1 00:00:02,440 --> 00:00:03,600 Speaker 1: Also media. 2 00:00:04,519 --> 00:00:07,680 Speaker 2: Hello and welcome to Better Offline. I'm your host ed Zeitron. 3 00:00:19,680 --> 00:00:22,120 Speaker 2: Back in March of this year, MIT economist, their own 4 00:00:22,280 --> 00:00:25,440 Speaker 2: some Oglu and MIT Sloan Simon Johnson published a paper 5 00:00:25,720 --> 00:00:28,760 Speaker 2: called the Urgent Need to Tax Digital Advertising, where digital 6 00:00:28,800 --> 00:00:31,400 Speaker 2: advertisers will be levied with a flat tax of fifty 7 00:00:31,400 --> 00:00:34,120 Speaker 2: percent on all revenue above five hundred million dollars. And 8 00:00:34,159 --> 00:00:36,360 Speaker 2: today I'm joined by Drone to walk through it. Daron, 9 00:00:36,440 --> 00:00:37,199 Speaker 2: thank you for coming on. 10 00:00:37,520 --> 00:00:38,400 Speaker 1: Thank you, Thanks Ed. 11 00:00:38,520 --> 00:00:42,519 Speaker 2: It's my pleasure, so walk me through the idea. It 12 00:00:42,560 --> 00:00:45,000 Speaker 2: seems pretty simple, but maybe there's more nuance to it. 13 00:00:45,280 --> 00:00:48,080 Speaker 1: Well, it's very simple to implement, it's very simple to explain. 14 00:00:48,479 --> 00:00:51,960 Speaker 1: The question is why, you know, why do something like this? 15 00:00:52,080 --> 00:00:55,560 Speaker 1: You know, after all, who doesn't love something free? And 16 00:00:55,600 --> 00:00:59,920 Speaker 1: we're getting a lot of free things because the entire 17 00:01:00,000 --> 00:01:06,920 Speaker 1: our online ecosystem is monetized via digital ads. The issue is, 18 00:01:07,680 --> 00:01:14,200 Speaker 1: I think this ecosystem creates a number of problems which 19 00:01:14,280 --> 00:01:16,840 Speaker 1: are set to get worse. 20 00:01:16,680 --> 00:01:18,399 Speaker 3: With AI right. 21 00:01:19,959 --> 00:01:25,360 Speaker 1: The most obvious of those is something that's been discussed 22 00:01:25,560 --> 00:01:27,640 Speaker 1: quite a bit over the last few years, which is 23 00:01:28,480 --> 00:01:36,080 Speaker 1: that monetizing via digital ads means that you are going 24 00:01:36,160 --> 00:01:42,520 Speaker 1: to encourage platforms to collect more and more data about people, 25 00:01:43,800 --> 00:01:49,040 Speaker 1: and this creates a much more intrusive, lower privacy, and 26 00:01:49,080 --> 00:01:52,120 Speaker 1: potentially distorted sort of system. 27 00:01:52,600 --> 00:01:52,880 Speaker 3: Right. 28 00:01:53,400 --> 00:01:57,520 Speaker 1: The second, perhaps corollary or separate thing which has started 29 00:01:57,560 --> 00:02:02,760 Speaker 1: Reach receiving more attention, is that this also means you 30 00:02:02,840 --> 00:02:06,240 Speaker 1: want to make sure that the eyeballs are glued to 31 00:02:06,280 --> 00:02:09,440 Speaker 1: the screen, which your large screen, small screen, and that 32 00:02:09,840 --> 00:02:13,080 Speaker 1: itself might generate a lot of other problems, including perhaps 33 00:02:13,080 --> 00:02:16,280 Speaker 1: mental health problems, because you try to get people to 34 00:02:16,360 --> 00:02:23,680 Speaker 1: stay on the platform by inducing strong emotions envy, jealousy, anger, outrage, 35 00:02:23,680 --> 00:02:27,320 Speaker 1: and so on and sort of it creates a very 36 00:02:27,320 --> 00:02:30,400 Speaker 1: different type of social environment than we are used to, 37 00:02:30,480 --> 00:02:34,640 Speaker 1: with widespread negative consequences. But I think the one that 38 00:02:34,680 --> 00:02:40,520 Speaker 1: I'm most worried about is that this reduces competition. It 39 00:02:40,600 --> 00:02:45,280 Speaker 1: is impossible today for any service by a newcomer to 40 00:02:45,360 --> 00:02:48,080 Speaker 1: come in and say, Okay, you're going to get this 41 00:02:48,240 --> 00:02:52,200 Speaker 1: from Google, Facebook, Instagram for free, and I'm going to 42 00:02:52,400 --> 00:02:57,040 Speaker 1: provide higher quality content for which you have to pay 43 00:02:57,280 --> 00:03:02,960 Speaker 1: a subscription fee or something else. Especially difficult because newcomers 44 00:03:02,960 --> 00:03:04,440 Speaker 1: are not going to have the network. There's going to 45 00:03:04,440 --> 00:03:08,400 Speaker 1: be uncertainty about their quality. So it really cements the 46 00:03:08,480 --> 00:03:12,280 Speaker 1: system where everything is going to be monetized via digital ads, 47 00:03:12,560 --> 00:03:16,560 Speaker 1: and that's going to discourage the entry of new products, 48 00:03:16,639 --> 00:03:20,800 Speaker 1: new services, and especially new technologies. For example, everybody worries 49 00:03:20,840 --> 00:03:24,120 Speaker 1: about what social media and other online platforms and AI 50 00:03:24,520 --> 00:03:30,240 Speaker 1: implies will imply for democracy. Well, something that actually creates 51 00:03:30,280 --> 00:03:37,040 Speaker 1: more pro democratic conversations, higher quality content, that's going to 52 00:03:37,040 --> 00:03:38,840 Speaker 1: be very difficult to get off the ground today. 