Business & Money

Google was recently fined $5B by the European Commission for antitrust violations. I find this ruling interesting for a number of reasons, but let’s start by listing out specifically what they were found guilty of:

1. Illegally bundling Google Search, Chrome, and the Google Play Store. To get the Play Store, and a full suite of Google apps by extension, Android OEMs (original equipment manufacturers aka phone makers) were forced to preinstall Google Search and Chrome, and also make them available within one screen of the home screen.
2. Illegally paying OEMs for search exclusivity – they had to preinstall Google Search (and no competing search apps) on every Android they made.
3. Illegally barring OEMs from selling Android devices that ran Android forks (basically negating the open source nature of the operating system).

Does this ruling remind you of anything? For me, it harkens back to the days when Microsoft was facing its own antitrust allegations. Similar to Google, Microsoft was under fire for bundling Internet Explorer to the Windows operating system, effectively killing off competition from other browsers, namely Netscape and Opera. In the days when application downloads were slow and users often had to buy software in retails stores, it was an insurmountable advantage that Microsoft could bundle its browser with the operating system that was preinstalled by PC OEMs.

But the interesting thing here is that Microsoft basically got a slap on the wrist. They settled the case with the DOJ without having to unbundle anything or change their go to market strategy.

By contrast, Google has to:

1. Pay $5B in fines,
2. Unbundle Google Play from Search and Chrome,
3. Stop paying OEMs for Search exclusivity, and
4. Stop barring Android OEMs from running Android forks.

That’s a massive difference in outcomes. I think that difference partially stems from the business model. Microsoft charged a per-device license fee to OEMs that wanted to pre-install Windows. Android is free to smartphone OEMs. Actually, it’s less than free. OEMs were paid for Search exclusivity and Google also shares a portion of search revenues. One could easily make an argument that that describes predatory pricing.

Perhaps most interesting, though, will be what happens next. Will this result be enough to shake Google’s competitive edge? I’m not so sure. And how will this affect Google investors? AT&T is up over 500% since it was broken up in the early 80s. Microsoft is up over 300% since it’s tussle with Uncle Sam in the early 2000s. In other words, I don’t think there’s much to worry about for long-term investors. Regulation isn’t what usually unseats dominant players. More often it is a new paradigm (e.g. mainframes > PCs > web > cloud > mobile).

Human Progress

Modern humans have been around for a couple hundred thousand years. Interestingly enough, our structure and physiology haven’t changed much during that time. However, our way of life has changed drastically. We’ve been hunter-gatherers, agriculturalist, and industrialists. We’ve covered all corners of the globe and subscribe to many different cultures and ideologies.

I don’t write this to kick off some long-winded history lesson, but rather because I find neuroplasticity to be fascinating. We are all basically the same, but each of our brains has the ability to undergo rapid changes based on our environment.

I remember reading a while back about how a taxi driver in London will exhibit an enlarged hippocampus after many years on the job.

Then you have the Moken, a seafaring people off the coast of Myanmar and Thailand who exhibit incredible underwater vision due to the amount of time they spend diving for shellfish and other food items.

I find myself thinking about this do to the moment we currently occupy. At a crucial juncture in our lives (our teens), my generation (dare I say “millennials”) experienced a shift to a world dominated by algorithms. Much of the news and information that many people consume is algorithmically curated to serve up things that confirm preexisting beliefs (or stoke anger and mistrust toward the “other”).

So I wonder how long someone needs to be exposed to this type of information before the brain rewires itself so that this is the new normal? And when that happens, how much harder will it be to reverse course?

Philosophy

What’s more, there’s a paradox at play here.

Many of the platforms that rely on algorithmically curated information are based around the premise of networks. In fact, it might be said that our ability to collectively organize is one of our greatest assets. Quotes abound about the value of working together and standing on the shoulders of giants.

However, when we organize, we are also at our most vulnerable. Collective biases, social pressure, and groupthink are nefarious forces. From these you get mob mentality and pluralistic ignorance. You get small transgressions that snowball into fascism.

Personally, I’m not sure how to reconcile the two.

My Latest Discovery

Last week I had an incredible omakase sushi dinner at Sushi by Bou at the Jue Lan Club. But neither the venue nor the food is the discovery, though both were incredible. Instead, the bartender was curating the evening with the “Sushi Flow 🐠🍣🦐” playlist on Spotify. It’s a must listen!!