All-In PodcastE6: Big Tech antitrust aftermath, potential effects of an M&A clampdown on Silicon Valley & more
EVERY SPOKEN WORD
150 min read · 30,085 words- 0:00 – 3:14
Jason intros Chamath, Friedberg & Sacks, the gang finds out what planet Friedberg is on
- JCJason Calacanis
All right, everybody, welcome back. It's another episode of All-In Podcast, the podcast that is racing up the charts despite the fact that we recorded every three or four weeks. Uh, there's no marketing, there's no ads in this podcast. It's just four friends who play poker together who've decided to talk about the most important issues in the world. Welcome back to the podcast, David Friedberg, the queen of quinoa, uh, himself, uh, obviously climate.com, ITSA, and, uh, an undisclosed beverage startup that I'm not supposed to talk about it. Sorry about that. I know a lot of people were tweeting about this beverage startup. You're still not ready to talk about the beverage startup.
- CPChamath Palihapitiya
Thank you, J-Cal.
- JCJason Calacanis
Yeah, welcome back to the show.
- CPChamath Palihapitiya
I al- I always appreciate your promotions. (laughs)
- JCJason Calacanis
(laughs) Uh, but when, when will the beverage startup be coming up for air?
- CPChamath Palihapitiya
By the way, do you guys wanna talk about, do you guys wanna talk about Jason's home address? 'Cause I have that, I think.
- JCJason Calacanis
(laughs) Please, no. Dude...
- DFDavid Friedberg
I wanna ask, uh, is, is that a picture in the background? I love space by the way, as you know, but is that a picture of Uranus or what is that picture?
- JCJason Calacanis
I think that's Saturn. It's Saturn.
- CPChamath Palihapitiya
(laughs)
- DFDavid Friedberg
(laughs)
- JCJason Calacanis
It's Saturn.
- DFDavid Friedberg
It's Saturn.
- JCJason Calacanis
It's like it's Saturn.
- DFDavid Friedberg
It's not Uranus.
- JCJason Calacanis
It's not, it's Saturn. Uh, Friedberg obviously taking the first Virgin Galactic flight. Uh, Chamath Palihapitiya, of course, with us here, the, um, prince of SPACs calling in from an undisclosed location that is not burning down like the United States. How you doing on your vacay?
- DFDavid Friedberg
Uh, doing really well. Thanks. Thank you. I'm giving you the three-button salute, as I told you.
- JCJason Calacanis
Yeah, thank God the microphone is perfectly positioned so we do not have to look at your chest hair, all six of your chest hairs. (laughs) Oh my God.
- DSDavid Sacks
It's like a $1,000 suit that's missing all of its buttons.
- JCJason Calacanis
(laughs)
- DSDavid Sacks
Or, or shirt rather.
- JCJason Calacanis
(laughs)
- CPChamath Palihapitiya
(laughs)
- DSDavid Sacks
I mean, they couldn't afford to put buttons all the way up on their, like, probably $2,000 shirt.
- JCJason Calacanis
Austerity measures.
- CPChamath Palihapitiya
When I get back to the United States, as Jason said, my haberdasher will meet me at plane side and he'll slip the three button up. (laughs)
- JCJason Calacanis
When he, when he leaves for Europe, they remove the three buttons. He comes back, the haberdasher puts him back on his shirt. Uh, he does that for the entire wardrobe. And of course, chiming in is Rain Man himself, David Sacks blo- professional blogger and, uh, the fund manager of Craft Ventures. Of course, uh, before that, working at PayPal, with, uh, Peter Thiel, Elon Musk, and a bunch of other famous people. Um, uh, two of which have gone on to have demonstrably more success than Sachs. But, uh, Sachs having, of course, more than success, demonstrable success than the other 72 rocket scientists from PayPal. In between, he did a little company called Yammer, which Microsoft bought for a billion dollars. Speaking of, um, big companies and big tech, we had a big tech hearing this week, and Jeff Bezos, Sundar, and, uh, Zuck himself, as well as Tim Cook, two founders and two hired guns, uh, people who were hired for their positions, defending themselves from what I thought was some pretty good questioning. Um, my, my expectations were very low that anybody on that panel would know what they were talking about. For me, I thought Jeff Bezos did the best job. He had a great opening statement and he was the most candid, um, and I think least likely to get broken
- 3:14 – 10:21
Who came out the best during the antitrust hearings? How much of it was real vs. political theater? who took the biggest hit?
- JCJason Calacanis
up. Going around the horn here, Chamath, who did the best job in the hearings? Uh, I don't know if you saw all of them or just clips, but who do you think shined?
- DFDavid Friedberg
I, uh, I only saw, to be honest with you, your recap, which I thought was frankly really, really good. Um, when we should, we should probably link to that in the show notes so people can listen to it. Um, I saw a couple of answers. Um, the, the thing that jumped off the page to me was I, I read a little bit of Bezos's statement. I thought it was pretty fire. I thought he did the best job, um, kind of positioning himself. But the reality is, you know, it's kind of what I said a few days earlier on CNBC, but I just thought going in, this whole thing was set up to be kind of performative theater. And it basically was that, you know, the, the just like, the, the level of questions are just so poor. The level of understanding is so bad. And then, you know, people just use it as a way to grandstand and, uh, everybody did. Um, so, you know, I wasn't completely blown away by any of it, to be quite honest.
- JCJason Calacanis
Uh, what do you think, Friedberg? Who had the best showing, um, in those hearings?