53 00:03:40,160 --> 00:03:44,880 Speaker 2: Right, So how does this tax actually change the incentive though? 54 00:03:45,880 --> 00:03:48,280 Speaker 1: Well, I think the main way in which it changes 55 00:03:48,320 --> 00:03:55,520 Speaker 1: the incentives is that it makes it possibly more likely 56 00:03:56,400 --> 00:04:00,160 Speaker 1: that both existing platforms and new platforms will now say, 57 00:04:00,440 --> 00:04:03,480 Speaker 1: let me experiment with new products that are higher quality 58 00:04:03,840 --> 00:04:07,880 Speaker 1: for which I can build a clientele via subscription fees 59 00:04:07,960 --> 00:04:10,920 Speaker 1: or other things. Because if I get one hundred million 60 00:04:10,960 --> 00:04:14,080 Speaker 1: dollars via digital ads, half of it is gonna go away. 61 00:04:14,400 --> 00:04:16,680 Speaker 1: If I can get that money for I have subscription fees, 62 00:04:17,120 --> 00:04:19,919 Speaker 1: that's good. It's no longer so inferior to doing it 63 00:04:20,000 --> 00:04:20,880 Speaker 1: via digital ads. 64 00:04:21,600 --> 00:04:24,760 Speaker 2: But I think one of the things that concerns me 65 00:04:24,800 --> 00:04:26,280 Speaker 2: with it, or maybe it's less of a concern and 66 00:04:26,360 --> 00:04:30,480 Speaker 2: more just the after effect will be is the people 67 00:04:30,520 --> 00:04:32,440 Speaker 2: are used to not paying for social media. 68 00:04:33,080 --> 00:04:35,000 Speaker 1: That's why this needs to be high. You know, if 69 00:04:35,040 --> 00:04:37,560 Speaker 1: this was a ten percent tax, it wouldn't make so 70 00:04:37,640 --> 00:04:40,360 Speaker 1: much of a difference. So in some sense, when I 71 00:04:40,440 --> 00:04:46,400 Speaker 1: mentioned ecosystem, I was intending to imply by that both 72 00:04:46,839 --> 00:04:50,720 Speaker 1: what the offering side the platforms are doing and what 73 00:04:50,760 --> 00:04:56,320 Speaker 1: the consumers are expecting. So there's a synergistic relationship between users, consumers, 74 00:04:56,360 --> 00:04:59,200 Speaker 1: and the firms, and you want to change that relationship. Again, 75 00:04:59,400 --> 00:05:01,200 Speaker 1: you wouldn't want to do it if the market system 76 00:05:01,279 --> 00:05:04,240 Speaker 1: was working perfectly and everything was hanky dory, but I 77 00:05:04,279 --> 00:05:06,240 Speaker 1: think there's a lot of evidence that's not the case 78 00:05:06,279 --> 00:05:06,799 Speaker 1: at the moment. 79 00:05:07,320 --> 00:05:10,159 Speaker 2: So and the incentives would be that they just can't 80 00:05:10,240 --> 00:05:12,880 Speaker 2: make that much money off of digital ads, so they 81 00:05:12,880 --> 00:05:16,520 Speaker 2: will have to find new business lines. But could this 82 00:05:16,760 --> 00:05:20,200 Speaker 2: not potentially kill off the idea of the free social network. 83 00:05:20,680 --> 00:05:24,320 Speaker 1: Well, first of all, I think that idea has become excessive. 84 00:05:24,400 --> 00:05:28,320 Speaker 1: If we scale it back, it wouldn't be so bad. 85 00:05:29,560 --> 00:05:33,160 Speaker 1: And in some sense, I think the purpose is to 86 00:05:33,240 --> 00:05:38,799 Speaker 1: scale it back because once everybody expects everything for free, 87 00:05:39,520 --> 00:05:41,719 Speaker 1: that does create a race to the bottom in terms 88 00:05:41,760 --> 00:05:44,320 Speaker 1: of quality, in terms of data protection, in terms of 89 00:05:44,640 --> 00:05:48,880 Speaker 1: you know, new technologies that you know, will actually change 90 00:05:48,880 --> 00:05:52,480 Speaker 1: the face of the kinds of offerings that we get right. 91 00:05:52,640 --> 00:05:55,920 Speaker 2: And it's I remember in the past, we've had companies 92 00:05:56,040 --> 00:05:58,560 Speaker 2: try paid social networks and it just hasn't worked. 93 00:05:59,240 --> 00:06:02,040 Speaker 1: Well. It didn't work because they were up against free 94 00:06:02,080 --> 00:06:07,200 Speaker 1: social networks digitized so it monetized via digital ads, especially 95 00:06:07,279 --> 00:06:09,760 Speaker 1: at a time when people didn't understand what the costs 96 00:06:09,800 --> 00:06:11,840 Speaker 1: of these things were. You know, I think even today 97 00:06:14,200 --> 00:06:18,960 Speaker 1: there are consumers who do not fully recognize the amount 98 00:06:18,960 --> 00:06:22,800 Speaker 1: of data that's being collected about them. So if you 99 00:06:22,920 --> 00:06:25,920 Speaker 1: go back ten years ago, I think both the sort 100 00:06:25,960 --> 00:06:31,760 Speaker 1: of addictive or quasi addictive nature of social media, the 101 00:06:32,279 --> 00:06:35,039 Speaker 1: extensive data collection, and how that data can be used 102 00:06:35,040 --> 00:06:38,159 Speaker 1: both you know, to guide you towards certain products, perhaps 103 00:06:38,200 --> 00:06:42,000 Speaker 1: to behaviorally manipulate you, or perhaps to charge you higher prices. 104 00:06:42,200 --> 00:06:44,840 Speaker 1: All of these things were not completely understood. 