll launched. Do you want to explain to people what Scroll is?

• 50:24Speaker 03

  Scroll is a $5 a month subscription service that if a partner website is partners with Scroll, that website does not serve you ads. Disclosure Vox Media, which includes The Verge, is a partner. So if you sign up for Scroll, you will not see ads on The Verge. It's not an ad blocker, because the ads never get show up on the webpage in the first place. So when The Verge sees that you are a Scroll user, it's like, oh, when we load this webpage up dynamically, magically, we're just not going to put the ads there for you. So I was like, oh, okay, that's cool and interesting.

• 50:56Nilay Patel?

  By the way, just to continue that disclosure, neither Dieter nor I made the Scroll deal. You had basically no idea it was happening.

• 51:04Speaker 03

  Yep.

• 51:04Nilay Patel?

  Yeah.

• 51:05Speaker 03

  I learned about it from your tweet about it, Neelai, actually.

• 51:07Nilay Patel?

  Yeah, and I learned that it had gone live from someone else's tweet. So I knew, like, in the back of my head that someone somewhere was talking to Scroll, but I have no idea what the details are. Big company, you get to get some insulation. Anyway, keep going.

• 51:20Speaker 03

  So the way that it works, and this is, this is one of my early revelations, is how does The Verge know that you are a Scroll user? Well, there's a cookie, of course, because everything is a cookie. And what that means is, like, Eventually it could break because all the browser makers are trying to change the way cookies work, but that's far off in the future, whatever. But Scroll, it pays out based on, you know, what websites it sees you're searching and it shows you a history of literally every website that you look at. And so here is this tiny startup that you've never heard of, who you're paying five bucks a month to, and they get your entire browsing history.

• 51:59Nilay Patel?

  Yeah.

• 51:59Speaker 03

  That seems, that seems like they promised they won't sell it. They promised, you know, privacy, et cetera, et cetera. But it also seems like it is a data mining time bomb, I think is the phrase I used.

• 52:09Nilay Patel?

  Yeah.

• 52:10Speaker 03

  Uh, yeah.

• 52:11Nilay Patel?

  It's like one of those, like, if you run out of money and this doesn't work, what's your most valuable asset? It's like a bunch of targeting data.

• 52:18Speaker 03

  Yeah.

• 52:18Nilay Patel?

  But at the same time, like, we are handing that over to, here's a trade-off. Yeah, like, do you want like a bunch of anonymous trackers in Google to have it? Cause Google owns the entire ad stack? Or do you want this tiny company run by a CEO who like is down the street over here?

• 52:34Speaker 03

  It's actually, it's not or, I think it's and. I mean, who knows how many, how many tracker, they, they do turn off some trackers apparently, but I don't know exactly what.

• 52:43Speaker 04

  I have ad blocker on, I have third-party cookies turned off, I can't see Google fonts, and I also paid for Scroll.

• 52:51Nilay Patel?

  You should just use links, like the text-based.

• 52:54Speaker 04

  Yeah, I mean, I'm pretty much, I'm pretty much there, uh, but like, I, you know, I'm relieved to hear that you guys are also concerned about Scroll tracking everything, because really, that's what they, they just have to, it's, it's so tough. Like, I, I felt horrible giving Scroll this much information to be a plugin that tracks all my browsing so that I don't see ads, but at the same time, I've wanted something like this forever.

• 53:22Speaker 03

  Well, there is something vaguely like this, you know, there's the Brave browser, for example, which blocks ads and may or may not pay creators, depending if they signed up with Brave, et cetera.

• 53:32Speaker 04

  It's a crypto scam.

• 53:34Speaker 03

  Every time I write about the web, I have, I, my inbox is filled with angry Brave users who are mad at me for not talking enough about Brave.

• 53:41Nilay Patel?

  All of those people also own the Nvidia Shield and they also all write me at the same time. I guarantee you there's a one-to-one nexus of Nvidia Shield owners and Brave users in crypto stands. And in one day, they're gonna light up the crypto mining ability of the Nvidia Shield and it's gonna be over. There's like a harder problem here, right? If you want to build a business like this, where you pay in some money as a user and then you dole out money to the things you actually visit, which just on its face abstractly seems like a great idea. There is almost no way to do that without some sort of centralized billing and tracking. Right? You have to, you have to trust somebody somewhere to deliver your money.

• 54:24Speaker 04

  Bitcoin, Lightning, like there are, there are promising ways of doing microtransactions without centralized third party.

• 54:32Nilay Patel?

  Like the Brave browser, if you, if it, if it all gets built into your browser and your browser doles out money as it visits websites.

• 54:37Speaker 04

  Why I refer to as something that's not Bitcoin as a scam and something that is Bitcoin is not a scam is because most crypto things do are just a shell game and have a centralized third party. In this case, it turns out to be the brave, brave corporation.

• 54:52Nilay Patel?

  Right, but I don't think like, let's say, so to, just to do that, you gotta put money in, right? I gotta like deliver some currency to you, to somewhere, so it's stored and then it can go out, right? And unless I have like my own physical Bitcoin wallet connected to my computer every time I browse, like that's, that doesn't seem appropriate and there's no way to do it across platforms. Like you need some, you need to put money into the network and you're immediately at that same problem.

