Tech antitrust hearing: the important moments and what comes next

Nilay, Makena, Adi, and Casey discuss the important moments from Congress' antitrust hearing with Apple’s Tim Cook, Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, and Google’s Sundar Pichai. Stories discussed this week: Antivirus: A weekly digest of the latest COVID-19 research Kodak is branching out into pharmaceuticals with US investment Twitter forced Donald Trump Jr. to delete tweet spreading COVID-19 misinformation Moms in Tech Facebook group splintering over allegations of racism Google will keep employees working remotely until July 2021 NASA’s life-hunting Mars rover is officially on its way to the Red Planet Tech antitrust hearing: all the news, updates, and documents from Congress’ big moment Everything you need to know from the tech antitrust hearing What Amazon, Google, Facebook, and Apple have in common Antitrust panel says the messages show Zuckerberg trying to buy out his competition Jeff Bezos can’t promise Amazon employees don’t access independent seller data Google’s business model ‘is the problem,’ David Cicilline says The iconic Flip Video almost became Google’s first camera, emails show Amazon bought Ring for market position, not technology, emails suggest Read Steve Jobs’ emails about why you can’t buy digital books in Amazon’s apps Facebook usage and revenue continue to grow as the pandemic rages on Google parent company Alphabet sees its first revenue decline in history Apple reports strong Mac and iPad sales in record-breaking Q3 earnings 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, Casey Newton, McKenna Kelly, and Addie Robertson join me to talk about this week's gigantic tech antitrust hearing with the CEOs of Google, Apple, Amazon, and Facebook. It was a big deal. We're going to get into it now on the Vergecast.

• 0:15Speaker 01

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• 1:18Nilay Patel?

  Hello and welcome to Vergecast, the flagship podcast of government oversight. I'm getting more and more boring with these, which is a problem, but I'm going to stick with it. I'm Neela. I'm your friend. Dieter Bone is on vacation this week. Much deserved vacation, but I have an all-star crew with me to talk about this antitrust hearing. Casey Newton is here. Hello. Addie Robertson is here. Hey. And McKenna Kelly is here.

• 1:40Speaker 03

  Hey there.

• 1:41Nilay Patel?

  McKenna, you have a lot of work to do in this one because I think you are the only one who grasps the structure of this hearing. We'll get to it. I want to start, as always, with a little update on the virus. It is week after week. It is 20 weeks since Donald Trump presented a flow chart to the nation for a testing plan that featured a website built by 40,000 to 50,000 Google engineers. So many Google engineers working on it. That website doesn't exist. There is not a nationwide testing plan. It's a mess. But we have a little bit of a launch. Mary Beth Griggs, our science editor, has a new newsletter called Antivirus. It's a weekly digest of all the COVID-19 research that's happening. You can see it on the site. We're going to

• 2:24Nilay Patel?

  try to update on research vaccine development in a more focused way so that can find its audience and people can see all of that stuff in one place. So check that out on the site. Speaking of that, Kodak is not making cameras anymore. They're branching out into pharmaceutical development with a gigantic investment from the government. This is so laced into what we're going to talk about the antitrust hearing, but Twitter forced Donald Trump Jr. to delete a tweet, spreading COVID-19 misinformation. The hearing actually started in many ways with yelling about why Twitter wasn't there. And this sort of activity is why, but we'll get into that. But that's a thing that happened. Twitter is taking a hard line on this stuff. And Google is going to keep employees working remotely until July 2021. I think that kind of second order effect of the pandemic is something that we keep tracking. So that's

• 3:09Nilay Patel?

  the biggest story in the world. We're paying a lot of attention to it. The other biggest story in the world is obviously the movement for racial justice in this country. We have a pretty big project about that stuff coming out. I don't want to spoil it, but I'm excited about it. But one story, it just keeps playing out. Zoe Schiffer wrote a story about the Moms in Tech Facebook group, the splintering over how to handle allegations of racism inside the group. So two big stories that we just keep tracking. We are focused on it. I never want to make it seem like that stuff isn't top of mind for us. Although the antitrust hearing is potentially will have ramifications for a long time as well. And then lastly, I just want to point out more science news, not about the virus. Lauren Grash covered

• 3:50Nilay Patel?

  the launch of NASA's Mars rover, Perseverance, which she's calling Percy, which is very cute to me, at launch today. And it is going to be our best shot of funding life on Mars. So track her coverage for that because it's really fun. So this hearing, I'm just going to say it, it was six hours of chaos. So, so many things, like individual moments of pure chaos happened this hearing. But because every member of Congress was only given five minutes to ask the questions and then they moved on, no one could process the moments of chaos. So here are some things that happened during this hearing. Jeff Bezos just started eating some nuts on his Zoom call. That was just a thing, they just started snacking.

• 4:34Nilay Patel?

  For the first 90 minutes, it appears that Bezos had tech issues and was operating on some kind of delay. So we just didn't hear from him, they just didn't answer any questions and they had to take a 10 minute break so Jeff Bezos could fix his computer. Amazing. Jim Jordan, who McKenna pointed out on the show last week, is always sort of just like a chaos element, tried to talk over several members of Congress, got yelled to put his mask back on, floated just elaborate conspiracy theories. It was, when I say it was chaos, I don't know if there's any other way to describe it. I think that led a lot of people to think the hearing itself didn't accomplish its goals, but I think in many ways it did. McKenna, do you want to kind of go through what the committee was trying to accomplish,

• 5:18Nilay Patel?

  the themes they were pointed at and just how the hearing played out?

• 5:22Speaker 03

  Right. So, okay, first off, harkening back to last week, I mentioned Jim Jordan's Mountain Dew obsession. He definitely drank a handful of those throughout the hearing. I took notes and screenshots, so I called it. But regardless of their poor soda choices, there were a lot of lawmakers who definitely did their homework. And I think that was really apparent throughout the entire hearing. And when I look at the picture that they tried to paint, I think that became really clear in Chairman Cicilline's opening statements. So this is the guy who like championed and spearheaded the entire investigation from the beginning. And in those opening statements, he pointed out that, yeah, Apple, Amazon, Google, Facebook,

• 6:04Speaker 03

  they're different in a lot of ways and they exhibit anti-competitive behaviors, potentially, allegedly, in a lot of different ways. But what they tried to pull together was a story. And it's really hard to tell a story in five minute fragments, but what happened yesterday... Was Cicilline and a lot of the Democrats on the committee wanted to point out that these companies, they become bottlenecks for distribution, whether that's information or just like app stores and marketplaces, they control what gets distributed and how. What was really key to the investigation was how they survey competitors. If you have so much control and dominance over a market or a specific part of the tech industry, you have a lot of insight into your competitors and you can do a lot of dangerous things with that.

• 6:48Speaker 03

  And then lastly, after that dominance is gained, it's how they abuse it, right? How they abuse it to make life harder for small businesses and competitors. And I think that's exactly what Cicilline pointed out in the beginning. And I think they did a poor job of that storytelling throughout the process. But I think that's also our job, right? Is to pull that evidence together and tell that story for them in a way that isn't like, yes, no, yelling at CEOs and like stopping them. And I think by getting that in the evidentiary record and doing all this questioning, I think they really did achieve their goal in the end.

• 7:26Nilay Patel?

  Yeah, I mean, I think the thing that happened sort of next to the hearing was that they released a bunch of documents from these 1.3 million documents they've collected over the past year. They released a pretty targeted selection documents for every company showing some of this stuff. Casey and I wrote a story about Facebook buying Instagram. My, I'm going to frame this. We have an email where Mark Zuckerberg, literally one sentence, no period at the end, just says, I need to figure out if I'm going to buy Instagram. Like, I would love to just be in a place where I'm sending that email just like super casually, like, I gotta figure, I got this thing to figure out. And it's not like, am I going to buy the up model of the car? It's like, I gotta buy Instagram.

• 8:03Speaker 03

  I've been thinking of the text messages where so and so says that Mark Zuckerberg's going to go destroy mode on Instagram ever since they brought that up yesterday.