- CPChamath Palihapitiya
Uh, I think Zuck ha- was, uh, the most kind of eloquent in the, uh, on point responses. He was, uh, super, super well prepped for this thing. Um, I think Bezos and, and others, um, were obviously, uh, um, you know, they had, they had great kind of prep work done for their statement, but in terms of like, warding off the attacks, I think Zuck did, did a great job. Um, you know, it was weird. It didn't feel like, uh, like Tim Cook should have been there (laughs) . It was like kind of a random thing that he was there because everyone had an ax to grind. And the ax that everyone had to grind was a little bit different. It wasn't like this was a, a true objective discussion about, you know, antitrust. And so, the, the ax that people had to grind were kind of pointed at Google and Facebook and Amazon in different ways. Uh, Tim Cook was kind of, you know, "Hey, yeah, this is cool. You guys go ahead and give your responses. I'll, I'm gonna go back to work."
- JCJason Calacanis
And do you think that's because Apple does not have a monopoly position on a, on a numbers basis in any one era? And-
- CPChamath Palihapitiya
No.
- JCJason Calacanis
... and, or, and be- and or because their products are so loved and universally, you know, used?
- CPChamath Palihapitiya
Well, I, I think it's actually a function of what these companies do. So if you look at, uh, the, the Jim Jordan rant. I don't know if you guys watched this, but Jim Jordan did this big rant at the opening.
- JCJason Calacanis
Oh, he's the worst.
- CPChamath Palihapitiya
And he went on and on, and the first thing he said, he's like, "Big tech is out to get conservatives." And then he went on and gave all these examples about how Twitter has been pulling down Donald Trump's tweets and flagging them and, and Facebook's been, been, you know, canceling certain people on the platform. And his whole ax to grind was really about censorship on social media platforms, which has fucking nothing to do with antitrust and has nothing to do with Apple's business.
- DFDavid Friedberg
... um, and so, yeah, I guess my point is like' and then other people have issues with, with the, with Google's dominance in ads, and Amazon's impact on local business. And so there wasn't much of an ax to grind, frankly, with Apple. At the end of the day, as I said, I just don't think that it was a function of, you know, a true kind of objective anti-trust approach, and it was just more about like, "Hey, we've all got different things we want to address, and we finally got these guys here. Let's beat them up." And you know ...
- JCJason Calacanis
Sax, what do you think? Are you, you with Friedberg that it was performance art, or do you think that ... Or performative, rather. Do you ... Or do you think that there are actually substantive issues that came up during the hearings that we should discuss here?
- DSDavid Sacks
Well, you know, it was both. Um, you know, certainly there was a trem- tremendous amount of grandstanding and political theater. And, um, the, the politicians on both sides wanted to take shots at, at the companies for various reasons. I mean, I think they have a slightly different hierarchy of hate. I think the, um, the, the Left sort of hates Facebook the most, because they blame it for, um, Trump's election, which I think is kind of a, a ridiculous scapegoating, uh, which we should talk more about. But, um ... And then I think the Right is, is most suspicious towards, uh, Google. Um, but I think there are, you know, legitimate issues here as, um, that were brought up. And I think the Congressional hearing did score some hit points. Um, and I think your, your previous pod did a good job showing some of those. Um, the, these hearings were teed up, apparently, over the past year by, um, a series of subpoenas of records that the, the committee ... This is the, uh, this is the, um, House, uh, Subcommittee on Antitrust had teed up. And so there were some moments where I thought that, um, you know, the, the representatives scored some hits on, you know, Facebook and Google. Um-
- JCJason Calacanis
What do you think the big-
- DSDavid Sacks
... Uh ...
- JCJason Calacanis
Who took the biggest hit in all of this? Who, who, who do you think has the most ... Putting aside all this performance, obviously, and the politicization of everything in our country. And Jim Jordan, who to me is like the ... He's like the dad at the baseball game, who like ... The Little League game, who runs on the court and pushes the umpire and gets banned for the season. Like, he just yells over everybody, um, for no reason. (laughs) But-
- DSDavid Sacks
Right.
- JCJason Calacanis
... what is the actual ... What was the punch that landed that is the most valid? As we go around the horn one more time here, now that we got our initial thoughts about it, what punch landed the squarest in one of these companies' faces?
- DSDavid Sacks
Well, I, I, I ... Let me, let me set this up. I, I think there were three big areas of concern, where just about all the companies, with maybe the exception of Amazon, took hits. Although even, you know, Bezos took hits. I think one is, um, with respect to anti-competitive actions that these platforms are taking, particularly with respect to the applications or small businesses that operate and are dependent on those platforms. I think all of the companies were interrogated about that. Um, you know, Bezos took a hit when he had to admit or concede that the company may not have always followed its policy with respect to using its, uh, you know, third-party sellers' data to, to figure out how to compete with them. Uh, you know, Google was interrogated about snippets. Um, there was news today actually, just out of Australia, that the government's gonna order Google to pay small businesses for the use of its, its content, uh, for snippets. Which, you know, so, so the, you know, the regulations are kind of heating up on this. But the, the sort of, the first, uh, area was sort of anti-competitive. And I think Facebook took some, some hits with respect to the Instagram acquisition, um, which, uh, you know, uh, Congressman Nadler really went after him. And then I think, um, uh, Jaya Powell as, as well. Uh, and that, that's a tremendously threatening issue for Facebook, because if it is forced to divest Instagram, it would just be crippling for, for the company.
- JCJason Calacanis
All right, so let's-
- DSDavid Sacks
We should talk more about that-
- JCJason Calacanis
... let's, yeah, let's take-
- DSDavid Sacks
Yeah.