• 55:21Speaker 04

  If you have a Lightning wallet, you can pay, like you go to Yall's is a, is a website that does micro payments where you just pay directly to, to read a store. You pay like 10 cents and you just pay with Lightning, it goes through in a couple of seconds. So that's a Lightning wallet that you have, you have the money, you possess the money and then you pay and it just goes through right away. But yes, traditionally with every single microtransaction setup, it is like that where you have to pay the money in and it's stored by somebody else and then they dole out the payments.

• 55:49Nilay Patel?

  And I'm saying, I think the, the whole privacy conversation, like another example of the same thing, let's take it out of that model. I pay the New York Times every month and I have to log into it all over the place. And it's always forgetting that I logged in. And this is like a central complaint of every new subscriber on the internet is, why am I not logged into the Washington Post at this time? I already paid you the money, just like leave me alone. Why is that? Because Apple is aggressively deleting third-party cookies that store your login information across browsers in the States. Like, what are you gonna do with that? Right? Like, how do you solve the problem of not tracking you when some of the basic things that every consumer wants require the browser to know who you are?

• 56:31Nilay Patel?

  Requires the website to, requires you to identify yourself to a website. And without some kind of tracking somewhere of like, just this is who I am and I can tell it to you. Like, it's impossible to build the consumer experiences that we want on the web. But then there's like a disaster of privacy next to it.

• 56:49Speaker 03

  It's worse than that. Because even if you come up with a very in-principle, uh, smart anti-tracking method, separate from like the payment thing. Uh, so Safari has, uh, intelligent tracking prevention.

• 57:02Nilay Patel?

  Oh, we actually haven't talked about this, or this is a wild story.

• 57:04Speaker 03

  Yeah, so it's, um, you know, Safari and Firefox, they both have got different ways to prevent fingerprinting. There used to be this button called "Do Not Track." And we're like, "Oh, cool. If you click 'Do Not Track,' then like, you know, websites will know not to track you, and they want to serve you cookies, that'll be great." Well, everyone ignored it. And in fact, it turned out that "Do Not Track" was another signal that a website could use to identify you via this method called fingerprinting. Because when you visit a website, there's all sorts of information that like gets told. Like, it's a, it does support touchscreen, it doesn't support touchscreen. Uh, the web, the browser is this big, it's this resolution. Like, all stuff that a webpage needs to render, right? And enough of that information adds up and they can identify you. So, Google's answer for this is a privacy budget that eventually will stop.

• 57:49Speaker 03

  But, you know, there's arguments about that happening right now. Firefox's answer was, "Well, we're just gonna make a blacklist or a whitelist." And like, anybody that's bad can't, can't track you. Apple's solution was very clever. They're like, "You know, if we just use a whitelist, that'll get gamed. We don't, this privacy budget needs some more web standard stuff. We need to fix this problem right now. So what we're gonna do is we're gonna use on-device machine learning. And we are going to intelligently try to guess whether or not a website is trying to inappropriately fingerprint a user using machine learning." Because machine learning is good at identifying stuff over time, right? And great, amazing, super smart, super clever, great technology. Google researchers figured out that it became yet another fingerprint.

• 58:35Speaker 03

  Like yet another way to track you. So they told Apple and they told Safari and Safari was like, oh shit. Okay. And they fixed it, right? It got fixed in December. And now there's a paper out explaining it. So even if you can, in principle, get the entire web ecosystem to agree that there should be a payment system. And in principle, you get the entire web ecosystem to agree on a methodology for that system. That seems very clever. You're still going to be screwed. There's always, it's an arms race that is just very, very difficult to win.

• 59:08Speaker 04

  I agree. It's an arms race. At the same time, I feel table scraps at this point are just basically, I want to reject cookies for everything except the thing that I'm actively logged into right now. Like, I really just don't, I don't think there are legitimate uses. There are enough legitimate requirements that you have to have all these cookies to make it worth the risk.

• 59:28Speaker 03

  Do you understand that rejecting cookies no longer is sufficient to stop you from being tracked?

• 59:32Speaker 04

  I know it's not sufficient. I'm saying it's just, it's just where you start out. It's like, how do I stop falling onto knives and then that are laying all over the floor of my kitchen? Like, okay, well first, first we'll take the knives off the floor of the kitchen. Like, that might not be enough, but it's the first step.

• 59:50Speaker 03

  First, first we'll like, we'll stop pouring Crisco on the knives.

• 59:55Speaker 03

  So confusing. This metaphor is very bad. For like just a huge number of reasons. No, you're right. I, I just think this tension between what outcomes do people want is just consumers. Remember that I pay for the New York Times. Right? Like.

• 1:00:15Nilay Patel?

