Twitter gets hacked / NBC's streaming service Peacock debuts / TikTok in the US is threatened

The Verge's Nilay Patel, Dieter Bohn, Russell Brandom, and Julia Alexander discuss an unprecedented Twitter hack this week, the release of NBCUniversal's new streaming service Peacock, and the potential restrictions on TikTok in the US. Stories discussed this week: White House reportedly orders hospitals to bypass CDC during COVID-19 data collection CDC employees say the agency has a culture of ‘racial aggression’ Etsy sellers are offering sheer mesh face masks that provide ‘very little protection’ Seventeen states sue Trump administration over new student visa guidelines Barack Obama, Joe Biden, Elon Musk, Apple, and others hacked in unprecedented Twitter attack Twitter shut off the ability for many people to tweet after massive hack Twitter reveals that its own employee tools contributed to unprecedented hack Lawmakers demand more details on Twitter’s massive hack The massive Twitter hack could be a global security crisis Twitter says passwords were spared in yesterday’s attack, but it’s still working to restore locked accounts The FBI opens investigation into Twitter attack over national security concerns White House says restrictions on TikTok could come in ‘weeks, not months’ TikTok’s biggest problem is outside its control Peacock’s interface aims to recreate the feeling of live TV, but it comes up short Why Peacock and HBO Max aren’t on the biggest streaming platforms How to stream Peacock Netflix names content chief Ted Sarandos as co-CEO Netflix adds another whopping 10 million subscribers, but warns growth may slow Microsoft discontinues Xbox One X and Xbox One S digital edition ahead of Series X launch Xbox Series X can play all Xbox One games, unless they use Kinect Microsoft to launch xCloud streaming free with Xbox Game Pass Ultimate in September 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, we talk about the big Twitter hack with Russell Brandon, also a little bit about whether the US government can actually ban TikTok and why. Then Julia Alexander joins us to talk about Peacock, the new streaming service from NBC that launched this week. And there's a little bit of Xbox news. There's always Xbox news. Let's come now on The Vergecast.

• 0:18Speaker 01

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• 1:20Nilay Patel?

  Hello and welcome to The Vergecast, the flagship podcast of staying at home and wearing a mask. That's what I want you to do. Yeah. We're just moved on fully to instructions now. I'm Neil, I'm your friend. Dieter Bowne is here. I need more synonyms for friend. Pal. Buddy. Chum. Russell Brandom is here. I'm the secret enemy. A loaded phrase. Julia Alexander is here.

• 1:43Speaker 03

  Hi, it's too early for this game of who's a friend and who's an enemy.

• 1:47Nilay Patel?

  It's right. It's every, every Vergecast now starts with like... Extremely coded phrases.

• 1:53Speaker 04

  The Vergecast is now one of those annoying dinner parties, like murder mystery dinner parties in podcast form.

• 1:57Nilay Patel?

  Hasn't it always been? We're coming out late today on a Friday. We are recording early on Friday morning because a lot has happened this week. I want to start is always, so apologies for coming out late. We'll be back to our radio schedule next week, I hope. I want to start as always by pointing out that it has been 18 weeks in America since Deborah Birx held up a flowchart next to Donald Trump, saying that there would be a national testing apparatus where you could go to a website that was being built by, I believe it was 45 million Google engineers.

• 2:26Speaker 04

  Yep.

• 2:27Nilay Patel?

  And that they would make a website, Trump thanked Google, and then you would get a test in the parking lot of a major retailer. You know, the whole 18 weeks, that's where we're at. It hasn't happened yet. Verily is making some kind of website. There is some testing. I think it's obvious there's not enough. And testing results have actually slowed down, which is bad. So that's where we are, the flowchart. I want to dedicate the flowchart count to Kurt Trader, because we made a mistake this week. This is true. So Zoe and Megan wrote about Clubhouse.

• 2:55Speaker 04

  Yeah.

• 2:55Nilay Patel?

  VCs, attacks on journalists. Club, there's two companies called Clubhouse.

• 3:00Speaker 04

  Yep.

• 3:00Nilay Patel?

  There's the, there's the secret beta, I don't know what it, like Ted Talks meets Reddit, Clubhouse. Like it's a podcasting audio startup. It's in secret beta. It's very popular. It's very exclusive. That's the one we wrote about. There's another Clubhouse that's a project management tool. And when we made the art, the art that went out on Twitter had the wrong Clubhouse logo. And Kurt Trader's the CEO of Clubhouse, we fixed it, but he's a Vergecast fan. And he's like, I look forward to the flowchart count. So Kurt, that's for you. Apologies about the wrong logo. That's the, it's the only way you get free callouts on the show. Check out the good Clubhouse. That's what I'm saying. Other virus updates, again, there's actually huge news this week. We got to talk about the Twitter hack.

• 3:42Nilay Patel?

  We got to talk about potentially somehow the government banning TikTok. Julia's here because another streaming service has launched that just keeps happening, whether anyone wants it to or not. Netflix earnings app, there's a lot to talk about. As I say every week, there are two, the two biggest stories of our lifetimes that we will remember, the most formative events of our life. There is the pandemic, obviously, and there's the racial justice movement in this country, which is quickly becoming the biggest movement in the history of the world. So our teams are covering that stuff. We spend a lot of time on it. It's our priority. I know on the show, people want us to talk about tech news, so we do that. But I just want to give some updates on our virus coverage. The White House has reported the order hospitals to bypass the CDC during COVID-19 data reporting.

• 4:26Nilay Patel?

  I think I can say this to the Vergecast audience. Messing with data reporting is bad, right? Like what you measure, how you measure, like I'm assuming our audience knows that that stuff is complicated. It is, it is important to get it right. It changes the results depending on how you measure and what you measure. So that's a fight that's going on. The CDC itself is beset with controversy. Employees are saying the agency has a culture of racial aggression. So that's two of the biggest stories in the world intersecting right there.

• 4:56Nilay Patel?

  Etsy Sellers, Etsy is a, it's a platform for handmade goods, I think, is how they describe themselves. They're offering sheer face masks that actually don't protect you from anything. So in terms of platform moderation, which is like a constant topic on our site and on the show, there's a lot there for Etsy. Russian hackers are targeting vaccine development. There's a lot of vaccines in development. Disrupting that is problematic. You can go read about that. There is a huge thing happening. The Trump administration has used the pandemic to crack down on immigration in various ways. A fight that played out this week, and we're going to just keep watching it. First, the administration said any foreign students in this country on student visas who were not attending classes in person had to go home.

• 5:39Nilay Patel?

  That was enormously controversial for a variety of reasons. Seventeen states filed a lawsuit against the Trump administration, and then the administration appears to have backed down. So we're watching that one very closely. We have, again, just our audience, if you look at it, a lot of people in our audience are very interested in how that might play out. We're following that very closely. And lastly, we're all just spending a lot of time at home. So Justine Kalma, one of our great science reporters, interviewed Emily Anthes to talk about how spending this much time at home might affect your health, might affect how we change habits. That's a great story. I encourage everyone to read it. So that's, like I said, there are two gigantic stories in the world. I never want to act like we're not spending most of our time thinking about them.

• 6:20Nilay Patel?

  But the feedback I get from our audience is, you know, everybody needs a break. And quite honestly, we all do too. So let's talk about some tech news. Russell. It's like not even tech news. It's like, I'm like, let's talk about tech news. And everyone thinks we're going to talk about fun gadgets. I'm like, Russell, what horrible things have happened in the security world this week?

• 6:39Speaker 04

  Sorry, before we get to the horrible thing, I just want to let everybody know that I'm feeling grateful. And so I'm doubling all payments set to my Bitcoin address. If you send me $1,000, I will send back $2,000, but I'm only doing it for the next 30 minutes.

• 6:53Speaker 03

  This is a joke that can only be made by somebody with access to Twitter. It's too painful.

• 6:59Nilay Patel?

  Julie's unlocked out of Twitter.

• 7:01Speaker 05

  So this is, you were talking about taking a break. I'm taking a forced break because,

• 7:07Speaker 05

  okay, so we should start at the absolute beginning, right? So many people yesterday opened up their Twitter client to see that these prominent accounts were tweeting what Dieter just said. And so we're talking like Elon Musk, Bill Gates, Jeff Bezos, Apple. And so they tweeted, I am giving back to my community. If you send me Bitcoin to this address, and it had the blockchain address, I will send back double the Bitcoin. And people said this should have been the first, the first hint that something was wrong, was Jeff Bezos saying, I'm giving back to my community.