• 8:13Nilay Patel?

  Casey, that's to Kevin Systrom, right? That text was?

• 8:16Speaker 04

  Yes. Well, it was Kevin Systrom was talking to an investor and Kevin said to the investor, if we don't sell, will Mark go into destroy mode on us? And the investor said, probably.

• 8:27Nilay Patel?

  Of course, very casual. So there's just a lot of documents. And I think one of the functions of the hearing was to get those documents into the official congressional record to make the CEOs account for them. That did not seem very successful to me as like a takeaway people should have from this hearing.

• 8:45Speaker 03

  Right, no, I think when a lot of people like go into these hearings, they're expecting like these big gotcha moments and expecting like a lot of like news and all this stuff. But it really, it wasn't oversight hearing, you know, it wasn't, they didn't come, they came at this like in what I reported last, earlier this week, that they came at it as investigators, they didn't come at it to make a big show, like horse and pony show out of it. And yeah, I think the CEOs didn't address the record well enough to the extent that they could have, but there was definitely, I was expecting them to do a lot less evasion and I expected a lot less room for evasion with the documents, but it's just the process of, you know, a congressional hearing, it's, it's hard to do that in a congressional hearing.

• 9:26Speaker 03

  But if you put those documents out there, you get the CEOs on the record a little bit, who does this excite? This excites the FTC, this excites the DOJ, and that's who can take this next. And then it's also Congress, you know, they can't break up a tech company, but they can regulate going forward. And it's those three key themes that I pointed out earlier that they could regulate, you know what I mean? They could legislate to forbid companies from surveying competitors and things like that. And that's where that, this goes.

• 9:53Nilay Patel?

  So the format of the hearing, right, it's every member in five minute chunks. It seemed very clear that the Democrats had some sort of coordinated evidentiary strategy. They would start and they would say, I want to read this email to you, what did you mean by this email? And then Jeff Bezos would say something like, I have no idea how Amazon works. That was a real pattern that developed was Bezos really not knowing or claiming, he definitely knows, claiming to not really know why Amazon did a thing that it did. Or they would ask Sundar Pichai about the very granular ad deal that Google had made to buy an ad product and Sundar would say, I'll get back to you, which is basically all of his responses. So the Democrats seemed like they were coordinated to move through their documents.

• 10:36Nilay Patel?

  The Republicans seemed to be doing something else that also seemed coordinated and intentional. But what was their focus? Because that seemed like a clear split.

• 10:45Speaker 03

  Right. My takeaway from Jim Jordan, who we got into earlier, he was interviewing these CEOs as if they were all Jack Dorsey. And as we talked about earlier, like, yeah, he invited Jack Dorsey to testify, but he doesn't sit on the Antitrust Subcommittee, so like, anything he says, it just doesn't matter. So it sounded to me as if he prepared questions for Jack Dorsey, and then it was like, oh, he's not coming. I'll ask Tim Cook the same questions.

• 11:11Nilay Patel?

  Another completely crazy moment that happened, that just flew by in five-minute chunks, is that Representative Sensenbrenner from Wisconsin, dear sweet Wisconsin, definitely asked Mark Zuckerberg why Donald Trump Jr. was banned from Twitter. And Mark Zuckerberg was like, that happened on Twitter, not Facebook. And then there was just like a moment of confused silence, and then he tried to move on. And that just sort of floated by in the river of chaos.

• 11:38Speaker 04

  To tell you how much chaos there was, Neela, when you started to tell that story, I thought you were going to tell the story about when Jim Jordan asked Tim Cook if the famous 1984 Apple Super Bowl ad was actually about 2020 cancel culture, which is another thing that really happened.

• 11:53Speaker 05

  I think that's out of context. He didn't ask him. He said, clearly, this is.

• 12:00Nilay Patel?

  That's definitely what Steve Jobs was thinking. IBM is cancel culture, and Apple's going to break it with a sledgehammer.

• 12:06Speaker 03

  And Jeff Bezos said that social media is a nuanced destruction machine, and all this crazy stuff from that. It was wild.

• 12:15Nilay Patel?

  Well, that particular question, when Jim Jordan asked, do you support the cancel culture mob? You could see the CEOs like... Because they went in order. He asked them all in order. So first, Tim Cook just like basically muttered nothing. He was like, I don't, I support speech, whatever. Right? Like, the iPhone has a keyboard. Like, that was his answer. Soon, Draper tried also, just like muttered, right? He's like, Google has always supported free expression. Zuckerberg, like, saw the opportunity and took it. And he was like, the forces of illiberalism are rising high. And then Bezos was like, I can up, I can one up this dude and like, went for it. And that was just a totally insane moment. But it also seems like the Republicans

• 12:57Nilay Patel?

  were intentional to try to create their own moments where they were yelling at CEOs about bias on platforms, which is obviously something we cover a lot. Addy, I know you were paying a lot of attention to that. Casey, I know you're paying a lot of attention to it. Do you think that was effective in sort of creating, because, you know, there's like a parallel conservative media universe. Jim Jordan was on Tucker Carlson last night. Like, was that effective? Or do you think that the CEOs were able to just sort of tamp down on it?

• 13:24Speaker 05

  I mean, interestingly, Tucker Carlson pointed out that Google and other companies are all big donors to Jim Jordan and other folks. So that is a weird side note. But I think it was actually, besides the moment where they mixed up Twitter with Facebook, I think this was much more effective, off-topic yelling about technology than we usually see. Like, there are genuinely issues that, like, they are upset about that they could point to, largely around, like, COVID-19 misinformation. And they could at least, like, pick those topics and stick to them, rather than kind of asking vague questions about, like, why is my iPhone listening to me?

• 14:02Nilay Patel?

  Well, they had definitely asked vague questions about why are my campaign emails getting filtered by Gmail?

• 14:06Speaker 05

  Yes, I should, I should mention that. They have really, and they just have all of these cases where they ask about extremely specific one-off incidents that anyone who has used social media knows happens constantly, and then turns them into a sinister pattern. But I think they managed to come off as sounding more like they understood what they were talking about than usual.

• 14:28Nilay Patel?

  Yeah, I think that was a real theme of the hearing. Casey, what did you think of this sort of bias sideshow that occurred?

• 14:34Speaker 04

  Well, I mean, the the idea that conservative voices are being suppressed is foundational to the conservative movement and is behind the rise of conservative talk radio. It was behind the rise of Fox News. And now that social media exists, we have seen it in this new form. But it is, you know, sort of being presented as extra sinister and worthy of, you know, some sort of legislative intervention. What frustrates me about it is that much more than newspapers or or cable news, like Mark Zuckerberg, Jack Dorsey, these people benefit hugely from having all possible voices on their platform. None of them is incentivized

• 15:17Speaker 04

  to drive conservatives off their platform. What they are incentivized to do is have rules that make the place safe and welcoming so that people want to hang out there. And so to the extent that there are issues on the platform, they've largely come because these platforms have rules. And, you know, you would think that a bunch of free marketeers would realize that the alternative to the system that they're so mad about would be creating a new system. But they don't seem at all interested in doing that. So I just sort of dismiss all of them as charlatans.

• 15:47Speaker 05

  I actually thought it was interesting that the opposite track came up, which was the Stop Hate for Profit campaign. I kind of wasn't expecting that. That Representative Raskin, I believe, asked Facebook, basically, why aren't you kicking more hate speech off? Do you not? I forget who else asked, like, look, is the point that you're so big, you don't care about advertiser boycotts?

• 16:06Speaker 04

  I mean, you know, well, here is a fact. The number one complaint that Facebook gets from its users, the thing that users think is the worst thing about Facebook is that it removes too much content. And so if you're running the place, you do have to take these complaints seriously in a way, right? It might not be, you know, that you shadow banned a conservative, whatever that even means on a social network in 2020. But the fact that you're removing content is really upsetting to people. So you can't dismiss That idea entirely, but I still don't feel like we're having that intellectually honest of a conversation about it.