  Classic sort of like user story like as a subscriber to the New York Times, I would like to be logged in all the time. Okay, just to get there, you gotta put some knives on the ground, you know what I'm saying? That's just the first step is like, well, you gotta put those knives back all over the floor. And like that, I think is, it's the trade off. And I, I think one of the answers here, you could totally decentralize it, but then when someone is a bad actor, like they'll still get, they'll, they'll do this thing where you can like, okay, actually intelligent tracking prevention turns itself into a fingerprint over time. Right? And they'll just be a bad actor. And then that's an arms race. Or you

• 1:00:55Nilay Patel?

  could say, we need to come up with a system where the centralized players get punished if they become the bad actors, which is like how you end up at a GDPR situation. You've got the data, you are required by law to tell people what data you have. If there's a data breach, you have to respond so fast, so blah, blah, blah, blah, blah. Yeah, that's the other solution. I think we're just seeing kind of both models play out.

• 1:01:20Speaker 03

  Yeah.

• 1:01:21Nilay Patel?

  I think that, I think that solution is the correct one.

• 1:01:23Speaker 03

  Yeah. Well, the, the fight over like, what should the future of cookies and web browsers be gets back to this earlier discussion we had of, do you trust Google or not? Google's like, oh, what if we create a privacy budget and let's work together and let's create new ways to create, you know, ways to like, give websites, you know, attribution for clicking on ads and blah, blah, blah, blah. Because we don't want, we don't want to have this arms race. And everyone else is like, yeah, but taking it really slow really benefits you, Google, right?

• 1:01:48Nilay Patel?

  Yeah. And also it's just like, there's no market signal for this stuff, right? Like, who is, who, how can you even possibly begin to vote with your dollars in this world? Like, you can't. Like, who are you paying? You're the product. So like, it's, I don't know, like, That I think is the other side of it is like whether the advertisers, if you talk to CMOs in this world, like at CS, I saw a bunch of them, they keep being like, well, you know, the cookie free world is coming. And it's like, that is a big deal for the advertising industry.

• 1:02:19Speaker 04

  I, I think that's the, the, the spirit behind a lot of like open source decentralized efforts are that I'm not, I ultimately don't want it to be up to another company of whether or not I get to be safe online. I want to be able to, on my own, ascertain that I'm safe and maintain my own safety and privacy to the extent that I want it. And I'm not asking for anybody's permission to achieve that on my behalf, because if I wait for that, or I wait for a government to order that, it's probably never going to happen sufficiently. The only truly sufficient privacy and safety that I can ever achieve in this world will be something that I basically cobble together on my own.

• 1:02:59Nilay Patel?

  Yeah, I think that's fair. I just think that's a, the level of complexity required to do that is not appropriate for most people. That's, I think that's very much the tension. Okay, we're gonna stop this and then we're gonna yell about streaming wars. How's that? You ready for this? All right, take a break. We'll be right back.

• 1:03:20Speaker 05

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• 1:04:20Nilay Patel?

  Paul Miller.

• 1:04:20Speaker 04

  Hello.

• 1:04:21Nilay Patel?

  Every week, you insist that this nation come together. This is my appointment television in an age of cord cutting.

• 1:04:30Speaker 03

  It's like, it's like, we're all, we're all in our bedrooms, watching our iPads and Paul's like, dinner. Everyone has to come to the kitchen and listen.

• 1:04:38Nilay Patel?

  It's so funny that this started as a joke about holding country together. Now I'm just like, what if it did hold the country together?

• 1:04:45Speaker 04

  Uh, it's called The Cloud, but for kids.

• 1:04:50Nilay Patel?

  Okay, Cloud.

• 1:04:51Speaker 04

  Yeah. Uh, there's actually two stories on, along this line. There's this really cool speaker. It's called the Yato Player. It's designed by Pentagram, which if you remember, are the people who like designed that really cool looking GPU a while back. Um, okay. But so the Yato Player is like a connected speaker, but for kids. And it plays audio based on which NFC card is inserted into it. So like the NFC card could do music or, or an audiobook or whatever. But importantly, um, the, all the content is in the cloud, right?

• 1:05:33Speaker 04

  So the NFC card is really just a URL for the, for the, the media that's in the cloud. So that's got me thinking of, um, like, what if you had like a, like a, like a mad DRM apocalypse world where to listen, you, all the music is in the cloud. It's all in Spotify or Apple Music, but to listen to it, you have to drive to Best Buy or, um, I, I forget what music stores were called. What, what's a music store names? Sam Goody's?

• 1:06:10Speaker 03

  Sam Goody, Tower Records.

• 1:06:12Speaker 04

  Tower Records. You go to Tower Records and you buy a little NFC token that looks like a CD. Yeah. You put it into your computer to unlock the album on Spotify. I thought that would be pretty cool. Anyway, something to think about.

• 1:06:27Speaker 03

  A bunch of, a bunch of Nintendo Switch games are now, you go to the store to buy a physical box, you open it up and there's a download code in it, not a cartridge.

• 1:06:35Nilay Patel?

  That's amazing.

• 1:06:36Speaker 04

  Not a cartridge. See, that's the thing that there's something so compelling to me right now, for whatever reason about like Switch cartridges, but it's very important to me that the data is on the cartridge. Otherwise it's so many ways.

• 1:06:49Nilay Patel?