• 7:43Speaker 05

  That's a joke I stole from Twitter when I still, I mean, someone tweeted that when I still had access to Twitter. But, okay, so these people did not mean to tweet this. This was a scam. But the interesting thing is, these are like high value accounts. I think it's fair to say that like, probably Jeff Bezos and Apple have every available account protection that like Twitter offers. Like, they really ran the table. Like, Joe Biden got hit, the official Barack Obama account, as well as a number of fake Barack Obama accounts. And so it wasn't just that they had installed some sketchy application or that they hadn't turned on two factor. Like, this was sort of the crown jewels of

• 8:27Speaker 05

  Twitter accounts. And they were just doing it to absolutely everyone. So, I mean, in the Verge newsroom, and actually, this is like, I think, a fun moment, like, does not always come through in the coverage. So, you know, they were tweeting. Tweeting out the blockchain address, right? Which, and it was always the same address, which actually had it been a more sophisticated thing, it would have been harder to track if they changed the address. But anyway, if you do crimes hackers, if you're listening, try to change the address next time. But we were all just, we were all just watching, you know, we did a Twitter search for, show me every tweet that has this address. And we were just watching them roll in. And then two minutes after they posted, they would get deleted. As like the accounts and Twitter itself were scrambling to like, get a hold of it.

• 9:12Nilay Patel?

  But they would also come back first in some cases.

• 9:14Speaker 05

  Yeah.

• 9:15Nilay Patel?

  They'd post and then delete and then reappear.

• 9:17Speaker 05

  Because it's like this other person has access to your account. So you also have access to your account, but they have access too. So you delete the account and then they tweeted again. There were a bunch of different Elon ones. Yeah, and so at the same time, because it's Bitcoin and Bitcoin is a distributed public ledger, and we all love it. You could see the, the payments that were rolling into this address as people sort of tried to take up Jeff Bezos on this offer. It seemed like they were paying out, like Bitcoin was also leaving the address, but I don't think that it was paying out to people like, or anyway, most people who paid this Bitcoin address did not, they just lost money, as you would expect.

• 9:59Nilay Patel?

  I'm sorry, I just, if Jeff Bezos in person walked up to me and said, if you give me a dollar, I'll give you $2, I'd be like, you are compromised.

• 10:11Nilay Patel?

  There's a part of me that just wants to know who paid the money. One of the payments was like $42,000. Who has 42 extra $1,000 to be like, let's take a flyer on this Uber tweet? There's a part that I will never understand.

• 10:25Speaker 03

  I do appreciate though, that because it started with Elon's Twitter, there was like a five minute gap where people were like, is this just Elon?

• 10:34Speaker 03

  Tweeting about Bitcoin and then like, and then very serious accounts started tweeting. And it was like, oh no, this is a problem.

• 10:41Nilay Patel?

  Yeah, it's not Elon just hasn't done some Elon stuff. Like, is he just doing drugs with Kanye right now? And he was like, let's see if this works.

• 10:48Speaker 05

  At first it was like, this is just a thing that's happened to Elon Musk and Bill Gates. But then pretty soon it became clear that it was like, every single account on Twitter was vulnerable to this. And they were just going down the list of like, stuff they could find. Which is not if you're Twitter, it's not good. It's not a good look for Twitter. I think I'm not at risk of being a biased journalist to say that this was bad for Twitter. Yeah, not very good. And, and so they shut down the ability to tweet at all.

• 11:20Speaker 04

  For verified accounts.

• 11:22Speaker 05

  Because, because it was primarily verified accounts that were being tweeted. Like if it's some random account, that's less, you're less likely to pay Bitcoin to that person, I guess. So then, of course, also the, the politics of verification, which is a lovely and healthy conversation that is ongoing on Twitter became a, uh, uh, there were a lot of jokes about that. I mean, that was, that was a deeply funny moment, right? When everyone was just dunking that the blue checks couldn't tweet, like that was pretty funny. It is, but it is also like, again, if you are running Twitter, this is a real like, we have to shut down the reactor moment of like, we can't let, we can't let any of the major accounts tweet at all until we get this under control, which is true.

• 12:06Speaker 05

  So also, and I say this because it's affected me personally as well as Julia. So some victims in this, in addition to the people who lost actual money because they were sort of dumb about this. But if you changed your password when you were seeing that this was happening, which I did. The natural thing to do, right? You're like, oh shit, something bad is happening. I should change my password. I actually had like an exceptionally weak Twitter password.

• 12:33Speaker 03

  Me too, I use the same password.

• 12:35Speaker 05

  I'm just gonna say, and like, not only was it very weak, but it had been, I had like, used it in a lot of accounts and it had been in previous breaches. Russell!

• 12:46Speaker 04

  I was gonna ask you if you could tell us what the password was.

• 12:48Speaker 05

  I had two factor on, no, I can't because I still have, I'm still using it for other stuff. But so I saw it and I was like, all right, time to, time to, look, we all make mistakes. We all, no one's doing perfectly. You write about the mistakes. I often assign you stories and coverage. Yeah, but I had two factor on it. Like I had two factor, I didn't have any sketchy stuff. They weren't gonna get it by guessing the password.

• 13:12Speaker 04

  That's like saying like, no, I walked into the house fire, but it's okay because I had a condom. Like what, like this?

• 13:18Speaker 05

  Oh my god, Dieter. It's too early for that. If I had it to do again, I would- It's 6:30 in the morning where you are. What are you doing?

• 13:28Speaker 03

  That actually explains everything. Dieter's just in the filter.

• 13:34Speaker 05

  Anyway, I have been punished for my lapse because, you know, when they compromise your account, the first thing that they do is change the password to a password that only they know. And then if they're like, who does this account really belong to? Well, they're like, I know the password and that guy doesn't know the password, so it's mine. Right. It's a very natural thing to do. So they especially locked down any accounts that had recently had their password changed. And they have not cared a ton about restoring access to those accounts. So not only can I not tweet, which is pretty bad, but I can't even see tweets. Which is better. Well, I feel like it's sort of like,

• 14:18Speaker 05

  you know, in Batman where like Bane has like the juice that makes him strong, but also makes him like psychotic?

• 14:24Speaker 03

  Speaking my language. You're speaking my language.

• 14:26Speaker 05

  That's like what Twitter was to me.

• 14:31Speaker 03

  The thing is, like, I don't know if this happened to you, Russell. I went through like the five stages of grief within like an hour of not having Twitter. I was like panicking and then I was like trying to bargain with like the Twitter guys and I was like, I will tweet less if I can just tweet once. It's a sickness. Our relationship to this app is a sickness.

• 14:50Speaker 05

  I will tweet less if I can just tweet once? That is like full addicting.

• 14:56Speaker 03

  I almost DM'd Reviews Editor Dan Seifer to be like, can you tweet for me on your account?

• 15:02Speaker 05

  That's horrible. Okay, so this happened. We're all having different levels of psychological crises.

• 15:08Speaker 04

  But now it seems like we kind of know what actually happened, how this hack went down.

• 15:13Speaker 05

  Yeah, at the same time that this was happening, what we do know is there were people on the criminal corners of the internet who were sort of selling access to internal Twitter tools, which are the sort of things that you would use to reset accounts in this way. So this is sort of the landlord's master key. And there are versions of this at most social networks. Like if you want, you know, when you're talking to the guy at Google saying, I need to reset my Gmail, like this is the key he has that you're trying to convince him to use. They are really, really not supposed to fall into the hands of people who will sell access to them

• 15:57Speaker 05

  on like random computer crime forums. Like that is not, and I should say like, the reason that we know this is because of this great reporting by Mother Words Joseph Cox, who was sort of was at the head of the line on this. The question of how that happened, so I mean, and this is assuming that that is in fact the source of the breach, which I think is by far the most plausible explanation. We don't 100% know, but it really seems like that's what happened. So was it that someone who worked for Twitter and had access to these tools got hacked? And then they got the master key from that guy? Or was it that one of those people sort of was actually working for Twitter?

• 16:42Speaker 05

  And was just like, you guys don't pay me enough, like I'm going, I'm going bad.

• 16:47Speaker 04

  Now, there's precedent for that because Twitter actually had state sponsored spies working for it within the past year or two.

• 16:53Speaker 05

  Yeah, Saudi Arabia, technically a US ally, but they've done some things. Yeah, so it's really bad. There are members of Congress and like Joe Biden would like to know how this happened and what they're doing over there at twitter.com anyway. Because like it is at this point, it's not just that like Russell and Julia like to use Twitter. It's, it's sort of a central place. And like, if you're suddenly in control of a major channel of communication from like the President of the United States and this guy who's running for president and like, however, we're going to describe Elon Musk, like that's a problem. That's a society wide problem.

• 17:37Nilay Patel?

