YouTube’s fight with Roku is about much more than TV

The Big Story

The future of TV … and everything else

One very good (and very popular) reason to try and build a vertically integrated tech giant is to not have to deal with other companies' rules. And given what's happening between YouTube and Roku right now, is it any wonder that Google is betting big on Chromecast and Android TV while Roku is going all-in on original content?

The quick backstory: YouTube and Roku have been fighting for a few weeks, seemingly because YouTube wants Roku to support new video codecs that won't work on the low-end hardware Roku's software typically handles so well. (Both sides have also made other, wilder accusations, but this seems to be the one agreed-on fact.)

• Roku eventually pulled the YouTube TV app from its channel store. Who's to blame depends on who you ask.
• On Friday, YouTube retaliated by planning to put the entire YouTube TV experience into the regular YouTube app, basically daring Roku to kick the world's most popular video service off its platform. Roku called this "the clear conduct of an unchecked monopolist bent on crushing fair competition and harming consumer choice."

This whole thing is remarkable both for how public and how bitter it is. Especially given that YouTube (the largest video service) and Roku (the largest streaming OS) need each other pretty badly. Although, that might actually be the real problem.

This is a fight for control. Who gets to decide what codecs get used to play video? Who gets to decide how things are ranked in search engines, or whether a search for "play the 'Quiet Place 2' trailer" opens YouTube, Fandango or something else? Each of these questions has huge technological and business ramifications.

Google and Roku have both also spent the last few years fighting for more full-stack control in everything they do:

• Google got into the phone business because it didn't like what others were doing to Android, just to name one example. It also exerts authority over the entire internet through Chrome and Chromium, started developing custom chips, built its own successful (and ruthless) TV dongle business and is even trying to overhaul the way internet advertising works.
• Roku has shifted from a "nice box on which to play your stuff" provider to an advertising behemoth, a company with huge sway in how the entire TV manufacturing business operates and a heavy investor in original content. HBO and Peacock would both happily tell you how much more aggressive a negotiator Roku has become.

Tech giants don't like being told what to do. And they hate being put between a rock and a hard place, like having to decide whether to give in or lose access to the most important TV platform or streaming service in the world. But this is what happens in tech, whether you run the Roku Channel Store, the Amazon Marketplace, the App Store or the biggest name in online video. Platforms get huge, and they get weaponized. And there are rarely easy solutions.

Epic v. Apple

Apple's many special deals

It's Epic v. Apple week two! We spent the first week getting way in the weeds about what a game is, and talking about our favorite sci-fi books. Expect things to remain just as wonky as the two sides explore the business models of the internet.

One big thing to watch out for this week: discussion of special deals that Apple cuts with its partners. Apple always says it treats every developer the same, and the App Store is a level playing field, but evidence shows that's not really the case.

• Already, the case has brought up conversations that Apple had with Facebook, Amazon, Microsoft, Netflix and even Epic over how their apps would operate on iOS. In Netflix's case, Apple was desperate to keep Netflix from turning off in-app subscriptions (which it eventually did) and offered some creative workarounds.
• Some developers have also gotten access to non-public APIs for everything from subscription management to video calling.

Apple needs to be seen as a good steward, not using its immense power to pick and choose winners, if its defense is to work. That is something Epic will try desperately to unravel, pointing to every back-alley deal and one-off email as evidence that there's no such thing as fairness in the App Store.

We'll be covering the trial here and on Protocol all week — here's where you can find all our coverage.

People Are Talking

Enough with the "who wants to go back to the office" surveys, Hunter Walk said:

• "Assume as CEO that it will be impossible to retain 100% of your employees no matter what you decide. There's going to be a talent reshuffling for the next 6–24 months IMO as employees decide whether their current employer's workplace strategy is right for them or not."

Amy Klobuchar said she's not anti-tech, just in favor of more competition:

• "I am never saying, 'Get rid of their products.' But let's have more of the products that give you more choices. You can keep one product, but it's better to have other products, because we're not China."

Elon Musk picked his favorite SNL sketch:

• "Wario was my fav haha 👀"
• Oh, and don't worry, he's already back to hyping Dogecoin. Nature is healing.

A MESSAGE FROM VENTURE FORWARD BY GODADDY

The nation's smallest businesses have a large impact on our economy and communities - yet are often overlooked by policy makers. See why GoDaddy created Venture Forward, a multi-year research effort to quantify the economic impact of 20 million businesses in the U.S. with 10 or fewer employees. Explore the Data.

Learn more

Coming This Week

IBM Think starts tomorrow, with two days full of all things cloud and automation.

The WSJ's Future of Everything Festival also starts tomorrow, with people like Marc Benioff, Whitney Wolfe Herd and David Baszucki all on the schedule.

There are more earnings reports this week, including from DoorDash, Airbnb, Palantir, Alibaba and Foxconn.

In Other News

• The Gates divorce has been in the works since 2019, The Wall Street Journal reported, with Melinda reportedly starting the process in part because of Bill's ties to Jeffrey Epstein.
• Stella Low is Apple's new head of PR. She was previously at Cisco, and will fill the role that's been vacant at Apple since 2019.
• Tesla's director of Autopilot said Elon's tweets don't match reality. Tesla told the DMV it's at Level 2 autonomy, and wouldn't say whether it would reach Level 5 by the end of the year, as Elon has suggested.
• Project JEDI may be no longer. The Pentagon is reportedly weighing shutting down its massive (and controversial) cloud project, and terminating its contract with Microsoft.
• WhatsApp made another change to its privacy policy rollout. It won't cut off anyone who doesn't accept the new terms … it will just slowly degrade the service until you can't really use it anymore.
• Only 4% to 5% of Americans are opting into iOS app tracking, according to Flurry analytics. That spells bad news for Facebook — though things are better overseas, with 11% to 13% of worldwide users opting in.
• A ransomware attack forced a fuel pipeline to shut down on Friday, and it's still not back up. U.S. fuel prices are soaring accordingly, while pipeline operator Colonial Pipeline said it's working on a plan to bring it back up.
• Bird's going public via a SPAC, dot.LA reported, at a $2.3 billion valuation.
• Meituan's CEO shared a poem seen as critical of China's government. He promptly deleted it and said he was referring to its competitors, but that didn't stop the company's stock from plunging.
• Clubhouse finally launched on Android. You still need an invite, though.

One More Thing

See you in Tuscany

The future of work, at least for some companies, is remote. So here's the win-win to end all win-wins: work remotely, in the Italian countryside, and get paid extra to do it. Two Italian towns, Santa Fiora in Tuscany and Rieti in Lazio, are offering to cover up to 50% of your rent if you move and telecommute long-term. All you have to do is prove you have a job.

A lot of cities see remote work as their chance to revitalize, and lure back some of the people forced to flee to bigger, smellier, more expensive cities for work reasons. I've been thinking about this all weekend, and I haven't found a downside yet. Should we be neighbors?

A MESSAGE FROM VENTURE FORWARD BY GODADDY

The nation's smallest businesses have a large impact on our economy and communities - yet are often overlooked by policy makers. See why GoDaddy created Venture Forward, a multi-year research effort to quantify the economic impact of 20 million businesses in the U.S. with 10 or fewer employees. Explore the Data.

Learn more

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