  I'm always like, I wanna buy the physical media, but what I want to consume is the digital version. Like, what if the internet goes away forever? I need, I need physical backups of this. And it's like, I mean, if the internet goes away for, like, for that long, like, something worse is happening. Like, I shouldn't, I shouldn't be watching Gravity in HD Blu-ray, like. Yeah. What am I doing with my time at the end of the world? Okay. So, yeah, watching things. Super Bowl. Super Bowl is this Sunday. My team's not in it, which is heartbreaking. They were supposed to be in it and they're not. But, uh, we did a piece today, Cameron wrote it, how to watch the Super Bowl in 4K HDR.

• 1:07:30Nilay Patel?

  Now, if you will recall, earlier this year, Fox started doing Thursday night games in 4K HDR. We wrote a big piece, they're like, "We're just doing 1080p in the cameras and upscaling it to 4K and sending it out, but it's high-res, upscaling is very good." And it is true, the upscaling is very good. But they're like, "The big deal is shooting HDR. That's the hard part, but we think it's a meaningful upgrade." So I wrote it up, got all excited, and then, basically, only, like, FiOS customers with one cable box and DirecTV customers with a special box could see it. Comcast dropped out the night before, because they couldn't reach a deal, and every streaming platform didn't get it. Right. Because it's too hard.

• 1:08:14Nilay Patel?

  Now they're gonna do the Super Bowl in it. You can get the Super Bowl streaming in 4K HDR if you have, like, one of two Amazon Fire devices, like, special on the Fox app. They've listed Roku on their website as being able to get it in 4K HDR, but they told us, "We're not 100% sure. It'll be 4K, but we don't know if we can deliver HDR to Roku. We're working really hard." And then, uh, Fubo TV, a streaming service that you can also pay for if you wish, uh, they're saying they can do it, but no one's ever seen it, so we'll see. Yeah. So if you wanna watch Super Bowl in 4K HDR, yeah, you basically need a Fire, like, one of two Fire devices. You with me so far? I'm with you so far. Okay, you know what you can't use? You can't use the Apple TV.

• 1:08:58Speaker 03

  No, you cannot.

• 1:08:59Nilay Patel?

  So, this is all related to like a very quiet, very nerdy format war that is like the death of me. Why can't you get on the Apple TV? Cause Fox is shooting in a format called HLG, Hybrid Log Gamma, which is developed by NHK in Japan and BBC in the UK. It is an HDR format that is like well-suited to broadcast television. Cause you can, basically, you make a stream that is downward compatible.

• 1:09:26Speaker 03

  Okay.

• 1:09:27Nilay Patel?

  Right, so it works live and then you send the same signal to SDR TVs and HDR TVs. The SDR TVs can just show you SDR and HDR TVs will figure it out. That's HLG. HDR 10 in Dolby Vision, this is a true, I'm gonna say this phrase now. They're known as PQ formats. PQ stands for perceptual quantizer.

• 1:09:47Speaker 03

  Okay.

• 1:09:48Nilay Patel?

  They require metadata stream.

• 1:09:50Speaker 03

  Sure, okay.

• 1:09:51Nilay Patel?

  Right, this is a different thing and they, they're not down-compatible. So you gotta send two different streams. Almost nothing supports HLG. The Apple TV doesn't support it, Roku's doesn't support, like, it's a, it's another format to support. But now we're in the world where we wanna watch the Super Bowl in HDR, you gotta figure out how to support it. So you can like convert it, you can like do all this other stuff. Apple doesn't allow you to like do any hardcore video to code in their boxes. That's why YouTube is not in 4K on the Apple TV, cause YouTube wants to use its codecs, Apple's codecs. So Fox is like ready, they've like hacked the Fire TV to make it work. They don't really know if they can get it there on the Roku, and they're not even trying with Apple. Cause they have to do this format conversion. I don't think Apple's gonna let them.

• 1:10:31Speaker 03

  Yeah. Can I, can I, can I make you even angrier?

• 1:10:35Nilay Patel?

  Yes.

• 1:10:36Speaker 03

  You know those Magic Eye posters?

• 1:10:37Nilay Patel?

  Oh my god.

• 1:10:38Speaker 03

  Where like you look at it cross-eyed and a picture pops out? You know, when you're like standing at the mall and there's a group of people staring at the Magic Eye posters and someone's like, "I see a sailboat", and the next person's like, "I see a sailboat", and then I'm the third person and I say, "Yeah, I see it too, but I'm totally lying."

• 1:10:54Nilay Patel?

  That's how I feel about HDR.

• 1:10:55Speaker 04

  Ooh.

• 1:10:56Nilay Patel?

  You gotta come over. I have an HDR TV. I mean, we were like CS together. There's one place you can see it, it's a CS. Like, eye-searingly bright. Uh, so I did eventually get a TiVo Edge. Why are you such a TiVo? Why do you still buy TiVo's? Because I refused to get the Verizon cable box. Like, it's just not gonna happen. Get out of my face with that thing. So I got the TiVo Edge, which in Decode HLG, and I watched some games in, in HDR. Okay. It is, if you are paying attention, remarkable. You actually see more detail, the helmets look beautiful, but like, David, come on. But, what are you doing? Uh, it's not like brighter, it's just like there's more detail, and it's a wider color gamut. Right.

• 1:11:40Nilay Patel?