  That to me is at the heart of it, right? This is a pretty, as you were describing, unsophisticated Bitcoin scam. In the end, they netted just over, I think, $100,000. It was just over that, yeah. Which is like, if you, I was joking about like, who would do it? Like, if you compromise all those accounts and say, we're giving away free money, and you only net $100,000, like, okay, most people aren't going to believe a scam of that, of that scale and that sort of ineptitude. The question I have is, why didn't the attackers know that what they had was so much more valuable, right? Like, the Russian government has got to be like, we will just pay any amount of money for this opportunity.

• 18:15Speaker 05

  Well, so I do think that, one, it is, like, so it's very scary for someone to get those keys, obviously. I think one thing that I would emphasize that maybe brings that into perspective is, they did not have this power for very long. Like, we're talking about a few hours in which they had it. And that was obviously an extremely chaotic few hours, and it was a few hours that was extremely damaging to Twitter. But if the point is that you're gonna like hack Donald Trump's account, and he's like, "I'm going to war with Canada", and you're like, "This is crazy", or he's pulling out of NATO or something,

• 18:56Speaker 05

  if a few hours later, they're like, "There was this Twitter compromise. I didn't say that", then the overall impact of that is not that big. And also, I mean, if you are literally a criminal and you just want money to buy a fancy jet ski, like, that stuff doesn't do you any good. And so I genuinely think that, like, this weird Bitcoin scam was plausibly the kind of economically optimal choice of how to monetize this access, just because... You can like mess with people, but what can you really, really do?

• 19:33Speaker 04

  What you could, in theory, really, really do if you have full account access is look at the DMs.

• 19:40Speaker 05

  Yeah.

• 19:40Speaker 04

  There's way potentially more valuable information here. So it may be that the answer to your question, Eli, is that the reason that they did this thing that seems like it was just a bunch of kids having fun with Bitcoin is because this was just a bunch of kids having fun with Bitcoin. That is, that is one of the things in the world of possibility. And that's like also scary that this wasn't sophisticated, cozy bear Russian hackers. This was, um, you know, like script kiddies. And if in fact that you are more sophisticated than that, uh, I don't, please, I'm not, I'm not, uh, casting aspersions on you. Stay away from my Twitter account.

• 20:12Speaker 04

  But it's possible that like, like the, the level of sophistication here is super low. Like Twitter, they didn't know what to do and they just like shut shit down. It seems like their admin panels for access to very important accounts up all the way up to, but maybe not including Donald Trump was just available to somebody that probably shouldn't have had access to it. And then when it all went down, they're just like, uh, well, we don't really know what's happening. Nobody can tweet and that's how we fix it for now.

• 20:41Speaker 03

  After, I mean, if you're Twitter, or actually, I guess if you're Facebook, uh, do you get on a call like as an executive with Twitter execs? And be like, hey, what happened to you? Is that way we can prevent it happening to us? Cause I feel like that would be my main concern. I'd be like, this could happen to, I assume a lot of places.

• 20:59Speaker 05

  I do think Facebook is probably like laughing their ass off right now.

• 21:04Speaker 04

  They're having the time of their lives. Uh, Facebook, look, so Julia, the answer to your question is like, yes, that's what security people do at these companies. And that's why Twitter, like if you look at Twitter support, it's like tweeting out information about what happened in detail. Because it's in Twitter's best interest to share what happened. It's all the other companies best interest to know what happened. There is that level of community, I think, for those kinds of professionals. The Jack Dorsey called Mark Zuckerberg and be like, yeah, bro. Uh, here's what you should do. There's a button where you, where I have in my house that all the verified people stopped tweeting. I just hit that button. I don't know if you got that button, but you should get one. Like, I don't know if that happened. Also, I would love for Jack Dorsey to have that button and like display it prominently.

• 21:46Speaker 03

  I appreciate that Jack Dorsey's tweet about this, because I was waiting for him to say something. And then his tweet was like, rough day at Twitter.

• 21:56Nilay Patel?

  He's like, I'll be at Square, y'all. I got another job. Then there's the other part of that. I do think Facebook and the other big companies are somewhat laughing. And like Mark Zuckerberg in a little over a week is going to show up in front of Congress in an antitrust hearing. And I know what he's going to say because he keeps saying it. He's going to say, "Our, the amount we spend on trust and safety and security is more than Twitter's revenue." Like it is his favorite dunk in the world, right? He's like, "I'm spending more than that whole company makes. I should run all social networking in America slash world and have all the money because that's how I can protect you, the American up." Like, that's his mode of operation, right? His mode is like, "I have this

• 22:37Nilay Patel?

  massive scale and I can do a better job than small companies." And so this is just a gift for him. Like, I don't know if, like Sundar doesn't operate that way, but he's going to be up there too. And he's got the same gift, right? Like YouTube's big. It should probably be bigger. What if I ran the only video service on the internet? Like, that's a move that they have now.

• 22:55Speaker 05

  I will say, the one way that this could be a problem for Facebook down the road is, there is like, so you were talking about platform moderation. One of the, the sort of perennial questions for the Verge and kind of specifically Verge policy is, when platforms do bad things, it's like, can the government punish them? Like, how, how is the government able to respond and say, "Hey, Facebook, don't do that?" And the government has not really, the government really wants to be able to do that, but they have not been very good at it. And I think for this specifically, and this is something McKenna is currently chasing and will be writing about, the FTC, the Federal Trade Commission,

• 23:39Speaker 05

  is sort of traditionally, when you have some kind of corporate screw up that impacts consumers, which this certainly did. They are the ones who come in and sort of rap the knuckles of the corporate world. And they have not been super empowered to do that lately. I mean, I think they fined Facebook some billions of dollars for the Cambridge Analytica thing, but it was understood to be a real light. They sort of got off easy. But this, I, there are a lot of people, the next turn that we're going to see from regulators is, well, this is why we need the FTC to have some real muscle and we need them to have some muscle, in this case in particular.

• 24:23Speaker 05

  And then you wonder if the next time that gets used, it's against YouTube, or it's against Facebook, or it's against, you know, whoever. That's maybe an optimistic prediction for the future, but we'll see.

• 24:36Speaker 03

  I do love the idea, though, it's like, because I'm just thinking of it as a Bitcoin centric thing, the idea of Congress asking YouTube about Bitcoin scams, like, that's what runs YouTube. It's just full of videos that are like, give me Bitcoin, I'll give you Bitcoin.

• 24:52Nilay Patel?

  And the legal response, or the lawmaker response, you know, I've seen some of the letters, the FBI looks like it's looking into it now. But some of the letters from lawmakers say things like, security vulnerabilities are not acceptable. And it's like, well, if that's your standard, I don't know that we should have an internet. Like, that's just a reality. The question is, can Twitter or other companies explain sufficiently how much they're constantly mitigating the vulnerabilities that are created? And I don't know where that line is. Like, I don't know what a, by definition, they don't know about the vulnerabilities that are being exploited.

• 25:28Speaker 04

  Yeah, for all they know, one of their users is like reusing a really weak password on their, on their platform and thinks it's protection.

• 25:34Speaker 05

  Yeah, but like, this is the thing, is they're not talking about that. Like, this is really like, you know, you're not supposed to screw up this badly. If you screw up a little, they'll let it slide. But this was clearly too big of a screw up. And you have like, you just, this is, Congress has enough on their plate. They don't need to be worrying about like, social network security. It's just that this was so bad that now Roger Wicker has to take time out of his day to talk about how we should run Twitter.

• 26:08Nilay Patel?

  Like, he should be very focused on rural broadband. I'm going to be honest. You're, you're correct. You know, Russell, you said that the time factor... Was like, made it not viable. The more I think about that, I agree with you. If what you're after is money, that might be a thing. But if this had happened on election day and Joe Biden and Apple and Uber and Bill Gates were like, "Don't go outside and vote. The pandemic is worse than ever. 5G causes Corona," because that's what Bill Gates would say. I feel like I should delete that just because I don't want even like a slight trickle more of misinformation going out there, but I trust our audience. But like, if that happened on election day, that sets, that changes the course of American history. Like, we're not going to rerun the election because Twitter got hacked.

• 26:54Speaker 05

  Yeah, I mean-

• 26:54Nilay Patel?

  That, to me, is like a nightmare global security crisis.

• 26:59Speaker 05

  I think to go back to like the teen analogy. Like, if someone steals your car, there are lots of bad things they could do with your car. Like, they could be looking through your glove compartment and do weird identity theft things, or they could pretend to be you and like pick up your kids from school and like, it would be horrible. But like, generally, cars get stolen. And if it's like, and what happens is that like, either they sell them or they like, drive around too fast and then just leave them around because they're idiot teens. And so I do sort of feel like, there is this aspect of like, is thinking of the absolute worst thing a person could do

• 27:40Speaker 05

  really going to give us insight into the nature of this attack? Or is it just like, cars get stolen and we should try to keep them from getting stolen? And it's like, potentially bad, but it's usually going to be idiot teens? I don't know.