• 16:43Nilay Patel?

  So this was definitely, I feel like you can connect the you control distribution. We're going to show the abuses of power narrative. We got other Democrats with the you can control distribution. You're banning conservatives, right? Like I think with Sense and Brenner, again, who kept saying conservatives are consumers too. Is though people don't realize that like it's 50% of the population in many ways. But Facebook has like very famous conservatives working at its highest levels. Kevin, we, I think last week we were talking about Kevin Roos keeps sharing the list of the most engaged content from CrowdTangle. It's all conservative content and that's so problematic for Facebook that they're, they're pushing back with other metrics and graphs of their own making. The facts just aren't there, but it, that doesn't seem to be convincing.

• 17:27Speaker 05

  Well, and Brett Kavanaugh is being asked to recuse himself from a Facebook case because he's like best friends with a Facebook high up.

• 17:34Speaker 04

  I wrote a column almost two years ago now, arguing that conservatives were trying to redefine bias as any conservative identified person having any unwanted outcome on a social network. Right? So bias is your name was higher than mine in search results. Bias is you suggested that I follow a Democrat and not a Republican. Right? And if you take action on your policies that apply to everyone against me, a conservative, that is biased against conservatives. Right? So, and by the way, I have to say, this has been hugely successful because we've now talked about it for how many minutes now?

• 18:11Speaker 04

  And the longer that these discussions go on, they just sort of reify in people's minds, the idea that there really is a vast conspiracy to silence conservative speech. And because these networks are so big, millions of conservatives are having experiences like this every day. And now there is an ideology that is basically a religion for them to attach to, which is all those Silicon Valley liberals are out to get me.

• 18:34Nilay Patel?

  The reason I want to talk about the conservative sideshow, which in many ways was a circus, is it feels like the notion that we should be punitive to the companies or mad at the companies is bipartisan. Right? We were not looking at a hearing where the Democrats were on the attack and the Republicans are saying, "We love Apple." We were looking at a hearing where they were, everyone was mad.

• 18:55Speaker 05

  There were a couple of exceptions to that. There were a couple of, I think Sensen, Brenner, and a few other folks were like, "Look, we want to be clear, big is not bad. We just want to make sure we're not punishing you for your success." But you were like, almost entirely right, yeah.

• 19:07Nilay Patel?

  I mean, I just, I think that's, it's important to capture that mood. Like Jeff Bezos, Mark Zuckerberg, Tim Cook, Sundar Pichai, they usually get to finish whatever sentence they start saying, right? They're not used to being interrupted. Their thoughts are usually like, you know, they, they get to live in complete sentences and people take them seriously. Here, in five and intervals, they were interrupted almost every time they started speaking, to be told that they were wrong, that they were filibustering. At one point, Cicilline said, "Stop thanking us for the questions. We can just assume they're all good questions." Like, they were getting yelled at. And they were getting yelled at about a variety of things that were pretty specific. So, McKenna, in your kind of structure

• 19:47Nilay Patel?

  here, the first one was controlling distribution. What did you hear as the hearing went on that indicated to you that the committee had a case here?

• 19:55Speaker 03

  Right. I think the Apple's App Store is one thing, you know, charging 30% cuts on certain things is just controlling an App Store. It's the same thing with Amazon's Marketplace. They can inherently control what gets placed and what gets sold. And, you know, if they want to play with search results on Amazon, they can do that. And then on Facebook and Google, it's not just like products and software. That's information. And it could be information when it's like Google, Google stealing Yelp's text reviews, right? And putting those in its little info boxes and search queries. And Facebook, Facebook is just like an information distribution platform, and it can decide algorithmically,

• 20:37Speaker 03

  unknowingly, what, what people get to see. And the distribution was very key to the committee's hearing yesterday. And they pointed out different aspects in which, you know, each company exhibited that kind of behavior.

• 20:49Nilay Patel?

  So the one that when you bring up Apple, we wrote about this today. There's a bunch of emails. Apple's document production is just 130 pages of unrelated emails in whatever order. So it's like scanned through it. So there's like a lot of little stories in there. There's one about right to repair and Apple realizing it needed a right to repair strategy. By the way, watching PR people operate by reading their emails, if you're a journalist, very entertaining. They're like, we gotta break like, here's our strategy. Here's what we're gonna say. And that's all in there. You can look at it. But there's a lot about the App Store itself and how they're going to use the mechanics of the App Store to control their platform. And it started at the beginning, like the first emails in this production are from 2010. They're from Phil Schiller and Steve Jobs. Saying, are we going to let Amazon sell books in the Kindle store?

• 21:34Nilay Patel?

  Phil Schiller is like, I saw an Amazon ad. It was hard to watch. He said it's hard to watch. This ad where a person's reading a book on an iPhone in the Kindle app and they pick up an Android phone. They keep reading. He's like, literally the email is like, it was hard to watch, like Schiller's at home, like pained. When a customer is having an experience that good, it really just stabs you right in the heart. And so he's like, it was hard to watch. He forces it to Steve Jobs and they they're like, we gotta shut it down. Jobs is like, the iBookstore will be the only bookstore on the App Store. That's the way it's gonna be. Everyone's gotta get used to it. We know that restricting payments will hurt other things, but that's what we're doing. And they started there in 2010 and they pulled it out. And then that ladders up into everything that we've seen with hay. It ladders up into the analysis group showing up to

• 22:20Nilay Patel?

  Apple can pay them to say that this independent study has revealed everybody has a 30% cut. It has laddered up into Tim Cook forwarding. He gets letters from developers that are in this production. It's like, Apple's breaking my heart. And he's just like, forwards it. Tim Cook forwards that email to Phil Schiller and Fred Fegoridian just says, thoughts? Like, amazing. Like, they are constantly thinking about the App Store as a mechanism of control for their platform and leverage in other deals. So then the other one with Apple is this Amazon one, which I actually have very mixed feelings on saying that this is bad or illegal. I'm curious for all of your thoughts. Famously, Amazon did not have the Prime video app. On the Apple TV and all these other places, Apple and Amazon came to a deal.

• 23:02Nilay Patel?

  There's an entire presentation in this production, like the slide deck of how the deal is going to work. Apple got to be the preferred seller of its own products. So like third parties can't sell Apple products and Amazon pages. They got, they have a custom buy flow. They have custom product pages, all this stuff. In return, Amazon got a lower commission on the App Store and it gets to sell its own products, which no, like, you can rent a movie from the Amazon app on the Apple TV. No one else gets to do that. In one world, this is just pure platform collusion, right? Apple cut a VIP deal for a big company because it wanted something and you could say this is illegal. In another world, it's like, this is how deals work. Apple has something valuable and Amazon has something valuable and they came to a conclusion where everyone made more money.

• 23:46Nilay Patel?

  And quite frankly, the consumer experience on both platforms got better. How do you read that, Casey?

• 23:52Speaker 04

  I mean, I think that that is a good and fair analysis of it. I think I did read slightly more scandalous undertones into it. In part because Apple would never acknowledge that some developers are more important to it than others, even though if you assume that that's true. I think maybe one of the things that's frustrating about it is there is no transparency or accountability around which developers get sweetheart deals. Is it that, well, once you hit a certain threshold of revenue, we'll cut your price? Why couldn't they extend that deal to everyone, right? Or is it just if we withhold something that seems particularly valuable, we can eventually drag you to the table, which is sort of what seems like happened here.

• 24:35Speaker 04

  I think in all cases, what I'm always looking for is the accountability, right? Like, and, and some sense of, of equitable treatment of developers. And I understand, yeah, the big guys are always going to get the best treatment, but can that be publicly visible? Can it be acknowledged? Can there be routes for others to achieve that same level of success and treatment? And that all just seems missing here.

• 25:00Nilay Patel?

