Microsoft to acquire Activision for $68.7 billion / Google is building an AR headset / The 5G battle between the FAA, AT&T, Verizon, and airlines

Verge editor-in-chief Nilay Patel talks with games reporter Ash Parrish and senior reporter Alex Heath about Microsoft acquiring Activision Blizzard for $68.7 billion and Google building a new AR headset. Policy editor Russell Brandom joins the show to discuss the battle between the FAA, AT&T, Verizon, and airlines over 5G and the antitrust bills in Congress this week. Further reading: The US’s free COVID test website has more visitors than all other .gov sites combined Microsoft to acquire Activision Blizzard for $68.7 billion Read Activision Blizzard CEO Bobby Kotick’s email to employees about the Microsoft acquisition Read Microsoft Gaming CEO’s email to staff about the Activision Blizzard acquisition Microsoft’s Xbox Game Pass service grows to 25 million subscribers Microsoft’s Activision acquisition would instantly make it a force in mobile gaming A guide to Microsoft’s Xbox game studios empire Is Microsoft building a gaming monopoly? Sony expects Microsoft to ‘continue to ensure’ Activision games stay multiplatform Google is building an AR headset AT&T and Verizon are limiting C-band 5G expansion around airports even more AT&T begins 5G C-band rollout in limited number of metro areas Verizon’s faster C-band 5G is live and off to a promising start Apple and Google split with startups over antitrust bill Tim Cook and Sundar Pichai are personally lobbying senators against antitrust legislation: report Lawmakers approve Big Tech antitrust overhaul, but with strings attached US competition enforcers launch overhaul of merger approval process Democrats unveil bill to ban online ‘surveillance advertising’ 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 week on the Vergecast, new Verge Games reporter Ash Parrish and Alex Heath join the show to talk about the big Microsoft Activision deal, Alex's big scoop about Google's AR headset, then Russell Brandon joins the show to talk about what is going on with the 5G rollout and the big antitrust bills that went through the Senate today. That's coming up on the Vergecast now.

• 0:18Speaker 01

  This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, hosts Lizanne Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab Center for Financial Research, bring you fresh insights on what's happening in the markets and why, and what the implications might be for your portfolio. Join Colin and Lizanne as they explore questions like, how do you evaluate corporate bonds that look interesting? And what sectors are on the move right now? Download the latest episode and subscribe at schwab.com/oninvesting or wherever you get your podcasts.

• 1:03Speaker 01

  This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, hosts Lizanne Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab Center for Financial Research, bring you fresh insights on what's happening in the markets and why, and what the implications might be for your portfolio. Join Colin and Lizanne as they explore questions like, how do you evaluate corporate bonds that look interesting? And what sectors are on the move right now? Download the latest episode and subscribe at schwab.com/oninvesting or wherever you get your podcasts.

• 1:52Nilay Patel?

  Hello and welcome to the Vergecast, the flagship podcast with Metaverse, the future of all web technologies. No. We gotta, we gotta be confident about it. Dieter is on vacation again. At the end of last week's show, I confidently was like, and Dieter will be back next week. Cause I cannot imagine a life without Dieter Bone, but he's still on vacation. So I apologize. Got the wrong impression. He actually texted me. He's like, you know, I'm still on vacation. But Alex Heath is here. Hi, Alex.

• 2:18Speaker 02

  Hi, I'm not Dieter, but I'm here.

• 2:20Nilay Patel?

  It mean, you know, look, it's a high bar, but we're gonna get through it. But Ash Parrish is here. Ash, you're the new games reporter. Hi, Ash. Hi, I am also not Dieter, but we'll make do. We're gonna get through it. A little bit later, we're gonna have Russell Brandom on to talk about some 5G stuff. But, you know, the biggest news of the week here is Microsoft buying Activision. Heath had a scoop. I do want to start by calling out the Biden administration. A day early, launched a website, which is amazing for the government. They launched a website to give away four free COVID tests. It's run by the United States Postal Service, uh, which was confusing at first. And I was like, oh, wait, we run a logistics and shipping. Like the, the government has the thing. It has the capability. So of course it did it. But it went up a day early. I know I called them out. They were very late.

• 3:02Nilay Patel?

  Um, in doing all of this, uh, the free COVID website had more traffic than all other .gov sites combined on that day, which is nuts. It had some bumps in the road about apartment addresses. It said it was a small percentage of users affected. Hopefully that's been better. And then, uh, White House also gonna distribute 400, 400 million free and 95 massive pharmacies. So COVID's still here, but I, you know, I literally count the days from the announcement, from the government announcing a website to the government releasing or not releasing a website. So I just wanna call, they, they were a day earlier than they said they were gonna be, and it did not crash.

• 3:38Speaker 02

  I gotta say, this worked and I was amazed. I ordered my tests in about five seconds. And they just, I just processed the order. I was just like, wow, we have a functioning government.

• 3:50Nilay Patel?

  Sometimes.

• 3:51Speaker 02

  Sometimes.

• 3:51Nilay Patel?

  Sometimes. From time to time, it, it functions. So this was good. I've talked a lot of shit about the government websites on the show, so I'm, I'm, here I am officially commending the launch of a website. I'm glad that they found their Squarespace promo code. All right, let's get on to the biggest news of the week, kind of a big surprise to start this week. The first thing that happened on Tuesday, obviously Monday was a holiday, it was one of the king days. So first thing that happens on Tuesday, Microsoft and Activision announced a $68.7 billion deal, all cash. Microsoft is buying Activision Blizzard in all cash, $68.7 billion. We can calculate the stock price. Activision is a troubled company. This reflects a bit of a discount, so we got to talk about that. But Microsoft, you know, and they obviously own,

• 4:33Nilay Patel?

  they own these huge franchises, makes sense. But they're like, this is to further our metaverse ambitions, which is an amazing thing to say, like, just a random buzzword out of the blue. So I want to talk about that first. But first, Ash, walk us through the deal, what's happening, and then I do want to talk about where Activision is as a company right now, because it is in an odd spot.

• 4:56Speaker 03

  Okay, so, a long time ago, Phil Spencer, CEO of Xbox Gaming, was like, we are actively looking for mergers and acquisitions, and we want to buy up everything we want to buy up. So in 2021, they decided, you know, they're one of their big, biggest purchases to date, after the, when they bought Minecraft in 2014, is they bought Bethesda. Bethesda, they make the Elder Scrolls games, they made Deathloop, which was a big splash in 2021. Just huge, like, huge gaming company. So they bought that for $6 billion. And then Tuesday, every gaming reporter that I know was woken out of their sleep with this news that they are buying one of the biggest publishers in North America for about 10 times that much. I'm actually

• 5:40Speaker 03

  a little bit sad that nobody could find in their hearts to round up another $300 million so we can get a nice $69 billion. But, you know, what can you do? So, yeah, they decided, like, Activision Blizzard was having all of these problems stemming from discoveries of rampant abuse and harassment in their workplace, their stock price had tanked.

• 6:04Nilay Patel?

  There was a strike. The employees were on strike for a minute, right?

• 6:07Speaker 03

  Employees are, um, some employees at one of the subsidiaries, Raven Software, they are in their seventh week of striking right now. Um, some QA testers were moved from wherever they were to Minnesota. Um, they were promised all these things and then, uh, they're like 12 of them were laid off. And they were not given the chance to extend their contracts or anything like that. So they decided that they were going to strike and they are, they have been striking since December. They are still striking today. Um, it's funny because in the SEC filings, uh, that Activision has to do in order to like get this deal approved. They did not acknowledge that their, that their employees are striking. I think that might have to do with the fact that there is no formal union at, um,

• 6:50Speaker 03

  Activision Blizzard, which is something that they are working on getting fixed, but that's going to take a very long time. And yeah, they, they're trying, they're just basically Microsoft unhinged its giant jaw and is slowly working on swallowing, uh, Activision Blizzard whole.

• 7:06Nilay Patel?

  So I want to put that 68.7 in the context. Microsoft's, so it's the, one of the biggest deals of all time. Microsoft's previous biggest deal was $26 billion for LinkedIn. So it dwarfs even sort of what you might think of as a standard Microsoft deal. Although at the time people were like, why are you buying LinkedIn? Now it's, I don't know, you've got Office, you got Excel, you got like, that made sense. Like there was like a thematic unity there. This is a bigger deal than that by, by some huge, by some multiple.

• 7:35Speaker 02

  I mean, Activision actually makes money. I think that's part of it. You know, like Candy Crush alone is like a billion a year, like operating profit. I think when they bought LinkedIn, correct me if I'm wrong, but I don't think LinkedIn was making money. And yeah, I mean, the, the metaverse, right? Of, of all this is kind of funny because if you kind of parse how they did the announcement, obviously there's the press release that Microsoft put out has metaverse all over it. And then you get the emails, right? Like we published the email that, uh, Phil Spencer sent, you know, the team members at Microsoft about buying Activision and then the one Satya sent to all of Microsoft. And the Phil Spencer email does not say the word metaverse once.