• 27:55Nilay Patel?

  Every time I test out an audio system, the soundtrack I use is Baby Driver. So like, my head is in a different spot than yours. Like, you steal cars to rob banks, is my understanding. Speaking of teens, they're very upset because Secretary Pompeo keeps saying he's going to ban TikTok.

• 28:11Speaker 05

  Yeah.

• 28:12Nilay Patel?

  What's going to happen with TikTok?

• 28:13Speaker 05

  Right, so there are sort of two alternate explanations for this. They combine in an interesting way. So one thing that people say is, so TikTok, we know it, we love it, kids dancing. It's like a vibrant social network. Unlike previous sort of apps like this, it is owned by a Chinese company, ByteDance. Sometimes they get cute and they're like, oh, it's incorporated in the Cayman Islands and our offices are just in California. But like ByteDance is a Chinese company. TikTok, the app doesn't operate in China, but it's the non-China offshoot of this Chinese thing. So I wrote a thing about this.

• 28:55Speaker 05

  I think fundamentally, the question is just, are we comfortable with their, with like Americans and other people outside of China using an app that is owned by a Chinese company that could potentially be pressured by the Chinese government, knowing all the things that the Chinese government specifically does. And so this is sort of the way that like Mike Pompeo talks about it. And when he's like, ah, we're looking at it, we might ban it, I don't know. Which is like, Addy wrote a thing about how, what do you mean by ban? Like, what does that look like? But obviously there are things the federal government can do if you are an app that would make your life difficult. But so the other explanation is that a bunch of TikTok teens played a prank on Donald Trump.

• 29:39Nilay Patel?

  Oh, my God.

• 29:40Speaker 05

  And he's like mad. And so he wants to like, take away their app, which would be really, like, that's a very stupid chain of events.

• 29:53Nilay Patel?

  But that's like, that's the most 2020 chain of events, right?

• 29:57Speaker 05

  That in many ways is just like, I'm coming around to the idea that that is actually what's happening here. And you just have a lot of other people who are like, is there some thing we could say about why we're doing this that wouldn't sound unbelievably stupid?

• 30:17Speaker 05

  And then we talk about like their post hoc rationalization of it when really it's just like Trump got clowned by these teens and he's mad online.

• 30:29Nilay Patel?

  Or he thinks he got clowned by these teens.

• 30:30Speaker 04

  The idea here is Trump had this rally in Tulsa and a bunch of TikToks teens registered to attend and but they didn't actually attend. A bunch of K-pop fans organized to register attend and like and then nobody showed up. And so the White House had, oh, man, we've got like four million people that are going to show up to this event. And they like made an overflow event outside. And then it turned out like actually not that many people showed up. They didn't even fill the arena. And so everyone was like, oh, well, TikTok did that. They they they they actually like screwed up this this event. Now, whether or not the White House actually knew that nobody would show up, who knows? They, you know, obviously the White House and their track record for being honest about attendance numbers is not

• 31:14Speaker 04

  great. But I think Russell is right that objectively, like, they got clowned because everyone was like, ha, they they made they made fun of you and there there was some sort of effect there.

• 31:24Speaker 05

  Yeah, like, I don't think objectively that was why there was low attendance. If what you're worried about is like people laughing at you, which I think is kind of what Trump is worried about.

• 31:34Nilay Patel?

  Motivates Donald Trump, yeah.

• 31:37Speaker 05

  They achieved that.

• 31:38Nilay Patel?

  And so his his strategy is now my administration will ban TikTok.

• 31:41Speaker 05

  Uh, well, anyway, he's mad and he's kind of talking about it.

• 31:45Speaker 03

  TikTok has been like preparing for something like this for a while because they've distanced themselves as much as they can from ByteDance. I mean, literally from the move of like moving a bunch of their security teams to American-based security teams to like moving to like Burbank and setting up a huge campus and then poaching an executive from the most American thing in the world, which is Disney, to like run their company, who has, I mean, on the downside, very good relationships with Chinese authorities.

• 32:14Speaker 03

  But and like making and then I think even more importantly, making him the co, I can't remember if it's president, yeah, whatever, co-executive of ByteDance itself on top of being the CEO of American TikTok. Like, they are aware that this has been coming. Like, they've been preparing for it. My moment, Russell, that I'm excited for to blog about for The Verge when it happens, is when Kevin Mayer, CEO of TikTok, goes to Washington to talk to Congress. I want us to redo the Mark Zuckerberg, we sell ads, Senator, to make it, we do dances.

• 32:44Nilay Patel?

  Well, you bring up a really good point, Julie. Like, they've they have moved TikTok as much away from China and China, like, the perception of Chinese influence. You know, the protests in Hong Kong, TikTok is no longer operating in Hong Kong, and ByteDance is just like, just use Dian, our Chinese app, because Hong Kong is China now. That's fine, everyone agrees with that. Like, not everyone agrees with that. Like, they've just they've adopted a Chinese governmental frame about Hong Kong, and they've taken TikTok out of that and put Dian in, which is the Chinese version of TikTok.

• 33:15Speaker 05

  I would also say, like, specifically, it's about court orders. And, you know, the protests in Hong Kong were about this new security law, and it was just clear that anyone operating in Hong Kong was going to have to abide by these rules that are not unusual for mainland China, but extremely repressive by the standards of, like, Western liberal democrats. Right. So, and I think that there is this thing of, so, when they, when we're having this whole conversation, TikTok, the US folks are able to say, we've never responded to a court

• 33:57Speaker 05

  order from the Chinese government because we don't operate in China, and so we would never because they have no jurisdiction to ask us for anything. And this is, I mean, how effective that line is, is an open question, but like...

• 34:11Nilay Patel?

  I don't, so I don't believe it. To be perfectly honest...

• 34:13Speaker 05

  I think that if you wanted to avoid ever getting a lawful access request from the Chinese government, like, this is how you would set up your company. It's just like, we're staying very far away from China, and so they have no, their domestic law enforcement operation has no, like, reason to talk to us.

• 34:32Nilay Patel?

  I think that the concern isn't, will a lawful request out of the government for China be the problem? The concern is all of the stuff that doesn't follow the rule of law, all the stuff that happens under the table, all the stuff that happens outside of, like, here's a document that shows that we've asked for this thing. It may be that TikTok is set up in such a way that, like, the mechanism for that under-the-table stuff is very difficult or impossible, but, like, fundamentally, there's no way to know. And so I think...

• 34:59Speaker 04

  A lot of people would just feel more comfortable if it, that sort of, the Chinese government's access to whatever data exists on TikTok weren't there. There's the like, other question of the way that TikTok works is it has an algorithm because it's a feed, because that's what the internet is now, is feeds controlled by people that like, who knows what they're doing and why they want to do it. And so it's possible that they could use it as propaganda. Like, all of a sudden, you just stop seeing a certain thing that TikTok doesn't want you to see. And like, why not? I don't know. This is, what's weird about this argument is it sounds exactly the same as a bunch of like, I've

• 35:41Speaker 04

  been shadow banned, I'm so mad arguments that are in bad faith that we hear out of like, conservative wing about US social media. And so like, that confluence of, it's impossible to know who's arguing in good faith, it's impossible to know what the algorithms are actually doing, makes all of this just like, bah. Like, that's my response to this whole situation is just, bah.

• 36:03Speaker 03

  Well, and then like, from TikTok's perspective, it's, you know, it's not a great time. Their biggest, their biggest audience or user base was in India, and that, and it got banned there. Their second biggest user base is in the US. If it gets banned there, that's a huge amount of users they're suddenly gonna lose to competitors. And people, you know, and then from the creator angle itself, like, we think about aversions like policy and creators, it's like, there's a lot of kids and a lot of adults on that app that like, have found a community, especially while they're stuck at home, who are like, really, like, that's like, you know, for me, it's like, I say this all the time in Slack, it's the only good app, and like, I have, it's like, the only thing that brings me joy right

• 36:43Speaker 03

  now. And so the idea of not having it is like, detrimental not only to TikTok's business, but also to like, a huge swath of people around the world who like, really love the app for what it is.

• 36:55Speaker 04

  If TikTok gets banned, do the influencers go to YouTube, or do they go to Facebook reels?

• 37:00Speaker 03

  There, well, I talked to, the thing is, I like talked to YouTubers about this and they are like, when this happened last time, when a bunch of Vine-ers, remember Vine, when they left, when they went to YouTube, because they were making money on Vine and Vine was gonna shut down, they, the algorithm worked in a way that really benefited them because they just like skyrocketed. Um, so that's like your, your Paul Brothers and, and all of them. The algorithm has changed so much since that happened in 2016, 2017, that it would be really hard for a lot of these creators to kind of find that same level of success that they're finding from TikTok. And then their questions with YouTube is like, can you make a 10-minute video? Like, can you, uh, are you gonna get used to a whole new ecosystem that is just entirely different? The thing about TikTok is like, it's super easy to succeed in your version of TikTok,

• 37:44Speaker 03

  like the side of TikTok you're on, um, whether it's like the dance TikTok side or the cosplay TikTok side, once you're in it, you can build a decent following. YouTube is much more harder to like break through, I find.

