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September 11, 2019

Gatekeepers Gonna Gate: Apple, Google, and Antitrust (Thinks Out Loud Episode 258)

September 11, 2019 | By | No Comments

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Gatekeepers Gonna Gate: Apple, Google, and Antitrust (Thinks Out Loud Episode 258) – Headlines and Show Notes

Apple's getting in some trouble for how their App Store restricts access to apps that aren't Apple's. Google's getting in even more trouble with antitrust authorities. And Facebook's not super popular with regulators either, facing scrutiny from a handful of state attorneys general too. We live in a world where it's clear that gatekeepers gonna gate. But is antitrust regulation the right answer? Should Google and Apple and Facebook and Amazon have to reveal all the details of how they do what they do?

The latest episode of Thinks Out Loud takes a look both at the reality that gatekeepers gonna gate and asks a series of questions about what you should expect of these tech giants, both as a marketer and as a consumer.

Want to learn more? Here are the show notes for you:

Relevant Links:

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 18m 58s

You can subscribe to Thinks Out Loud in iTunes, the Google Play Store, via our dedicated podcast RSS feed (or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Gatekeepers Gonna Gate: Apple, Google, and Antitrust (Thinks Out Loud Episode 258) Transcript

Well. Hello again everyone and welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. My name is Tim Peter. Today is Tuesday, September 10th, 2019. This is episode 258 of the big show. And as ever, I very much appreciate you tuning in. It's funny the name of this show is Thinks Out Loud. Today that title is probably more spot on than most.

Gatekeepers Gonna Gate: Introduction

The reason for that is because I have said for some time that gatekeeper's gonna gate. It's just the way they behave. It's the world in which they live. There are two new stories this week that got my attention around what gatekeeper's gonna gate might look like as we go forward through the rest of this year and into 2020.

The first was a story from the New York Times that noted Apple's apps ranked first, and I'm quoting, "For at least 700 search terms in the app store. Some searches produced as many as 14 Apple apps before showing results from rivals though," and the article continues, "Though competitors could pay Apple to place ads above the Apple results." I mean, that last line is a killer. If we're saying gatekeeper is going to gate, that pretty much sums it up right there.

They note in the article that searches for podcasts don't turn up Stitcher radio, which I talk about here all the time on the show, very popular podcatcher. They note that searches for music doesn't turn up Spotify. That's crazy. So clearly, this is a gatekeeper who's gonna gate and they're gating pretty hard.

The other article, of course, is that Google has been hit with an antitrust investigation from essentially every state's attorney general in the United States. Facebook has been invited to that party by another half dozen or so attorneys general. Which clearly that's a huge, huge step in terms of trying to reshape the marketplace.

Now, the reason that I think these are both interesting is because they're going to shape the landscape of what gatekeepers and you as a user of those gatekeepers, you as a marketer who tries to get your customers, who tries to reach customers using these folks, that's going to shape the landscape of the world you live in for the next couple of years. Now what's really interesting about this is the New York Times stated, this is from the New York Times article about Apple and the app store. I'm quoting this. It says, "Apple and other tech giants like Facebook and Google will not explain in detail how such algorithms work even when they blame the algorithms for problems."

Now I want to be really fair. I actually agree with the gatekeepers on this one. I have agreed with this approach forever. There are a couple of good reasons why gatekeepers should not make this information public.

The first is we've all seen how open access allows for trolls and allows for trouble. Look at 8chan or some of the more problematic boards on Reddit, or the rise of, well essentially Nazis on Twitter. There are just all whole host of horrible people out there who look for opportunities to pee in the public pool every chance they get. I've said many times before, quoting the French philosopher Paul DeLillo, "When you build the ship, you build the shipwreck."

Should Google's algorithm or Apple's be fully public? I think that's just going to make it easier for the trolls and troublemakers to game the system. There's a really great book by Emerson Brooking and Peter Singer called LikeWar. It's spelled #LikeWar, where Singer and Brooking say that once, every village had an idiot. It took the internet to bring them all together. And I'd add the same is true for every villages resident troll too.

Trolls used to exclusively live under bridges. Now, thanks to the internet, they coordinate their harassment and their hurt on a daily basis using digital to share tips on how to be the most effective and efficient trolls they possibly can be in their attacks. They have all the incentive in the world to keep doing it, to get better at that. Do we really think it's a good idea to provide them access to understand how to do it better? I don't. So clearly I'm not a fan of making the algorithm public for that reason alone.