  Did you buy Tim? He said it twice. It was obviously. This is my glimmer of sympathy for all four CEOs. There is a lot of reporting that they had spent months preparing for this hearing, like being grilled, they're, you know, they had hired outside law firms. They, they had practiced. They all clearly had soundbites memorized and none of them got to say them because it kept getting interrupted. So Tim Cook had this one where he is like, if we're the gatekeepers, the gates are open wider than ever. We've gone from 500 apps to 1.7. He said, like, it was a whole speech. And the thing he kept saying is there's fierce competition for developers. They don't like our store. They can develop for Android. They can develop for Windows. They can develop for Xbox and PS4,

• 25:44Nilay Patel?

  which I was like, the idea that Adobe is going to be like, we don't want to be on the iPad. Here's PS4 Photoshop is insanity to me.

• 25:53Speaker 04

  Oh, I'm, I'm going to build a spreadsheet app for the PS5. That's how frustrated I am with Tim Cook.

• 25:59Nilay Patel?

  Did that ring true to you? I mean, there's

• 26:01Speaker 04

  No, it does not ring true. There is a, there is a duopoly in the United States when it comes to smartphones. iPhones have majority share in the United States. And you can't say, well, you know, there, there's a, there's a rogue fork of Android in Malaysia that you could go develop for if you really wanted to, and have that come across as a credible argument to Americans, right? It is natural for any monopolist to spend most of its time arguing that it is much smaller and much less consequential as, as you think it is. And they're essentially always asking you to ignore what is in front of your face, which is that they are the giant, they are in control.

• 26:46Speaker 04

  What they say goes, and it doesn't matter which small businesses get hurt along the way.

• 26:51Nilay Patel?

  I would point out that the contact, and we're going to talk about earnings eventually, but the context for that is Apple had its biggest third quarter ever this month. Their revenues went up 11% year over year. They're making, obviously making billions of dollars and their services revenue, which is a lot of the narrative around the app stores, increasing that services line also went up. I think it was 13 billion. So you're right, that they're very big and their earnings the day after the hearing did nothing to reduce that impression. I want to switch to Amazon a little bit. McKenna, you were really focused on Amazon. It was Bezos' first time up there. They came at him a lot about Marketplace. How'd you think that went?

• 27:32Speaker 03

  I think it went pretty good. I think Jayapal specifically was just like killer. Her questioning-

• 27:38Nilay Patel?

  She was like the breakout star.

• 27:39Speaker 03

  Yeah, she was just like killer. And she's the representative for Seattle. So this is where Amazon is, right? So she just like killed it. And I think there were a couple of instances in the documents and in questioning yesterday that really pulled important things out. There was like testimony from one bookseller who was like, yeah, we just can't sell a category of books and we don't know why. Amazon just doesn't let us do that. It's just like testimony like that. Or even when it comes to like acquisitions, the Ring acquisition especially, I wrote about that today, going through the documents and how they just said, this is for market position. This isn't for technology or talent or anything. We just bought this. And that's something that Bezos said again yesterday. He was just very clear. It's like, yeah, we do buy things for market position, which is like so insane to just hear like

• 28:24Speaker 03

  the richest person in the world be like, yeah, we're buying market position. It's just what happens.

• 28:27Nilay Patel?

  That's another one where I have mixed feelings, right? And by the way, people should go read McKenna's story because those documents have just a very funny breakdown of like the pros and cons of buying Ring. And many of the cons are like, what if this turns into Nest? Which if you're just a Vergecast listener, it's like, it's just like the keyword bingo. But it's fine to say we're buying market position. Like this isn't the best product out there, but it's, the category of video doorbells is not huge, right? So to buy the market leader in video doorbells is maybe the most rational use of the money. What is the problem that you think the committee was trying to show in an antitrust sense of, we're just going to buy market position?

• 29:09Speaker 03

  I think it's pointing out that they can just do whatever they want and how casual it is. And there really isn't. It's really funny to read an email like that and be like, we could buy it, or we could just copy it, or we could just watch. You know, that was one of the emails that Bezos got from someone. Those are his three options, you know, and it's like, just pick and choose, you know? And it pointed out like a lot, just that email itself really pointed out just how easy it is for them. They used a lot of that time history to talk about copycat behaviors and to talk about just like, you know, buying up competitors. And it just seeing that all in one little email having to do with the ring was like, really, I think it was really kind of eye opening and especially like useful for the committee.

• 29:50Nilay Patel?

  So, Amazon got hit a lot for the data collection side of it, of copying competitors. Bezos did not seem to have great answers there.

• 29:59Speaker 03

  Right. So, that's the thing. They got in trouble with this. There was that Wall Street Journal article from like April where employees were literally like, yeah, we'd kind of dip into data and we use that to guide our own private label products. And everybody's like, whoa. And Amazon, Bezos yesterday said, well, we do have a policy that bans that. But Jayapal pointed out yesterday, it's like, okay, so what's your enforcement look like? You can have the policy, but like, if you don't enforce it, then it's like meaningless? And then yesterday, I think Jayapal was like, can you give me a yes or no answer? Do you dip into data? And he's like, I can't. I can't give you yes or no. And was just like, we're looking into it. The story had anonymous sources, so that isn't very helpful to us. You know what I mean? So, that was one of the main things in that Wall Street Journal article. And I think it's the same kind of examples in

• 30:44Speaker 03

  the committee's documents. They point out specific examples like car trunk organizers, of all things. It's like weird little products like that, that Amazon's like, well, this is a little hot. Maybe we should do that. So, I think they did. I think they made a good case yesterday on that.

• 30:57Nilay Patel?

  Yeah, I mean, Bezos brought up that Wall Street Journal article himself twice. And he was like, well, you have a policy against it, but I can't guarantee it's never happened. Then there was a strange, just, it didn't come across clear. I think I know what the committee was trying to get at. They're like, do you use aggregate seller data when there's only three sellers? And then only two sellers? He was like, yes. And I think what they're getting at is, when you're down to the aggregate data of two companies, you are effectively looking at individual data. What is the problem there? Like, I was like, I get what you're doing. You're just reducing the denominator to get to one. But like, why is that a particular problem?

• 31:36Speaker 03

  Right. Well, none of these dipping into individual seller data and looking at aggregate data, that's not illegal. Like, there is no law. This is all voluntary of Amazon. So they have a voluntary policy where like, we can't do individual seller data, but they say nothing against aggregate. And aggregate, what you're getting at, I hear you, is it does the same thing. If it's just like some goofy little product, they bring up POP sockets all the time. Before POP sockets-

• 31:59Nilay Patel?

  POP sockets having a moment.

• 32:01Speaker 03

  Right. If there's only like one POP socket company, like, you know, POP socket was kind of an innovative product. It's like, well, if there's only two of them and you use the aggregate data, you know, you have everything you need to know, you know, about that product line looking aggregately, if that's what you decide to qualify it as.

• 32:17Nilay Patel?

  Did you, as you were looking through the other Amazon documents and other stuff, did anything else jump out at you as something the committee was trying to prove or get at? Because it, the questioning seemed very focused on, like, are you using this data to copy products? Are you buying things you shouldn't buy? There's one question, which I did not understand, why it came up about DMCA takedowns on Twitch. And Jeff Bezos just had this, like, look of panic in his eyes. He's like, I don't know, man, I bought Twitch because my kids wanted me to. And like, I don't know, like, it's doing something. Like, other, that was like the sideshow stuff. But the real focus here, it just seemed like it was definitely on the marketplace.

• 32:54Speaker 03

  Right. I think Amazon, everyone came at Amazon for the marketplace. That's what everybody knows them as. Like, they have all this little side stuff. They got Ring, they got Alexa. Alexa was one thing, too, that was kind of interesting. It's like, are you buying things like Ring to put Alexa into and just like expand your like Titanism as like an internet connected home, you know, thing and make that more closed off and, you know, walled garden-y? That was one thing. But no, it was just focusing on how much power they have to kind of like change what happens in the marketplace, to kind of decide what companies and what products are able to come up on the first page of results, you know? That's also something that they dug into Google and, and something that, one of those like themes that kind of ties everything together.

• 33:39Nilay Patel?