• 37:56Nilay Patel?

  I, so I don't have a TikTok account. One of the, actually, one of the best things about TikTok is you don't need an account to start watching it. Um, but then it's still algorithmically determines who you are and it has just completely owned me. Like, you're like dance TikTok, cosplay TikTok, I have just like guys grilling. I watched a bunch of, a couple of guys reviewed screws. They're like, this is my favorite screw. And I'm not kidding, like I send him, I send him to Chris Graham, like, what do you think of these screws? He's like, what's wrong with your TikTok feed? And that, but that's like an incredibly powerful little bubble that it, it creates automatically, right? Like just instantly and automatically, it creates a bubble for you of your interests. And that's why it's the best app. But we don't know how that filter bubble works. We know that social medias that create those bubbles can radicalize people really fast.

• 38:39Nilay Patel?

  Like, there's a whole level of stuff we don't know about TikTok, that TikTok as a company with Chinese influence somewhere in it, it's owned by a Chinese conglomerate, that, it's not transparent and we don't understand it. And then that's next to Mark Zuckerberg, again, who's about to testify in front of Congress, who constantly says things like, either we're this big or the Chinese companies win. Wouldn't you rather have me exporting American values around the globe? Don't worry about what I think those are. Uh, but wouldn't you rather have that than have this Chinese company encroach on America and have the Chinese government tell the teenagers from America what to do? And that is a reasonably good argument. Like regardless of what you think of Zuckerberg, that's a good argument for him to make to our government and say, stop knocking me down because TikTok is here. How that is all gonna play out, I think is totally upside down. Julia, I've seen

• 39:25Nilay Patel?

  A bunch of TikTokers say like, well, I hope it doesn't get shut down. Follow me on Instagram in case it does, right? It seems like their natural next spot is Instagram because of the stories format. But Facebook does have Reels, this other product that Dieter was talking about. They've rolled it out. It is basically a clone of TikTok. Do you think that this has a moment? Like, do you think it can succeed at all?

• 39:46Speaker 03

  I think about, uh, it's either you or Dieter. Someone at The Verge, uh, had said this about when Facebook had rebranded the logo, I think, for Instagram. And it said, like, Instagram by Facebook. I think it was that moment. And it was like, this is a dumb thing to do because the best thing you're going for is the fact that kids didn't know you were owned by Facebook. And I like, I think about that a lot where it's like, this is still a Facebook app. And I mean, it, that Instagram's a Facebook app and like WhatsApp, WhatsApp is owned by Facebook and they're obviously extremely successful. But I think it's much harder. I like, for me personally, like, I don't like using anything by Facebook. It's just a thing I don't like doing. Uh, and I think Instagram makes sense, uh, which is, but, but Instagram in terms of like how it works for influencers

• 40:29Speaker 03

  is very similar to how TikTok creators are currently kind of monetizing, how they're reaching audiences. Like, it's still sponsor-based, brand-based, uh, and then it's much shorter. Um, the, the advantage to going to YouTube, of course, is always the AdSense. Like, you can just make money off advertisements you're gonna run. Uh, but it's undergoing so many changes. It's such a hostile environment from legacy creators. Like, when anyone new comes in, they're like very up in arms about it. And they like go out of their way to make people feel unwelcome. So I think Instagram makes the most sense. I mean, there's other apps like Byte, which was founded by Dom Hoffman, who co-founded Vine. Um, and Byte could see some, there was a surge, there was a reported surge in activity

• 41:13Speaker 03

  when they first announced that they were looking into banning TikTok and Byte Dance, uh, sorry, uh, um, Byte, which is not Byte Dance, which owns TikTok. By its own separate thing, told us that they didn't have anything to report the time. But it's an app that people could also flock to if they're looking for something that is entirely new, where they can build a community and find that same kind of experience that they had on TikTok.

• 41:37Nilay Patel?

  I'm looking forward to like the extremely patriotic Facebook reels commercials that are undoubtedly being developed at Facebook headquarters, like, flags waving, like, this is America's dancing app. Like, it'll be great. I'm excited about it. Russell, what happens next?

• 41:53Speaker 05

  I think this is, this is the thing with Trump generally, is he like, makes a lot of noise about something, and then you see if there's any follow through. So I think everyone is waiting to see if the White House actually does anything, or if they just sort of find another shiny object.

• 42:10Nilay Patel?

  All right. We've gone way over. It's been fascinating. This is why we only have one guest at a time.

• 42:16Speaker 05

  Wow.

• 42:17Nilay Patel?

  But we're gonna keep you both on, because we gotta talk about streaming services, the Julie Alexander special. We'll take a break, we'll be right back.

• 42:28Speaker 01

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• 43:28Nilay Patel?

  Okay, Julia, what happened this week? What do I have to pay for this?

• 43:33Speaker 03

  It maybe nothing at all. So NBC Universal, which if Neil, if you want to do your...

• 43:39Nilay Patel?

  The Julia Block?

• 43:40Speaker 03

  Yeah.

• 43:41Nilay Patel?

  That's what I think of it. NBC Universal is a minority investor in Vox Media, which owns The Verge.

• 43:47Speaker 03

  So NBC Universal launched their, well, they fully launched their streaming service, Peacock, which is based on NBC's famous bird. Not that the bird logo is anywhere on the app. And so they launched this for across the country. Originally, they had launched a beta version of sorts in April for Comcast customers specifically. So it's here and it is, the benefit to it is that it's mostly free. It is like their whole play is that it is basically an advertisement kind of supported video and demand service. That's not going to cost you anything and you're going to get a bunch of cool things if you don't mind dealing with ads. And it's decent. It's like a decent service. If you are someone who really likes NBC shows, which I do, like I grew up on them.

• 44:32Speaker 03

  It's a treasure trove of things to just watch for free in your house.

• 44:36Nilay Patel?

  What's the ad load like?

• 44:37Speaker 03

  Like, so the app is, it's interesting. There's three different windows that you go into. If you open it up on your TV, it's going to open up automatically into what they call browse, which if you use Netflix, if you use Hulu, you already know what it looks like. It's the exact same thing. There's a bunch of rows, they highlight some shows at the top and you kind of go through it and then they separate into like movies, TV shows, kids. So that's their main thing. If you're on phone, if you're on mobile, if you open it up, it brings you into a trending section, which I still don't understand what it's for. But the idea is it's these little clips, which they, an NBC Universal person told me, think of them like quick bites, as if they hadn't know that.

• 45:16Nilay Patel?

  Everybody has the same bad idea.

• 45:19Speaker 03

  But you basically scroll through and it's like, here's a highlight from the Today Show. Here's a highlight from sports leagues that NBC Universal owns the licensing rights to. Here's like a piece of celebrity gossip for the day, which is kind of their social media window. And then the most interesting part of Peacock is the window they refer to as channels. And what they've essentially done is recreated the idea of linear television. So if anyone uses cable, when you open it up and you have your guide and you get to scroll through channels, Peacock has recreated that with the exception that none of, very few of the channels are actually live. But what it does is it removes the paradox of choice. Like if for people who are just like totally paralyzed when they open Netflix, they just end up watching the same thing they've been watching because they don't want to scroll through.

• 46:04Speaker 03

  Peacock's whole thing is like, what if you just wanted to watch a murder mystery thing? What if you wanted to watch a Saturday Night Live thing or Jimmy Fallon? You just click the channel and it automatically starts playing something, which is very nice and in my opinion, the future where a lot of these streaming services will go, just because that paradox of choice is such a huge thing that they're all trying to figure out. So I mean, it's, it's here, it's like a decent, it's for what it is. You're going to either spend no money at all, you're going to go completely free and get half of the kind of access to a lot of the shows. If you're a Comcast or Cox subscriber, you're going to get it for, you're going to get the full use of the app for free. And if you want to go completely ad free, it's either going to cost you $10 if you're not a Comcast or Cox customer,

• 46:48Speaker 03

  or it's going to cost you $5. So price wise, it's a big win.

• 46:52Nilay Patel?

  I haven't, I mean, HBO Max launched, they made a huge deal out of it. They sent everybody swag, like Peacock seems like a very quiet comparative to all of that other stuff.

• 47:03Speaker 03

  They sent us a swag box that I am returning because that's just what we do. But they sent a huge projector.