105 00:06:45,560 --> 00:06:48,080 Speaker 3: And I think I gain what you mean. 106 00:06:48,160 --> 00:06:52,840 Speaker 2: It's like the latest stage model of Instagram and Facebook 107 00:06:53,200 --> 00:06:56,880 Speaker 2: is so different because when everything's free, you don't really 108 00:06:56,920 --> 00:07:00,240 Speaker 2: have a mechanism to control the customer other than just 109 00:07:00,680 --> 00:07:02,400 Speaker 2: tricking them just continually. 110 00:07:03,000 --> 00:07:06,920 Speaker 1: I mean, I'm not gonna trick is probably wrong. There 111 00:07:06,960 --> 00:07:09,920 Speaker 1: is tricking. There is tricking, it's not everything. So you know, 112 00:07:09,960 --> 00:07:14,280 Speaker 1: when you get an AD, it's useful, you're finding out 113 00:07:14,280 --> 00:07:19,480 Speaker 1: about products. But what is the trade off between how 114 00:07:19,560 --> 00:07:22,320 Speaker 1: much of your private data you want other people to 115 00:07:22,360 --> 00:07:26,120 Speaker 1: have access to versus getting some of those products? And second, 116 00:07:26,160 --> 00:07:30,560 Speaker 1: once people wants platforms have access to that data, what 117 00:07:30,720 --> 00:07:33,920 Speaker 1: is there to stop them from offering some of the 118 00:07:34,080 --> 00:07:38,320 Speaker 1: manipulative products as well as some of the useful products. 119 00:07:48,840 --> 00:07:52,320 Speaker 2: So perhaps the biggest thing, because I just while prepping 120 00:07:52,360 --> 00:07:55,000 Speaker 2: for this episode, I went and did some math, and 121 00:07:55,120 --> 00:07:57,680 Speaker 2: what you're suggesting would kill Meta. Now I'm not saying 122 00:07:57,680 --> 00:08:00,160 Speaker 2: that you should. You're suggesting you should kill Meta. I'm 123 00:08:00,200 --> 00:08:03,320 Speaker 2: just saying that metas for the last four quarters their 124 00:08:03,360 --> 00:08:06,960 Speaker 2: net income was fifty one point three five billion, offer 125 00:08:07,200 --> 00:08:10,920 Speaker 2: one hundred and thirty billion dollars worth of revenue. So 126 00:08:11,720 --> 00:08:13,760 Speaker 2: this would make their business model untenable. 127 00:08:13,920 --> 00:08:15,000 Speaker 3: Is that well? 128 00:08:15,040 --> 00:08:16,880 Speaker 1: First of all, no, I mean, you know, instead of 129 00:08:17,680 --> 00:08:20,960 Speaker 1: fifty five billion, if they make you know, thirty billion, 130 00:08:21,640 --> 00:08:23,200 Speaker 1: it's not the end of the world. I would be 131 00:08:23,280 --> 00:08:26,160 Speaker 1: happy to have a company that is worth thirty billion. 132 00:08:26,600 --> 00:08:27,080 Speaker 3: As would I. 133 00:08:27,600 --> 00:08:30,800 Speaker 1: But the hope is that they would also then offer 134 00:08:31,800 --> 00:08:36,080 Speaker 1: products and services that are higher quality, that are subscription based. 135 00:08:36,679 --> 00:08:40,120 Speaker 1: You know, we know people still you know, pay for 136 00:08:40,240 --> 00:08:45,520 Speaker 1: certain things, although less like Netflix. Netflix is also now 137 00:08:45,559 --> 00:08:50,800 Speaker 1: being sort of being forced to move more in that direction. 138 00:08:51,920 --> 00:08:56,480 Speaker 1: You know, is there a world in which higher quality 139 00:08:56,520 --> 00:09:00,920 Speaker 1: Netflix for which some people pay is viable, where whereas 140 00:09:01,000 --> 00:09:04,640 Speaker 1: you know, some lower quality one financed via you know, 141 00:09:04,720 --> 00:09:08,000 Speaker 1: monetized via ads also coexists. I think those are questions, 142 00:09:08,040 --> 00:09:10,480 Speaker 1: and I think it sort of opens up the market 143 00:09:10,520 --> 00:09:14,400 Speaker 1: system to different, different sort of forces. So if there 144 00:09:14,480 --> 00:09:17,200 Speaker 1: is a paid What's Up that has better security features 145 00:09:17,600 --> 00:09:22,880 Speaker 1: and you don't get these completely unexpected annoying things that 146 00:09:23,000 --> 00:09:26,400 Speaker 1: have started popping up in What's Up, perhaps that's attractive 147 00:09:26,400 --> 00:09:28,200 Speaker 1: and some people will be happy to pay ten dollars 148 00:09:28,559 --> 00:09:29,240 Speaker 1: a year for that. 149 00:09:29,920 --> 00:09:32,000 Speaker 2: Kind of feels like the advertising model is a lazy 150 00:09:32,000 --> 00:09:35,000 Speaker 2: man's business as well, because it doesn't incentivize you to 151 00:09:35,000 --> 00:09:38,840 Speaker 2: make a better product. To exactly, a device is a monopoly, right. 152 00:09:38,720 --> 00:09:41,160 Speaker 1: And why, you know, how did I arrive to this idea? 153 00:09:41,760 --> 00:09:46,120 Speaker 1: My stick for the last you know, two decades at least, 154 00:09:46,440 --> 00:09:50,640 Speaker 1: and especially with regards to AI and the digital technologies, 155 00:09:51,679 --> 00:09:57,480 Speaker 1: is these technologies are extremely malleable. We can develop them 156 00:09:57,480 --> 00:10:03,640 Speaker 1: in different ways. We can have higher quality technologies that 157 00:10:03,679 --> 00:10:07,480 Speaker 1: increase worker productivity, or we can have rot automation lazy automation. 