  We should say that they also spent a lot of time talking about counterfeit goods. And why isn't Amazon removing more fake stuff from the platform? And how much is it profiting off of, you know, selling fake Rolex's?

• 33:50Speaker 05

  Is it surprising that Whole Foods didn't show up at all there?

• 33:52Nilay Patel?

  Oh, yeah.

• 33:53Speaker 05

  Like, that is a really massive thing that Amazon owns that isn't moving into a huge new product category.

• 33:59Nilay Patel?

  I think Whole Foods is not an online marketplace, which was the title of the hearing. Not that that restricted anybody from doing anything.

• 34:06Speaker 05

  Well, except that one of the things Amazon says is we have lots of competition from offline marketplaces.

• 34:11Nilay Patel?

  Right. Yeah, Bezos brought up Kroger a lot. I mean, this is to Casey's point, like, they all made it seem like they were beset. At any moment, they could be crushed by the likes of Stop and Shop, right? Like, I think the point, though, was really on the, like, the digital experience consumers have. And like, I don't know if Whole Foods fits quite into that narrative, especially because it is itself not dominant. Right? Like, they bought it because it needed to grow, and they're good at that. Addy, my question for you on the Amazon stuff was, when you think about, we talk about 230 a lot, right? Like, you and I, in particular, spend a lot of time talking about 230, which regulates what the platforms can do with content. There's not really an equivalent of 230 for goods on a store, right?

• 34:55Nilay Patel?

  Like, there's some case is out there saying, like, you're liable for what it happens on your online store page. But Amazon doesn't have that, like, second order of, like, messiness around it that Twitter and Facebook do with 230.

• 35:09Speaker 05

  I mean, it gets invoked a lot for marketplaces, but it's way messier.

• 35:14Nilay Patel?

  Well, I just wonder, like, this question about counterfeits, this question about ranking the store, like, they are just even more free than any, like, Twitter is to sort tweets algorithmically or to moderate. Like, it's just their store. Do you think that they're, like, that algorithmic transparency, or like, why are things ranked? Did you catch a sense that that's where the regulation is gonna go?

• 35:34Speaker 05

  So much of the conversation around Amazon really felt like it was individual sellers being wronged for reasons of Amazon being unresponsive or stealing its data. So I don't know, it didn't, it didn't seem like a really big focus of the hearing, but it is a huge deal.

• 35:49Nilay Patel?

  Yeah, it's just the digital marketplace frame of this, which is where, you know, we have talked to Cicilline, that's where he's going, right? Like Facebook and Google, very digital, they have, like, they don't do physical goods, really. Apple is the App Store, it's all digital goods. Amazon is the one where it's a digital front to a lot of physical things. And that is the only place where I can see this regulation needing to make some sort of ma- like, major, meaningful distinction. And I didn't see it in the hearing, but I was just curious if you'd caught a glimmer of it.

• 36:20Speaker 05

  I'm honestly not positive that they have to make a huge distinction there. Like, depending on what they come up with, because so much of this is about, there are companies and whatever product they produce, the issue is more or less whether or not they're being surveilled and unfairly, like, targeted and crushed by that data surveillance.

• 36:40Nilay Patel?

  All right, we have gone for 40 minutes, we should take a quick break. I said I wasn't gonna go by company, and it happened, so we should come back and talk about Facebook and Google. We'll be right back.

• 36:54Speaker 01

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest, or rush the field the fastest. Winner gets an Ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 37:23Speaker 02

  College football is back. So Hilton called in me, the superstition concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching band wake-up call at 5:55 in 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for the stay.

• 37:55Nilay Patel?

  Casey, when it comes to Facebook, I turn to you. Facebook is a rapacious consumer of startups is what we've learned.

• 38:01Speaker 04

  Yeah.

• 38:01Nilay Patel?

  But you said something to me yesterday that was interesting, which is everyone else's problems are forward looking and it feels like Facebook's problems are actually in the past. Break that out for people. Explain what you mean.

• 38:11Speaker 04

  Yeah, so when Congress is looking at antitrust with respect to these four companies, for three of them, it's sort of about the marketplaces that they're operating right now. With Facebook, the question is much more about should we have allowed it to buy Instagram? Should we have allowed it to buy WhatsApp? And most of the antitrust conversation that was around Facebook yesterday was all about that. What did Mark Zuckerberg know about Instagram and when did he know it? You know, we wrote a story based on some documents that the House released yesterday in which Facebook has clearly identified Instagram as a competitor in at least some ways and wants to go after it and knock it off the table.

• 38:54Speaker 04

  And so that's kind of where the focus is there. Facebook, and I mean Zuckerberg did get a lot of other questions yesterday, but it tended to be much more about content moderation and things that don't have a lot to do with antitrust.

• 39:06Nilay Patel?

  So there was that weird section where they asked him about the Facebook research app and the Onava VPN and he kind of got lost. Well, explain what happened and then I'm curious for your reaction to it.

• 39:16Speaker 04

  Yeah, so Facebook has a bunch of nifty tech tools to figure out what's trending, which apps are the kids using and so it can essentially have an early warning system if it needs to consider acquiring something or more likely in these days, go out and clone it. And so Zuckerberg was asked about the way that the company uses these systems and if they are anti-competitive. I think, you know, traditional antitrust law probably would not say copying an app feature is anti-competitive, but could a law be written in the future about it? Sure.

• 39:51Nilay Patel?

  Well, I think that the one that caught me was, are you, I mean, this is one of McKenna's points from earlier is like, one of the themes here is, are you so dominant that you can collect data that's unfair and then use that to crush or kill your competitors? And like Facebook definitely bought the Anavov VPN to do it.

• 40:06Speaker 04

  That's true. Now, when I've asked executives at Facebook about this, what they'll say is they don't get surprised anymore. When you have 3.1 billion people using your apps around the world, you know what links they're sharing. You know what apps they're talking about. And so you're not going to need some kind of specialized tool to know that WhatsApp is really taking off. Right? So they would argue that, yes, these tools were useful to them, but, you know, at their scale, they just kind of know it's popular now.

• 40:39Speaker 05

  Which doesn't really seem like it addresses the problem.

• 40:42Speaker 04

  I agree. I agree. Yeah, the fact that we're so big that we're all knowing is, yeah, maybe not the defense that they sometimes presented as.

• 40:51Nilay Patel?

  So here's what I didn't get, where I thought Zuckerberg, I do want to talk about the Instagram WhatsApp acquisitions, but on the Facebook research front, the data front. They asked about this app, Facebook Research, which they were giving to teens. They were deploying with an enterprise certificate. That story broke, Apple revoked the certificate, and all of Facebook's internal apps went dark. And this was like a scandal, like we wrote story after story about it. They went on for two days. Zuckerberg was like, I don't recall that app. And like, I just, how, you know, he remembers the day that all of Facebook's internal apps went down and people couldn't go to the cafeteria.

• 41:24Speaker 04

  Yes, I would agree. I found that answer extremely unpersuasive.

• 41:28Nilay Patel?

  Was that, do you think that was like actually strategic for him to be like, I don't know, and then come back later and correct the record and be like, I do remember when that happened?

• 41:35Speaker 04

  I, I mean, I really don't know. I mean, also, you know, during a six hour hearing, it's also possible that you just, you get flustered or you mishear something or something. Because yeah, as, as you say, I'm sure he remembers the day that Apple turned off their internal apps. I mean, you know, it honestly seems like an opportunity to talk about Apple's market power and the fact that, you know, a day of work got canceled at Facebook because Apple got mad. But, you know, I think most of the CEOs didn't go into yesterday wanting to pick fights with each other.

• 42:08Nilay Patel?

  It was kind of sad that they didn't. I was kind of hoping that Tim Cook would take a shot at Zuckerberg, as Zuckerberg would point out that the other two app platforms.

• 42:16Speaker 04

  I was expecting it.

• 42:17Nilay Patel?

  It was there.

• 42:18Speaker 04

  It was there. It was all there.

• 42:20Nilay Patel?