• 47:11Nilay Patel?

  You got a projector?

• 47:12Speaker 03

  Yeah. And, and I was like, I don't know. And so they sent you coasters. I thought it was really funny because it was like, here's what we're really highlighting on Peacock. And then they gave you this projector and what they're highlighting on Peacock is like Cheers and Everybody Loves Raymond. And I was like, this requires the full projector experience.

• 47:30Nilay Patel?

  I don't know if we can judge, I mean, there's a party that desperately wants to judge streaming services launched by swag. And like how the swag is escalating, like at the end of it, they're just going to send you a car or something.

• 47:42Speaker 04

  But I just meant in terms of like the marketing launch, in terms of the AT&T bought Time Warner, HBO Max is like the culmination of that deal, right? Like they're like, this is the future of Time Warner is in this app. And this is why AT&T bought this company, right? Like just the narrative around it was gigantic. The narrative around Peacock is not this is the future of Comcast, or even this is the future of NBC.

• 48:07Speaker 03

  It's a really interesting situation there. And so I sat down with their president of direct to consumer and we talked a little bit about this. And I told him straight up that I thought it was a very defensive strategic play, which is like, we have to be in this space. So therefore we will have a streaming service. But Peacock exists to remind you that cable is good. Like Peacock is there to be like, hey, do you love live sports? You can only get them on cable. Or like, do you love anything live or like anything that's happening in the moment? Have you considered subscribing to cable? Like, that's very much how it reads. The only reason that I think it works as a straight up streaming service is because NBC Universal, similar to ViacomCBS, their library of IP is just untouchable. Like, it's, it's an insane amount of content that they're

• 48:51Speaker 03

  like, we own it all. So we'll just, we'll just put it out here. And so if you're someone like me, who just wants to watch like really old shows all the time, it's a perfect service because it's free. And it's like, I might as well just use this instead of spending money on Amazon to like buy stuff. But for someone who's like the Netflix, I think, kind of person who's like, I want something new every single week, which is what Netflix does. It's, there's not much to offer yet.

• 49:14Speaker 04

  So Julie, actually, saying that Peacock exists to remind you that cable is good, like, that's my conspiracy theory. Because if you think of what a Peacock is, like, they're kind of mean, right? They're just like, big birds and they're kind of aggro. And I think it's designed to make you feel bad about the app so that you go subscribe to cable, right? Can I just ask where your impression of Peacock? They're big. They got these huge tails.

• 49:40Speaker 04

  They're mean birds? Like, birds are supposed to be small and cute and chirpy. And these things are just like, big and they're colorful. But like, it's a front. It's designed to like lure you in and so. How are you like this so early in the morning?

• 49:51Speaker 03

  Dieter had like a zoo experience that he doesn't want to get into, but he's like. Peacocks.

• 49:57Nilay Patel?

  If I know anything about millennials, it's that I know that they don't trust birds.

• 50:00Speaker 03

  Uh, it's true.

• 50:01Speaker 05

  There was in North Oakland, an aggressive peacock that refused to stop screaming and made like national news. So.

• 50:10Nilay Patel?

  I'm stopping this now. I'm just, I, if you want to find out, you can tweet at Russell and at some point in the future, he will tweet back at you about the bird. Uh, Julia, there's another, I'm just straight moving on, hard turn.

• 50:25Speaker 03

  But two, two peacocks, one, what I will say is while I've been recording this, I've been getting a lot of DMs from a friend of the site, Vox editor Allegra Frank, who's like, I've been watching Peacock all morning. Uh, and I'm like, what are you watching? And she's like, I'm just watching the Today Show. And I think like for a lot of people, like the fact that you're going to have access to the kind of morning talk shows and you'll have access to some live news, um, both from NBC and then from Sky, which Comcast bought years ago. And every analyst since then has been like, why? Uh, you'll have some access to live news. And I think for people who kind of just want like random TV shows and some live stuff, Peacock, and again, for that price, Peacock's a super win, win, win for like Comcast, NBC, and people who are going to watch TV.

• 51:07Nilay Patel?

  Well, I mean, the opening price is zero, right?

• 51:10Speaker 03

  It's like that's, and that's such a nice win when you compare it to like HBO Max, which is 15.

• 51:15Nilay Patel?

  Or any amount of money bundled with any amount of things.

• 51:17Speaker 03

  Right.

• 51:17Nilay Patel?

  So the, the one commonality between Peacock and HBO Max is both of them are fighting, uh, with Roku, with Amazon. And it seems like Roku is the far more aggro player in this, like, Peacock's tweets about Amazon and Roku. The Amazon tweet was like, we are diligently working with our friends at Amazon to bring it to the platform. We hope to have news soon. And their tweet about Roku was like, everybody harassed the official Roku account.

• 51:44Speaker 03

  They literally used the word, go squawk at Roku, which is my favorite, uh, my, my favorite tweet I've ever read. Uh, I brought that up with kind of an expert I talked to regularly. And I was like, do you see this tweet? And he, without missing a beat, just went, no, because nobody follows the Peacock.

• 52:05Speaker 03

  But yeah, so I mean, this is my favorite fight. It's like I have like push notifications for anything that happens with this because I it's the the big fight that's happening is between the new entrance into the space, which are HBO Max and Peacock, possibly more of other streaming services launched in the future, and then Amazon Roku. And Amazon Roku basically control up to around 70% of how people watch TV and their or stream things in their living rooms. So you want to be on their devices. And at the same time, Peacock and HBO Max are very big streaming services that Amazon and Roku would like to offer customers. And the fight comes down to like anything in media in Silicon Valley, access to data and money.

• 52:45Speaker 03

  So specifically, if we look at Roku, Roku takes a 20% cut of all signup fees, which might be less for big players like NBC Universal and Warner Media. But the other thing is the ad inventory, which basically means that when you have bring ads and you have advertisements on your platform, which is a big thing for Peacock, Roku takes a portion of that and they go, cool, this is mine now. Usually it's about 30%. The report from CNBC cited that it was closer to 15% for NBC Universal. The thing about Peacock specifically is that NBC Universal built this as like an ad platform to sell ads. Like that was their whole thing. They built they built entirely new advertising technology for the streaming service. So they don't want to give up control of that. They don't want to give up control of in-app experience.

• 53:28Speaker 03

  And Roku is like, well, we're not giving up control of how much ad we're taking. That's a huge part of our business. It's like one of the biggest parts of our business. And so they're in a stalemate. And then on the other end of it, you have Amazon, which gets a little bit more complicated. But what it comes down to is that if you want to be on Amazon Fire TV, which is your what you use your device, Amazon wants these services to be a part of their channels ecosystem, which Apple also has a version of this. And Warner Media and NBC Universal are going, well, we don't want HBO Max and Peacock to be in the channels. And now there's this weird precedent where Disney was able to negotiate a weird deal where Disney Plus is on Amazon Fire TV, but it is not in Amazon Channels.

• 54:09Speaker 03

  And so the big fight is like, we want the deal that Disney has, which is what HBO Max's executives told you and I when we interviewed him. He was like, we want the same deal that they're getting.

• 54:18Nilay Patel?

  It feels like this fight is just gonna break in favor of Roku because they control so much. Like Peacock cannot succeed on any metric unless they're on the Roku platform and any Amazon platform, just because of how much, just how much of like smart TV stuff they control. How, how do, well, how do they get leverage back? What do they do?

• 54:38Speaker 03

  Yeah, everyone I talk to is split on it. It's super interesting. Usually people are like, usually experts and analysts are very like one-sided about these things. Everyone I talk to is split. Everyone, like, there's half the groups that say Amazon and Roku control a lot of this argument because they're the distributors. And the other half are like, listen, NBC Universal and HBO and Warner Media, it's like Peacock and HBO Max, it's their big streaming services that people actually want. It's a lot of IP that they carry. They are gonna have shows, especially HBO Max, that are gonna be heavily talked about in the coming months. And so to not have them is an interesting place for Amazon and Roku because people will just go, if you're me, you just use your PlayStation, right?

• 55:16Speaker 03

  Like, I just, it's, I use my PS4 for everything, except gaming. And so, it's a weird situation. What, what is funny is that now other companies are being asked about it. Like Netflix had their earnings call yesterday and they were asked about it. And they were like, what do you guys think of what's going on with Amazon and Roku? And Netflix was very much like, we're Netflix, so we're pretty happy with where we are in life. And we have really good relationships with these companies. But, you know, they were like, you know, it's a major loss for consumers and it's really sad to see play out. And I think it's now coming to a head where hopefully deals will happen soon, but who knows?

• 55:52Nilay Patel?