- JCJason Calacanis
Let's-
- DSDavid Sacks
But, but just a, just a ... Jason, just to set the table, two other issues that I think came up. I'll just very briefly ... The, uh ... Number two is sort of cozying up to China. I think Google is the one that's most vulnerable here. And then the third issue is sort of this issue of censorship and bias, uh, with respect to content and, and politics, and the election.
- JCJason Calacanis
Which has nothing to do with ... Which has nothing to do with anti-trust, the censorship issue. So let's table that one.
- DFDavid Friedberg
Hitting that-
- 10:21 – 20:29
Chamath ranks the most at-risk companies, creating regulations that make sense in today's age, Facebook's strategy to delay antitrust
- DFDavid Friedberg
- JCJason Calacanis
That one.
- DFDavid Friedberg
I think you're hitting the nail on the head. This was not about anti-trust going in. I think people were, you know, kind of confused. Even Jim Jordan, just ... I don't think he has any clue what he's talking about. He doesn't know the difference between regulation and anti-trust. He doesn't know the difference between the Sherman Act and like, you know, Section 230. I think they're all kind of making it up as they go along. So in many ways, I think, personally, that the companies that were the most at risk going in were the same companies at risk coming out. And so, you know, if you had to stack rank to risk, I think Facebook is number one at the top of the list. Then I think it's Google. Then I think it's Apple. And then I think far, far, far down is Amazon. In many ways, Amazon is the most inoculated, simply because the end market that they operate in is so massive. Um, and the, the market that Facebook operates in is so new, yet so constrained with very few competitors. So in many ways, I think that's how the risk cuts. I really think that the anti-trust legislative framework that exists today isn't enough to touch any of these guys. Instead, I think what really happens is more regulatory. Um, and if you really think about what these guys are very concerned about, it's more that Facebook largely, and then Google to a smaller degree, essentially can be king makers with respect to popular opinion and sentiment. And I think that they want to have regulations, and I think that there's a good historical precedent for a bunch of industries, um, that have had to come under regulation when they effectively get to 100% distribution. You know, whether it's meat or airplanes or radio or television. You know, agriculture writ large, um-... uh, automobiles and transportation, whenever a market basically serves 100% of the total addressable universe, governments step in. And they don't necessarily legislate and trust bust, they fundamentally regulate and tax. And I think in many ways, that's just as bad, and frankly in some ways it's worse, because if you do that to a tech company, you're basically crippling the one thing that they're supposed to be very good at, which is to innovate. And that's the only thing that they can use to basically keep their stock price high, which is then the only thing that they can use to get people to continue to work for them. So-
- JCJason Calacanis
Uh-
- DFDavid Friedberg
... that's the sort of circular loop that breaks if you regulate them. And I think that the risk coming in was the same as coming out.
- JCJason Calacanis
So Facebook, let's, let's take 'em, let's take 'em one at a time. Facebook, I thought, had the worst performance because it was pretty clear that Nadler was setting them up not only to not be able to buy a company in the future, but in that clip, he was sort of teeing them up that maybe the Instagram, uh, acquisition should be unwound and they should be forced to spin that off, uh, because they were saying over and over and over again that Zuckerberg put in emails, uh, with his management team that they were going to buy these companies or kill them or copy their feature sets. And even though that may not be explicitly illegal, the fact that they've hit, as Chamath is talking about, such incredible market share with billions of users, and because of the track record of Zuckerberg, you know, which may not be at all related to this, but it sets the table.
- DFDavid Friedberg
No, but Jason-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
In case, Jason, in fairness to Mark, that decision wasn't made when Facebook had market dominance. Um, that decision was made when Facebook was still fundamentally at risk and there was a large-
- JCJason Calacanis
Right.
- DFDavid Friedberg
... period of time where a lot of other people, had they been left to their own devices or properly capitalized, could've actually become a relatively imp- you know, important competitor to Facebook.
- JCJason Calacanis
Instagram could've been at that point, but then Snapchat was the opposite. Snapchat, they were at scale and then they were gonna buy it and threaten them, "Either you sell to us or we're gonna copy the features."
- DFDavid Friedberg
I think, I think, I think what a more logical and defensible reaction i- i- like I just think it's not defensible to say, "Oh, you know what? Facebook, I didn't like the acquisition you did 10 years ago basically because it worked."
- JCJason Calacanis
Yes. Yes.
- DFDavid Friedberg
"And so I'm gonna punish you 10 years later." That's crazy. That's stupid.
- JCJason Calacanis
Yeah. Yeah, i- in the rear view mirror, no. No good. Yeah. Good point.
- DFDavid Friedberg
A more reasonable place to be is to say, okay, this thing, meaning communications at large, has become a critical piece of societal infrastructure and we are trying to figure out now what the rules should be. And rules shouldn't be brittle. Rules should be evolutionary. They should map, you know, to the moral decisions and ideas and frameworks of the time. And so, you know, uh, we have to figure out, for example, number one, interoperability. So how can you message across all these multiple networks? You know, another simple example, uh, you know, we legislated the ability for emergency services to be able to send a message on your mobile phone line and your landline. You should probably-
- JCJason Calacanis
Yep.
- DFDavid Friedberg
... be able to have a backdoor into all the messaging networks simply for that reason. So the point is that, you know, there are all kinds of things you can do today to make this infrastructure layer of society operate in a more predictable way on behalf of-
- JCJason Calacanis
What was your best, do you ev- have you thought about a regulation, and let's stick to Facebook and then we'll go to Amazon. Chamath, have you thought about a regulation that would make sense to Facebook? Whether it's divesting an asset or maybe a certain percentage of usage or allowing Facebook Messenger to work with iMessenger to work with, you know, Twitter DMs?