• 8:17Speaker 02

  And that's, and that's to employees. But when you're talking to investors, it's Metaverse, Metaverse, Metaverse. I think this just fully encapsulates what Metaverse has become, which is a meaningless buzzword that CEOs want to use, like Walmart, like, you know, Chipotle, I'm sure at some point, to say, we are innovative. And to Satya's credit, he did, I think, use the word Metaverse before Mark Zuckerberg.

• 8:43Nilay Patel?

  Yes.

• 8:43Speaker 02

  But it was like Enterprise Metaverse, which is something I try to forget the moment I say it every time. And yeah, I think this just, I, there's no, this isn't a Metaverse play, right? Like, there's nothing with Activision that is going to make Hololens better, or make Microsoft be able to release an AR headset to compete with, with Meta, or Google, or whoever. It's games. It's just a lot of money for a very profitable, successful gaming company, and it should just be that. I don't really, I don't know. I just thought the email from Phil Spencer kind of showed the two-facedness of the whole Metaverse angle.

• 9:19Nilay Patel?

  So Ash, the interesting thing about Activision, my understanding of it, you mentioned they have a small studio where the folks are on strike. Activision is like a collection of independent studios, right? They're all pretty much run on their own. They obviously have the huge franchises, but the way the company is built is like, a lot of somewhat independent studios. The way Microsoft is built now is, especially with its acquisitions, somewhat independent. Like LinkedIn has a CEO, GitHub has a CEO, Microsoft doesn't mess with them too much. This one is like, we're buying Activision, Phil Spencer is getting promoted to CEO of Microsoft Gaming, and he will oversee Activision, which is just not what you would

• 10:00Nilay Patel?

  expect, right? Like, just based on how both of these companies have kind of structured this stuff. Part of that, I think there's, there's a big question about whether the CEO of Activision, Bobby Kotick, is going to stay. What, I mean, does it make sense to you that it would all just roll up under Spencer?

• 10:15Speaker 03

  So it's interesting that you said that and phrased it in that way. I think that this is being done the way that it's being done, specifically because we want to get rid of Bobby Kotick. So Bobby Kotick is CEO of Activision Blizzard. Um, when all of this stuff about how Blizzard was running their company was coming out about all these like allegations of harassment and discrimination and abuse um came out like the there was a Wall Street Journal report later after that saying that Bobby Kotick was kind of in on it like he knew what was going on and enabled it and participated in some of the abuse himself and it's just been nonstop from employees get rid of Bobby Kotick get rid of Bobby Kotick and it what's been interesting to see is like you know shareholders as their stock prices are tanking are like yeah we're gonna stand by this guy who's like enabling

• 10:58Speaker 03

  all of this abuse because he's been with the company for thirty years right all of this everything has happened under his watch but they're like oh no we're gonna stay with him and as we as this announcement is coming out like the big thing was that Bobby Kotick will stay uh as we transition and that's what and I don't think anybody can like legally say like oh we're gonna get rid of him as soon as this deal is done but I think that's what everybody is thinking at least that's what everybody's hoping for and this move this move with you know having Activision Blizzard roll up to to Phil Spencer makes it seem like yes once this deal is done and Activision has been fully absorbed into the Microsoft you know family that he is gone whether or not someone else will be put in

• 11:41Speaker 03

  his place like someone internally or if it just you know Phil Spencer is now head of Activision Blizzard he remains to be seen but right now they're just you know playing playing like talking out of the side of their mouth about what they're gonna do with Bobby Kotick and it's just like okay I guess we just have to wait and see.

• 11:56Nilay Patel?

  Yeah, and I would point out the um the timeline of this deal is really long.

• 12:00Speaker 03

  Yeah.

• 12:00Nilay Patel?

  They're saying it's gonna close before the end of Microsoft's fiscal year twenty twenty three which is June twenty twenty three so it's a year and a half effectively so like a lot of things can happen in eighteen months I don't think they could say it's gonna close potentially eighteen months from now and the current CEO is gone. Like, so he's got to stay there through the deal closing. I mean, the big question is what happens after the deal closes?

• 12:27Speaker 02

  There's no way he's going to stay. He's going to make hundreds of millions of dollars off of this. He's not going to want to report to Phil Spencer. He's been the CEO of this company for decades. And he's like, super embattled, as we've all just been talking about. I mean, there's, why would he want to stick through any kind of transition like this? I mean, I guess, thinking about this, like, the shareholders saying they back him to, I wonder if when they said that, they knew about the Microsoft negotiations, and the board knew that they were in talks to get a 45% premium on their stock in cash. And like, of course, they're going to back him if that's happening. It's kind of a gross situation, isn't it? I mean, to, to see kind of the reporting that's come out about the culture and then realize that, like, all these executives are just going to make a boatload of money and kind of get a graceful exit.

• 13:10Nilay Patel?

  Yeah, I think that, just the history there to lay it out, and Ash, I'm curious what you think. Kodak bought Activision, just Activision, out of bankruptcy 31 years ago, for $400,000. So when we're like, he's been there for 31 years, he bought the thing. And then they did Call of Duty and Candy Crush and World of Warcraft. And, yeah, like, that's all, you can see why there's that long history. Because it, he might not be the founder, but it was, it, it's his company. It was built in his image out of the wreckage of what was Activision. And then the merger with Blizzard. But the revelator, I think that the question is, like, Microsoft issued a statement, Phil Spencer is like, after these allegations came out, he said to

• 13:52Nilay Patel?

  employees, we're reevaluating our relationship with this company. I think Sony said the same thing. And then, and, and kind of at the same time, he's like, buying it for a discount. One assumes that it got, he took a discount because this thing, I think, I was talking to Casey about it. He's like, it was a wounded gazelle. And they just like, took it down. I'm curious, like, do you see that, that long history is playing a part in the fact that, you know, he's not leaving soon? Or like, they sold, like, there's, there's a good reason for Microsoft to buy it. I'm trying to figure out why, why he sold if he wasn't going to ever let go.

• 14:24Speaker 03

  I don't know. That's the question, right? I think it might have to do with, like, okay, he needs an exit plan. And he needs an exit plan that makes him look as good as possible, I guess. I don't know. I I mean, the way that we're this as the story like continuously unfolds is that, you know, they were looking for someone to buy them and they were looking at Meta. They were, you know, like, hey, Meta, come on over here. You know, we might got what you want. And then I guess Meta declined or something and and then Microsoft was like, hey, we're here. We've got a boatload of cash. We'll take it. So and and you know, that's kind of how it happened. And the the the timing is suspect, but it sounds like this deal was something that happened in the last month.

• 15:04Speaker 03

  Meanwhile, this whole this explosion of news about what's going on in a company has rolled out over the last like six months since summer of last year. So we heard of we started her hearing about this in June. They've been, you know, Blizzard has been like sued up and down by like every government agency that you could be sued by for something like this uh all throughout the summer. There there were several walkouts. The Wall Street Journal uh thing came out, I think, in like maybe November. But as we are hearing, you know, how this deal went down, like this was a whip fast kind of deal. Like it happened in the last month or so. So maybe they were reevaluating their relationship. And, you know, after that point, it's like, we have evaluated this enough and we've decided that we want to buy it. So.

• 15:46Speaker 02

  The Meta thing is fascinating because Meta can't even buy Giphy. Um. So the idea that they could buy, you know, the world's uh second largest, third largest games publishers, you know, kind of laughable uh because they, yeah, they can't buy anything. But I, you know, I think like the I I mean, Bobby Kotick gave this interview in Venture Beat. I don't know if we all read it.

• 16:06Speaker 03

  We did.

• 16:07Speaker 02

  I I thought it was pretty interesting because it was it was uh he was pretty frank that it was also like they they can't compete with tech. They can't compete with the scale of these companies and like, you know, the balance sheet of these companies. And if you're one of I so like to me, that suggests like EA may be next, like Netflix buying EA, I think, would make a lot of sense if Netflix is really serious about gaming. So I thought that was just an interesting angle, too, that like maybe Activision just getting a forty five percent premium in the year twenty twenty two ahead of a very likely, you know, major stock market reset was a really good deal. And like sometimes the best thing as a CEO is like knowing when to take the deal. I don't know. What do you think about that, Ash?

• 16:45Speaker 03

  It makes me think that this is not about the video games. I mean, it's obviously not. It's obviously about the money. But Bobby Kotick in that interview was talking about like. Cloud gaming and AR and all these things that Activision Blizzard is not in a position to do because they're bleeding talent because it sucks to work there.

• 17:05Speaker 03

  So Microsoft with their cloud gaming offerings are in a much better position to, you know, do whatever it is that Activision wants to do. But I mean, cloud gaming is really cool. Like, I like the idea that I can, you know, turn on my phone and connect to Xbox or whatever and like stream Spyro the Dragon on my cellphone. That's not, I don't really, when I think about the average gamer, they don't care about that stuff. They, they don't care. They just want to have the console and play the game. And that's what Activision was doing. They were making the games that people want to play. Like, people want to play Call of Duty on whatever, you know, whatever. And it, it doesn't really matter to them if Activision Blizzard has a, a cloud service or not, but I guess apparently it matters to the shareholders. So this isn't like a games focused kind of deal. This is like, how do we remain competitive?