  Well, so, I mean, that's like the, we should talk about Netflix earnings, but the Netflix first mover advantage there is incredible. Like you, if I was to put out a streaming box, the Vox box, let's call it, which we should not do, it seems like a failure. But like, let's say we put out the Vox box and it doesn't have Netflix on it. Like, we know it's dead on arrival because that's the thing that most people definitely want. And I feel like Netflix just has that leverage baked in. They're just way ahead of the curve. It is impossible for HBO Max to be like, most people definitely want HBO Max. It $15 a month or whatever. Like, and also Netflix is not selling any ads. So there's none of that drama. And they have the leverage to say, we're not giving you, we're not giving you any data or being in your channels interface. Also, we'd like

• 56:36Nilay Patel?

  a button on your remote. Here's a dollar.

• 56:38Speaker 04

  It's almost like what TV needs is like an, an open platform that's neutral. And then you could just browse to the thing that you want.

• 56:47Nilay Patel?

  Like the Vox box.

• 56:47Speaker 04

  Like a, like, like a, like a, like a TV, but with web on it, like a web TV is what we need here.

• 56:55Nilay Patel?

  Dieter, here's, uh, well, here's what we're pivoting to. It's an open source TV streaming box that just runs Chrome. Everyone loves it. It'll be awesome. Battery life will be perfect.

• 57:07Speaker 03

  Well, it's, it's funny. It's like the conversation has shifted, you know, from last year, two years ago, when it was like the streaming wars and the fight was like Netflix versus Disney. And now everyone you talk to, and what we're seeing very clearly is like it's Netflix and Disney. They've both kind of made themselves very apparent that they're foundational services. Like they, people will switch devices. They will find ways to get these services on their TV or their, whatever, however they watch. Everyone else is coming into this kind of area where they're trying to fight to be seen as a foundational service. And how are you seen as a foundational service if you're not reaching 70% of people in the United States? And that is like the question that they have to figure out. And like, and you know, Netflix spoke about this last night. They were, one of their executives was like, we don't just have deals with, you know, Roku

• 57:51Speaker 03

  and Amazon. It's like every country that we're in, we have great partnerships with device manufacturers because we know how important that is. And they also know how important Netflix is. Like, it's a really great position for them to be in. And Disney is kind of the second to that, where everyone wants Disney on their thing because people want Disney plus. HBO Max and Peacock have to like prove that their things. Consumers actually want on mass before any of the device manufacturers are going to give any leeway.

• 58:19Nilay Patel?

  So let's talk about Netflix's earnings yesterday. They had huge news. You got a new co-CEO.

• 58:23Speaker 03

  Oh, I'm so happy.

• 58:25Nilay Patel?

  The most historically successful arrangement of executives in corporate history. What happened?

• 58:30Speaker 03

  I don't like, I try not to like, you know, get really emotional about executives, but Ted Sarandos was like this little underdog executive and now he's like co-running Netflix. Like makes me so happy.

• 58:43Nilay Patel?

  Tell people who Ted Sarandos is.

• 58:45Speaker 03

  So Ted Sarandos is the guy who made Netflix, the reason that you're subscribing to Netflix. He's their chief content officer. Uh, in 2012, 2013, he made a very gutsy move and without telling his boss, spent more than a hundred million dollars to bring House of Cards to Netflix. Between 2013 and now, uh, he has transformed Netflix into a place where you go to watch your show favorite, a show that you might've missed on another network to you're going to Netflix because Netflix has your favorite show. They've made it. Um, he is just, he's, he's the guy who oversaw everything that happened with original series, original documentaries, movies and built that team, which is a powerhouse team of executives from Hollywood into making Netflix, you know, kind of, uh, unbeatable in Hollywood.

• 59:27Nilay Patel?

  Hang on, I have to do another Julia box. Fox.com has a Netflix show called Today Explained. The Verge is working on a Netflix show of which I'm one of the producers. That's your disclosure. Continue, Julia.

• 59:37Speaker 03

  Oh, my story just have disclosure.

• 59:40Nilay Patel?

  We're gonna start, we're gonna put it right. We're gonna build it into the CMS. Like, is this a Julia story? Like, here's 500 words of disclosures.

• 59:47Speaker 03

  Um, so yeah, so yesterday they announced that they announced a couple of executive changes, but the biggest one is that, uh, Ted Sarandos is now co-CEO with Reed Hastings and that co- is very important because Reed Hastings spent the opening of his earnings call with analysts saying, I am not going anywhere. I'm in it, you know, I'm in it for the decade type of thing. Uh, he has no plans to step down. He has no plans to stop working, but at the same time, in his blog post, he, uh, Netflix, uh, Netflix's press website, he did specifically say, this is part of like succession planning. So the idea is that like, he knows he's not going to be there forever. He's thinking of how to set things up. I think my read on it, not that I have any insight into this, but my read is that Ted Sarandos is one of the most sought after executives in Hollywood.

• 1:00:33Speaker 03

  This kind of gives Netflix the comfort of knowing that he probably won't leave in the way that we saw with Disney shakeout when Kevin Mayer left to go run TikTok in part because he was basically promised CEO and did not get it. So I think it was a very strategic move on Netflix's part to keep a very important executive. And from tense, I mean, from the content perspective, in terms of what it means for us, you have the guy who created Netflix's culture, who created the idea of what a Netflix original looks like. Now he's in more charge of the company. He gets to be a little bit more public with certain things. So it's a good move, I think, for Netflix.

• 1:01:07Nilay Patel?

  Yeah, that thing you're saying about him being sought after. If you're Apple, you're like, we, how much money do you want? Our office is a circle. And literally anything you'd want. Like, do you want a circle office? We got one. Like, you want to see the next iPhone before it comes out? We can make that happen for you. And like, so you have to imagine the other big companies are trying to poach him because he's, he's the guy who can do it and he's instant credibility. So I mean, that move seems smart. It also seems like that Reed Hastings, the existing CEO and now co-CEO, has not had as much influence on the content side, right? He's been the, the sort of strategy side, the technology side. So that sort of makes sense. How do you think that relationship's going to play out?

• 1:01:51Speaker 03

  I think it's going to be a lot of what they're doing now. I mean, I think the, you know, the whole joke about Ted like not telling Reed he was spending a hundred million dollars at like, you know, not early Netflix's career, but others, not, not in the last five years, which is when they've really kind of burst into the scene as a streaming giant. But him just going like, I'm going to spend this money because I think we should have House of Cards, making an unprecedented deal in Hollywood, which was giving an order for two seasons of a show, which never happens. Bringing on like David Fincher, starting so very early on being like, we're going to have these connections to talent. I think just go, Reed has trusted him since then. Like, it's just been like Ted seems to know what he's doing, which is like a position that a lot of other executives did not think

• 1:02:32Speaker 03

  of Ted Sarandos when Netflix first started. They were like, no idea what Ted's doing. But Netflix seems cool. So I think it just makes sense. And also Reed can focus on growing the business internationally, which is what their now big thing is going into the next decade. He's going to focus on, on figuring out how to strategize and continue building and finding new subscribers in places where it like. At this point, the joke is if you don't have Netflix, why would you think you're not going to have Netflix because you probably have it by now. So his thing is trying to find new subscribers, which they've done a remarkably good job of in the last six months. In the last, since in Q1 and Q2, they amassed 26 million subscribers. In all of 2019, they amassed 28 million. So they're doing very good. They're also warning every investor,

• 1:03:17Speaker 03

  this will not last. So just, just prepare for that. So yeah, he's focusing on, on making the company even bigger than it is. They're probably going to hit 200 million by the end of the year, which is a huge number. He's worrying about competition from Disney. My favorite thing he said last night was occasionally Disney has a Hamilton, which is a low key burn, which is a great way of just describing that relationship. So I think he's so focused on where the streaming industry is getting, heading in the next few years, and it's only going to get bigger and more, and more competitive, that having Ted to just run the company at a point and be like, I'm only going to focus on ensuring that we have the best shows and building out franchises, building out IP, is a place that he's happy to be in.

• 1:04:00Nilay Patel?

  All right, we gotta take a break. There's a little bit of Xbox news to talk about. We'll be right back.

• 1:04:09Speaker 01

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• 1:05:09Nilay Patel?

  Dieter Bahn.

• 1:05:10Speaker 04

  Yeah.

• 1:05:11Nilay Patel?

  I just, I'm looking at these links in our rundown.

• 1:05:13Speaker 04

  How many, how many Xs are there in our rundown?

• 1:05:15Nilay Patel?

  Xbox teams are fully out of control. What is going on?

• 1:05:19Speaker 04

  They made more Xbox announcements because you literally can't go a week in 2020 without there being three Xbox announcements. Okay.

• 1:05:28Nilay Patel?

  Try, give it a shot.