- DFDavid Friedberg
I'll answer it in a different way. So look, I mean, for 20 years I've run these kind of businesses, like from, from Winamp to AIM and ICQ to then, uh, you know, and Facebook. And so, um, you know, I remember in, at AIM and ICQ, we, you know, uh, did all this hand-wringing in all of these meetings between us and Microsoft and Yahoo to make our messaging networks inter-operate. And, you know-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... eventually we were basically just cut off at the knees because other people just moved around us and eventually it all just morphed anyways away from, uh, these sort of brittle messaging networks. My, my kind of view is that I don't, I, I think what's best for Facebook is the status quo. And so, you know-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... uh, if, if, if they can basically... And by the way, I think the strategy is, and, and Mark wrote this in his manifesto, but a couple of years ago, you know, this is sort of what led to Chris Cox resigning, if I'm playing, you know, sort of like conspiracy theorist, if you read Zuck's manifesto, what he was basically saying is, "Listen, we're gonna take all these product and we're gonna take all that code and we're gonna mesh 'em all together in such a complicated convoluted mess, that if and when somebody ever tells us to rip it apart, it'll take another five or 10 years to do it." And that's effectively the technical read on that manifesto. It's just like, "You're gonna make it-
- JCJason Calacanis
Hm.
- DFDavid Friedberg
... technically impossible to, uh, unthread these things, uh, as independent entities."
- JCJason Calacanis
And, and your th- thesis is that's a strategy against an antitrust breakup. I, I, I find that...
- DFDavid Friedberg
No, I just think it's a really smart strategy. I mean, he wrote it and he published it online, so it's not (laughs) like he's hiding anything. (laughs) He made it-
- JCJason Calacanis
Right.
- 20:29 – 33:37
Is the age of Big Tech M&A over? Would stricter M&A regulations be a disaster for Silicon Valley?
- CPChamath Palihapitiya
and how these services
- JCJason Calacanis
What do you think-
- DSDavid Sacks
... actually work.
- JCJason Calacanis
... about a solution, uh, David, in which, uh, they conceded, hey, we're not gonna buy any more of these, uh, uh, uh, competing social networks? Which I think it would be kind of hard for them to buy one right now. (laughs)
- DFDavid Friedberg
I think that's done. I mean, like, you can even see-
- JCJason Calacanis
That's done, r-
- DFDavid Friedberg
... that Google Fitbit, I mean, Fitbit is, you know, what is it? A 1.2 or $3 billion acquisition, it's going to take almost two years to close, and Google's already making concessions, antitrust concessions to the EU.
- JCJason Calacanis
Correct. Correct.
- DFDavid Friedberg
For, you know, this is a $1 trillion company trying to buy a $1 billion company. (laughs)
- JCJason Calacanis
Right. Right. Well-
- DFDavid Friedberg
So, I think large acquisition in M&A, uh, by the big four, uh, it's impossible.
- JCJason Calacanis
Is that good for society, Chamath, or bad for society? Is it good for our business of investing in startups or is it bad for us investing in startups?
- DFDavid Friedberg
Well, I, I think it's good in one very important way, which is that it forces the capital markets to support, uh, these companies. And what I mean by that is, you know, I, I, I told you guys a couple of times, but in the year 2000, there was 8,000 public companies. In the year 2020, July 2020 as we sit there, August 2020, there's about 4,000. So we've seen-
- JCJason Calacanis
Sure.
- DFDavid Friedberg
... a shrinking of 50% of the number of public companies. So, the idea that there isn't an M&A on-ramp anymore means that more capital and the capital markets will become more fluid, and we will support emerging growth companies in the public markets, is my suspicion.
- JCJason Calacanis
If only there was ... Yeah. If only there was an easy way for these companies to get public. Go ahead, David, respond.
- DSDavid Sacks
Well, I, I was- I mean, I, I, I think that, um, I, I think you're raising the right issue, which is, um, the chilling effect on M&A that these hearings are gonna have. Um, even if Facebook is never broken up or, or that deal is sort of retroactively challenged, um, the, the, the big four tech companies have to be looking at these hearings, and now they're gonna be second-guessing every acquisition they want to make and it's gonna have a chilling effect. And I, I think that's a disaster for Silicon Valley, um, because we know that most of the startups don't work, um, and, you know, uh, and there's really only ... You know, most of them go out of business, and there's only two good exits. One is an IPO, the other is M&A. And if you take the M&A exit off the table, because it's no longer sort of feasible from a regulatory standpoint, um, not all those companies are gonna IPO. You know-
- JCJason Calacanis
Yeah, but David, what you're f-
- DSDavid Sacks
Um-
- JCJason Calacanis
... What you're saying doesn't make logical sense because if those companies are shit anyway, they should be going out of business. And who cares about an Acquihire or some mini modest hire that gets you two times your money?
- DSDavid Sacks
There's a lot of, of, uh, acquisitions, um, where the acquirer is picking them up because they provide an important component or technology or product, but that, that, that startup would not have been a great standalone public company.
- JCJason Calacanis
Would Ya- Would Yammer-
- DSDavid Sacks
Um-
- JCJason Calacanis
... be worth more today and would you be worth more money, would your investors be worth more money if Yammer had SPACed? Yes or no, David?
- DSDavid Sacks
(laughs) Um, I, y-
- DFDavid Friedberg
The answer is absolutely yes.
- JCJason Calacanis
Okay. So David, your, your argument makes no sense. I think you're playing to lose.