  See, there's more, there's actually more color information coming to you. Oh, by the way, uh, just to make this even more complicated, I have this TiVo Edge. What's the big selling point in TiVo Edge? It has Dolby Vision. But Dolby didn't tell anyone that there's actually two versions of Dolby Vision. This is a true story. One is decoded on-device and one is decoded in the TV. Sony was like, "We're only gonna support the one that's decoded on-device." Because of some latency issue. Yeah. TiVo didn't know, like, they didn't know. "So it doesn't support Dolby Vision on my TV." And all the support forums, like, "What's up with this?" So like, "Oh yeah, we just found out about these Sony TVs." Microsoft had to do a quiet update of the Xbox to support Sony.

• 1:12:25Nilay Patel?

  Apple had to do a quiet update of the Apple TV to support Sony. Amazing. They just made a custom Dolby Vision profile for Sony. And like, didn't tell anyone about where, where some of the decode goes. And so now there's like, there's even inside of this bad format war, there's yet this other X-factor of like, "What if Sony was a little bit dumber than everybody else?"

• 1:12:45Speaker 04

  Wait, when, when there was Blu-ray versus, uh, what is, what does Fox Sports get out of using a weird HDR format that nobody else uses? And also, would it kill them to transcode it on their end and send out like a, you know, a, it could have a minute delay on it, a different stream?

• 1:13:09Nilay Patel?

  For the Super Bowl?

• 1:13:10Speaker 04

  For the plebs.

• 1:13:11Nilay Patel?

  Do you know how many like gamblers would die if they had a minute delay of the Super Bowl?

• 1:13:15Speaker 04

  Okay, well, they just, they can be warned.

• 1:13:19Speaker 03

  Have you guys ever watched the Super Bowl streaming in like an apartment building? It's amazing because there is a delay and so you're like watching the game and then you just hear somebody across the way screaming, just screaming.

• 1:13:31Speaker 04

  I know that sensation.

• 1:13:32Speaker 03

  Okay.

• 1:13:32Nilay Patel?

  That's amazing. So the benefit is Sony makes a lot of the broadcast equipment in the world and they are all in on the broadcast side on HLG.

• 1:13:40Speaker 03

  Right.

• 1:13:41Nilay Patel?

  Right, so this is like a standards battle that's happening with a bunch of buyers over there and so like the broadcast world is quickly standardizing around HLG because you need to do less work and you can send out one signal that works for both sides.

• 1:13:55Speaker 03

  Mm-hmm.

• 1:13:55Nilay Patel?

  Is what I am told. I mean, have I talked to-

• 1:13:59Speaker 04

  And Fox is just like, whatever you say, Sony.

• 1:14:03Nilay Patel?

  Well, I mean, they gotta buy stuff.

• 1:14:05Speaker 03

  Look, here's, here's a solution. They need to use some AI to solve the format problem.

• 1:14:11Nilay Patel?

  I'm dying.

• 1:14:12Speaker 03

  And then they can get it up to 8K and then you watch it over 5G.

• 1:14:15Nilay Patel?

  It's a horrible situation.

• 1:14:17Speaker 04

  What's, what's crazy to me is that obviously you all, everybody has the same televisions. They're not saying you have to buy this or that television. This is a box that is going to transcode this HLG stream into something that the television can handle. So I'm just asking kindly that Fox does that earlier on in the chain before they send it to their app.

• 1:14:42Nilay Patel?

  So I think Fox is doing it earlier on in the chain because it says, Cameron's post says the Fire TV Stick 4K and the Fire TV Cube will get the 4K HDR 10 feed via the Fox Sports app. They can deliver it to those. They should be able to deliver it to everyone else, but there, there's gotta be some underlying technical reason. I'm pretty confident it's like they wanna make sure they get it right and they, they can do more with what are effectively Android apps on the Fire platform.

• 1:15:11Speaker 03

  Right.

• 1:15:11Nilay Patel?

  Than you can maybe do with Roku or depend on the processing power of a Roku. And then you are somewhat, not even somewhat, you are extremely constrained with what you can do on the Apple TV.

• 1:15:20Speaker 04

  So you're saying Nvidia Shield's gonna knock this out of the park?

• 1:15:23Nilay Patel?

  Nvidia, as soon as you turn off your Bitcoin renderer and switch that processor power over.

• 1:15:28Speaker 04

  Renderer.

• 1:15:29Nilay Patel?

  I don't know. Whatever they do, man.

• 1:15:35Nilay Patel?

  I said that just to get

• 1:15:45Speaker 03

  That's a true honeypot of a phrase right there. Nvidia Shield Bitcoin renderer, come at me.

• 1:15:54Nilay Patel?

  Alright, Dieter, you want to, you, we did not talk about streaming more stuff last week with Comcast. There's AT&T earnings this week. There's just a lot going on in, with the legacy companies streaming stuff. Oh, and I have a fact to share, which I think is really interesting, but you go, tell me about AT&T first.