158 00:10:08,600 --> 00:10:13,040 Speaker 1: You can have addictive social media that makes you go 159 00:10:13,120 --> 00:10:18,640 Speaker 1: into your cocoon and you become uninterested in forming bridges 160 00:10:18,720 --> 00:10:22,000 Speaker 1: and engaging in democratic citizenry. Or we can have platforms 161 00:10:22,040 --> 00:10:26,360 Speaker 1: that actually encourage different types of communications and the active 162 00:10:26,400 --> 00:10:29,920 Speaker 1: citizenry that democracy requires. Which ones of those will be? 163 00:10:30,360 --> 00:10:33,600 Speaker 1: And I think since we have gone more and more 164 00:10:33,600 --> 00:10:38,640 Speaker 1: in the automation way and the lay in the sort 165 00:10:38,640 --> 00:10:45,280 Speaker 1: of toxic environment of social media, a change requires new products, 166 00:10:45,360 --> 00:10:50,400 Speaker 1: new technologies, and that means a more open system. So 167 00:10:50,440 --> 00:10:54,880 Speaker 1: the way that I sort of started sort of coming 168 00:10:54,880 --> 00:10:58,720 Speaker 1: towards this idea was, well, what's the barrier to this? Well, 169 00:10:58,760 --> 00:11:01,720 Speaker 1: the fact that there are a few big tech companies 170 00:11:01,720 --> 00:11:05,600 Speaker 1: that can acquire competitors as a barrier, but the fact 171 00:11:05,679 --> 00:11:11,720 Speaker 1: that even if they don't acquire you, they pigeonhole you 172 00:11:11,800 --> 00:11:14,400 Speaker 1: into the same ecosystem in which they exist. And I 173 00:11:14,400 --> 00:11:15,640 Speaker 1: think that's a big problem. 174 00:11:16,120 --> 00:11:18,160 Speaker 2: How do you mean they pigeonhole you even if they 175 00:11:18,160 --> 00:11:20,319 Speaker 2: haven't acquired you as a user, Because. 176 00:11:20,040 --> 00:11:21,920 Speaker 1: To compete against them, you need to also offer your 177 00:11:21,960 --> 00:11:24,240 Speaker 1: products for free, which means the only thing you can 178 00:11:24,280 --> 00:11:27,160 Speaker 1: do is for digital advertising. If you need quality data, 179 00:11:27,240 --> 00:11:28,840 Speaker 1: you can't afford it, You're not going to have an 180 00:11:28,880 --> 00:11:32,960 Speaker 1: incentive to get it. If you need high quality, niche products, 181 00:11:33,040 --> 00:11:35,800 Speaker 1: you know nobody's going to buy them because everybody is 182 00:11:35,920 --> 00:11:37,880 Speaker 1: used to this free free v's and. 183 00:11:38,360 --> 00:11:43,360 Speaker 3: Everything, right, So it creates a kind of h yeah, 184 00:11:43,480 --> 00:11:45,520 Speaker 3: RaSE the bottom. But also just there's no way to 185 00:11:45,600 --> 00:11:47,280 Speaker 3: there's no reason they would have. 186 00:11:47,240 --> 00:11:49,760 Speaker 2: To compete, like you couldn't compete as they We haven't 187 00:11:49,800 --> 00:11:52,880 Speaker 2: really seen any new social networks in years other than 188 00:11:53,000 --> 00:11:56,680 Speaker 2: Blue Sky and Threads. And Threads is a part of 189 00:11:57,360 --> 00:11:59,839 Speaker 2: a part of the Facebook machine. 190 00:11:59,320 --> 00:12:01,800 Speaker 1: And we have seen talk about TikTok is just a 191 00:12:01,800 --> 00:12:06,120 Speaker 1: amplification of the same business model, same monetization system, same 192 00:12:06,160 --> 00:12:10,280 Speaker 1: sort of weaknesses being exploited as Instagram, Facebook. 193 00:12:09,920 --> 00:12:13,000 Speaker 2: And they burned, and they burned billions and billions of 194 00:12:13,040 --> 00:12:15,440 Speaker 2: dollars to get there. It wasn't like that. People try 195 00:12:15,480 --> 00:12:17,560 Speaker 2: and I don't know why people would possibly think this, 196 00:12:17,600 --> 00:12:20,600 Speaker 2: but they frame Byte Dance some plucky upstart versus just 197 00:12:21,200 --> 00:12:23,400 Speaker 2: a massively funded Chinese juggernaut. 198 00:12:23,559 --> 00:12:26,439 Speaker 1: Actually much is why I actually use the word ecosystem 199 00:12:26,480 --> 00:12:35,480 Speaker 1: because this model itself is highly synergistic with companies growing 200 00:12:35,600 --> 00:12:40,000 Speaker 1: very fast. And why do they grow very fast Because 201 00:12:40,000 --> 00:12:42,880 Speaker 1: they want market share, they want to dominate the market. 202 00:12:42,920 --> 00:12:45,560 Speaker 1: But I also want data and how is that possible? 