- DFDavid Friedberg
It's not that it doesn't make sense. I think Dav- David does bring up something that's important in the following way, which is there's a lot of companies, Jason, that get to a certain amount of scale, and then-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... they basically start running out of oxygen, whether it's because they've overbuilt or they've overhired or they've overspent or whatever.
- 33:37 – 42:38
Should there be a regulation committee for Internet content & user data?
- DFDavid Friedberg
um, once you get to a certain level of scale, the thing that we're missing with online businesses is this kind of like, you know, there, there's like a, there's like a great original sin here that we're not admitting, which is that the internet is now a pervasive and critical part of human infrastructure. As such, there needs to be people that regulate and manage the internet the same way the FAA manages and regulates planes and wind turbines. Like, th- think about the FAA. Let's just take aviation. It is impossible for you to go and just go into your garage, build some random thing to carry people from point A to point B in the absence of some certification, okay? Take agriculture. It is impossible for you to basically go and, like, build up a farm and build up, you know, uh, livestock or whatever, and all of a sudden just supply it into fucking Sobeys and Safeway without any sort of, like, checks and balances. Similarly, and the reason is because it's simple human infrastructure that everybody relies on. And, and I just think that we have to admit that now the internet company-
- JCJason Calacanis
Well, those, also, those are life and death.
- DFDavid Friedberg
Th- this can be, too. I mean, like, what about the guy-
- JCJason Calacanis
Is it?
- DFDavid Friedberg
... that read the post about, like, the pedophiles in the pizza joint (laughs) came up with an AK-47 gun?
- JCJason Calacanis
Yeah, I mean, it's quite an edge case compared to flying on a plane.
- DFDavid Friedberg
This stuff is life and death at some level, but even more than life and death, it's the anointing of power that then determines life and death.
- JCJason Calacanis
That, and that's, I think, the key, is that it's power, yeah.
- CPChamath Palihapitiya
Chamath, do you think that there should be an internet regulatory body that decides how businesses operate and how content is, uh, censored and, and managed on the internet? Is that what you're kind of suggesting?
- DFDavid Friedberg
Yeah, so let me be very specific. So I think that there are very specific kinds of businesses, um, and business models that should be overseen. Specifically, I think the first and most important thing is a body that oversees the collection of user data and how it drives targeting and identification.
- JCJason Calacanis
So privacy concerns around that. That's a, that's a no, uh, brainer.
- DFDavid Friedberg
Um, that's the first one. And then-
- JCJason Calacanis
Yeah.
- DFDavid Friedberg
... I think the second one is something that essentially tears the fig leaf off of internet companies and says, "You know what? You are the equivalent of a publisher and a platform, some weird hybrid that we didn't think could exist when we wrote these rules, and so we're now going to adapt these rules." Because, you know, if you think about it, nobody is happy with the internet publishers today. You know, the, the left thinks that it skews right, the right thinks it skews left. Everybody's confused. Nobody gets what they want. Um, and so I think somebody has to step in and kind of sort it all out.
- JCJason Calacanis
Well, I think this is a good segue to Sax's point, and then I guess we, we have, we have a fork here now in the discussion. Do we wanna go and talk about censorship and that specific issue across Facebook, or do we wanna get into Amazon for a second?Which way do we want to go, Sacks?
- DFDavid Friedberg
Go to censorship.
- DSDavid Sacks
Well, I mean-
- JCJason Calacanis
Okay, we'll go- let's make the- let's jump the fence.
- DSDavid Sacks
Yeah, we can, we can talk censorship. I mean-
- JCJason Calacanis
Let's jump the fence here.
- DSDavid Sacks
Yeah.
- JCJason Calacanis
Should there be, uh, to Chamath's point, Sacks, a regulatory body that decides what people can and cannot say on social networks, yes or no?
- DSDavid Sacks
No, I mean, let- let's think about that. What we're saying is, we- we need the- the- the politicians to set up a regulatory body to control how the people talk about the politicians. I mean, that seems like a recipe for disaster. Um-
- JCJason Calacanis
What about specific lies and intentionality to, um, frame, uh, debates incorrectly?
- DFDavid Friedberg
Sacks, that's not what I'm saying. I'm saying like, like you go to a movie and, you know, there's a little blurb here that says who can go to the movie and who cannot. Um, you know, you get a, you buy an album and it tells you whether there's explicit lyrics or not. Like, you, before you turn on the TV, there's like some rating agency that tells you whether your kids should be watching it with you. My o- my point is, what is the equivalent version? We all need to think about what it is, but to say that there should be nothing, I think is crazy.
- JCJason Calacanis
Sacks?
- DSDavid Sacks
Well, well I think, um, so I mean, the- those ratings are mostly about, um, you know, uh, standards related to- to kids, you know. And, um, the big internet companies already have a lot of child safety features; I don't know that you need to create laws around that. Um, and- and I- and I don't think that's what we're talking about anyway. I mean, I think the big debate about Facebook or Twitter is whether they're engaging in censorship or bias, um, right? And that- that goes way beyond, um, th- this topic of l- of- of child safety.
- JCJason Calacanis
So okay, let's- let's unpack.
- DFDavid Friedberg
I don't think that they are censoring. All- all I'm saying is I think you need to label and you need to more clearly designate what this content is so that people can choose. Like for example, on Twitter, you know, I follow a bunch of people on the right, I follow a bunch of people on the left, I follow one or two QAnon accounts, only because like I just want to see it all. And then I want to judge-
- DSDavid Sacks
Right.
- 42:38 – 1:05:42
Why Zuckerberg's position on free speech the most defensible & also the most hated. Are anonymous accounts & bots the main issue on social media?