• 17:50Speaker 03

  And they're not competing with Sony or EA anymore. They're competing with Facebook, which is an interesting thought from a place that, you know, that was, you know, that we, we are led to believe is a gaming company first and foremost. It's kind of not anymore.

• 18:03Nilay Patel?

  Don't knock the power of Spyro is all I can say. Spyro's great. By the way, every company, when they do a giant merger, they say it's because they can't compete with the tech giants. Like, it's, it's, it's just what you say. Like, if you get a speeding ticket, you'd be like, officer, I don't know. I was just trying to compete with Google. And like, it's just like an all purpose excuse to do whatever you want sometimes.

• 18:23Speaker 03

  My thought is, like, I don't, why? Why does Activision Blizzard have to compete with the tech companies? Who they should be competing with is Square Enix, who's eating their lunch every day, you know, with World of Warcraft versus Final Fantasy XIV. Had to get that in there. Proud of myself. Because that's what they do. They make games. They make, you know, these experiences that people want to play. Like, who cares what Facebook is doing? That is not your lane. You have a lane. Stay in it. But shareholders are like, no, we got to get on all this other stuff. So I guess that's why we're here, having this conversation about it.

• 18:54Nilay Patel?

  Well, I think there's a, there's a big parallel here. And let's just set aside that it's hard to do, but let's set aside the sort of big culture issues. We have spoken to Satya Nadella before. We've spoken to Phil. And, you know, they say loudly they care about culture. Microsoft's a huge company, obviously has problems just because of its scale. But overall, they've spent a lot of time making sure the culture of Microsoft can do these integrations and is generally stable. So let's assume they can fix it. It's a big if, but let's assume they can fix it. What they're looking at is Game Pass, which is, you know, that's their big bet on the future of games. They're looking at metaverse stuff like you need game engines to do some of the things they are talking about doing in the metaverse.

• 19:38Nilay Patel?

  We see that all over the place. And I think they're also looking at, well, if you shift the distribution of games from selling a $60 physical copy or a $60 digital copy to any kind of subscription service. The economics of the industry just radically changed. We've seen that in the music industry, probably most dramatically of all. We're seeing that play out in just an absolutely chaotic way in film and television with streaming services. Isn't the bet that it's just that same thing is going to come to games? Isn't that really when they're saying we can't compete with tech giants, them saying the distribution is going to get taken away from us? And so we have to go to where there's expertise and we're in the channel. Otherwise we'll get crushed.

• 20:22Nilay Patel?

  Like, I don't know that that argument will come true, but we've seen it in music. We've seen it in TV. Is there any reason to think we won't see it in games?

• 20:29Speaker 03

  We're gonna see it. I mean, we've already seen the patents come out with like these Xbox apps that you can buy with your TV. So you can stream games with your Game Pass subscription from your TV without the need for any kind of console.

• 20:43Nilay Patel?

  Oh, Phil just told me that on Decoder.

• 20:46Speaker 03

  Yeah, like, so that's what it is. So in addition to like this distribution process being disrupted in order to make that work. Microsoft needs content. So they have 32 studios now and this enormous backlog of beloved games. Spyro the Dragon foremost among them, of course. Now, if Game Pass, you know, is already becoming this killer deal that is just like amazing. Like, just, I can't imagine the 2020 that we have this, you know, subscription service where I pay $15 a month and I can play. Almost about whatever I want. They need content to sustain this, you know, console future that they're envisioning and Activision Blizzard is right there. So it all fits together that way. Yeah, I mean, I don't personally, I don't think that's necessarily something

• 21:31Speaker 03

  that Activision Blizzard has to do. They just make the games. They'll get out there to people. They just make them. All you gotta do is make them. You don't have to be everyone to everything. Just do what it is that you do and you do it pretty well. Culture issues aside. So eh, this is, I guess, what the future we're looking at.

• 21:49Speaker 02

  While we're on the Microsoft angle here, I think it's also interesting to look at what Microsoft didn't do leading up to this point. This was maybe their third or even fourth big M and A transaction they've tried to make in the last couple of years. And I think it's very interesting that the one they finally got through was in gaming. When we know they looked at TikTok, we know they looked at Discord. There was a report that

• 22:10Nilay Patel?

  Well, hold on, hold on. They only looked at TikTok because the Trump administration.

• 22:14Speaker 02

  Sure.

• 22:15Nilay Patel?

  Like Donald Trump said on a plane, I'm banning TikTok. And then Microsoft ended up in a room being like, what is going on here?

• 22:21Speaker 02

  Kind of. I mean, we, you and I were in the room when Nadella was talking about this at Code and he kind of gave it a little bit of a different story where it was actually TikTok approaching Microsoft about cloud help and anyway, but like, I'm saying that almost happened, right? And then Discord, they tried to buy Discord. There was a report in the FT, they looked at Pinterest. They've had a hole in their pocket for the last couple of years. And I have a feeling they think that they are one of the last large multi-platform FAANG companies that can do a deal like this. Um, there was some congressman saying to the Washington Post, like, I, I'm sure they have the best intentions or something with this, which is like, imagine any member of Congress saying that about Meta or, you know, Google in, in this kind of situation. So they have all this goodwill and they have

• 23:04Speaker 02

  all this money. They need to do something and they finally landed on this. And I, I don't really know what it all means. I just think it's important to look at like the history that got up to this point.

• 23:12Nilay Patel?

  Yeah, I actually wanted to talk about antitrust a little bit. Russell's going to come on in the second segment. There's the antitrust, the tech antitrust bill was in the Senate. There was a markup hearing today. It got traumatic. But on Tuesday, Microsoft announces a deal. On the same day, Lena Khan at the FTC and the Department of Justice have a press conference to announce new merger review guidelines because they're saying all the companies are too concentrated. Lena Khan has been on the broadcast. You can listen to her. Like, she thinks the economy is too concentrated. Now she's in charge of the FTC. So literally, these things happen in parallel. Obviously, I don't think either side knew that was going to happen. Microsoft may have because the Lena Khan press conference

• 23:56Nilay Patel?

  has been scheduled out, but it's natural to connect the two things. And I, I think Microsoft really does believe it's played. It is very good at Washington. It is a major supplier to the government. Brad Smith, the president and chief legal officer of Microsoft, is great at politics. The quote you're noting, Alex, is from Representative Ken Buck, who's one of the Republican congresspeople who is a supporter of antitrust reform. And he's like, I've received encouraging assurances from Microsoft, the deal won't decrease competition.

• 24:30Speaker 02

  Way to go, Brad.

• 24:31Nilay Patel?

  If they keep their promises, which is one of the biggest ifs in the history of corporate oversight. They've suggested they're going to emphasize access to titles and competition in the marketplace as well as the individual gaming experience.

• 24:44Speaker 02

  Oh, that's beautiful.

• 24:45Nilay Patel?

  And there's, is there really a policy goal higher than the individual gaming experience?

• 24:49Speaker 02

  If there's anything we know about multi-billion dollar transactions in the US is that the companies always keep their word, especially, you know, T-Mobile, Sprint, they always keep their word. And so we should only assume that Microsoft will as well.

• 25:01Nilay Patel?

  I mean, that to me is, right, Microsoft is gonna, they're gonna face the regulatory scrutiny. Kara Swisher, Andrew Ross Sorkin actually had Lena Khan on Kara's podcast, Sway, at the New York Times. They asked about activism very directly. Like, it's all happening on the same day. Yeah, she had to defer to the training at the FTC, but she made it pretty clear, like, yeah, we're obviously going to look at this. Like, they're looking at everything right now. And I think that the idea that this will just sail through. Is a little optimistic. Meta is they're buying within which makes supernatural for $500 million and the FTC is looking at that. Like, there's just a lot of scrutiny around the deal. So like I said, it's 18 months out from their own predicted closing. A lot of things can happen in 18 months.

• 25:44Nilay Patel?

  I the instruction I gave to our editors was like, do not just take this for granted. We have no, what will Bobby get up to in the next 18 months? Like, it could be anything, right? What will the regulators do in 18 months? Will this antitrust bill that we see in Congress today pass and change the stakes for a lot of these deals? We don't know. One of the one of the provisions of the antitrust bill, like the main one is companies that run platforms can't preference their own products on the platforms, which is obviously, you know, very targeted Amazon, very targeted app stores. But if you are running a Microsoft Game Pass, and you want to put Call of Duty at the top of the cert, like, that's your problem, right? That's a big platform that you'll be covered. So there's a lot to happen in the next 18 months.

• 26:30Nilay Patel?

  Ash, as you, by the way, Ash, can I say, my favorite little piece of the story, just because you used to work at Kotaku, was that in like a fit of desperation, Activision was like, we'll just buy Kotaku. Oh, my God. That was amazing.

• 26:41Speaker 03

  Yeah, it's funny because, like, 10 years ago or something, Kotaku did a joke post that they had been bought by Bobby Kotick. So there is there's a Kotaku post for everything.