• 1:16:11Speaker 03

  So they, it, there's, it's earnings week, we talked about Apple earnings, everybody else had earnings. AT&T's earnings were basically, yeah, we took a $1.2 billion revenue hit that we won't normally have to do in order to secure content, because we're really gonna like make HBO Max a thing. And then Julia Alexander listened to the call and she was tweeting it and talking to me about it in Slack. And like, every question was like, I don't understand what you're doing. And AT&T was like, well, you know, like HBO is gonna be a thing, and then 5G is gonna be a thing, and then they're, they're, we're not, we're not gonna say that there's gonna be a super cycle, but we're not not gonna say there's not gonna be a super cycle.

• 1:16:50Nilay Patel?

  Oh my god.

• 1:16:51Speaker 03

  A super cycle. Well, you know, people want HBO, so they set up for AT&T, and then they want 5G to get the HBO faster, so they buy a new phone, and now they've got a new phone, and if they got a new phone, they're obviously gonna wanna watch some HBO, because they got a new phone, so that's cool, and it'll create a whole like virtuous cycle, and it's like, you are making a giant, almost bet the company bet, that there is some sort of synergy between HBO Max and 5G and buying a new phone. And I just don't believe that any one of the three of those connecting things in that circle are real, much less all of it together creating a flywheel.

• 1:17:27Nilay Patel?

  Yeah. I mean, I'm an AT&T customer. I also pay for HBO.

• 1:17:32Speaker 03

  Yep.

• 1:17:32Nilay Patel?

  I somewhat unsurprisingly own a phone.

• 1:17:35Speaker 03

  Yeah.

• 1:17:35Nilay Patel?

  Uh, nope.

• 1:17:39Nilay Patel?

  I mean, okay, you can already see the ads, right? Like, that's like some business logic. Imagine the ad, right? Buy the new Samsung Galaxy S20 5G Plus and get a year free of HBO.

• 1:17:51Speaker 03

  Yep.

• 1:17:52Nilay Patel?

  That's what they can do, right?

• 1:17:54Speaker 03

  Mm-hmm.

• 1:17:54Nilay Patel?

  There's not much more they can do.

• 1:17:56Speaker 03

  But so, the thing, and this comes from Carl Bode's article on The Verge today, the day we're recording this, you should go find it, it's very good. It's titled "AT&T Tried to Buy Out the Streaming Wars and Customers Are Paying For It." Made me realize that a few years ago, we all won because we stopped paying subsidies for our phones. That like, the cost of the phone wasn't built in, we didn't have tier contracts, we got much clearer pricing. Well, the subsidy for your physical phone got replaced with a subsidy for some random streaming service you may or may not want.

• 1:18:26Nilay Patel?

  Yeah.

• 1:18:26Speaker 03

  Right? You're like, it, don't think that you're getting AT&T, or AT&T, don't think you're getting Apple Music for free on Verizon, right? It's free, but is it free?

• 1:18:35Nilay Patel?

  Yeah.

• 1:18:36Speaker 03

  And don't think that HBO Max is gonna be provided free to you, AT&T customer. Is it free? Is it really free? And so, you can't not pay for these streaming services if you have a phone now.

• 1:18:48Nilay Patel?

  Verizon and Disney Plus is another good example. Quibi, uh, we free for T-Mobile customers, in case you were wondering about that one.

• 1:18:55Speaker 03

  There you go.

• 1:18:56Nilay Patel?

  Netflix, T-Mobile bundles Netflix in, same deal. Netflix gets paid for those subscribers, that money comes from somewhere.

• 1:19:02Speaker 04

  Going through that list, I don't know who, which side is paying for each one.

• 1:19:07Speaker 03

  The carriers are paying the streaming services.

• 1:19:09Speaker 04

  So Verizon wanted the edge of having Disney Plus for free? Cause I assumed that maybe it was like, Disney wants to get it in front of a bunch of eyeballs.

• 1:19:17Speaker 03

  No, no, no. The way these contracts usually work, I am told, I don't know how all of them work in, like specifically, but they negotiate what's called a wholesale rate. So there's the retail rate for Disney Plus, like, whatever. Verizon, you know, they guarantee some minimum number of signups, they get a wholesale rate on them, and then if people actually sign up, they pay the wholesale rate. Is that how all of them specifically work? I don't know the details, that's usually the shape of it. So what's really interesting about this, I am told, Comcast, which owns NBC Universal, which has its, you know, they, are a investor in Vox Media, blah, blah. My understanding is that the little bit of competition from AT&T and 5G, and the shenanigans

• 1:19:58Speaker 03

  of like, home internet and bundling and all this stuff, has gotten Comcast to the point where they're gonna start to say, "We treat all internet traffic the same."

• 1:20:07Nilay Patel?

  Like, you can sign up for this crazy mobile service on 5G that's maybe just as fast or faster than the wires in your house, but AT&T will throttle the video and do this weird bundle pricing and blah, blah, blah, and we won't. Remember us? Good old trustworthy wires in the ground Comcast.

• 1:20:24Speaker 04

  Would you look at that?

• 1:20:25Nilay Patel?

  And it's like, the tiniest bit of competition has pushed Comcast to be like, yeah, we're gonna go ahead and advertise net neutrality. So I'm trying to get them to say that to us, like, from an executive on the record, but that's what I have been told. I think that's super interesting if that's the message they go out with. I'm, I hope they do, right? Because I think that'd be great for everybody. But it's funny how, you know, when, when you suggest to the world that Comcast would somehow zero rate NBC's Peacock, they're like, no, no, no, we won't do that. We want, we want our internet service to be differentiated from the weird shenanigans of the mobile carriers. Because every mobile carrier does weird bundle pricing, net neutrality garbage. So they're like, what if you had pure internet?

