July 1, 2021
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Good morning! This Thursday, the Amazon/MGM deal is under "meticulous antitrust scrutiny," IBM is having a horrible time migrating email systems, a judge blocked Florida's social media law, and Tim Berners-Lee's NFT is maybe the only NFT we'd bid on.
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The Big Story
James Bond and grocery stores
Buying MGM was never likely to be easy for Amazon. It's spending just shy of $8.5 billion to acquire the company, making MGM its second-largest acquisition ever. Amazon framed it as straightforwardly as possible — Jeff Bezos called it "really very simple" and pointed out that Amazon has a content platform and, well, MGM has content — but the reality is much messier.
- This deal has had critics since the beginning. "Amazon's proposed purchase of MGM reinforces what we already know — they are laser-focused on expanding and entrenching their monopoly power," Rep. David Cicilline tweeted the day it was announced.
- MGM had been reportedly looking for a buyer for a while, and Amazon actually paid less than the company had been hoping for, so it's not like it godfathered its way into the acquisition. But it still rubbed some people the wrong way.
Now the deal is under even more scrutiny. The FTC will reportedly lead the investigation into the deal alongside its other antitrust investigations into Amazon, and Sen. Elizabeth Warren urged the agency to give it "meticulous antitrust scrutiny." And in a way, MGM is a perfect representation of why Big Tech antitrust questions are so complicated.
This is not a normal antitrust question. Antitrust analysis in the traditional sense would look at this deal and say: Does this give Amazon outsized power in movies and TV? The answer there is fairly clearly no. Thanks to Netflix/Disney/Paramount/HBO, it's as competitive a market as you'll find right now, and Amazon's actually a relatively small player. But does MGM make a big, powerful, horizontally- and vertically-integrated company more of all those things? Of course it does. When "big and powerful" turns into "monopoly" is still very much an open question.
- Prime Video's value to Amazon isn't just about the videos. To get Prime Video, you subscribe to Prime, which also gets you free shipping, cheaper groceries and all sorts of other things. So you could argue — and Warren and others do argue — that buying the rights to James Bond movies actually contributes to Amazon's outsized power in selling you bananas. That's how weird this all gets.
- Warren's letter to the FTC went right to the heart of that issue. "Amazon's tactic to operate at a financial loss and use low prices to lure in customers and capture the market has worked before," she wrote, "and the FTC must determine whether this vertical acquisition is truly an entertainment strategy or merely another step towards unfettered monopolization."
Amazon is clearly nervous about the outcome. It filed a request with the FTC on Wednesday requesting that Lina Khan be recused from all Amazon-related investigations. (Bold strategy to make that request of the new chair!) Amazon's logic: Khan has a long history of making an antitrust case against Amazon and can't possibly be receptive to arguments to the contrary.
- Amazon argued that her writing, including that 2017 paper everyone still talks about, "convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon's antitrust culpability as well as about the ultimate issue of culpability itself."
- Will it work? That's what I asked Protocol's Ben Brody. "Amazon's petition draws heavily from Paul Rand Dixon's record," he said. "His work as a lawyer for a Senate subcommittee's antitrust investigation prompted a court to invalidate an agency order that involved one of the companies from the lawmakers' probe. That being said, the FTC and its staff has more than its share of lawyers who worked for industry or consumers and made their views clear before going into the government."
So far, most experts seem to think the deal is likely to be approved … eventually. But along with Facebook's victory over the FTC this week, this is yet more evidence to Congressional antitrust hawks that the problem with antitrust is not the enforcement — it's the laws themselves.
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People Are Talking
A Travis Kalanick-led Uber might have been bigger than Google, Emil Michael said:
- "I think we would have seen the grocery delivery opportunity, that Instacart has dominated, much earlier. I think we would have actually won against DoorDash in the U.S. for food delivery ... we would have had a much longer roadmap, and transportation is huge."
Every company should spend some time designing its digital workspaces, Slack's Stewart Butterfield said:
- "What people need in a digital-first world, is something that acts as a virtual HQ and plays the same role for how productivity and collaboration happen just like the building did. People don't design their virtual HQ in the same way they do their physical buildings."
The old Instagram can't come to the phone right now. It's dead, Adam Mosseri said:
- "We're no longer a photo-sharing app, or a square photo-sharing app … what you're going to see over the next couple of months, really, is us starting to experiment more in the space of recommendations. Showing you things in Feed that you may not be following yet."
Two Microsoft presidents are leaving the company. Microsoft said both Kate Johnson and Toni Townes-Whitley are leaving for "personal reasons."
Today is Cristiano Amon's first day as Qualcomm CEO. Happy retirement to Steve Mollenkopf!
Big IPOs for everybody! LegalZoom jumped; DiDi spiked (before falling back to earth a bit); Clear popped; SentinelOne leaped. We're running out of positive verbs, but whatever: It's still good to be going public.
In Other News
- A judge blocked Florida's social media law. Pretty much everyone paying attention saw this coming, because a law that would fine companies that ban political candidates never seemed like a plausible idea. It was signed into law in May anyway, but now has been blocked at least temporarily.
- IBM is migrating email systems, and it's going … horribly. Employees told The Register they've been without email and calendar for days, and that the migration — which has taken 18 months of planning — has generally been a total mess.
- On Protocol: Have you noticed all those giant series A rounds? They're not the sign of a crazy market. (Or at least, not just that.) They're increasingly a way for mature, bootstrapped companies to take their success to another level.
- Virgin Orbit completed its first commercial mission. It took seven satellites into orbit during a two-hour mission. So, Richard Branson, you're next, right? "All I can say is when the engineers tell me that I can go to space, I'm ready, fit and healthy to go," Branson told the AP. "So we'll see."
- Volvo showed off its EV design concept. Called Concept Recharge, it's a pretty interesting roadmap for how a traditional car company might go all-in on electric and autonomous vehicles. It's still a car, but not quite the same.
- Tim Berners-Lee's NFT sold for $5.4 million. The files contain the original source code for the web, and 51 people bid to win it. The high-res JPG is pretty cool, too.
- Don't miss this story about how restaurants are combatting the labor shortage with serverless ordering and better payments systems. There are automation ideas in here for almost any company anywhere.
- AT&T is on the RCS wagon. All of its Android phones will use Google's Messages app for texting, and will offer the better and more secure RCS standard as well. RCS has always been Google's plan to build a system that rivals iMessage, and this is a big step toward that.
- TikTok kicked out millions of teens. The company said more than 7 million "suspected underage accounts" were found and moved to TikTok's experience designed for younger users in the last quarter. It also removed more than 12 million videos posted by spam accounts in the same period.
- Bye-bye APKs? Google is making the new Android App Bundle format the standard for Play Store apps in August. Most big apps already made the switch, but this will send some devs scrambling to update their stuff.
One More Thing
The audio/video switch
If you're chatting with someone you don't know well, turn cameras on. If you know each other, turn them off. If you're looking for a good rule of thumb for your digital communication, that's a pretty good place to start. It's also what Tamar Yehoshua, the chief product officer at Slack, told us has worked for her the last few months.
Slack is rolling out a new feature called Huddles, which it built to be a much lower-friction, less formal system for chatting with co-workers than meetings. (Because who needs more meetings.) It's meant to be an audio-first experience, which Yehoshua said has been great for one-on-ones with her team; she's not distracted by looking at the screen, or exhausted by the presentational feeling of video chat. The first few times she meets someone, she'll go camera-on — but always hide the self-view, obviously — but for those she knows well, audio does the job.
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