• 26:54Nilay Patel?

  Uh, it's very good. What do you think happens next year on this deal?

• 26:57Speaker 03

  Oh, God. I don't know. Somebody's somebody's buying Ubisoft. That's what's going to happen. Um, like, all of the big people, like, everybody at Sony is like, okay, who can we buy? I think with this deal, like, even though Sony still eclipses Microsoft a little bit in, um, like, market share and how many studios they own and, you know, their output or whatever, they're they're probably going to buy someone, it's probably going to be Square Enix, and that'll probably make me very sad. Uh, you know, I don't know it it what happens in the next eighteen months at Xbox uh. You know, Call of Duty will come out, um, everything that has uh already, you know, existing deals in place for multi-platform will come out.

• 27:39Speaker 03

  And then it's anybody's game. When when Microsoft bought Bethesda uh last year, they were like, we'll honor our exclusivity deals with PlayStation or whatever. And that's why we see Deathloop on PlayStation, which was a very good game. Um, but now like Bethesda's, you know, first new IP in forever, Starfield is Xbox exclusive and it's day and date with Game Pass. Uh, the Elder Scrolls Six, whenever that happens, it may not, who knows, um, Xbox exclusive. So, you know, there's a real concern right now that, you know, games like Call of Duty, which is like this big multi-platform thing, will eventually be uh uh an exclusive game. And, you know, right now, the the words are,

• 28:22Speaker 03

  uh, we are gonna honor all of our existing deals, which is exactly what they said with Bethesda. But we're committed to keeping Call of Duty on PlayStation because that's the big thing that everybody's worried about right now. But, you know, you don't buy this company for sixty-eight billion dollars and still, you know, give out all of your other stuff to multi-platformers to your essentially your competitors. The interesting point to that, counterpoint to that, rather, is my uh Minecraft, which is still everywhere. Um, so maybe, you know, they'll be strategic about it. Maybe Call of Duty is the thing that they do keep multi-platform. But, you know, you can get World of Warcraft on your Game Pass subscription and that's it. Who knows?

• 28:59Nilay Patel?

  I cannot wait for the YouTube conspiracy videos about like the next version of Call of Duty, pointing out the graphics on the Xbox are ever so slightly better than the graphics on PlayStation and like just running with the conspiracy theory. I mean, that to me is just a fascinating dynamic, right? Like with studios, the past year and a half, right? The big argument at the studios in Hollywood is don't day and day dust on your streaming service. Give us the theatrical release. Microsoft doing day and day in Game Pass, no one seems to be mad about that. Right, even though that's building a pretty substantial moat for Microsoft. Like, do you see them ever doing a thing where Game Pass subscribers get a game first? And then there's a window to buy it, and then there's a PlayStation window?

• 29:42Speaker 03

  There, there might be. I think there's, um, there's a little bit of that going on with Game Pass already. So Game Pass is integrated with EA Play, which offers, you know, EA games. Um, like, like, brand new EA games are available on Game Pass for like a certain window for like a certain amount, and then it shuts down, so you have the option to buy it. So you might see a, a retooling of that. But, yeah, I, I, it's anybody's guess because it is such a big thing. But if we look at what Microsoft has already done with Bethesda, it's, it's, offers a pretty clear roadmap for what's going to be done with these Activision Blizzard games. Like, it's going to be day and date with, with, with Game Pass.

• 30:22Speaker 03

  And if you want to buy it, you're, you're gonna buy it, but you're gonna, only gonna be able to get it on either your PC or your Xbox. Or your phone through Cloud Gaming.

• 30:30Nilay Patel?

  Like I said, this deal is going to take 18 months. Who knows what will happen with the platforms, uh, with regulation? The phone thing is really fascinating, right? Because right now, Apple won't let you put a game streaming app on their phone. Google will very begrudgingly let you do it. Like, they've, they gotta solve that problem if they think that that's actually a realistic future. I have no idea what's gonna happen there, and this is gonna take 18 months to resolve. So I don't want to overthink it, but just another thing to keep in mind. All right, let's take a break. We'll come back, talk about Heath's Big Scoop. We'll be right back.

• 31:27Speaker 04

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• 32:13Nilay Patel?

  We're back. Mr. Heath, Metaverse reporter extraordinaire.

• 32:18Speaker 02

  Oh, man.

• 32:19Nilay Patel?

  And it's either that or the polishing cloth, which, by the way, came out and then there were instructions on how to clean the Apple polishing cloth this week, which surprisingly, we're not to buy another one.

• 32:30Speaker 02

  It's not getting great reviews, is it? I mean, have we done a proper review yet?

• 32:34Nilay Patel?

  Well, get to it. I mean, that's your job.

• 32:36Speaker 02

  I know.

• 32:36Nilay Patel?

  You've seen your polishing cloth reporter. You gotta get you one. Do you buy one?

• 32:40Speaker 02

  I haven't. I just wasn't sure. I just, I don't know. It just seems kinda, I have to. You're right. I just have to. I'm gonna do it.

• 32:46Nilay Patel?

  This is your whole bit on the show.

• 32:48Speaker 02

  I know, I know, I know. I gotta commit to the bit.

• 32:51Nilay Patel?

  All right. You've had a big scoop this week. What's going on?

• 32:53Speaker 02

  Yeah. So, Google is doing something in AR and it's a thing. It's very early, but they have revived aspirations to do hardware. Don't call it glass. It's called Project Iris and it is seemingly going to be similar to headsets we have coming from Meta called Project Cambria and Apple as soon as later this year, a mixed reality. Probably very expensive thing with past their videos. So basically cheating using the video feed of the world you're seeing to to throw in graphics and give you that kind of AR, but more immersive experience. And yeah, so we kind of broke some details

• 33:38Speaker 02

  on that. This is under Clay Bavor, who reports to Sundar Pichai, has been at Google forever, managed Google's many fits and starts in this area. It's safe to say Google has a very spotty track record with this stuff, dating back to Glass, of course, but also people probably remember Google Cardboard, Daydream, the VR platform that barely lived, and they killed quickly as Oculus took off. And then they bought this this AR glasses company called North in 2020 in Canada that was doing kind of smart glasses, kind of more bare bones, Google Glass-esque stuff. And they still work at Google, but I think probably on something else. So yeah, Google's, you know, Google's gonna Google, they're

• 34:23Speaker 02

  gonna look at everything, but they're definitely hiring up for this right now and wanting to make it more of a priority and throwing a bunch of headcount and budget at it. So the headset wars are on.

• 34:34Nilay Patel?

  So you your piece is in depth, people should read it. They have a lot of people, there's a lot of executives paying attention to this now. You also, is it Starline, Skyline?

• 34:42Speaker 02

  Starline, yes.

• 34:43Nilay Patel?

  Starline. So they announced this video conferencing technology. It's like a display technology. I think Lauren Gettit Wired got to go play with it when they announced it. They're building that in parallel, right? Display technology is connected, because that is like a very expensive hologram projector idea.

• 35:01Speaker 02

  So Google's display technologies are connected in some ways. I don't know a lot about the display tech in this headset, but I have to imagine they're similar. Google's very interested in light field technology, which allows you to do some really kind of fancy 3D stuff. They have the CTO of Lightro working on this headset as a distinguished engineer and light field tech is used, I think, in Starline. I'm going to get corrected very swiftly if I'm wrong on that. But yeah, I mean, Starline is this very expensive Have cost tens of thousands to make a booth that has a bunch of sensors, cameras, and a very high-res display and it makes it apparently, I've never tried it, but people who have tried it have said it's one of the most impressive tech demos they've ever seen.

• 35:44Speaker 02

  You really feel like you're looking at another human that's sitting in front of you because of the depth that it provides. And Google, we kind of note in this story, is wanting to make Starline a kind of permanent part of its hybrid work strategy for its own employee base going forward. So Starline's kind of throughout the offices for talking with your colleagues who aren't in the office that day. And they're also planning a pilot program with some various Fortune 500 companies to also try to get Starline in there, you know, deployed in those companies. The problem is, is that it's, like I said, incredibly expensive and they're focused on, you know, trying to get it under like 10,000. But they're also targeting 2024 for trying to get Starline out the door in some commercial fashion and also Iris.

• 36:29Speaker 02

  I think both of those year dates are very aspirational. In these companies, you kind of need to give the, you kind of need to give everyone a date to marshal around, otherwise you just kind of twiddle your thumbs forever. And I have a feeling that's more of what this is. The thing is, is like, all these headsets are going to be hitting around the same time and I think all of the companies are going, wow, we, who's going to be first? Who's going to have the best thing? And Google, I have a feeling, has a little bit of FOMO here because they have the resources. They've had, you know, when I was reporting this story out, I didn't put this on the story, but, you know, Clay Bavor and his team with Daydream, they had basically the Oculus Quest before the first Oculus Quest.