• 1:21:07Nilay Patel?

  Which I think is like, cool. But they gotta actually commit to it, which is the thing I'm pushing.

• 1:21:12Speaker 04

  Maybe this is a bit of a tangent, but is that, you know, there's always these ads for like, you know, mobile for seniors. And it's like a phone carrier where like, it's like, $20 a month for a phone plan, and you can get the flip phone with the big buttons. It's like, like, what's the catch? Like, and so is, is there, because I've, I've known that MVNOs often have, in a sense, like, less priority than the traditional customer, so that maybe they get worse service. And I thought that was the main catch for why an MVNO could offer cheaper than Verizon, Verizon service. But is it also the case that these carriers are spending so much on content now?

• 1:21:51Nilay Patel?

  Um, no. So the MVNO, I've learned about this more because of the T-Mobile Sprint deal, right? Where T-Mobile and Sprint will combine, and then Dish Network will stand up a fake fourth carrier that is really just a T-Mobile MVNO while it builds its own network. And so like, the argument is, MVNOs have traditionally not worked. Like, if you just wanted to start your own carrier and your first move was to go to T-Mobile and buy a bunch of access, you would lose. Because T-Mobile would make sure that the rate that you pay them is enough to price you above them. Right? That's just the natural, why would they let you compete unpriced with them? There's no reason, like head on for the same customer.

• 1:22:32Nilay Patel?

  So, most MVNOs are customers that the carriers don't want, or are small enough so they can be over there, or that are too hard to service. So, what's like the most successful MVNOs? Like Boost? Boost is like mostly lower-income people, right? And they're like, it's too hard to get the money out of them, like, they don't want to sign up for prepaid or postpaid contracts, they don't want to sign prepaid, like, that's why they're mostly prepaid MVNOs. Because T-Mobile is a business, is like, we'll just be guaranteed some money from this MVNO, and they can handle the hassle. Senior citizens who don't want the fanciest phone, they just want a flip phone, whatever,

• 1:23:12Nilay Patel?

  the MVNO can serve them at a lower rate, because T-Mobile's like, we can't foist quibby upon them. Like, we'll just like take some margin and not have to worry about that customer, we won't deal with the cost of it. No, that was a pretty cogent explanation, but I think we could do better. I think if you're listening to this, please pull over in your car, and tweet at remarkably handsome and cogent actor Ryan Reynolds, who is a co-owner of Mint and the MVNO, and ask him to come on The Vergecast and explain how MVNOs work. Yes, please, Ryan Reynolds on The Vergecast talking about the economics of the wireless industry would be incredible. We will happily shill his aviator gin. I've never been a gin fan, but I could, I'll make an exception. Yeah, pull over and ask Ryan Reynolds to come on The Vergecast.

• 1:23:57Nilay Patel?

  Him and Ajit Pai at the same time, that's what, that's what we're going, my god. Do you think they've had a meeting? Like Deadpool rolls into Pai's office and is like, I'm starting an MVNO. The part of it that I think we're kind of circling around here is like, they have now all spent so much money to do this thing, right? To marry content with the network, because they all want to be fancier than just a pipe, they have to pay it off. AT&T in particular has to pay off this bet, it's existential for AT&T. And that means they are going to do the scammiest things in the world to get those HBO Max dollars out there. And I think like, what's, I've said it before, but what's like the vergiest story in the world?

• 1:24:41Nilay Patel?

  Like, all of our threads come together, our hardware review program, our policy conversations, the interface covering disinformation, it's, at the end of next year, they're launching HBO Max in May. Give it a year, right? We'll see what happens at the beginning. But by the end of next year, you will reasonably be in a position where when you buy a phone from AT&T, it comes preloaded with CNN and CNN will stream for free and Fox News will not. Right? And like you will just be in a position where one of the largest access corporations in the world is preferentially pricing one news outlet over another and they're ideologically opposed in a time when like that polarization is worse than ever.

• 1:25:26Nilay Patel?

  Like Ezra Klein, our colleague, just wrote a book called Why We're Polarized and like this is one of the reasons because we've actually, we're gonna price information differently. And I think that's like, it is just worth thinking about. Like you're gonna buy the $400 LG mid-range Android phone from AT&T. It's gonna come preloaded with their media and if you want to consume any other media, you're gonna have to pay extra in some, in one way or the other. And I think that's like, we haven't quite grappled with it yet. We haven't thought that through enough. It's like everything I've been yelling about for years. I'm sorry, people in your cars, you like heard it before, this is not surprising to you, but it's, it's here. It's like, it's way more real than I think people are giving that moment credit for. Why do you think Trump like wanted to stop the merger?

• 1:26:07Nilay Patel?