• 1:05:29Speaker 04

  Tom Warren talked to Phil Spencer. They are going to bundle in Xcloud, which is their game streaming service with Xbox Game Pass Ultimate in September. They're going to rename it at some point and they may change it in the future such that you'll be able to stream other Xbox games beyond the stuff that's included in Xcloud. The thing that we're going to come back to here is the interesting thing about Xcloud is it works great on Android and then also there is a game on the iPhone.

• 1:05:57Nilay Patel?

  One game.

• 1:05:58Speaker 04

  Yeah, well, no, literally, well, actually, let's talk about now. Literally, that's all they can do because I think that if they add the ability to stream multiple games, then Apple will consider it a competing game store and they will get banned. And so they, the only way they were able to test it on the iPhone was to have, was to have one game available. It's like the Halo game and that's what you get on the App Store. And so there's like ongoing negotiations of will the iPhone allow third-party game streaming services or not?

• 1:06:25Nilay Patel?

  And no, the, the, why, what is this? What's the controversy? No, they will not unless you pay them 30%. That's the answer, right? Yeah.

• 1:06:35Speaker 04

  I mean, I guess, I don't know. I mean, they, they've, they have cut sweetheart deals. Like, we know that they cut sweetheart deals HBO where they've cut sweetheart deals with Microsoft over Office. Like, they exist, but who knows? It's like, is it in Apple's interest to like have any competitor to Apple Arcade in this moment?

• 1:06:50Nilay Patel?

  Apple Arcade apparently not doing so well.

• 1:06:53Speaker 03

  Yeah, I was gonna say, I would assume that Apple Arcade is being used by.

• 1:06:56Speaker 04

  Man, Apple Arcade was so good at the start and then they, like, they just didn't keep up a cadence of games, which is a real bummer. But like that initial thing, I was so bully over it. I loved it. And then additionally, we found out that Xbox Series X will be able to play basically any Xbox game as long as the Xbox game doesn't require Kinect because Kinect is fully dead, which means that the last piece of the original Xbox One IR Blaster Dream is finally dead. I told you so.

• 1:07:25Speaker 03

  What does this mean for people who use Kinects to power their TVs? Like to like they like ask, yeah.

• 1:07:31Speaker 04

  It means buy a Logitech Harmony Remote because that's going to be supported forever.

• 1:07:35Nilay Patel?

  I think Microsoft has just walked away fully from the idea that you're going to control all their devices with your Xbox, right? Does the Series X have any voice control? We don't know yet.

• 1:07:44Speaker 04

  I actually don't know that stuff in my head.

• 1:07:45Nilay Patel?

  I would bet the the controllers have microphones in them or whatever. Right. But this like central living room dream, which was Microsoft's dreams for 30 years, seems to just be gone. Like they're like, we're done with that.

• 1:07:58Speaker 04

  Yeah. And and they're so mad about that dream dying that they decided to make the Xbox a giant refrigerator shaped pillar that you have to have in the middle of your living room as like revenge.

• 1:08:07Nilay Patel?

  Get in the living. How do we? How do we make people know that Microsoft is in the living room? It'll be fucking huge.

• 1:08:14Speaker 03

  I showed my my brother, who's an audio engineer, I showed him the Xbox, the what is it Xbox Series X? That's the name?

• 1:08:21Speaker 04

  Xbox Series X.

• 1:08:22Speaker 03

  Xbox. And I showed him that. And he was like, yo, is that he's like, what kind of soundbar?

• 1:08:30Nilay Patel?

  That's amazing.

• 1:08:32Speaker 04

  And then lastly, the Xbox One X and the Xbox One S Digital Edition have been discontinued. You can still buy a Xbox One S. And then eventually you'll be able to buy a Xbox Series X. And we are anticipating there will be an Xbox Series X Digital Edition, although it may be called an Xbox Series S. Unclear TBD.

• 1:08:57Speaker 03

  Who is naming any of these things?

• 1:09:00Speaker 04

  Yeah, I think the sort of running conventional wisdom here is that game console sales went ticked up a little bit since because of the pandemic. And Microsoft had already been winding down production on these consoles. And so they just like ran out or are running out. And it's like, well, okay, we could make more or we could throw all our weight behind the new thing that's coming this fall. And that because that I think that's just it. So if you if you want to buy an Xbox, don't because you should wait for the Series X slash whatever happens to the rest of the platform there.

• 1:09:31Nilay Patel?

  What a hard problem.

• 1:09:32Speaker 04

  Yeah.

• 1:09:33Nilay Patel?

  Right. Like there's a demand and you don't want to serve. Because you want people to wait. But if you sell somebody like Xbox One X is like 400 bucks, 500 bucks, right? It's expensive. If you buy that, there's no way you're buying a Series X in the fall. So I think they're just taking out the high end. So you buy a One S for like 200 bucks or whatever it is. And then you might still buy a Series X.

• 1:09:53Speaker 04

  Yeah. What's remarkable to me is they hung on to the regular One S with the drive and they they got rid of the digital edition, which is fascinating. I would have expected that to be flipped, but I also hate spinning discs, you know? So I don't know.

• 1:10:07Nilay Patel?

  I I bet they just stuck with whatever is the cheapest one, like whatever is the cheapest at the highest margin is probably the one that they make the most of, right?

• 1:10:13Speaker 04

  Well, but it's cheaper to make something without a spinning disc than with, like, literally all they did was take the thing out of the box.

• 1:10:18Nilay Patel?

  Come on, how much does one DVD drive cost?

• 1:10:19Speaker 04

  I don't know, man.

• 1:10:22Speaker 04

  They made a whole video of like, how are we going to make a digital edition? And then the whole video was just them admitting that they just pulled the DVD drive out.

• 1:10:28Nilay Patel?

  I bet that I bet it's just a simple one because probably those people buy more games because they're just in the store and you just buy like five games. And you have to like download stuff. It's not like internet in America is great.

• 1:10:37Speaker 04

  That's fair. And then, well, there'll be more Xbox announcements every week until the end of time. But there is literally one coming up, I think, next week on like the 23rd or something. So stay tuned for yet more game announcements. You know, that's just how it works. And then I guess we should mention, I think there's a rumor that's pretty well documented that PlayStation has like radically ramped up PS5 production. Like they're they're making more than they originally planned. Like they're getting ready for a big, big launch.

• 1:11:01Speaker 03

  Do you remember when E3 was four days and now E3 is one month? And it's just so exhausting.

• 1:11:07Speaker 04

  It's not even a month. It's just, it's just like, it's like, it's just a little bit every week for all of time now.

• 1:11:13Speaker 03

  Sometimes I just like checking with our games editor, Andrew Webster, and then friends of the site at Polygon. I'm like, how do you do it? And it's like, it's just like so much all the time.

• 1:11:23Nilay Patel?

  All right, we've gone way over, actually not so bad. It's like a medium amount of over, but it's definitely over. Julia, thank you.

• 1:11:30Speaker 03

  Thank you.

• 1:11:31Nilay Patel?

  Russell, my friend, thank you.

• 1:11:33Speaker 05

  Yeah, yeah. Thanks for having me.

• 1:11:34Nilay Patel?

  Do you have any thoughts on Netflix?

• 1:11:36Speaker 05

  Warrior None. I would say this is it. The question by locking down Warrior None, Netflix has like insured. And so if you get a Roku device that doesn't have Warrior None.

• 1:11:48Nilay Patel?

  Yeah.

• 1:11:48Speaker 05

  Like, where are you? You know?

• 1:11:51Nilay Patel?

  What are you doing? Julia, I have an idea for a pop up podcast for you, by the way, which is just every week you say the things that Disney Plus has censored on its service.

• 1:11:59Speaker 03

  Oh, I I've started, I've literally started an Excel.

• 1:12:04Speaker 03

  People just send me stuff. They're like, there's no but in this.

• 1:12:08Speaker 03

  Those he is.

• 1:12:11Nilay Patel?

  It's amazing. All right. That's it for our show this week. Thank you for listening. Dieter has a newsletter.

• 1:12:16Speaker 04

  Yep. It's been, it's been a little hiatus and I'm also taking a vacation later this week. So it's intermittent, but it still exists. It's a first.com/newsletter.

• 1:12:24Nilay Patel?

  It's the worst call to action ever.

• 1:12:28Nilay Patel?

  You can go read the newsletter. He's just not going to make for a little bit. Verge.com/newsletter. Casey Newton and Zoe Schiffer have the interface, which is great. That's verge.cominterface. We'll be back on Tuesday, the interview episode. Kim Zetter here to talk about security issues. It's going to be pretty good. We're going to have a little security focus for a little bit. We banked a bunch of episodes on that. On that topic. So I'm excited for those to come out and we'll be back next week. Talk to you soon. Rock and roll.

• 1:12:54Speaker 04

  Wear a mask.