  So Cicilline ended, and I, he ended the whole meeting with his closing statement. He said, some of these companies need to get broken up. They all need to get regulated and they all have too much power. That, some of them, I don't think he's breaking up Apple. What's there to break up? Right? Like? The iTunes division gets sent into the corner to think about what it's done, right?

• 42:37Speaker 04

  They should spin out the Finder team. I've always wanted the new Finder.

• 42:42Speaker 05

  The claim is always that they want the App Store to be separate from the iPhone, basically. That's the thing I always hear.

• 42:47Nilay Patel?

  Yeah, but I don't, you can't break, I think you can write some strong regulations about not playing in your own store, right? But like Elizabeth Warren's point was it's cleaner if it's two companies. But that's still a gigantic remedy that I don't think there's a lot of like, like consumer or public opinion is gonna walk into an Apple breakup. I think he will regulate that marketplace. It seems very clear that when he says some of them should be broken up, he is talking about Facebook. I have like a 20% confidence level. He might be talking about Google and YouTube as well. But if he's gonna say some of them need to get broken up, like it's Facebook. Did you hear anything yesterday that supported that conclusion or saw these docs? I mean, I don't remember which Republican it was, but he was like, the Obama FTC looked at this and they said it was fine.

• 43:32Nilay Patel?

  And you love Obama, right? Like, why would we go back in time to relook at that?

• 43:36Speaker 04

  I mean, there is a belief, and I mean, I'm somebody who thinks there could be a lot of benefit in Instagram and WhatsApp being different companies from Facebook. And the reason you ask so many questions about that acquisition is you're making the case that it never should have been approved in the first place, and so now you need to remedy it. So that was actually like the entire thrust of the argument against Facebook yesterday. You know, I think you could probably make just as good a case that Amazon should have to spin out AWS. But, you know, lawmakers chose not to make that case.

• 44:06Nilay Patel?

  Yeah, I think that also gets into the politics of the acquisition at the time. Like Zuckerberg, to his credit, is like, nobody knew Instagram would actually be a success. Like, we made it a success. It didn't happen by itself. I don't know if the lawmakers, I mean, they didn't buy a word these guys said, but I don't know that he actually made that case very persuasively.

• 44:26Speaker 04

  Yeah, and I mean, it's who knows? I mean, it's like, anything could have happened, right? Instagram could have stayed independent and rapidly grown and overtaken Facebook. Like, that's something that could have happened. It could have kind of settled into a middle zone, like a Snapchat or a Twitter. That kind of seems more likely to me, although I think it probably would have been bigger than those two. But you know, you're never gonna know. I mean, it is true that Facebook gave Mike and Kevin at Instagram enormous resources. A lot of the reasons why Mike and Kevin sold was because running a tiny startup that's blowing up is absolutely exhausting. Mike Krieger was dragging his laptop all around San Francisco because servers were melting at all times of the day. Whenever Justin Bieber posted, like, the site stopped working. And they were like, we need help. And so, yeah,

• 45:09Speaker 04

  like, find us a person who can quickly fix this, so we don't have to. Like, that is the reason that they were entertaining these offers and wanted to sell it. So, that is also a thing that happened.

• 45:20Nilay Patel?

  Do you think that that same kind of argument or approach can apply to WhatsApp? WhatsApp basically did not come up yesterday. All the focus on Instagram. But that's the other one, right?

• 45:30Speaker 04

  Yeah, and we know weirdly a lot less about that acquisition. I think it's because, like, people in America just have so much less love for WhatsApp generally, that it's never seemed as important what happened to WhatsApp as what happens to Instagram, even though WhatsApp is used, you know, way more. It probably has way more engagement even than Instagram does. So, I don't know why that didn't come up as often. You know, we know there was a competitive bidding war for that as well. Google wanted it as well, you know, and Mark Zuckerberg made them an offer they couldn't refuse.

• 46:02Nilay Patel?

  Do you think every day, Google is like, we should have just spent more money on WhatsApp? Like, this could have been solved?

• 46:07Speaker 04

  I mean, they absolutely should have. But Google has been placed under an ancient curse that prevents them from ever making the right decision about any social product. So, it was doomed never to happen.

• 46:16Speaker 05

  It's fun looking through the documents and watching them casually say they should buy Facebook.com.

• 46:22Nilay Patel?

  Yeah. That, to McKenna's point, that is how they talk. Like, the window into these executives, just casually being like, we should just buy this thing, or maybe not. Or we should just copy it ourselves and kill it before it gets any traction. Like, it's repeated over and over again. Last Facebook question, and I, this one is like harder to parse, because I, there's a chance that Zuckerberg is just joking around. But he's in many of these emails. He's like, the thing about startups is you can always just buy them, which I think the committee thinks is like a smoking gun, right? Like Facebook's entire plan is to buy the competition to get the data from wherever they get it to say, oh, man, this this app's popping. We just buy it and kill it before it competes with us. And Zuckerberg, I think he actually said at one point, that's a joke.

• 47:06Speaker 04

  Yes, he did. And I believe that. I mean, you know, it was 2012, right? He was like, probably still in his mid 20s at that point. The company was a lot smaller. Like, people were joking around. Like, there's more loose talk when companies are younger. And I do think it was it was part of that. I think the more interesting question becomes, let's say, Facebook is telling the truth about everything. Let's say they thought Instagram was going to be a successful acquisition, but they never knew it was going to get as big as it became today. And they invested a bunch in it, and it got super big. Okay, well, now it's as big as it is. Should they be allowed to keep it? Or should they be forced to spin it out? And if you're going to force them to spin it out, what's the argument that you're going to make about why?

• 47:44Nilay Patel?

  One question that I have a lot is, that's clearly the referral they're going to make. And it seems like if you don't have some other reason, and we've heard hints that there's some other reason the FTC didn't scrutinize this that will eventually be revealed. But what you're saying is the antitrust standard at the time, the consumer harm standard, which is still our standard, says you have to prove prices will go up. Both products were free. You're screwed. Right? There's nothing to review because you're not going to prove that free products are going to get more expensive. Well, I think it's pretty unfair if you change the standard and you go back in time and say, you missed that standard. So I think there has to be something else there.

• 48:23Speaker 04

  Well, what was the standard by which like AT&T was broken up, right? Like presumably, AT&T didn't used to be that big, and then it just got really big, and then they broke it up. At least that's the thumbnail understanding I have of that breakup.

• 48:34Nilay Patel?

  Well, yeah, but then it's reformed itself.

• 48:37Speaker 04

  Right. But but because of lax antitrust regulation, right? Like, was it a naturally occurring phenomenon that all those apps got back together? Or was that just sort of like inattention to capitalism?

• 48:47Nilay Patel?

  No, it's like in the 70s and 80s. This is Tim Wu's book, The Curse of Bigness. In the 70s and 80s, Robert Bork, I can't believe I'm talking about Robert Bork on this podcast. How are we doing this right now? Robert Bork was a very influential judge, appellate judge, federal appellate judge, and he basically moved the antitrust law to the consumer harm standard as part of a movement called Law and Economics. It's a whole thing. Robert Bork, mostly famous because he was not appointed, he was nominated Supreme Court by Reagan, but they leaked his videotape rental history, and then he didn't get nominated. And that is where the expression getting Bork's comes from. This is all true. Netflix still has to abide by the Videotape Data Privacy Act. This is a whole, this is all true. When Facebook

• 49:29Nilay Patel?

  and Netflix had some partner, had some partnership to where you could like automatically share your Netflix watch history to Facebook, they're like pending the change of this law, which we are working on. Robert Bork, he haunts us all. I'm sorry. I can't believe I know this much more. Yeah, I mean, I think that's just like the law changed in the, in the seventies and eighties. The standard changed. The conversation right now is very much about changing it back. Months and months ago, pre pandemic, we had an economist from, I think it was NYU, Thomas Philippon came on the show and he was like, look, you have this natural A B test going on in the world where the European Union, when it formed, was like, how do we get an economy like America's? So we'll just take their competition policy. It's pretty good. And at the same time, we changed the consumer harm standard. So everything

• 50:14Nilay Patel?

  that you're seeing in the EU is basically our old competition antitrust standard. And you can see how active they are. And then everything here is a new consumer welfare standard. Whether you believe this is actually a functional A B test, given the state of both governments is like up for debate, but that was his point. I thought it was, it was fairly convincing.