• 37:10Speaker 02

  And I'm not talking about the one where you put a phone in, I'm talking about the truly untethered standalone VR. They had a really good prototype of that and they just never shipped it because they got distracted by ARKit. And then they did AR Core and Lens and all these things. So Google's just been very flighty with its investments in there and that's, I think, going to be the biggest thing to watch is can they stay focused? And invest aggressively enough in this to match Meta, which is spending the most by far. And Apple, which is low-key, has thousands of people working on this and is willing to bet the farm if it needs to. So. It's gonna be interesting to watch. I mean, Clay Bavor has this very interesting position where he's now the VP of Labs and he, this unit was created just last year, I think in like November,

• 37:54Speaker 02

  and he was moved out from Rick Oslo, the head of hardware, reporting directly to Sundar. And his projects are Starline, Iris, which has not been known until my report this week, a new blockchain division, which was just also reported on this week. So he's got all kind of the weird stuff, but it's, he's definitely like very tight with Sundar, bragging about budget and headcount and all that. So I think, you know, this is definitely an area to watch. I'm also just like, take a healthy dose of skepticism with any Google AR stuff, because they have not shown they're willing to see it through to the end.

• 38:28Nilay Patel?

  I mean, that's Google. When you're like, can Google stay focused? Like, I can, I can point you into any number of messaging apps.

• 38:34Speaker 02

  Right.

• 38:35Nilay Patel?

  Right? Like, that, I think, is the biggest knock on Google is they gotta pick one thing and iterate it. The idea that they had at something that looked like the Quest or the Quest 2, that's gotta hurt, right? Because the Quest 2 is a great product. We like it a lot. It's, it's a mid-range Android phone that you wear on your face. Like, it runs Android. It has a Qualcomm, like, effectively a mid-range Qualcomm processor in it. I think there was a report that Facebook tried to move away from Android and make their own operating system, and then Facebook denied it, and so they're still working on it. But at the end of the day, it's running Android. So Google had all of the pieces.

• 39:08Speaker 02

  The person who was building that operating system just went to Google to work on Iris, the OS for it. It all comes around. Yeah, it's, it's a very interesting talent scene right now, because Meta is out. My, what I'm hearing is that Meta is outspending everyone for talent in this area. And so it's kind of just like, Zuck, Eye of Sauron on this space, and like, anything must be his. And so I think Google and Apple are feeling the heat. And I think Google realizes they need to have something in this space. And that the tech is good. I mean, I do think we are going to be blown away, and I think a lot of skeptics are going to be, um, kind of change their tune a bit when a lot of these headsets start hitting in the next couple of years. I mean, obviously, Apple's gonna be a big moment, but even Cambria, probably this Google thing.

• 39:52Speaker 02

  The tech with eye tracking and the resolution of these things is gonna get so much better. And I think it's gonna be like, oh, wow, this is like what a retina screen is type moment for people. And that's all gonna be hitting in the next couple of years, based on what everyone's working on.

• 40:06Nilay Patel?

  I've been very skeptical of that hardware promise on this show. I think it's very challenging, but such is the way of hardware, right? It will, it will improve. I think the question I have is like, on the software side, what is the point of some of this stuff? Like, Facebook has made it pretty clear, right? They're just buying everything. They're really invested in gaming. They've got, I don't know, meetings, you know, like Horizon Workspace, right? You can, they have a picture because they're shipping stuff. So the picture is at least a little bit coherent, just because it exists. Apple is pretty unclear to me what they expect you to do when you're wearing this thing on your face all day. There is a report that they don't, they don't want to use the word metaverse. They don't think you should wear a headset all day. It's like in and out. We'll see. Google is by far the most

• 40:51Nilay Patel?

  question marky of them all, right? Because they, they just aren't committed to any software ideas in that way.

• 40:56Speaker 02

  Well, so Google has Lens, which I think is arguably the most compelling thing you could imagine. I know your killer app is like recognizing someone's face, and I agree that's a killer app. But like Lens on a headset that you wear all day, and this is not what Iris is, by the way. This is not what Apple's device is going to be. We need to separate these two things. So like, AR glasses, you will, you wear every day are not coming for a very long time, you know, like very good form factor. These very expensive, high-res headsets are though. And I think even something like Lens on a headset like that could be compelling, even if you're mostly in your house or your office. And just like the, you know, I reported like the head of, the guy who founded Assistant, Scott Huffman, within Google is working on this headset. Like, they have the, they have the AI, machine learning tech to really do something interesting. But

• 41:41Speaker 02

  you're right. I mean, it's not proven what it will be. I mean, Google and Apple are both platform companies. And the way they approach new categories is like, let the developers decide, right? Like the iPhone famously didn't have an App Store. Apple really had no idea what was going to happen with the App Store. And it probably is going to be the same thing with the headset. They're going to rely on developers to come up with ideas for it. But yeah, we haven't really seen what the most compelling use case is. I imagine they'll lean into productivity and stuff because this is something you wear at home. This isn't going to be something that you, even though it's untethered, the prototypes, like you're not going to take it out and walk down the street with it. I did see a Twitter of, a Twitter video of a guy walking with an Oculus Quest on down, uh, down the river walk down in Chicago.

• 42:24Speaker 02

  And with like a suit on and people just like, well, what? I mean, that's awesome.

• 42:28Nilay Patel?

  That's amazing.

• 42:28Speaker 02

  Totally recommend doing that with pass through enabled.

• 42:31Nilay Patel?

  You're not supposed to wear those things outside. By the way, we keep saying Oculus, it's a medic, it's technically a medic quest now. You, by the way, they like are very clear that you should not wear these things outside.

• 42:41Speaker 02

  No, you should not. You absolutely should not. And like, that's what these headsets are. They're meant to be entertainment, productivity in the home type devices. And I think that's what we're going to have for a while. The, the truly heads up glasses type thing, that's not ready.

• 42:54Nilay Patel?

  When you think about the, the overall like software play, right? You're in the home, you're, maybe you're doing work from home. You've got this stuff on your face. Like Google doesn't have that, even with Android, right? Like there is some productivity in gaming that happens on the iOS platform. You can see those developers move over. You see Facebook just like building that application ecosystem and then buying whoever is successful. That's a great move for them. That's getting them scrutiny from the NTC. I, I just don't know how Google's going to court those developers. Like that to me is the big question mark here. We see it every year at I O, right? Like that's their developer conference. And we hear about a lot of technologies that Google's going to build.

• 43:34Nilay Patel?

  And then we just like kind of wait. And I, I just wonder like, to me, the idea that they're doing it themselves and it's a hardware, software integrated product. And it's not a VR OS for other vendors to build is just like very indicative of Google's entire experience with Android.

• 43:51Speaker 02

  Yeah, I mean, this is running custom silicone using Pixel stuff as well. Yeah, it is very indicative. I think the yeah, I mean, some of the feedback I've gotten already from the story is like developers just don't trust Google here, obviously. And we're burned by Daydream and a lot of that developer attention is now just in Meta's world firmly. Also, because there is no other company to speak of that's actually doing stuff in the space. So that's going to definitely be an uphill battle. I mean, they have more money than God. So like, you know, if they have enough determination, they can make it happen. But it's that's always the question with Google is like, what is their level of determination? And with Meta, you know that it is like, it is, you know, it is bet the farm, right? It is like, this is, this is our future. Google has a lot of things going on.

• 44:36Speaker 02

  And yeah, Sundar may think this is cool and they may have some FOMO and they may realize they need a headset, but they'll be fine if they don't, right? And so that's the question is like, can they hire enough people too? Because the talent industry in this space is very, is very not, it's illiquid right now. So I'm very skeptical of this one, but I thought it was important to like, kind of peel the veil back a little bit and show people that Google has something going on. They've been kind of hinting at it, but it's definitely a thing. It's very early. They don't even have like go to market figured out. They don't even know like the customer verticals. They're still trying to figure all that out, but it's like, apparently a pretty cool tech demo. So that's like kind of Google in a nutshell, right?

• 45:14Nilay Patel?

  It's very much Google nutshell. Is there an open version of this? I realize like, just in asking that last question, all of these products are the iPhone model, right? Closed software hardware and great, and maybe, you know, this is a very hard product to build and to get right. But it just feels like there's no, there's no windows of AR or VR yet.

• 45:35Speaker 02

  No, I mean, maybe Google, maybe Google, you know, with Daydream, they worked with Lenovo on the hardware. Maybe they will work with an OEM, you know, the moment these headsets hit, Samsung is going to be calling Google. They're going to be calling Meta and going like, hello, where's my headset, right? Like the OEMs are going to want in on this and Google's well positioned to do that, given their history and how they operate. So like, maybe they will go that route. Again, they are a platform thinking company, so I could see that. But yeah, I think they've realized like Apple and Meta that you need the custom silicone. You need your own data centers. Another part of this is that, you know, they're wanting to do kind of remote rendering with their data centers and try to like, take some of the compute off the headset. And Google's very good at that. They have.