- CPChamath Palihapitiya
... and I totally agree with you. I think Zuck's position is the most defensible, but it also is the most untenable because it's the most, it's the, it's the, it's the least, uh, technologically-
- DSDavid Sacks
Okay.
- CPChamath Palihapitiya
... and s- socially palatable. But it is the most defensible and philosophically, in my opinion, the only position-
- DSDavid Sacks
Right.
- CPChamath Palihapitiya
... you can have. But it's not-
- DSDavid Sacks
Right. Well, let's-
- CPChamath Palihapitiya
... it's not gonna be what wins. (laughs)
- DSDavid Sacks
Right. Well, it's, it's, it's, the, the, the reason why Zuckerberg is hated is because if you're gonna defren- defend the principle of free speech, you always end up defending speech that society hates, you know, like the ACLU and smoking.
- CPChamath Palihapitiya
Exactly. Exactly.
- DSDavid Sacks
And, and, and so, you know, Zuckerberg, I think, has done the best job sticking to his guns. I mean, the reason why Twitter is sort of, uh, you know, loved on the left is, is precisely because they gave in to the mob and they've, you know, they've started, uh, taking down, like, accounts that the mob doesn't like, or, or, or, or, or, you know, fact checking them.
- CPChamath Palihapitiya
Right.
- DSDavid Sacks
Whereas I think, you know, Zuck... And, and that, and, and Zuckerberg's refusal to do that... And by the way, I don't think he's been, like, perfect in this regard, but he's been much better about standing up for the principle of free speech. That's what's made him, you know, anathema to the left. I think that and the fact that Facebook still gets blamed for-
- JCJason Calacanis
Freeberg, I have two-
- DSDavid Sacks
... you know, Hillary's laws.
- JCJason Calacanis
I ha- I have two specific follow-ups to what David just said for you, which is, one, how much of this has to do with anonymity being allowed on Twitter versus not being allowed on Facebook? And second, how much of it has to do with the fact that we have algorithms that trend topics? If we didn't have those algorithms trending them, perhaps this wouldn't be an issue because if you wrote something that was inflammatory, it wouldn't... A- and false, let's say, in that situation, both characteristics, it wouldn't go to the top of the list, which is what everybody's kind of upset about is that something that's false goes to the top of your feed. C- comment on those two issues for me, Brian.
- CPChamath Palihapitiya
Well, I think your second, your second point's an important one, which is, like, social media helps to enhance the stimulation of the amygdala in the human brain. Uh, you know, you see something that makes you angry or something that makes you elated, you are more likely to engage with it. If you see something that is kind of a rational discussion about something that doesn't incite emotion in you, you're less likely to engage in it. And so whatever the engagement model is, it ends up, you know, creating a lot more virality and chatter and, and it kind of gets brought to the surface. And there's a lot that's been written and said about this that I don't think we're kind of uniquely in a position to, to say anything more on. Um, and that's obviously what a lot of people are kinda concerned about is the, uh, inflammatory and polarizing nature of the content that is getting highlighted on these platforms and is getting greater distribution on these platforms. And then I think your prior point, I'm not sure it's about anonymity as much as it is, um, uh, about any form of censorship that ultimately can be viewed as bias. So Jim Jordan's points were actually, you know, as much as the guy rants and goes on and sounds like a guy running on the soccer field to punch the coach, um, it, it's really interesting to hear the point of view that, as a conservative, I believe that a lot of what Donald Trump is saying or what some conservative voices are saying is reasonable and that voice should be heard. And to hear over and over about Twitter pulling these things down and then seeing a whole bunch of stuff like anarchists taking over Seattle and taking over Portland and they don't get their stuff taken down. You know, them claiming that they can hold down the streets of Portland and Seattle because that's, you know, the way that it should be doesn't, you know, uh, incite any sort of censorship. But Donald Trump saying he's gonna end it incites censorship. Um, and so I think it's not as much about anonymity as much as it is about, um, you know, having, um, censorship tied to a voice and censorship tied to a labeled or tagged point of view or labeled or tagged individual or voice, um, on the platform. So, uh-
- JCJason Calacanis
Without anonymity, I think the problem goes away for Twitter. I think Twitter is working on a project, and I've been saying this for a decade, that they should let everybody pay $50 a year, $5 a month, or 30 bucks a year, $10 a month, whatever it is, to go through a verification process to make sure it's their name on the account, which by the way, Nextdoor is doing at scale. Not only do they know it's you, they know it's your, you're the person who lives at that address 'cause you got a postcard there. I think... And in Korea, uh, South Korea, you're required to put your social security number in to open a social, uh, account. That would solve the entire problem. Now, that may seem... And then it would drive other users who want anonymity to anonymous platforms, and that's where Twitter is trying to have its cake and eating it too and they're falling on their face. They have one level, which is troll accounts 'cause you can do whatever the hell they want, playing on the same playing field with people who, uh, can. And, and this is just a disaster for them. The, Jim Jordan may be an idiot, um, and, and just a loudmouth, but I think... I agree with you. If the situation was reversed and we were talking about Obama being censored for some reason and the ri- and right wing people or left wing weep- people, um, being silenced or deprecated on the platform and, uh, you know, soft banned, uh, people would be up in arms. But it w- that was a different forum. He shouldn't be doing that in a censorship and they should have a censorship committee talking about that. What do you think, Chamath, about these two issues? Anonymity on these platforms and the velocity in which things that outrage people, because you yourself, Chamath, went from... Hold on, but I wanna just cue this up for you, Chamath. You yourself went from being, uh, a perennial guest on a lot of these programs and then now, since you've been a little bit more vocal about how you feel about social issues, when you said, "Break everything up, who cares?" on CNBC, and then when you said, um, "Who cares? Let them fail. They don't get their Summer Hamptons house," you gained 150,000 fo- followers. And now you've learned that if you're more, I don't wanna say the word outrageous, but if you're more vocal about social issues, you're gonna gain a lot of attention. Um, do you think you should have been labeled as somebody who is hysterical by your 500,000 people or being outrageous?
