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It is a classic tension in business: pleasing users versus making money. You’d think it would be simple. But countless enterprises compromise depending on who’s writing the check. If users aren’t always the ones paying bill, as is the case in ad-based media businesses, the commercial urge easily can lead greedy and short-term-oriented managers astray.
In her illuminating feature in the new issue of Fortune, “Confessions of an Instagram Addict,” Kristen Bellstrom explains how well the Facebook unit has walked the line so far. Begun as a photo-sharing site with no revenue whatever, Instagram under Mark Zuckerberg’s ownership has had to stay true to its aesthetic roots while bringing in cash.
As Bellstrom tells it, using her own devoted usage as an example, Instagram largely has succeeded. Its ads sparkle and show off the brands that place them. Its user-generated content has become an e-commerce engine in its own right. And together with Google’s YouTube, Instagram has created an all-new and lucrative class of influencers who’ve built their wealth on the app’s success.
Perhaps most surprisingly, Instagram has done all this without being too closely associated with Facebook. That’s quite a feat considering Facebook’s tarnished reputation and that Instagram’s technology and selling tools are intertwined with its parent.
Want more Instagram? The Wall Street Journal favorably reviewed Sarah Frier’s new book, No Filter. Want more Facebook? I highly recommend this New York Times feature about Zuckerberg’s consolidation of power. As an inside-baseball aside, the story is even more impressive because The Journal beat The Times on the topic, and The Times did it anyway and advanced the story admirably.
I erred yesterday when I wrote that only public companies appear in the Fortune 500. In fact, 29 companies that report their finances to some governmental authority are on the list. These include mutual insurance companies that file with state regulatory bodies and privately owned companies with publicly traded debt that report to the U.S. Securities and Exchange Commission.
This edition of Data Sheet was curated by Aaron Pressman.
Weight watchers. As you might have noticed in Adam's big feature on Uber that we linked to in yesterday's newsletter, the newly public company is under a lot of pressure to trim down and cut costs to reach profitability. The latest development arrived on Monday, as Uber CEO Dara Khosrowshahi said he'd have to layoff another 3,000 workers, following the 3,700 a few weeks ago. Together, the cuts trim Uber's workforce by 25%.
Zone diet. Even though pretty much every other streaming service includes old TV shows and movies, Apple initially said it was going to offer just original programming on Apple TV+. Well, slow user growth may have prompted a change. Bloomberg reports Apple is now licensing older content. I'd certainly like to relive my youth with old shows of Get Smart, Space 1999, and Laverne and Shirley, if you're taking requests, Tim Cook.
Paleo diet. The "crypto wars," as Steven Levy called the 1990s debate over regulating strong encryption apps, have never ended. Exhibit next: The FBI cracked the security of the iPhone used by the shooter in the December attack at the Naval Air Station in Pensacola, Florida. And despite not needing Apple's help, the agency immediately attacked the company for not helping. Apple shot back that the government was looking for an excuse to weaken encryption for everyone.
New Atkins diet revolution. Amazon acquisition rumors are another unending category of news, it seems. The latest is that the e-commerce giant might buy some or all of bankrupt retailer J.C. Penney. I think the logic is that JCP owns dozens of desirable distribution centers that Amazon could use for its network, but your analysis may vary.
Raw food diet. Yesterday brought news of SoftBank's huge losses and founder Masayoshi Son's weird metaphor of his unicorn startups falling into and flying over the "Valley of Coronavirus." Today, we bring you the company's graphics that illustrate this. A taste:
FOOD FOR THOUGHT
Extensive leaks indicate that a massive DoJ antitrust case against Google is only weeks away. Such a case would put the search giant in the same situation as the dominant tech companies of earlier eras, like Microsoft, Intel, and IBM. Yale University economics professor and former Justice Department chief economist Fiona Scott Morton is out with a new 41-page paper (PDF) she calls a road map for charging Google with monopolizing the digital ad market.
The obvious end state of this monopolization strategy is a world in which, with the exception of ad spend directed to Facebook, Amazon, and other closed systems, Google collects for itself the vast majority of the total digital ad spend in two ways. Google extracts approximately 40% of the total ad spend through its intermediation services, part of which would otherwise go to publishers and advertisers. Google limits the use of its data and designs its fees and auction to reduce payments to publishers while keeping ad prices high. It further reduces publisher revenue by steering consumers to its own supply of search and display and then selling that inventory directly. Google also disadvantages third-party publishers by appropriating information about those publishers’ audiences and using that information for its own gain, including by serving ads on other sites (and making a profit) using the insights Google gained serving ads on the original publishers’ sites.
ON THE MOVE
With all the troubles at SoftBank, it might not be a surprise that Alibaba co-founder Jack Ma has left its board of directors...Another non-surprising departure but surprising landing comes to us from the House of Mouse. Disney’s head of streaming, Kevin Mayer, is jumping to TikTok as CEO...Twitter added former Google A.I. boss Fei-Fei Li to its board of directors...Speaking of SoftBank, SoftBank-backed subscription car service Fair.com hired Bradley Stewart as CEO. Stewart had run aviation startup XOJet previously...Joshua Builder, Rent the Runway's CTO and head of product, has left the company.
IN CASE YOU MISSED IT
Amazon was built for the pandemic—and will likely emerge from it stronger than ever By Brian Dumaine
ViacomCBS: Why Shari Redstone sees ‘significant growth’ ahead By Aric Jenkins
Women run 37 Fortune 500 companies, a record high By Emma Hinchliffe
Microsoft and FedEx team up to make deliveries more predictable By Jonathan Vanian
German intelligence can no longer freely spy on the world’s Internet traffic, top court rules By David Meyer
J.K. Rowling was drinking old-fashioneds and asked Twitter to explain Bitcoin. Here’s what happened next By Jeff John Roberts
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BEFORE YOU GO
Ranjan Roy's blog isn't meant to be humorous, exactly. It's typically about the economics and strategies of startups, such as his post back in March on how low interest rates worldwide were fueling investment in high risk offerings. But this week's post is sort of a Jonathan Swift or Kurt Vonnegut short story come to life. I won't spoil it beyond giving you the title. Doordash and Pizza Arbitrage: There is such a thing as a free lunch.