• 46:18Speaker 02

  Um, you know, best in class cloud. So like they have a lot of the resources to do it themselves. And I think they've realized to make the best product, you kind of need to do it yourself. You can't really rely on like piecemealing everything together. And I don't know what that means for like the Qualcomm's of the world going forward, because I don't see a future where the largest companies want to rely on a very distributed supply chain for this tech anymore. It looks like we're past that era.

• 46:43Nilay Patel?

  Yeah, we had Qualcomm CEO Cristiano Aman two weeks ago on Decoder and he was like, I'm in everything, like I'm in the HoloLens, we're in the Oculus, we're good on the future. And he was like, the next market for us is not phones, it's glasses. So I think there's some interest there.

• 47:01Speaker 02

  If anything, they could be the Android, honestly, Qualcomm with that reference design and Niantic. And you know, if anything, that might be how it plays out is the chipmakers and some kind of weir- smaller third party, you know, companies that don't have big platforms already. They'll band together and do something. I don't see Google or Apple or Meta becoming like a build on top of my platform type company. I just don't think that. Cause like if you're investing billions of dollars to build this stuff, like what is the ROI on that? Like just giving it away, right?

• 47:30Nilay Patel?

  Yeah. Truly love the future where I have multiple headsets in the house to run.

• 47:35Speaker 02

  It's coming.

• 47:36Nilay Patel?

  YouTube is on this headset is going to be an amazing future for all of us. All right, we gotta take a break. We'll be back with Russell Brandom, Alex, Ash. That was great. We'll see you later.

• 48:25Speaker 05

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• 48:56Nilay Patel?

  All right, we're back. What's that I hear?

• 49:00Speaker 06

  There I am.

• 49:01Nilay Patel?

  Russell Brandom's here. That was his entry music.

• 49:03Speaker 06

  You thought you'd seen the last of me, but here I am.

• 49:07Nilay Patel?

  It's just you and me, man.

• 49:08Speaker 06

  Yeah.

• 49:08Nilay Patel?

  No Dieter. This is just the direct Brandon. It's gonna be, this is gonna be a wild ride. So there's two big stories I want to talk about with you. Let's start with the 5G debacle, because I think we can, it's not over yet, but I think we can get through it pretty quickly. So we've been talking about this for weeks. It appears the major airlines in this country have not been listening to the Vergecast.

• 49:30Speaker 06

  Not, not closely enough.

• 49:32Nilay Patel?

  Not closely, but we have been talking about this for weeks. So AT&T and Verizon launched their C-band 5G networks, their mid-band 5G, the good stuff. And so they were, they were set to launch it a few weeks ago. The FAA and the airlines had a little bit of a panic because the mid-band 5G might interfere with radar altimeters in planes. They agreed to delay it. The FCC and the FAA have just been infighting, which is really weird.

• 49:58Speaker 06

  Yeah.

• 49:59Nilay Patel?

  And then this week, the airlines were like, hey, you're launching this thing as scheduled. There'll be catastrophic disruption to flights in America. And then everyone scrambled. Some flights were canceled on, on particular, some Boeing planes flying internationally, 777s. And now everything seems to be fine.

• 50:17Speaker 06

  Yeah.

• 50:18Nilay Patel?

  And the mid-band did launch and people seemed to like it. What is going on here?

• 50:22Speaker 06

  I will say, and I'm a little like, I don't have perfect information. And obviously, a bunch of airlines were saying like scary things, as they've been saying this whole time. And I don't want to discount that, but... I have not seen the catastrophic disruption, right? Like, I think we have seen flights canceled, but there are lots of flights canceled. I don't think we've seen like a huge shutdown of air travel. And now, granted, there were extra things that even carriers did where they said, "Okay, look, we won't turn on the towers that are right next to these major airports for another however long." But it's... I am...

• 51:04Speaker 06

  I have been waiting to get proven wrong that this is not actually a big deal and they're worrying over nothing. And I have not seen anything that convinces me that this is actually a problem and not just airlines being overly cautious. Which is like understandable and valid and fine, but I feel like in the end it wasn't like... There was no catastrophic disruption. They said catastrophic disruption, and like, where is it?

• 51:35Nilay Patel?

  So, one thing we should note from the jump. These 5G frequencies are being used around the world.

• 51:42Speaker 06

  Yes, yeah.

• 51:43Nilay Patel?

  So that seems to be fine in other places. Two, it's been years since AT&T and Verizon purchased the spectrum. So everyone has known it's been coming.

• 51:54Speaker 06

  Yeah, I mean...

• 51:55Nilay Patel?

  I'm just trying to get to like, the president of Emirates Airlines was like, "This is the greatest debacle I've ever experienced in my life as an airline exec." Like, how did that happen?

• 52:04Speaker 06

  Well, I mean, it's been a... It's been a smooth... I don't know. It's been a smooth decade for air travel. I don't... The thing I would say is, and this is where it does get tricky. So it's true that in 40... I mean, this is like, in some ways, what the telecoms keep saying is that it's used in 40 countries around the world. The problem is it's a little bit different in each country. So like, the big example is France, where it's true that these specific frequencies have been in use. Like, the specific frequencies that are most...

• 52:37Speaker 06

  Available in the mid-band, change a little bit, and also the configuration of like, specifically how high the power is for the cell tower, what it's, how strict they are about how they're oriented, and then also how strict they are about how close you're allowed to have a cell tower to an airport. There are just like different rules for this in every country, and this is why every country, we have the airline regulator and the telecom regulator get in a room and like, hopefully has it out. And that's the, that's the process that happened in every other country, and it was just, uh, America was too cringe to, to make it work.

• 53:21Nilay Patel?

  I have to say, one of the strangest pieces of this whole story is, the FAA is supposed to regulate the airlines, and the FCC is supposed to regulate the telecoms. And on this, like, it's more like they're boosters for the industries that they're right, like, they're fighting on behalf of their, it's very strange.

• 53:44Speaker 06

  Yeah, I do, like, part of me, I do think that this was like a bipartisan failure, because like, it's been a year on each side, like, if either-

• 53:56Nilay Patel?

  Of Trump and Biden.

• 53:57Speaker 06

  Of Trump and Biden, yeah, exactly. So it's tempting to be like, oh, like, Trump's FAA was a mess, and then they, they couldn't, they didn't have time. But like, actually, they did have time. So Harold Feld, who we love, friend of The Verge, described this as like, a game of chicken, that the FAA, so, so basically, because the FAA is the airline regulator, they have the power to go to all of the airlines and say, give us this detailed information about the equipment you're using on your plane, and we're gonna do these tests and figure out what's safe and what's not, and the stuff that's not safe, we're gonna replace your altimeter, and it's, you know, Verizon will write you a check for a new altimeter, because they do not care, they just want to be able to

• 54:41Speaker 06

  use their spectrum. That they paid like, $60 billion for, they just want to be able to use it. 20 grand for a new altimeter is not going to break the bank for Verizon. But so, and I mean, there's like funds and there are ways that they do this. It's not just Verizon writing checks.

• 54:59Nilay Patel?

  And Verizon bought Yahoo, man. I feel like they'd be like, altimeters were good.

• 55:02Speaker 06

  Yeah.

• 55:03Nilay Patel?

  We know what they're for.

• 55:04Speaker 06

  Verizon buys a lot of silly stuff. This is, this is like one of the more, we're going to help do our part to help secure air travel. Like, yeah, absolutely. It seems like they didn't do that because this is the game of chicken metaphor that Harold Feld has is that they were sort of figuring, well, we need to extract more concessions from the carriers. And they did extract some concessions, like they kept, we, even now, we're seeing, okay, they're going to give a little bit more of a radius around the airports. There's an extra 20 megahertz, I want to say, around of the spectrum that we're not. But I actually think it's just hurts, but anyway, a big chunk of the spectrum got carved out

• 55:46Speaker 06

  just so we would have more of a buffer between the spectrum that 5G uses and the spectrum that these altimeters use. But it kind of never got to the point where they were like, okay, we've bargained enough. Time to all buckle down and do our job for making this work. And really, that was the FAA's job to like, make sure that the planes had the right equipment for this thing that we basically knew was going to happen. And yeah, I mean, that didn't happen.

• 56:15Nilay Patel?

  Yeah. I will say that you rarely get statements where companies express emotions. So AT&T said it was frustrated, which I just, I love the idea of AT&T just being, Verizon was frustrated. It seems to be rolling out, I will say that hilariously Verizon had much more at stake here. They, they turned on much more of this network. People do seem to be happy, they're getting good speeds. AT&T in classic AT&T fashion. It's like street corners in seven cities. So they've got a much longer way to go. But it is on now. There's still a fight over some planes. I think at last, the last I checked, it was 64% of affected flights were now or affected plane types were approved. It's not a lot.

• 56:57Speaker 06

  Well, they keep getting more. It is sort of like, those are the ones that we're 100% sure are fine. And then there are others where we don't know. And that's like an alarming thing if you're on the plane. But also, this is like a process that started a month ago. So it's, it's like, kind of even remarkable that they've done that much.

• 57:20Nilay Patel?