I also, even in Google's case, more or less agree with their argument about the importance of keeping the algorithm private as a trade secret. I'm a capitalist. I'm a business guy. I think there's a lot of merit in saying there are things that companies are allowed to keep private. I do think the public good outweighs that sometimes and I will come to that, but Google in my experience is uniquely positioned both as a company that dominates the market place and also as one that could lose it all tomorrow.

Google's Power is Brittle: Is That Always True for Gatekeepers?

I've mentioned before here on the show how their power is brittle because switching costs for consumers are so low. Consumers tomorrow could start searching on Bing or DuckDuckGo in an instant. And it would significantly hurt Google's revenues right now. Last quarter, the company made about 85% of its revenues from paid clicks on advertising. Believe me, they'd notice if a large number of folks started searching somewhere else. Let's be fair about this, even switching from an Android device to an iPhone is relatively trivial, if we think about the history of switching costs.

Now, as for the switching costs argument for Apple and Amazon, I'd say somewhat similar dynamics apply. Though to be fair, you have to think that Amazon isn't a switching cost problem for customers. It's really a switching cost problem for sellers. That dynamic, the differences between Facebook and Google and Apple and Amazon, when we get into these details, underscores why actually it's tougher to look at these tech giants holistically than it might seem at first glance.

As an example of the contrasts, Facebook absolutely plays a huge role in digital media. And while it's free for customers to use, the switching costs for Facebook's users are for all practical purposes, infinite due to its network effects. You can't leave Facebook until and unless all the other people you want to connect with do too. The same is true for them in reverse. All your friends and family and fans and followers would all have to agree to leave at the same time and choose to go to the same place to really break free of Facebook's influence.

Now call me crazy, that seems pretty unlikely. Whereas Google and Amazon and Apple, that same dynamic doesn't exist. But all that said, I think it's safe to say that we should all agree that we don't want trolls to have better understanding of the algorithm, and that varying market dynamics might play a role in determining varying approaches to the differing players here.

"Do Nothing" Isn't a Good Answer Given that Gatekeepers Gonna Gate

Now, all that said, I also don't believe that the right answer is to do nothing. Google's power, no matter how brittle it may be, also is enormous. The same is true for Facebook and Amazon and Apple. They have within their respective spheres of influence, tremendous power over the marketplace. In most cases, it's safe to sow that they exercise either monopoly or monopsony power over some piece of the value chain.

So for me, the questions start to become:

  • What markets do they each actually have power in?
  • Is their power monopoly power, monopsony power — meaning they're the only place you can sell to, not the only place you can buy from — or is it some combination? Is it both monopoly and monopsony power? And I think in Google's case you can argue they definitely have some monopoly power and some monopsony power.
    • By the way, this is straight out of the legal framework, I didn't make these up.
  • But the next question is, are they unduly leveraging that power to hurt competition or consumers or again, both?
  • And assuming the answers to those first three questions lead in this direction, how do you best remedy the situation?

Now it's clear, it's apparent given that 50 states's attorneys general think it's worth investigating Google for antitrust, that at least, when it comes to Google, the answers to some of those questions are problematic. At least again, a half a dozen states attorneys general agree that the same is true for Facebook. So there's something there that we need to be paying attention to. I don't think we need states attorneys general tell us this. I think we see it both as consumers and as marketers every day.

Now in the book Information Rules, which I cite regularly here on the show, economist, Carl Shapiro and Hal Varian argue that these dominant players are a natural consequence of digital. I think they're right. Hell, I think the history of the last two decades has proven their point. By the way, I always have to point out that Hal Varian who wrote that book is now the chief economist for Google. So he didn't just put the writing on the wall. He read it and said, "I know where I want to be." But I think we need to look at this and say, "Okay, does this mean we can't compete?" And I'd say the answer's no. Because in that same book we do see you can be a differentiated player. And again, we see example after example where people pull that off or people accomplish that.

So I think we need to think about this in terms of are we competing effectively? The right answer for almost everybody who's going to listen to this show is not to compete by trying to be the dominant player in an information space. It's to be a differentiated player. It's to own your niche and own your customer more directly. It's, as I talked about last week, not to outsource your sales and marketing to any one of these folks. We are all better off when there is a Google and an Apple and an Amazon and a Facebook and whatever else comes down the pipe to help us ensure that no one of them becomes the single dominant player.

I think we have to start asking very serious questions about what role do we want government to play in shaping these remedies. What is an appropriate remedy. And is an inappropriate remedy throwing open the commons to everybody? Because as we've seen with comment boards and we've seen with 4chan and 8chan and things like that, I don't think that's really what we want. I don't think we really want to turn all the power over to the trolls because they have every incentive to take it and ruin it for everybody.