203 00:12:45,600 --> 00:12:49,920 Speaker 1: How can you grow so fast? Well, you get venture 204 00:12:49,960 --> 00:12:53,079 Speaker 1: capital or Microsoft to bankroll you, as in the case 205 00:12:53,120 --> 00:12:56,000 Speaker 1: of open ai, So you burn through a lot of 206 00:12:57,160 --> 00:12:59,920 Speaker 1: cash early on in order to get data dominance and 207 00:13:00,040 --> 00:13:03,120 Speaker 1: market dominance. And again it's not a pro competitive picture 208 00:13:03,160 --> 00:13:04,080 Speaker 1: that's emerging here. 209 00:13:04,960 --> 00:13:09,200 Speaker 2: I feel like General VII is something separate because with 210 00:13:09,320 --> 00:13:11,640 Speaker 2: that they well they don't have a business model yet, 211 00:13:11,800 --> 00:13:12,280 Speaker 2: they do not. 212 00:13:12,240 --> 00:13:14,680 Speaker 1: Have a business model. But you know what that does, 213 00:13:14,960 --> 00:13:18,200 Speaker 1: It makes it even more likely that we're gonna just 214 00:13:18,280 --> 00:13:21,840 Speaker 1: repeat the same sins of earlier social media. Look at 215 00:13:21,840 --> 00:13:23,880 Speaker 1: what is open ai doing. It's burning through a lot 216 00:13:23,920 --> 00:13:26,960 Speaker 1: of cash in order to acquire market share and data. 217 00:13:27,559 --> 00:13:31,600 Speaker 1: It's not monetizing through anything. And I think the most 218 00:13:31,679 --> 00:13:34,720 Speaker 1: likely cash cow ideas that are coming up we're going 219 00:13:34,800 --> 00:13:37,280 Speaker 1: to use generative AI for Internet search and we're gonna 220 00:13:37,280 --> 00:13:40,320 Speaker 1: take over the digital ad revenues. Well, that's more of 221 00:13:40,360 --> 00:13:40,960 Speaker 1: the same. 222 00:13:41,360 --> 00:13:43,880 Speaker 3: And I don't different conversation. 223 00:13:43,960 --> 00:13:46,600 Speaker 2: I don't think that'll work, but it's Nevertheless, I can 224 00:13:46,640 --> 00:13:47,439 Speaker 2: see the idea. 225 00:13:47,880 --> 00:13:50,400 Speaker 3: It's funny, these incentives really have it. 226 00:13:50,640 --> 00:13:52,600 Speaker 2: I've never really thought about it before this conversation, but 227 00:13:52,880 --> 00:13:55,400 Speaker 2: it feels like digital advertising really did harm the tech 228 00:13:55,440 --> 00:13:59,440 Speaker 2: industry in that they found something very profitable that got 229 00:13:59,480 --> 00:14:03,240 Speaker 2: more profit ple without making the user's life better at all. 230 00:14:04,120 --> 00:14:07,160 Speaker 1: Well, Larry Page and say Gay Brinn, when they first 231 00:14:07,200 --> 00:14:10,640 Speaker 1: formed their company, said we don't want ads. That's not 232 00:14:10,760 --> 00:14:11,640 Speaker 1: like a good model. 233 00:14:11,960 --> 00:14:14,760 Speaker 3: Yeah, it's empathetical to a search problem. 234 00:14:14,760 --> 00:14:17,280 Speaker 1: At the moment, somebody came and gave them venture capital 235 00:14:17,280 --> 00:14:20,160 Speaker 1: money and said, but we do it so that you 236 00:14:20,160 --> 00:14:22,680 Speaker 1: can actually the lads. 237 00:14:22,760 --> 00:14:24,720 Speaker 3: Yes, what if you were super rich. 238 00:14:25,080 --> 00:14:27,240 Speaker 2: But it doesn't sound like this would kill the digital 239 00:14:27,280 --> 00:14:28,840 Speaker 2: ads industry, because if. 240 00:14:28,960 --> 00:14:30,960 Speaker 1: I don't think we should kill it either. I mean 241 00:14:31,000 --> 00:14:35,000 Speaker 1: I think again, if we created a monolith, a monoculture, 242 00:14:35,040 --> 00:14:40,760 Speaker 1: that wouldn't be good. If everything was on online, everything 243 00:14:40,880 --> 00:14:43,760 Speaker 1: was based on subscription, that wouldn't be a good model either. 244 00:14:44,360 --> 00:14:49,320 Speaker 2: So you want a variety, but so well is more 245 00:14:49,360 --> 00:14:52,120 Speaker 2: operational level. I'm guessing that this would also have to 246 00:14:52,160 --> 00:14:56,760 Speaker 2: have some way of cutting through things like if people 247 00:14:56,800 --> 00:14:59,240 Speaker 2: set up subsidiaries to try and pass off the tax 248 00:14:59,280 --> 00:15:01,040 Speaker 2: as well. You would have to make sure that there 249 00:15:01,120 --> 00:15:03,479 Speaker 2: was a way around. 250 00:15:02,720 --> 00:15:06,240 Speaker 1: You know. That's why this is not a sort of 251 00:15:06,280 --> 00:15:09,120 Speaker 1: a graduated tax that is easier to gain. But if 252 00:15:09,200 --> 00:15:11,400 Speaker 1: you know five hundred million, you know it's like a 253 00:15:11,480 --> 00:15:14,440 Speaker 1: very small amount of money. So you just set a 254 00:15:14,520 --> 00:15:17,880 Speaker 1: minimum like that, perhaps a little bit more so that 255 00:15:17,880 --> 00:15:20,480 Speaker 1: the really small companies are not burdened by it. We 256 00:15:20,520 --> 00:15:23,720 Speaker 1: know one problem, for example, with the European GDPR is 257 00:15:23,760 --> 00:15:27,240 Speaker 1: that once you put a regulation like that, the burden 258 00:15:27,360 --> 00:15:29,840 Speaker 1: is heavier on smaller companies, and so it actually it's 259 00:15:29,840 --> 00:15:32,280 Speaker 1: a competitive advantage for the large platforms that you don't 260 00:15:32,280 --> 00:15:32,800 Speaker 1: want to do that. 261 00:15:33,400 --> 00:15:36,680 Speaker 2: But I think five hundred million would actually that would 262 00:15:36,720 --> 00:15:40,120 Speaker 2: make a very healthy market for smaller companies. 