  I would say that Tuesday and Wednesday, we're just like utterly, like Boeing is issuing statements. Emirates and ANA Airlines, Japan Airlines, Air India, they're canceling flights. Regardless of the fact that it's a year on both sides. I would just say one of the main promises of the entire Biden administration is like, we're competent government bureaucrats who will execute the functions of government well. And they just like, did not in this case. So hopefully it gets resolved, but C-band is rolling out. I think, I do think there's going to be more, more of this story to come. Just because everyone is mad. Rarely does AT&T come out and say, I'm frustrated. Like, that's just a weird one.

• 57:58Speaker 06

  Maybe T-Mobile was pulling the strings. It's like a Godfather type thing.

• 58:03Nilay Patel?

  You have to imagine that the T-Mobile people were like, we told you so.

• 58:06Speaker 06

  Yeah, T-Mobile loves it because, because, because before this, it seemed like they had gotten kind of crappy spectrum. Because they couldn't like, put down the big bucks that Verizon and AT&T could. And now it's like, oh, actually, T-Mobile is the only one with actual workable mid-band spectrum that isn't being blocked by federal airlines.

• 58:30Nilay Patel?

  It's pretty good. I mean, that's what they've always said. But we'll see what happens next. That's that story. The other story, which is bigger, has a much longer journey, I think, is we've been covering the antitrust bills that have been winding their way through hearings. They were in the House. The big one hit the Senate markup today. There's a lot of arguments about it. Ted Cruz name checked a phone call with with Tim Cook, which is pretty good. What's going on there?

• 58:57Speaker 06

  Yeah, so this is the American Innovation and Choice Online Act. There's also the Open App Markets App that's act that's like a little more about Epic versus Apple type stuff like App Store rules. But the one that advanced today, the general principle that they always come back to is this sort of thing that we've heard from Liz Warren a bunch, that is basically if you run a platform, there need to be strict rules about what you can do on that platform. And so this is the classic thing of like, Apple runs the App Store, but Apple also has apps in the App Store. Amazon runs a big store, but

• 59:39Speaker 06

  it also has products in the store. And so the basic idea that they have in the messaging of it, and seemingly in writing it, is we're going to prevent these companies from sort of boosting their own products on their own platforms. You can run the platform, but you're not allowed to promote your own stuff on it over everyone else.

• 1:00:05Nilay Patel?

  So that seems like a good idea. The bill is obviously very long. It made it out of committee today.

• 1:00:11Speaker 06

  Yeah.

• 1:00:12Nilay Patel?

  Six people voted against it. 16 senators voted for it. It's not like over. And the bill seems to have some inbuilt weirdness, especially around like content moderation, which is why like Ted Cruz is so excited about it.

• 1:00:28Speaker 06

  Yeah. So I mean, one of the things is, it's not just that you can't promote your own stuff. There are also rules about discriminating between sort of similar equivalent services on the platform, right? Which is on some level, you're like, yeah, okay, we don't want Facebook just deciding that like, it likes this publisher and not this other publisher. And so we're only going to show things from this, right? But it's a little bit hard to know who are equivalent publishers. And then also, we've had, like, over the past five years, this move towards deplatforming,

• 1:01:13Speaker 06

  right? So the question, one of the hypotheticals that was brought up is, you know, Amazon doesn't want to host Parler on Amazon Web Services anymore. Is it going to be seen as discriminatory? I mean, so objectively, Amazon blocked them because of these, or sort of dropped them as a customer because of these violent threats. Is that going to be seen as discriminatory? And then they're going to get sued by some, by some state attorney general who, who wants to make a point about anti-conservative bias, right?

• 1:01:44Nilay Patel?

  That, to me, is like so far afield from, Amazon runs a store and it will see the popular product in the store, clone it, and then rank the Amazon Basics version above the popular, like, that's the, that was the heart of this. That's like where this all began. Or, Apple sees a popular product in the store and makes sure that the Apple app comes up over, right? Like, yeah. Next to that is, okay, you made a business deal with Amazon to advertise your product at the top. Like, right. That's pretty wonky and difficult, but it, getting from there to, I don't want to host a racist platform seems like wildly different things to me.

• 1:02:27Speaker 06

  Right. I think that's true. I also would say, like, well, okay, I'm in a weird place with this, but I do think one of the common things that people have said about deplatforming when they do this sort of thing, is that there's actually no rulebook for it. That, like, the question of when something is too far out of bounds to be like, to appear in Google's search results, is actually something that seems like we should have some sort of legal or political rule about it, and it shouldn't just be like, whatever Google decides, or whatever, like, Google employees can pressure the broader company to, like, this is probably something we should decide as a society.

• 1:03:12Speaker 06

  Some sort of political government way. And I kind of think that's what this is like. I would say in specifically the Amazon Web Services Parler thing, like they were violent threats. Amazon had a legal obligation and it can say, no, we're not discriminating between like Parler and Snapchat. It's that Snapchat, when we send them these violent threats, they take them down and Parler doesn't take them down. And we're worried about the legal risk from that. And so we're dropping them, but like, that's the reason. I also worry that like it's, it is warping the conversation to say, well, we have all of these sort of bizarre,

• 1:03:52Speaker 06

  bad faith, conservative bias lawsuits, and we know that there are going to be more of them in the future. And so we need to pass regulations with an eye towards what is the worst possible like Josh Hawley? I want to be a Senator lawsuit that could possibly be used for this. Like it is sort of a weird acid test for.

• 1:04:16Nilay Patel?

  What you're talking about there specifically is Josh Hawley was the Attorney General of Missouri.

• 1:04:20Speaker 06

  Yes, yeah.

• 1:04:21Nilay Patel?

  And he, he loved filing lawsuits against tech companies to like build his brand.

• 1:04:25Speaker 06

  Yeah. Which like, God bless him. I, I think specifically with 230, like section 230, we have had a ton of lawsuits that are just like, Google helped promote this protest and.

• 1:04:39Nilay Patel?

  But here's the thing I'll say about those 230 lawsuits, they all fail.

• 1:04:42Speaker 06

  Right.

• 1:04:42Nilay Patel?

  They all just hit the same exact brick wall and nothing stops them from happening. And I'm looking at Ted Cruz with his various amendments to this antitrust bill. Here's the quote. He's like, the abuse, and he wanted to add a language that would allow users to sue platforms if the platform is quote harmed them. The Ted Cruz quote is, "The abuses of big tech are such that I am happy to unleash the trial lawyers."

• 1:05:06Speaker 06

  Yeah.

• 1:05:07Nilay Patel?

  That just feels like an open threat. Like do what I want or I'll like this disaster will befall you.

• 1:05:13Speaker 06

  Well, and, and friend of the show Baron Joko was also like, loved that quote where he was like, "I'm so angry about big tech that I'm willing to bracket, like abandon every principle of conservatism."

• 1:05:26Speaker 06

  I don't know. I just like, I don't, I do think we need some like, I mean, this is like what Facebook keeps saying in ads is like, we need some platform regulation, like we do. The idea that every possible proposal is going to be held hostage to like, these horrific bad faith lawsuits, and what we need to be thinking about is how we minimize the damage from them. I don't know that it's wrong. It's just like, that's not a good situation to be in. I don't know.

• 1:05:55Nilay Patel?

  I will say, so the, the tech companies obviously hate this antitrust bill. They hate it. The amount of furious lobbying that we've seen this week is out of control. Tim Cook and Sundar Pichai have both been calling senators directly. Only Ted Cruz, brave enough to admit that he spent 40 minutes on the phone with Tim Cook, but Politico and others have reported that it's like, and he, Tim Cook did not convince Ted Cruz. Like Ted Cruz, like screw it. Like, go ahead. I really do think he just wanted the name check.

• 1:06:20Speaker 06

  Oh, yeah.

• 1:06:21Nilay Patel?

  Google put out a blog post, which has this like, great line in it, which is, we need to protect competition, not competitors, which is very funny, because you need competitors to have competition.

• 1:06:34Speaker 06

  Yeah. So Google's example, which is one of the more compelling ones to me, and I, it's interesting to think about, is they say, this will prevent us from giving this useful information in Google Maps, which is like, one of those Google products we use and love, and we want it to stay good. And people kept going back and forth about this. There's this fact sheet that was like, it, it won't, that's not what this says. And interesting, so, I mean, the way that it would work is, Google Maps is this platform that's run by Google. There are sort of, there are little entries in it, right? And some of those are sort of populated by Google information. And also, some of them are ads served by Google, like, right? Like, you can pay Google to have an ad that shows, like,

• 1:07:17Speaker 06

  here's the Verge scissor vodka experience, like, come on down, and

• 1:07:24Nilay Patel?

  Let's do it.

• 1:07:26Speaker 06

  The question of like, which of those of the things that are on Google Maps? How do you write a bill? Which is mostly about like Google Search and Amazon and Facebook and things that are more conventionally platforms where it's like a feed and we have objects in the feed. And we know where each of them comes from. Whereas Google Maps, it's like, okay, here's this restaurant entry. Is it a Google monopoly because there's nothing that's like populated from Yelp? Or is it a Google entry because it's?

• 1:07:56Nilay Patel?