- CPChamath Palihapitiya
Um, both and all platforms are littered with fake accounts. Um, the interesting factoid from yesterday was I think Facebook says they take down 6.3 billion fake accounts or something. Some crazy, crazy, crazy number. So they are paying, playing Whac-A-Mole. Twitter just basically says, "We don't have the team and the infrastructure, so let's (laughs) just let the 6 billion accounts be." That's the only difference between Facebook and Twitter. It's a, it's a, it's an acknowledgement, uh, of the problem and transparency on the reporting. So, um, you know, look, my, my point of view on this is that...
- DFDavid Friedberg
... I think that, uh, irrespective of what I believe about free speech, I think it's becoming harder and harder for me, just as a layman reading, to figure out what's true and not true. Um, I think that the line is getting very gray, and I think that sources that used to have complete, um, integrity, that were, you know, just, um, just beyond reproach in terms of their integrity, um, it's not clear anymore, because the business model of the internet is driven towards clicks. So, I think what's actually happening-
- JCJason Calacanis
Hmm.
- DFDavid Friedberg
... is that we are dismantling, um, information and news and journalism. Um, the first place where I think that goes is places like Substack, which is going to rebuild it bottoms up, where people will vote with their subscription dollars what to believe and what not to believe. And then, on top of that, people will overlay aggregation tools so that you can actually have multi-subscriptions and create sort of, like, next generation magazines and content subscriptions or whatever. I think that's where the, that's where the world is going in terms of information and content. Jason, my honest belief is that I don't think I've ever said anything that particularly crazy. I just think that I'm reasonably intelligent and I'm precise in what I say, and it cuts through a lot of the bullshit because most people have nothing to say.
- JCJason Calacanis
Hm.
- DFDavid Friedberg
So, um, you know, when I make a fucking investment, I write a one-pager and I post it and I'm willing to be held accountable. You know, when I don't understand about climate change, I just post about it even though I want to invest two billion dollars of my own money in it. And so, I think, uh, being authentic and just being straightforward is, is sort of like what is valuable at some level on the internet.
- JCJason Calacanis
For, uh, for, uh-
- DFDavid Friedberg
I think that governments are going to regulate these companies. Let's just be clear on that.
- JCJason Calacanis
Yeah. Yeah. And, and you, you, you-
- DFDavid Friedberg
Whatever I think about censorship, it just doesn't matter what I think, because governments are of a belief that these platforms craft and shape public opinion and sentiment which drive the aggregation and coalescing of power, which fundamentally disrupts the business model of the politician.
- JCJason Calacanis
Uh, let's go, swing over to Sacks here. Uh, Sacks, any comments on that censorship issue, or, uh, the, uh, once very respected sources of news maybe being less respected now? I think the New York Times came to mind when, uh, Chamath was sort of outlining that phenomenon, and then we'll move on to Amazon.
- DSDavid Sacks
Yeah, I mean, I, I think there are things that these platforms can do to elevate the, uh, you know, the, the discourse, you know, the, the quality of the information people are getting. I think that, um, eliminating the bot accounts, I think it's a huge problem on Twitter, that, that it's, you know, that they're out there. Um, and they're not really doing much about it. Um, I think that's something they could improve and fix. Um, you know, r- requiring people to, to be who they purport to be, you know, I think, and a- this is tied to the bot issue of, you know, not allowing, um, these sort of, um, sock puppet accounts. Um, so the, the, but, but the thing about those, those steps that they could take is they're speech-neutral, right? The rules would apply to everybody, um, you know, to Freeberg's point. And so I think they should look at doing more of those things. But, you know, what, what I'm concerned about is that, um, you know, so, so much of the, um, the debate, so much of the pressure that's being brought on Facebook is to actually moderate and control the, the type of speech that occurs on its platform. And, um, and I think the reason why Zuckerberg is, is, uh, attacked more than, say, you know, Jack Dorsey, is because he's been more resistant to, to doing that.
- DFDavid Friedberg
I, I think, I think it's actually because you have a bunch of what seems like real names. But again, I think that there's a fake account issue on Facebook that's just as bad as Twitter. It's just the difference is, you know, the, the fake accounts on Facebook have proper first and last names, whereas Twitter you could have all kinds of alphanumeric garbage as a, as an account name. So, here's a different proposal: why, you know, maybe what, maybe what we need is the decision that we allow complete unfettered free speech, and there's a layer of both Facebook and Twitter and YouTube where that's completely allowed, but the precursor to have that access is you need to put in your Social Security number or something that's uniquely identifiable by your government, so that if you say something and there's a law against you saying something, already a pre-established law, there's recourse.
- 1:05:42 – 1:13:19
Amazon's chances of being broken up, Friedberg gives insights on being a large third-party distributor on Amazon, benefits of at-scale companies with huge R&D budgets (like Google with Waymo)
- DFDavid Friedberg
But let's, let's go to Amazon, because I thought that this was a particularly interesting one. Amazon, um, I thought came out the best of everybody and is the least likely to be broken up. I think some of you agree with that. Uh, what were your impressions on Amazon's performance and Amazon in terms of being broken up? Let's start with you, Friedberg, and then we'll go back to Chamath.