We also have to agree that that can't be the reason just because there might be a shipwreck is no reason to not invent a ship. Right? I mean we've got to be able to turn that phrase around. The reality is we need to take control of the commons in a way that makes sense for us. We need to come up with some basis for agreeing on where it's appropriate to say, "Okay, somebody got too much power and that's making it problematic for everybody." But also they have to be free to make use of their power where it's appropriate to to create a better space there too, and to compete commercially. Because maybe someday we'd like to be those folks.

I opened by saying, "This one's going to be something of a thinks out loud." I don't know that I know the answers. But I do think the right first step in coming up with the right answers is asking the question. And the questions are where do we want this to go? What kind of world do we want to live in? And how do we want to shape the environment in which we compete in a way that's better for everybody? Because if we get that right, all the rest of this takes care of itself.

I'd love to hear your point of view on this. I've mentioned every week that you can email me at podcast@timpeter.com. Again podcast@timpeter.com.

You can find me on Facebook at Facebook.com/TimePeterAssociates. You can find me on Twitter using the Twitter handle @TCPeter. You can find me on my website and send a contact message, whatever you prefer. But I'd love to hear from you about what you think the right thing is here, and how it is that we make sure we're inventing the ship as well as a shipwreck, and making sure that if gatekeepers going to gate we understand where those walls are and where those gates are and which ones we're comfortable with. Because it may be true that gatekeepers are going to gate, but I think it's fair to say that we get a voice and a vote in terms of where those gates can be, and which tolls we're willing to pay and when it is that it's appropriate to actually break those gates wide open.

Now looking at the clock on the wall, we are out of time. But I want to thank you again so much for tuning in. I genuinely do appreciate it. I want to remind you that you can find the show notes for today's episode as well as an archive of all our past episodes by going to TimPeter.com/podcast. Again, that's TimPeter.com/podcast. Just look for episode 258. While you're there, you can click on the subscribe link in any of the episodes you find there to have Thinks Out Loud delivered to your favorite podcatcher every single episode.

You can subscribe in iTunes or Stitcher radio or the Google play music store or whatever your favorite podcatcher happens to be. Just search for "Tim Peter Thinks," "Tim Peter Thinks Out Loud" or "Thinks Out Loud"; we should show up for any of those. While you're there, I'd very much appreciate it if you could provide a positive rating or review. It's so helpful. Makes it easier for others to find us.

As mentioned, you can also find Thinks Out Loud on Facebook by going to facebook.com/TimPeterassociates. You can find me on Twitter using the Twitter handle @tcpeter. Or of course, you can email me by sending an email to Podcast@TimPeter.com.

I'd also like to thank our sponsor. Thinks Out Loud is brought to you by Solo Segment. Solo Segment focuses on AI driven content discovery and site search analytics to unlock revenue for your business. You can learn more about how to improve your content, increase your customer satisfaction, and make your search smarter by going to solosegment.com.

With that, I want to say thanks so much for tuning in. I very much appreciate it. I hope you have a great rest of the week, a wonderful weekend, and I will look forward to speaking with you here on Thinks Out Loud next time. Until then, as ever, I want to remind you to please be well, be safe and take care everybody.

Tim Peter

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June 29, 2017

OK, Google, After the EU Fine, is Google OK? (Thinks Out Loud Episode 198)

June 29, 2017 | By | No Comments

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OK, Google, After the EU Fine, is Google OK? (Thinks Out Loud Episode 198) – Headlines and Show Notes

Subscribe to Thinks Out Loud

Contact information for the podcast: podcast@timpeter.com

Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil Sound PR 30 Large Diaphragm Multipurpose Dynamic Microphone through a Cloud Microphones CL-1 Cloudlifter Mic Activator and a Mackie Onyx Blackjack USB recording interface into Logic Express 9 for the Mac.

Running time: 15m 30s

You can subscribe to Thinks Out Loud in iTunes [iTunes link], the Google Play Store, via our dedicated podcast RSS feed )(or sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player at the top of this page.

Tim Peter

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January 7, 2013

What Google's Flight Explorer Tells Us About the State of Travel Search

January 7, 2013 | By | No Comments

No sooner did I mention that Google will be able to explore lots of innovation and opportunity now that they’re free of regulatory investigation, than the company introduces its new Flight Explorer feature.

Google Flight Explorer screenshot

Just put in where you’re looking to go (the feature “auto-magically” determines your starting airport) and how long you’re willing to travel and the feature will show you the best flight options (best defined as cheapest) available to you.