263 00:15:39,960 --> 00:15:42,440 Speaker 1: Which is great. We want more smaller companies as well. 264 00:15:42,840 --> 00:15:45,600 Speaker 2: But wouldn't I think that this would help with the 265 00:15:45,600 --> 00:15:48,480 Speaker 2: problem a great deal. But don't we also need something 266 00:15:48,480 --> 00:15:51,800 Speaker 2: to do with the algorithms themselves. Because I feel you 267 00:15:51,800 --> 00:15:54,400 Speaker 2: could do this and it would solve some problems. It 268 00:15:54,440 --> 00:15:57,880 Speaker 2: would begin incentivizing them in the right direction. Theoretically, yeah, 269 00:15:57,920 --> 00:16:00,720 Speaker 2: but you still have this problem of they wouldn't stop algorithm. 270 00:16:00,760 --> 00:16:05,400 Speaker 2: In fact, this might encourage them to be more algorithmically. 271 00:16:03,640 --> 00:16:05,960 Speaker 1: Absolutely, and that's why I don't think this is a 272 00:16:05,960 --> 00:16:12,640 Speaker 1: silver bullet, you know it. You need a range of policies. 273 00:16:13,440 --> 00:16:17,880 Speaker 1: But the hope is that at least such a policy 274 00:16:17,960 --> 00:16:23,000 Speaker 1: would create some push towards some platforms and products to 275 00:16:23,040 --> 00:16:26,160 Speaker 1: have better quality algorithms that don't trap you like that. 276 00:16:26,640 --> 00:16:29,960 Speaker 1: But for example, if we're talking about social media, we 277 00:16:29,960 --> 00:16:33,800 Speaker 1: should also be talking about repeal or relaxation of Section 278 00:16:33,880 --> 00:16:39,000 Speaker 1: two thirty of the Digital Acts, so that you know, 279 00:16:39,640 --> 00:16:44,960 Speaker 1: companies that algorithmically boost content cannot then say, well, you know, 280 00:16:45,000 --> 00:16:47,240 Speaker 1: this is not our speech, this is somebody else's thing 281 00:16:47,400 --> 00:16:49,400 Speaker 1: that we have nothing to do with it. So there 282 00:16:49,440 --> 00:16:51,760 Speaker 1: are some details there that we have to think about. 283 00:16:51,800 --> 00:16:54,760 Speaker 1: And I think Section two thirty, which was written in 284 00:16:54,800 --> 00:16:57,960 Speaker 1: a different age in the nineteen nineties, is definitely not 285 00:16:58,480 --> 00:17:01,360 Speaker 1: up for dealing with issues algorithmic boosty. 286 00:17:01,480 --> 00:17:04,480 Speaker 2: And debating Section two thirty a side, because that is 287 00:17:04,520 --> 00:17:08,240 Speaker 2: also a separate conversation. It does feel like we have 288 00:17:08,440 --> 00:17:11,879 Speaker 2: just kind of not given tech companies much responsibility for 289 00:17:11,920 --> 00:17:12,440 Speaker 2: what they're doing. 290 00:17:12,680 --> 00:17:16,520 Speaker 1: No exactly, just that's the main reason why I want 291 00:17:16,520 --> 00:17:19,480 Speaker 1: to have a conversation about Section two thirty because it 292 00:17:19,520 --> 00:17:25,000 Speaker 1: can't be optimal that that corporations that are arguably the 293 00:17:25,080 --> 00:17:27,840 Speaker 1: largest and the most powerful humanity has ever seen can 294 00:17:27,880 --> 00:17:30,160 Speaker 1: then wash off their hands and say we're not responsible 295 00:17:30,200 --> 00:17:32,119 Speaker 1: for anything that happens on our platforms. 296 00:17:32,680 --> 00:17:36,679 Speaker 2: Yeah, it feels with two thirty and I am not 297 00:17:36,760 --> 00:17:38,480 Speaker 2: as well read as I should be about it, but 298 00:17:39,000 --> 00:17:42,200 Speaker 2: it feels as if that responsibility side is the real 299 00:17:42,359 --> 00:17:45,560 Speaker 2: niggling issue but also the most thorny because on some 300 00:17:45,720 --> 00:17:49,119 Speaker 2: level it makes sense with social media platforms that they 301 00:17:49,160 --> 00:17:52,040 Speaker 2: should be able to say we're not responsible for all 302 00:17:52,080 --> 00:17:54,760 Speaker 2: the posts, and if they had to be, they will. 303 00:17:54,760 --> 00:17:58,560 Speaker 1: Absolutely And look, I think free speeches of major issue. 304 00:17:59,080 --> 00:18:02,280 Speaker 1: I am worried about erosion of free speech, but you know, 305 00:18:02,760 --> 00:18:05,600 Speaker 1: I'm also not like a one hundred percent free speech absolutist. 306 00:18:05,680 --> 00:18:07,160 Speaker 1: I think we have to balance it, and the way 307 00:18:07,160 --> 00:18:09,880 Speaker 1: that I would suggest as is again, so now we're 308 00:18:09,920 --> 00:18:14,240 Speaker 1: changing topic a little bit. Second two thirty is, you know, 309 00:18:14,320 --> 00:18:17,800 Speaker 1: subject to whatever legal requirements there are on you know, 310 00:18:19,320 --> 00:18:24,040 Speaker 1: abusive content, et cetera. If you post something on Instagram 311 00:18:24,160 --> 00:18:30,080 Speaker 1: or Facebook and the company doesn't algorithmically promote it, then. 312 00:18:30,720 --> 00:18:31,920 Speaker 3: It's completely right. 