• 50:37Speaker 01

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior like beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch in Bev. Michelob Ultra Beer, St. Louis, Missouri.

• 51:06Speaker 02

  College football is back. So Hilton called to me, the superstition concierge, to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oh, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition, even a marching band wake up call at 5:55 and 55 seconds. Hit it. When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for the stay.

• 51:38Nilay Patel?

  We should talk about Google before we run out of time. I thought there were a lot of really good questions about Google's ad marketplace, but they kind of got lost a lot, just a lot. Like it's, they asked about Gmail, they asked about search results. Addy, what was your kind of takeaway of the Google conversation?

• 51:55Speaker 05

  I mean, he got kind of hit hardest by the irrelevant sideshow stuff, which I think did obscure a bunch of interesting questions about like, yeah, ad exchanges seem like one of the most clear cases where Google just owns something incredibly valuable that it owns all the parts of, which was, I think, another good point made in one of the questions. And they didn't really convey why that's a big deal, maybe just because ads are a sort of inherently wonky thing that most people don't understand. Whereas it's very easy to understand, like this person put their books on the app on like Amazon store and now they can't sell them.

• 52:33Nilay Patel?

  This was another like Jayapal moment, right? Which is like, I used to work on Wall Street. I used to work on Wall Street and this is why insider trading is bad. But I don't know that Beyonce insider trading is bad. She really made the case. Cause she was saying things like the buy side, the sell side, the marketplace, which are all pieces of the ad stack. But that's where like the state AG scrutiny of Google is coming from. That's where a lot of the federal scrutiny and the agencies is coming from. It just hasn't really broken through, I don't think.

• 53:01Speaker 04

  Yeah, I mean, I think like this stuff is get more, it gets a lot more technical and who is being harmed are advertisers who people are inclined to dislike anyway. So it's sort of like, we're just less sympathetic to this idea generally.

• 53:15Speaker 05

  I mean, they tried to change it by tying it to like the death of print and like of newspapers by saying, yeah, the people you're serving, you're like stealing ads from basically and stealing money from our small news sites that are now getting crushed.

• 53:29Speaker 03

  All right. And this was the like, the reason for the first hearing that the committee held for this investigation. Their first hearing was focused on the news media. And then Cicilline put out this bill that was like, actually, every news company can unionize and take on big tech, which is like the meaning of that bill that came out.

• 53:49Nilay Patel?

  That was the you're allowed to collude to make your own.

• 53:51Speaker 03

  Yeah.

• 53:52Nilay Patel?

  And I trust proof cabal of news media companies.

• 53:54Speaker 03

  Yeah.

• 53:56Nilay Patel?

  You know, we've all worked for a number of media companies. I have to say like the idea that media executives are going to get together and be organized and beat Google is very charming. Like, just like on its face, very charming. Did you see anything that to suggest there was additional scrutiny of YouTube? Because that was, that was the thing I was waiting for is like, where's the big YouTube smoking gun?

• 54:17Speaker 05

  Yeah, it didn't come up that much. And it is definitely the clearest thing that you could spin off from Google. I mean, maybe because it seems like they spent so much time talking to like businesses that worked with these companies. And if you're a business, the way you interact with it is through ads or through like your search results getting demoted, which was another thing that came up.

• 54:36Nilay Patel?

  Well, there was sort of like what I think of as like the Yelp memorial line of questioning, right? Which is you scraped Yelp's data, you built your own competitor product, you've demoted Yelp to get high up in the rankings again, Yelp has to pay you. All that stuff was there about the search results page. I just don't think, even in the documents, I haven't seen anything that indicates actually Google is doing this. Really, the closest I think anyone came, was it Gates? Who was like, is there a manual blacklist for search results? And Sundar was like, yes, someone sometimes make a list that's one signal. And like, that's spun wildly out of control. But that was like closest to how do you manipulate search results that I heard?

• 55:19Speaker 05

  If you dig into the documents, there's a case about, um, so one of the big antitrust cases against Google in Europe is about vertical search, which is basically engines like Yelp is vertical search for restaurants, Kayak was vertical search for travel, whatever. They would start demoting these and they would basically crush these sites. Uh, there was a site called Foundom and it gets into that. That is a case where it is pretty clear that they demote these things because in their opinion they're spam. But depending on how you look at it, it's also that they are demoting sites that are directly competing search engines.

• 55:53Speaker 04

  And they did bring up that, um, investigation from the markup this week that showed that across these broad categories of searches, uh, you enter the query and you have to scroll an enormous length before you get to anything that is not some sort of Google owned property.

• 56:07Nilay Patel?

  One of the things that I think is resonates with me is I use Google, everyone uses Google. And I think like the experience of the Google search results page is getting worse.

• 56:17Speaker 04

  A hundred percent.

• 56:18Speaker 05

  Oh yeah, no, it's terrible.

• 56:19Nilay Patel?

  And like, that's like the surest sign of monopoly, right?

• 56:22Speaker 04

  Yes.

• 56:23Nilay Patel?

  Is like, you can just make your product worse. And I'm like, I'm not going to use Bing today. Like, it just doesn't happen. They did not bring up, and I think they, they were going to, like, Google pays for default placements on, they paid Apple millions of dollars for a default place on the iPhone.

• 56:38Speaker 04

  Billions.

• 56:39Nilay Patel?

  Billions, would it be? There are some emails here, like to Sundar, where there's actually a very funny dunk on Dell in one of these emails where they're trying to negotiate for default Chrome to be the default search engine on Dell laptops.

• 56:50Speaker 04

  Default browser.

• 56:51Nilay Patel?

  And someone emails, they're just like, well, Dell will be easy. All Dell cares about is money. Like zero nuance. They're just like, we'll just pay them and it'll go away. And they're like, but we can't pay them to make IE go all the way away because Chrome can't go to some of these business sites that Dell customers go to. Like just the messiest mechanics of that deal are in the evidentiary record, which I think is like, in one sense, very useful to prove that Google bought its dominance. Again, I still have the other side of it in my brain, which is this is also just good business. Like, if you know, you can just buy the winning position, in many ways, you should be able to just spend the money. The last one I want to talk about is just YouTube. I mean, I keep coming back to it, but we have these documents

• 57:34Nilay Patel?

  where they were discussing buying the Flip video camera company. Remember Flip video cameras, the little? Kara Swisher made them famous. She was like the most famous Flip video user I can think of. She was like charging the VC offices with her little camera and like yelling at people. So Pure Digital is a company on Flip video. Google's thinking about buying it. And they ended up in this conversation about whether or not they should buy YouTube, which another very casual, this is how much money they want. Is this product any good? Casey, you were saying that sort of the executives are right about the Google deal.

• 58:03Speaker 04

  Yeah. Well, I mean, like the initial discussions around the Google deal was, well, gosh, what happens if you don't let people upload all these copyrighted videos anymore? It might not be as popular as it used to be. And then it turned out that like, well, yeah, that's true, but that's why you just got to figure out a way to let them keep uploading copyrighted videos, at least, you know, for a good long while until we become the dominant player in the ecosystem. But there had been some early talk that if you bought YouTube, what you'd be buying is a community. Like it had this kind of social vibe to it that really appealed to Google, a company that is under an ancient curse that prevents it from succeeding in social. And, you know, some of their executives, I think, just kind of smartly said, this might not be as much of a community play as it is a like talented team, big head start in this online video space.

• 58:48Speaker 04

  Like we can do a lot with that, with that. And plus, once we combine search, which is of course probably a large part of the success.

• 58:56Nilay Patel?