- CPChamath Palihapitiya
I think, um, the intention of antitrust laws obviously is to protect consumers and protect markets and protect, um, market pricing from being manipulated by monopolists, uh, monopolies. And so, um, you know, the, the, the point that was made about Walmart years ago is the same point that's being made about Amazon today, which is that they're crushing small local businesses, um, and as a result, uh, there is a lot of damage being done and they are "too powerful." But the reality is that the, the pricing, um, effect of what they're doing is what needs to ultimately be scrutinized and I think is what will ultimately drive whether or not these guys have either some massive penalty or get forced to break up. And so you ask yourself the question, "Look, if I'm going to buy, call it, um, a mattress, or let's, let's use something like a pillow, uh, is it cheaper for me to buy that pillow as a consumer through Amazon or from the local store? Now, what if the local store is put out of business because of Amazon, and now Amazon is the only place I can get a pillow? Is the pillow now going to be more expensive or less expensive than it would have been otherwise?" Um, and I think that is the lens by which we need to kind of assess and the regulators will ultimately assess whether or not Amazon is causing harm in the marketplace because of its position and its power.
- JCJason Calacanis
What do you think, Friedberg?
- CPChamath Palihapitiya
Look, I have several businesses that sell on Amazon, um, and it is fucking expensive. Uh, one of my companies I'm on the board of, we, we've been the number one food product on Amazon multiple times, uh, and we kind of slide up and down the top 10.
- JCJason Calacanis
Can you say what that is?
- CPChamath Palihapitiya
Uh, yeah, Soylent, Soylent. And so we sell a lot of Soylent on Amazon.
- JCJason Calacanis
Yeah.
- CPChamath Palihapitiya
Um...... and, um, it is expensive, man. I mean, the fulfillment, the shipping, the advertising fees they force you to pay. Um, I will tell you that as a business owner or board member of a business that sells, and I have several others that sell on Amazon too, um, it is a- it is a grind. Um, and it is cheaper for us to sell directly through Shopify-
- JCJason Calacanis
Well, why don't you just raise the price on Amazon?
- CPChamath Palihapitiya
Um, so to some extent... So Amazon f- (laughs) this is actually part of the problem. So Amazon forces certain, um, best pricing negotiations if you're a large seller on Amazon. You have to make sure, in order for them to promote you and make you kind of a sponsored item and show you at the top of the list, you have to give them the best deal. Sort of like what Walmart does, right? You can't have a cheaper price anywhere else.
- JCJason Calacanis
Got it.
- CPChamath Palihapitiya
And so-
- JCJason Calacanis
So that was something that did not come up. They force you to have the best price there, even if you charge more on your website.
- CPChamath Palihapitiya
In these negotiated deals, yeah. And so you have to make sure that you're providing, um... Uh, and I'm not sure what the deal is specifically with Soylent, so I don't want to kind of speak it incorrectly here, uh, but I know that that-
- JCJason Calacanis
No, no, I've heard the same thing from other folks. What if Soylent-
- CPChamath Palihapitiya
Yeah. That, that is kind of part of what happens. And so, um, I will tell you, like, it- it is harder for... It is cheaper for me to sell Soylent, I- I think it's cheaper, uh, for some of these products to be sold. I can tell you my other company in which we sell quinoa, it's cheaper for us to sell through retail stores than it is to sell on Amazon. We actually give up more margin selling on Amazon, more margin.
- JCJason Calacanis
Then why would you do it?
- CPChamath Palihapitiya
Because of the volume and-
- JCJason Calacanis
Okay.
- CPChamath Palihapitiya
... because they've aggregated all the consumers.
- JCJason Calacanis
So you've made the decision as an entrepreneur to sell your quinoa in all places, even though you lose some margin, you make it back in aggregate?
- CPChamath Palihapitiya
Well, this, this goes to the market problem.
- JCJason Calacanis
Sounds like capitalism to me.
- CPChamath Palihapitiya
Well, this goes to the market problem because now I as a... I have less choice as a business owner because the only place I can find consumers is in this online marketplace called Amazon. I can no longer go sell at 50 local grocery stores because people don't go to the freaking local grocery stores anymore. And that's obviously a little bit of an extreme statement, but let's say I'm a pillow guy, I can't go sell at 50 pillow stores because they've all been shut down because all the consumers go to Amazon. They're looking at it-
- JCJason Calacanis
But couldn't you also sell at Target and Walmart and those other competitors who seem to be doing just, you know, pretty well actually, uh, again selling something-
- CPChamath Palihapitiya
They're doing well, yeah. And, and a lot of people have said that they're the kind of ex- you know, the exceptions, but there's a thousand versions of Sears and other stores that haven't done as well. Walmart and Target just happen to be extremely well-run businesses, but there's nothing fundamental about those businesses.
- JCJason Calacanis
What if Amazon kicked you off the platform and said, "We're not going to allow third-party sellers," would you be happier or would you be sadder?
- CPChamath Palihapitiya
We'd be sadder.
- JCJason Calacanis
Got it. Chamath, what are your thoughts? Amazon specific.
- DFDavid Friedberg
Yeah, I think David said it really well up front, um, which is that it's a- it's kind of a when and not an if. So it's, you know, Amazon today I don't think is at risk just because its end market is so big. But I think within five or 10 years, um, it definitely will be looked at through the same lens as Facebook and, uh, Google. And, um, actually th- just those two.
Episode duration: 1:34:10
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