313 00:18:33,040 --> 00:18:36,560 Speaker 1: It's there. It's my speech. If my friends find out 314 00:18:36,600 --> 00:18:38,680 Speaker 1: about it, they can go and look at it. If 315 00:18:38,680 --> 00:18:42,720 Speaker 1: somebody stumbles on it, that's fine. But algorithmic boosting is 316 00:18:42,760 --> 00:18:45,320 Speaker 1: like New York Times putting you on their front page. 317 00:18:45,560 --> 00:18:47,520 Speaker 1: We can't say New York Times is putting you on 318 00:18:47,560 --> 00:18:49,280 Speaker 1: your front page, and you can say all sorts of 319 00:18:49,600 --> 00:18:52,600 Speaker 1: lies and crazy things, and that's just freedom of wealth. 320 00:18:53,560 --> 00:18:55,600 Speaker 3: Yeah, okay, yeah, now I know what you mean. 321 00:18:55,480 --> 00:19:00,960 Speaker 1: Though, if you have a more more preferred newspaper that example. 322 00:19:00,640 --> 00:19:02,520 Speaker 2: No, no, no, but I know what you mean. It almost, 323 00:19:02,680 --> 00:19:04,960 Speaker 2: and it seems like the problem is that you're saying 324 00:19:05,040 --> 00:19:06,960 Speaker 2: is it isn't two thirty itself. It's the fact that 325 00:19:07,000 --> 00:19:10,320 Speaker 2: the algorithms boost yeah, these particular things. 326 00:19:10,920 --> 00:19:13,720 Speaker 1: Thirty was fine for the age it was written where 327 00:19:13,960 --> 00:19:18,520 Speaker 1: nobody could could have understood the onslaught of algorithmic boosting 328 00:19:18,560 --> 00:19:20,400 Speaker 1: promotion and manipulation that would come. 329 00:19:20,800 --> 00:19:23,240 Speaker 2: And it feels like it's an incentive problem that we 330 00:19:23,400 --> 00:19:28,800 Speaker 2: just it's almost that platforms should either move away from 331 00:19:28,800 --> 00:19:32,480 Speaker 2: the algorithm model, because if you because the amendments section 332 00:19:32,520 --> 00:19:34,280 Speaker 2: two thirty that just says it should go away kind 333 00:19:34,320 --> 00:19:36,280 Speaker 2: of doesn't sit right with me. I don't think you should. 334 00:19:36,480 --> 00:19:39,480 Speaker 2: It would make platforms like WordPress impossible to use, or 335 00:19:39,520 --> 00:19:42,440 Speaker 2: like blogging platforms, but the idea of what they promote 336 00:19:42,480 --> 00:19:43,400 Speaker 2: being more intentional. 337 00:19:43,520 --> 00:19:46,760 Speaker 1: Absolutely that I actually reallyze this rule that I suggested 338 00:19:46,920 --> 00:19:52,240 Speaker 1: completely protects WordPress. WordPress doesn't promote, right, So this sort 339 00:19:52,280 --> 00:19:55,440 Speaker 1: of reformed two thirty is completely fine in that respect. 340 00:19:55,720 --> 00:19:58,439 Speaker 2: So as far as this fifty percent tax, do we 341 00:19:58,480 --> 00:20:00,919 Speaker 2: have any kind of historical press to something like this 342 00:20:01,040 --> 00:20:01,480 Speaker 2: being done? 343 00:20:02,560 --> 00:20:07,240 Speaker 1: And that's why, you know, am I sure fifty percent 344 00:20:07,280 --> 00:20:10,480 Speaker 1: is the right level? Absolutely not per thirty. 345 00:20:11,119 --> 00:20:12,840 Speaker 3: But I think fifty is great. 346 00:20:13,880 --> 00:20:14,159 Speaker 1: Thank you. 347 00:20:14,640 --> 00:20:16,960 Speaker 2: Well, Because the thing is, the way I look at 348 00:20:17,000 --> 00:20:21,040 Speaker 2: it is these companies are so adept to avoiding responsibility, 349 00:20:21,600 --> 00:20:24,959 Speaker 2: and they're so unwilling to change their ways and so 350 00:20:25,280 --> 00:20:28,919 Speaker 2: unwilling to be responsible with what they're doing, that it 351 00:20:28,960 --> 00:20:30,480 Speaker 2: needs to be like this. And I'm sure that if 352 00:20:30,480 --> 00:20:33,320 Speaker 2: this actually got anywhere near a government, they would have 353 00:20:33,480 --> 00:20:34,879 Speaker 2: the world's biggest tantrum. 354 00:20:35,359 --> 00:20:37,720 Speaker 3: But I feel like we need stuff. 355 00:20:38,119 --> 00:20:41,280 Speaker 1: It needs to be a shock to the system, absolutely. 356 00:20:41,080 --> 00:20:44,480 Speaker 2: And I think that well, actually maybe that's the question. 357 00:20:44,640 --> 00:20:48,560 Speaker 2: How practical would this be to actually implement? 358 00:20:49,240 --> 00:20:50,919 Speaker 1: Well, Well, it depends on what you mean by that. 359 00:20:51,840 --> 00:20:54,639 Speaker 2: Well, I mean, how how hard would it be to 360 00:20:54,760 --> 00:20:58,440 Speaker 2: get to get this actually into existence with the government 361 00:20:58,520 --> 00:20:59,520 Speaker 2: able to levy that tax. 362 00:21:00,200 --> 00:21:02,800 Speaker 1: It would be extremely hard because of the lobbying, as 363 00:21:02,800 --> 00:21:05,399 Speaker 1: you pointed out, But if there was agreement, if the 364 00:21:05,520 --> 00:21:08,600 Speaker 1: Chinese government wanted to do it right, they could do 365 00:21:08,600 --> 00:21:12,600 Speaker 1: it overnight. It's it's all out there. The digital ad 366 00:21:12,640 --> 00:21:16,359 Speaker 1: revenue is there, it's measured, you know all. And the 367 00:21:16,440 --> 00:21:20,080 Speaker 1: flat tax is very easy to implement. You could do 368 00:21:20,119 --> 00:21:26,720 Speaker 1: it at source when you know advertisers, companies pay for advertising. 