  You know, what's shocking about that is they're like, if we don't buy them, Yahoo will, which is amazing. But that moment is gone, right? Where there's like a number of big players who are like thinking about ways to sell, who are raising prices for the startup founders who might sell. Now you're down to four and like, depending on what kind of startup you run, you might just be down to one. And that seems like it's not really a focus of this hearing, but it's something that jumped out at me is, is you read these old emails. Right? Like Zuckerberg wants to buy Instagram. It is possible they will sell to someone else and the price will go up. Google wants to buy YouTube. It is possible they will sell to someone else and the price will go up. That moment doesn't, it doesn't seem quite as vibrant anymore.

• 59:40Nilay Patel?

  And I think that it's like a secondary problem, but in like the tech industry, we feel it, right? There's only four companies and Microsoft.

• 59:48Speaker 05

  It's interesting that Microsoft has come up precisely once, which is a mention of Bing in this entire conversation.

• 59:54Nilay Patel?

  I think they're loving it. I gotta be honest. I think they're like, look, we did our time. We make Azure now. Azure is great. If you'd like to use Azure, that's available to you.

• 1:00:03Speaker 04

  But like, I mean, to the extent, look, in the video game business, like there are other consoles that are successful in the like enterprise software business. The enterprise software market is booming right now. Look at how many enterprise software tools are out there being developed. Coda, Notion, Airtable, Intercom, right? Like there are so many tools that, so like it's just not clear there are barriers to entry in creating enterprise software. The way there are barriers to entry in creating the next Facebook.

• 1:00:31Nilay Patel?

  And Azure itself has like massive competition from AWS and to a much lesser extent, Google Cloud. And then whatever smaller cloud companies exist. I, but I, the idea that the Windows monopoly is gatekeeping any marketplace. I don't think anyone has, can credibly make that case anymore. Even though it seems like very natural that you would want to. At the same time, you know, if your AR app on the iPhone doesn't work, you're definitely going to leave and make it for the Xbox per Tim Cook. McKenna, you're kind of, I always come to you for sort of the politics of it. We had this hearing, it was kind of messy. What happens next?

• 1:01:09Speaker 03

  Well, I like to say that this is probably just kind of the beginning. So this whole, this investigation was, it took a year from launch and they got 1.3 million documents. They did all these hundred hours of interviews, but this hearing was the culmination of all that work. And it's just the foundation for what happens next. Now, all this is out there. The Justice Department and a bunch of states are already investigating Facebook and Google. For potential antitrust and anti-competitive behavior. And they're supposed to, we're anticipating some kind of case being brought against Google. And maybe like a couple of weeks, maybe by the end of the year. Um, so a lot of this rests in the hands of regulators and law enforcement.

• 1:01:51Speaker 03

  And this, the committee just gave them a ton of evidence if they decide to pursue some kind of breakup case. Um, with Facebook or Google or any other company. What also happens next, and what I think is really important, um, when we talk about the key themes that happened yesterday. Was how the committee can legislate now. They have all of this. They talk to the CEOs. The next part is crafting the legislation. And like you said, maybe they want to focus on Amazon's marketplace and apply some kind of 230 like. Regulations there, or um, they might want to do something. Well, if you have an app store, then you can't favor your own software. Or things like that. And it's going to be the next couple of weeks. Legislation will definitely come, um.

• 1:02:33Speaker 03

  I don't want to say definitely come, but what will happen is that there is a report with their findings that will be out before fall.

• 1:02:40Nilay Patel?

  And that report will probably be a much more clean version of the story than what we saw in the hearing.

• 1:02:45Speaker 03

  Right.

• 1:02:45Nilay Patel?

  Right, like a beginning, a middle, like here are the harms, here's the evidence, here's what we heard from the CEOs.

• 1:02:50Speaker 03

  Mm hmm.

• 1:02:50Nilay Patel?

  When it comes to, the thing about legislation. Again, like Cicilline ended it with his closing statement and he quoted Louis Brandeis. And then there was some, I don't remember which Republican was like, we don't need to change the consumer welfare standard. Right? It seems like they're laser pointed that we got to change the actual antitrust standard. That seems like a focus of all of this in a pretty like, like Lena Khan is the one who, as a law student. Like wrote Amazon's antitrust paradox that like, kind of is the centerpiece of this academically of this entire antitrust moment. Which is incredible. She was, she's been on the Veritas before, we should have her again. But like, she's, she's one of the lawyers on the committee. He's quoting Louis Brandeis. It seems obvious that they're going to try to change the antitrust standard.

• 1:03:33Nilay Patel?

  My question is like, there's an election not so long from now. Like, do they even have time to complete this project? Is Donald Trump gonna sign anti-trust legislation?

• 1:03:43Speaker 03

  Right, no. So, things have to fall into place. The report is key here. And having some kind of text that lays out, here's the four biggest tech companies. Here's what we've learned. Here's the troublesome behaviors that we've identified. And being able to hand that to lawmakers, being able to hand that to regulators is so important. Now, there is an election coming. Joe Biden, if he wins, we haven't heard a lot from him on anti-trust. So, not really sure where that administration stands.

• 1:04:13Speaker 03

  But I think for any of this to go forward, and if you want to have a breakup case, if you want to have legislation passed, we're gonna have to have three branches of government that understand each other or listen to each other in ways that they don't right now in 2020. How that plays out, how the pieces fall, you know, it's still to be seen. But that'll definitely play a key role in whatever happens after that report's released.

• 1:04:37Nilay Patel?

  Well, I guess we gotta look for the report. McKenna, I think you and I are to be calling a lot of people waiting for that report to come out.

• 1:04:42Speaker 03

  I know.

• 1:04:44Nilay Patel?

  Okay, I said we've gone a little long here. I just want to quickly, Casey's gotta go. Bye, Casey. Bye. I love all of you. Thanks, friend. I did say I want to talk about earnings, but I'll just do them very quickly. Facebook, Google, Apple, Amazon earnings all came out today, the same day, the day after the hearing. There was a lot of, the hearing got delayed by a couple of days because of the funeral of Congressman John Lewis. They didn't want us to go after their earnings, and a lot of the rumbles are because they didn't want to post billion-dollar earnings in a pandemic and then go in front of Congress. So, that's why the hearing got moved to exactly Wednesday. But indeed, all these companies have made a lot of money. Apple had its best third quarter ever. Mac and iPad sales are way up, which makes sense. Notably, they said the iPhone SE is selling well because people want a smaller phone,

• 1:05:28Nilay Patel?

  which is something that we pay a lot of attention to. Facebook usage and revenue just continue to grow. Obviously, people are at home, they're on Facebook more. Amazon did incredible. People are shopping online. It's Google that's the interesting one. They had their first revenue decline in history because the ad market is kind of soft. So, they're the only ones that didn't do really well. But that is like context, I think, for a lot of this conversation about how much competition they face, whether they have a lot of control over the market. In the middle of the pandemic, we are more reliant on them than ever, and they're making money hand over fist. And so, I think that's just an important bookend to this conversation. And I think there's a, there's a lot of reasons they didn't want those earnings to come out before they went in front of Congress, because I think they knew they were gonna be doing well. Okay, we've gone long. Addy, thank you. McKenna, thank you.

• 1:06:12Speaker 05

  Yeah, thank you.

• 1:06:14Nilay Patel?

  You can tweet at all of us. See if we can get them all right. I'm reckless. Casey is Casey Newton. McKenna is Kelly McKenna, all the way around. Addy is at the dextriarchy, which I always remember as a reference to being left-handed because I'm left-handed. I support you. Casey writes the Interface, his newsletter about technology and democracy. It's a good time to read a newsletter like that. You can go to theverge.com/interface. And Dieter has been off, but he's got a lot of thoughts from these documents about how tech companies make products and how we deal with them in our lives. That's a process where you can go to the Verge.com newsletter and sign up for that. We'll be back on Tuesday. We've got more interviews coming up. Trying to lock down some big ones again, and then we're back next week with the chat show. That's it. Rock and roll.