  Cause he is the one who's like, man, that mid-range Android phone's gonna suck. Anyhow, but that's strange, like it's not quite here yet. Like they're not, they're not launching until May. Peacock is not launching until later this year. Like, we'll see what they do, but you, you have a bunch of big, big media companies that are actually parts of big, big ISPs and everyone's gotta pay that debt. And like Comcast is raising its rates. AT&T is raising rates on U-verse and DirecTV subscribers. Like they're trying to make up the money while people transition to streaming and it's like causing a little death spiral because raising rates means people quit and that's like, right? That's gonna catch up to them in a, in a really big way.

• 1:26:48Speaker 04

  I just think it's interesting, if you're gonna spend this much money, like it seems to, to open the gateway for somebody to, I don't know, space internet or something, something that isn't encumbered with all of these extras to, to, to truly be competitive. I have no idea if that'll, that'll happen, but it seems like there's an opportunity here if they're truly gonna jack prices to give people things that they don't want.

• 1:27:14Nilay Patel?

  Yeah, I mean, we'll see, or, I mean, their argument is that this is what people want. Right? Like, what people, I mean, the classic cable pricing in America for like 20 years was the triple play. Right? You're gonna, you're gonna pay Comcast, they're gonna deliver you a, a medium fast internet connection, a phone line, and cable television. And they're gonna be your provider of those things, and everyone wants that bundle. We've moved all the video to the internet, so you don't need the one part of it anymore, but you're still getting the bundle. And it's just like, you're just back at it again. And the question is, is that what people want, or do they want more à la carte access? Like, I don't, I don't know the answer. But that bundle is definitely getting reformed. So, except for the phone line part.

• 1:27:53Speaker 03

  By the way, you can, you can, if you've, if you've in fact tweeted Ryan Reynolds about the Vergecast, you may now drive again.

• 1:28:00Nilay Patel?

  Are you done? Yeah, I mean, look, I think there's, the, the one part of it that I think is better than the old bundle, for sure, is you can quit, way easier. Right? Like, you don't want, I encourage you, do this right now. Just go cancel your Disney Plus subscription. It feels great. And then you can sign up again tomorrow. Right? Like, that is way easier than canceling HBO for traditional cable.

• 1:28:22Speaker 03

  My whole plan with Picard is to wait until I can, I've got the time to binge it in a week, and I'll sign up for CBS All Access again for a week, and then cancel.

• 1:28:30Nilay Patel?

  Yeah, and so I think that, that is different, and will lead to different consumer behaviors. But, yeah, that bundle is, is just like, it's barreling towards us, built into access, because they gotta, they gotta pay it off. Like I said, I, I think like, the, the sort of consumer side of it makes sense. Like, everyone kind of knows what AT&T is up to. They have to, because AT&T's saying it all the time. Like, they have to tell their investors. But the part where, you know, the largest wireless carriers in America are excusing their preferred services from data caps, and making you pay for the other ones, is like, a little dicier.

• 1:29:00Speaker 03

  Yeah. Uh, I'm gonna blow your mind real quick. The business model here is paying for access to infrastructure and then getting, uh, content as a bonus? Sounds a lot like, um, Amazon Prime.

• 1:29:14Nilay Patel?

  Yeah, I mean, right, like, where's Apple gonna fit into that? Like, are they gonna pay Verizon, AT&T for sponsored data, the way that those companies would want? Where's Netflix gonna survive in a world where they have to pay for peerage fees? Like, that's all just up in the air.

• 1:29:29Speaker 04

  I gotta say, Amazon's trying my patience lately. I feel like all the good shows, all the good murder mysteries are like, you gotta pay for like, BritBox or something like that. Like, the actual Amazon Prime is pretty bare. And, I don't know, it seems like they're trying to upsell me. It's like, I already pay you, I don't know, more than a hundred dollars a year.

• 1:29:49Nilay Patel?

  That's where you're talking about it.

• 1:29:50Speaker 04

  Stop upselling me so hard.

• 1:29:52Nilay Patel?

  That's their, actually, Ronnie Mola at Recode wrote a great story that's like, Amazon Prime Video is, also has a bunch of like, user-submitted videos in it. And it's like, the long tail of that library is just a bunch of really wild crap. You should go read it, it's on Vox slash Recode. Okay, that's, that's it. There's enough. There's a folding Samsung phone.

• 1:30:11Speaker 04

  Yeah.

• 1:30:12Nilay Patel?

  But we're not gonna talk about it at this time.

• 1:30:14Speaker 04

  No.

• 1:30:15Nilay Patel?

  It's there.

• 1:30:15Speaker 04

  Next week.

• 1:30:16Nilay Patel?

  You just think about it.

• 1:30:17Speaker 04

  It will be discussed.

• 1:30:18Nilay Patel?

  You just think about what you did. Uh, you can tweet at us, Dieter's at Backlon, Paul's feature Paul, on at Reckless. We love hearing from you, Dieter, tell them about your newsletter.

• 1:30:26Speaker 04

  I have a newsletter, it's at theverge.com/newsletter. It's called Processor Write About Computers.

• 1:30:31Nilay Patel?

  It's very good. I enjoy it, I enjoy it a lot. All right, that's it. We'll see you next week. Rock and roll.

• 1:30:36Speaker 04

  Paul. Snip, snip.

• 1:31:26Speaker 08

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