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I attended a spectacular conference Friday at the University of Chicago’s Booth School of Business, whose Stigler Center for the Study of the Economy and the State hosts an annual discussion of antitrust and competition issues. This year’s event, convened by scholars Luigi Zingales and Guy Rolnik, focused on the threat of concentration of Big Tech, otherwise known as the Big Five: Facebook, Amazon, Apple, Netflix, and Google.
This was one impressive gathering. As I gazed out at the room I saw some of the most important voices on the debate: USC’s Jonathan Taplin, Columbia’s Tim Wu, Berkeley’s Carl Shapiro, Stratechery proprietor Ben Thompson, and the monopolist scourge Gary Reback. Former Italian Prime Minister Mario Monti, who also was the European Commission’s top antitrust enforcer, gave an erudite and illuminating lecture on how the EU approaches antitrust with a more unified and less political voice than the U.S. One panel, expertly moderated by Rana Foroohar of The Financial Times, explored how regulation of Big Tech might proceed. The short version: It will be complicated.
As for my panel, it was a riveting, sometimes heated, and informative session. Facebook policy official Matt Perault gamely explained his company’s new party line: Facebook will throw the same energy and resources into fixing its privacy problems as it did to build Facebook. His assertion, which felt sincerely articulated, satisfied almost no one.
Venture capitalist Albert Wanger believes regulation will help Big Tech the most as they’ll be the only ones to afford new strictures. (Wanger has espoused, and backed off of, mandatory APIs, a way of forcing giant platforms to open up.)
Patent expert Elvir Causevic similarly argues that Big Tech benefits from their ability not so much to innovate but to use the patent system to buy and stifle innovation. Researcher Glen Weyl, who works for Microsoft but is visiting Yale, thinks the answer is to refocus antitrust enforcement on competition as opposed to its current scrutiny of consumer wellbeing. Weyl shortly will publish a book on the subject with the son of eminent Chicago jurist Richard Posner, Eric Posner: “Radical Markets: Uprooting Capitalism and Democracy for a Just Society.” The two sliced off a portion of their thesis in The Wall Street Journal this past weekend.
By the end of the week my brain hurt but my soul was uplifted knowing so many smart people are working so hard to fix at least some of our society’s problems.
(Update: This story was updated on May 29, 2018, to correct the author of Radical Markets.)
I am not a crook. The researcher at the center of the Facebook data scandal, psychologist Aleksandr Kogan, tells BuzzFeed that he violated Facebook’s developer policy when he transferred personal data about a reported 87 million people to Cambridge Analytica. But there’s one conspiracy theory he wants to shoot down: “I am not a Russian spy,” he says.
The finest steel has to go through the hottest fire. Another day, another new satellite startup. EarthNow plans to use satellites to provide a continuous real-time video feed of the planet. The company said it raised an undisclosed amount of capital from private investors, including Bill Gates, Airbus (which is supplying satellites), and Masayoshi Son’s SoftBank Group.
Capitalism works better than it sounds. Dell Technologies spin-off Pivotal Software went public of Friday, selling 37 million shares at $15. The first day of trading was relatively modest and the shares finished up 5% at $15.73. CEO Rob Mee told Fortune that the company can’t just ask Michael Dell for more capital when it wants to expand. “Michael Dell is extraordinarily frugal,” he said. “It’s not a mistake he’s one of the richest people in the world.” Perhaps the same is true of Chinese billionaire Pony Ma, CEO of Internet giant Tencent. The company is planning a public offering of its streaming music subsidiary that could value the sub at $25 billion.
Only if you have been in the deepest valley, can you ever know how magnificent it is to be on the highest mountain. Speaking of streaming music, the market has bolstered the overall music industry. Global music revenue totaled $17.4 billion in 2017, up 9% from the year before and close to 2008’s past peak of $17.7 billion, research firm Midia says. The gain was completely from a 39% jump in streaming subscription service revenue. Sales of digital and physical media fell 10%.
Well, I screwed it up real good, didn’t I. The federal government’s E-rate program to subsidize Internet connections for rural schools has slowed to a crawl under the Trump administration, Wired reports. Schools currently have to wait a record 240 days to get aid and 60 projects have been denied unfairly since 2017, nonprofit group EducationSuperHighway tells the magazine.
I made my mistakes. Analysts have soured on Apple’s iPhone X lately. Sales of the most expensive iPhone helped save Apple in the fourth quarter (its fiscal first quarter) by boosting average selling prices, but could be a drag in the most recent quarter, analysts believe. “The price point above $1,000 has been a greater deterrent for broad market appeal than anticipated,” Canaccord Genuity analyst Mike Walkley wrote last week. Apple shares lost 4% on Friday.
Defeat doesn’t finish a man, quit does. After years of failing to create a compelling messaging app–sorry, Allo–Google is now trying to convince wireless carriers to enable a replacement service for texting, or SMS, to work with its newest effort, simply called Chat. The underlying standard carriers must adopt is called Universal Profile for Rich Communication Services, or RCS. I wouldn’t hold my breath waiting for this one to catch on. Meanwhile, Google CEO Sundar Pichai wins a payday of almost $400 million on Wednesday, when restricted shares of stock he was granted in 2014 finally vest, Bloomberg reports. Google’s stock price has risen 90% since the shares were awarded versus a 39% gain in the S&P 500 Index.
(Headline quote explainer for those who don’t remember our 37th president.)
FOOD FOR THOUGHT
The future of money may be in apps like Venmo and Apple Pay, but existing banks aren’t sitting around waiting to be disrupted. They crafted their own version of the consumer friendly and easy to use mobile payments apps and called it Zelle. Only one problem, as New York Times reporter Stacy Cowley investigated:
The same features that make Zelle so useful for customers, its speed and ubiquity, have made it irresistible to thieves. Hackers and con artists have used the system to steal from victims—some of whom had never used Zelle or even heard of it until someone used it to clean out their bank accounts.
Interviews with more than two dozen customers who had their money stolen through Zelle illustrate the weaknesses that criminals are using in targeting the network. While all financial systems are susceptible to fraud, aspects of Zelle’s design, like not always notifying customers when money is transferred—some banks do; others don’t—have contributed to the system’s vulnerability. And some customers who lost money were made whole by their banks; others were not.
IN CASE YOU MISSED IT
Sheryl Sandberg Talks Paid Family Leave, Community Organizing, and Cambridge Analytica Interviewed by Valentina Zarya
The 4 Biggest Takeaways From Facebook’s New Data Policy By Lisa Marie Segarra
Your Next Home Could Be 3D-Printed By Chris Morris
Amazon Is Shielding James Comey From Review Spam By David Z. Morris
Wikileaks Claims Coinbase Has Shut Down Its Online Store’s Bitcoin Account By David Z. Morris
Commentary: How Blockchain Could Put an End to Identity Theft By Frederic Kerrest
BEFORE YOU GO
Astrophysicist Donald Olson and his research team at Texas State University are sort of forensic detectives when it comes to great works of art. They figured out that the glowing circle depicted in Vincent Van Gogh’s painting White House at Night must be Venus, for example. Most recently, they’ve been trying to identify where and when photographer Ansel Adams took some of his most iconic pictures. It took all kinds of creative calculating to crack then mystery of Adams’s Denali and Wonder Lake, as writer Cara Giaimo explores at the website Atlas Obscura.