  I think Yelp would kind of say yes, right? Like the answer for Yelp. And by the way, Yelp and Sonos and others met at the White House to talk about these competition concerns this week, too. Like, just a lot of noise with this. But the historic answer from Yelp is Google has illegally scraped our shit for years. And they steal our data to populate Google Search. And they illegally, what people want when they search restaurant reviews is Yelp. And what they get instead is whatever Google wants. And to even show up, we have to pay Google for ads to show up at the top of search. Sonos would make the same argument, right? They would say, like, if you search smart speaker on Google, you get their stuff and ours, if you search Sonos to become the first search result, we have to pay for the word

• 1:08:41Nilay Patel?

  Sonos on Google. Otherwise, you get results for Google's products.

• 1:08:45Speaker 06

  Yeah.

• 1:08:46Nilay Patel?

  I don't know how you make that same argument with Maps, right? Like, I get what you're saying. But at the same time, Yelp would happily tell you they should have equal access to the search results in Google Maps.

• 1:08:57Speaker 06

  Yeah, well, and so this was actually one of the more interesting things about the like, conversation around it. So there was this letter in support of the bill, which in part, it was like the usual suspects of like, people who don't like Google. Sort of Yelp is on there, DuckDuckGo, which is like the anti-Google search engine, Genius, which has also been.

• 1:09:19Nilay Patel?

  Hates, hates Google.

• 1:09:20Speaker 06

  It basically only exists to sign these letters at this point. It's not really like a functioning website anymore. But then you have Y Combinator, which is like, probably the preeminent accelerator, certainly like Story, they have all these huge, it's. You know, run by Andreessen Horowitz, but like this major startup engine that I mean, on some level, you would think that they would be worried, or I was surprised to see their name on it. And I do think it shows how much like the assumption is any company starting out today is going to be running uphill against this because eventually Google or Amazon or Facebook will see that you have a good idea and there's this marketplace and they

• 1:10:03Speaker 06

  want to have their own product in this marketplace and they'll just destroy you. It'll be impossible to compete. And I mean, so they like the bill. I don't know what that exactly means. I don't think that means there's nothing they would change about it. But I do think within the tech industry, there is a real divide on this.

• 1:10:23Nilay Patel?

  Yeah. And I do think that divide is kind of broadly expressed as small companies versus big companies. And Y Combinator is a proxy for every small company that doesn't exist yet.

• 1:10:33Speaker 06

  Yeah, yeah, I think that's right. It's just, it is, I will say, even given the people who are raising, like, a lot of smart people are raising concerns about these provisions, mostly in the context of deplatforming. And it's the kind of thing where it's not obvious to me how you like amend your way out of this. Because fundamentally, most deplatforming is some form of discrimination. I mean, discrimination sounds bad, but they're like, we don't like Nazis. We're going to discriminate against Nazis on our platform and not have them. And this is like, there's this question of how you draw the line. And fundamentally,

• 1:11:12Speaker 06

  this is making rules about that. But I don't see how you amend your way to a version that doesn't create those concerns. Maybe they're going to do it and I'll have egg on my face, but I don't see it.

• 1:11:25Nilay Patel?

  The other bill is the open app markets app, which is, in many readings, would allow side loading on the iPhone. Apple obviously hates this. It's like, you know, it's sort of debatable. So Apple's had a statement from their senior director of government affairs, Tim Powderley. He wrote a letter to a bunch of senators. He just took all in, whole hog. I'll just read it. "After a tumultuous year that witnessed multiple controversies regarding social media, whistleblower allegations of long ignored risks to children, and ransomware attacks that hobbled critical infrastructure, it would be ironic if Congress responds by making it harder to protect the privacy and security of Americans' personal devices." That is what this bill would do. He's basically saying if you let side loading happen,

• 1:12:08Nilay Patel?

  children will be at risk. Like, that's the Apple move.

• 1:12:11Speaker 06

  Yeah.

• 1:12:12Nilay Patel?

  I would say that Apple has, like, I get it, that's an argument, that's the, Apple loves to make the privacy argument. I would say that Apple has total control of the phone.

• 1:12:21Speaker 06

  Yeah.

• 1:12:21Nilay Patel?

  Right now. And there were multiple controversies regarding social media whistleblowers allegations of logging for, risks to children, and ransomware attacks and like, it's, those things happen regardless of the control.

• 1:12:32Speaker 06

  Yeah, and also, that's another one where like, it's, another frustrating dynamic with this stuff is that we're just arguing from the most extreme possible consequences. We're like, it's very easy to imagine things that would peel away Apple's control of the App Store and open the app markets without completely, like, unchaining the iOS connection with the iPhone. Like, I just don't really, like, what is the relation between the non iOS apps and the Apple App Store? It just, I don't really buy it. I think that it's not, I think they're just

• 1:13:14Speaker 06

  exaggerating the problem. And I think also, we saw the same thing, you know, way back when, when it was a question of jailbreaking specific, but like locking SIM cards to phone networks. I don't know.

• 1:13:27Nilay Patel?

  We'll see. So the bill is out of committee. A number of people, it went 16 to 6 out of committee. A number of those 16 said, I'm voting for it to go out of committee, but I'm not going to vote for the bill in this form. So it has yet to change.

• 1:13:38Speaker 06

  Yeah.

• 1:13:39Nilay Patel?

  I think this deplatforming provision is gonna get more attention. It seems to be where the most scrutiny is. Apple and Google are not gonna stop. They are motivated to stop this thing. I think we're gonna hear a lot of noise. I think we're gonna see some advertising, the industry groups.

• 1:13:55Speaker 06

  Oh, yeah.

• 1:13:55Nilay Patel?

  You know, their lobbying groups are already advertising in force. We're gonna see it. I'm sure just based on this conversation, Russell and I are both gonna get some emails. We're going to get some opportunities to talk to lobbyists. What's the timeline here? Is this thing like on a train going or fits and starts? What do you think?

• 1:14:11Speaker 06

  I don't know. I mean, I would not. The Senate, you never bet on anything moving fast. And also the Biden priority now is, is whatever's going on with Joe Manchin. So I don't think they're in any hurry on this. I do think we're gonna, they're gonna try to get it done like this Congress, obviously. But it could be any time in the next year. As you get closer to the election, it gets a little dicey. So like probably the next six months, but I'm not, I think there won't be snow on the ground when we see movement on this.

• 1:14:39Nilay Patel?

  What's interesting is that this one is bipartisan, right? They don't need the 50 senators plus the vice president in lockstep. They do have, they do have Ted Cruz saying, Tim Cook called him, like Josh Hawley voted for this bill out of judicial, like,

• 1:14:53Speaker 06

  Yeah, yeah.

• 1:14:53Nilay Patel?

  There is more bipartisanship around this than you would expect. I think the overall brand of big tech is not a political winner right now. I think every politician wants to go home and say they stood up.

• 1:15:05Speaker 06

  I, I think one of the interesting things about this is the people who really care about tech antitrust are the people on the judiciary committee. Because they're like in there all day. They want their bills to get out. We don't really know how like the average Republican, like they like to complain about big tech a lot. But we don't actually know how much they're going to be committed to like voting for a bill that a lot of people are lobbying really hard against. And the same thing's true with Democrats. I mean, there are a lot of very pro industry Democrats like Ro Khanna and sort of people in that caucus. I mean, Nancy Pelosi.

• 1:15:41Nilay Patel?

  Yeah, Dianne Feinstein was like, a lot of these companies are in my, are in my state. Like, I'm not voting for this.

• 1:15:47Speaker 06

  Right. So like, it's weird because we're so used to everything passing on a, passing or failing on a party line. But this, it, it kind of scrambles. The thing, I'm genuinely curious to see what this looks like in a full floor vote. Because I think there are going to be some surprises.

• 1:16:03Nilay Patel?

  All right. Well, we'll see what happens. McKenna is on the case. She's obviously covering this. You can follow her. It's, there's action here in an election year. I do think every politician is motivated to go home and tell their constituents they did something about big tech. It doesn't matter what you say. You're like, I did something about big tech. All right. That's it. We've gone over, as always, Russell. Thank you so much for being on The Vergecast.

• 1:16:29Speaker 06

  My pleasure.

• 1:16:29Nilay Patel?

  I think Dieter will be back next week. I hope so. I miss him. But my thanks to Ash Parrish. She did great for her first time on the show. And Alex Heath. You can tweet at us. I'm at Reckless. You can tweet at Dieter, at Backlon, tell me you miss him. Russell is at Russell Brandom. Alex is at Alex E. Heath. Ash is at Ad Dashtra, A D A S H T R A. We love to hear from you. I want to shout out two stories. We have a story from a freelancer named Anna Betts about women who drive for Uber and Lyft and what their experiences are like. And then just one of my favorite headlines of the week from Aria, who helps Ashley write Hot Pod, librarians are coming for podcasts. I won't tell you what that means. You go

• 1:17:12Nilay Patel?

  read it. It's pretty good. That's it. That's The Vergecast. We'll see you next week. Rock and roll.

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