At present, it looks like all the inventory is coming from the individual airlines, which they must love. Of course, the OTA’s probably won’t be happy. But it’s a fascinating move from Big G and one worth watching as we move forward.

Clearly, Google thinks this is an underserved way consumers want to search. I think they’re right—I’d have killed for this a couple of weeks ago while trying to plan an inexpensive getaway for my family. Google’s now free of the (immediate) threat of government involvement in their day-to-day product direction, which means this likely isn’t the last enhancement of this kind we can expect to see. While this one looks good for suppliers and competition for intermediaries, that won’t necessarily remain true for any future enhancements. I’d stay tuned on this front if I were you.

I’ll be exploring and explaining what features such as these mean for your business in the Biznology webinar I’m conducting January 15th: “It’s All E-commerce: How the Local, Social, Mobile Web Affects Sales Online and Offline”. We’ve still got some space, so register today and learn more about how all channels tie together in the social, local, mobile web.

Tim Peter

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March 2, 2012

Google now offers airlines a CRS platform. Is this a Good Thing?

March 2, 2012 | By | No Comments

OK, this I didn’t see coming. Google just built its first airline CRS. Big G has worked with Cape Air to provide a reservation system,

‘That may not look all that different from other airlines’ systems on the surface, but Google says that there’s plenty different going on under the hood, noting that it was built “from scratch using modern, modular, scalable technologies.” That last bit is perhaps the key one, with Google further adding that the system is “built to scale to support airlines of all sizes.”‘ [Emphasis mine]

On many levels, this makes loads of sense both for airlines and for Google. The search giant offers server power and engineering talent on a scale unlike, well, just about anyone. And what better way “…to organize the world’s information and make it universally available” (Google’s stated mission), than get airline information (and, eventually, I would assume, hotel information and car rental information and…) directly from the source.

Further, I can imagine many airline executives (and hotel executives and car rental executives and…) drooling over the notion of letting Google do all the heavy lifting on the tech front. And the idea of the large players in the space (Sabre, Amadeus, IBS, etc.) facing further competition is a good thing. Isn’t it?

Probably.

The one possible downside here is that for airlines (and hotel companies and car rental companies and…), Google represents one of their largest advertising partners, too, with huge market share for search, display and mobile advertising dollars.

Giving Google access to all inventory, rate and passenger data could potentially lower distribution and reservations systems costs for its future customers. But it could also potentially cost a lot more for advertising, too, as Google learns more and more and more about these businesses.

Which is definitely something to watch in the coming months and years.

Tim Peter

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January 11, 2012

Google is not Evil. They just appear to be.

January 11, 2012 | By | No Comments

Is Google EvilGoogle is making lots of news this week and not all of it is for the right reasons. First, they introduced their Search, plus Your World enhancement (hereafter referred to as Search Plus because Danny Sullivan is a genius), incorporating social results more fully into the company’s search results pages. Twitter hates it, while Matt Cutts thinks it’s magical.

Me? I’m ambivalent. This has been a long time coming and, while I don’t think it’s going away anytime soon, I also think it’s incomplete, if for no other reason that so much of the social content that makes Search Plus attractive comes only from Google+. Maybe as Google+ use grows, Search Plus will become more valuable to consumers. But it’s way too soon to suggest how it’s going to affect business (though I plan to take a couple of guesses next week).

Speaking of the business impacts of Google+ growth, Matt McGee takes a long look at the growth of [Not Provided] as a referring keyword from Google. As I noted in the comments, the more folks log into G+, the bigger potential business impact.

What these two stories have in common is both present Google in a less-than-glowing light. In the first, Google appears to promote its social service ahead of alternatives such as Twitter and Facebook. In the second, Google offers its paid search customers benefits unavailable to those who don’t pay.

But are either of these “evil”?

You could easily argue that they’re not.

Now, before you get out the torches and pitchforks to storm my castle, hear me out for a second. If you made moves that benefited your bottom line and stuck it to your competitors, do those moves make you evil? Of course not.

So why isn’t that true for Google? Shouldn’t they get the same opportunity as you? (Ignoring for a moment any antitrust issues, of which I expect Google to face plenty pending the outcome of this year’s elections).

Actually, here’s the problem. Google’s stated mission is to “…organize the world‘s information and make it universally accessible and useful.” All the world’s information, universally accessible. Not just the information available on Google’s services and not just to people who pay them.

From that perspective it sure looks like they’re compromising their core mission some. That may not be evil. But if you sacrifice your values to boost profits, eventually you’ll end up with neither.


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