369 00:21:26,720 --> 00:21:28,520 Speaker 1: You could do it in many different ways, so it's 370 00:21:28,800 --> 00:21:32,600 Speaker 1: very easy, you know. We it's a version of variety 371 00:21:32,640 --> 00:21:35,679 Speaker 1: of VAT like at volume taxes. We have them in 372 00:21:35,760 --> 00:21:39,840 Speaker 1: under much more complicated situations when there is much lower 373 00:21:39,960 --> 00:21:43,440 Speaker 1: quality data about what's going on. You know, many middle 374 00:21:43,480 --> 00:21:46,000 Speaker 1: income countries have a very complex sales tax or a 375 00:21:46,080 --> 00:21:46,840 Speaker 1: VAT tax. 376 00:21:47,200 --> 00:21:50,000 Speaker 2: Yeah, and it almost feels that you could have a 377 00:21:50,040 --> 00:21:52,800 Speaker 2: little fun with it as well. Maybe you could do 378 00:21:52,920 --> 00:21:55,119 Speaker 2: this fifty percent tax and freed it directly into some 379 00:21:55,160 --> 00:21:58,159 Speaker 2: sort of national venture fund. It would end up funding 380 00:21:58,160 --> 00:22:02,239 Speaker 2: the feure. It feels as if the as go like 381 00:22:02,440 --> 00:22:05,080 Speaker 2: on a larger scale, it feels like governments are just 382 00:22:05,880 --> 00:22:09,480 Speaker 2: twenty years behind technology. Not even putting aside even Section 383 00:22:09,520 --> 00:22:12,400 Speaker 2: two thirty. It feels like we should have an EPA 384 00:22:12,640 --> 00:22:15,119 Speaker 2: or an FDA for data. It feels like we should 385 00:22:15,119 --> 00:22:18,160 Speaker 2: have ways of Actually we don't know how these algorithms work, 386 00:22:18,160 --> 00:22:20,560 Speaker 2: and it just feels a little crazy to me. 387 00:22:21,080 --> 00:22:23,159 Speaker 1: Yeah. Absolutely, But the way I would say it is, 388 00:22:24,200 --> 00:22:27,280 Speaker 1: I'm not sure that I would say they are twenty 389 00:22:27,359 --> 00:22:29,320 Speaker 1: years behind in terms of knowledge. 390 00:22:29,359 --> 00:22:31,840 Speaker 3: I actually, oh, not knowledge, just legislation. 391 00:22:32,160 --> 00:22:37,639 Speaker 1: Legislation. Yeah. So, like a completely different but related topic 392 00:22:37,840 --> 00:22:43,400 Speaker 1: is we actually need an infrastructure for data markets, right, 393 00:22:44,359 --> 00:22:49,520 Speaker 1: so you know, I think everybody says data is going 394 00:22:49,560 --> 00:22:52,720 Speaker 1: to be one of the most important factors of production 395 00:22:52,840 --> 00:22:57,080 Speaker 1: for the future, more important than land. Imagine that I 396 00:22:57,200 --> 00:23:01,640 Speaker 1: told you that today land that is still pretty relevant 397 00:23:01,640 --> 00:23:04,000 Speaker 1: for many businesses. It's up for grabs. You can just 398 00:23:04,040 --> 00:23:06,440 Speaker 1: go and get whatever piece of land you want and 399 00:23:06,960 --> 00:23:09,560 Speaker 1: you don't have to pay for it. You know, that 400 00:23:10,000 --> 00:23:12,680 Speaker 1: tragedy of the commons is well understood from history. It 401 00:23:12,680 --> 00:23:13,640 Speaker 1: will be disastrous. 402 00:23:14,160 --> 00:23:16,000 Speaker 3: Yeah, it's just the wild West. 403 00:23:16,160 --> 00:23:20,320 Speaker 1: Yeah, it's wild West. Nobody produces high quality data, Nobody 404 00:23:20,359 --> 00:23:23,040 Speaker 1: gets compensated for the data that they have, and it 405 00:23:23,200 --> 00:23:27,400 Speaker 1: encourages you know, the monetization that model that we talked 406 00:23:27,400 --> 00:23:29,960 Speaker 1: about where you actually sweep people's data without their permission 407 00:23:30,000 --> 00:23:32,040 Speaker 1: or without their understanding, and you try to monetize it 408 00:23:32,040 --> 00:23:50,200 Speaker 1: by digital app So a complementary thing is we think 409 00:23:50,200 --> 00:23:52,359 Speaker 1: about how how is it that we can have a 410 00:23:52,440 --> 00:23:57,399 Speaker 1: system where data producers are encouraged to produce higher quality 411 00:23:57,440 --> 00:24:00,200 Speaker 1: data so that perhaps, you know, next version of a 412 00:24:00,280 --> 00:24:03,760 Speaker 1: large language model learns not from Reddit, but learns from 413 00:24:03,840 --> 00:24:06,639 Speaker 1: high quality, dominant the domain relevant expertise. 414 00:24:07,359 --> 00:24:10,639 Speaker 3: I think in that case, Hey, I think in that case. 415 00:24:10,760 --> 00:24:13,880 Speaker 2: I'm not sure I agree, just because large language models 416 00:24:13,920 --> 00:24:16,639 Speaker 2: getting higher quality data is a pro like how you 417 00:24:16,680 --> 00:24:19,280 Speaker 2: build them, would like it? Just higher quality data would 418 00:24:19,280 --> 00:24:21,359 Speaker 2: just be they still need more. But I get what 419 00:24:21,440 --> 00:24:23,760 Speaker 2: you mean that if these companies were incentivized to actually 420 00:24:23,800 --> 00:24:26,159 Speaker 2: have good data and provide good services with the data, 421 00:24:26,480 --> 00:24:28,959 Speaker 2: that would be better. Because that's the thing I'm not. 422 00:24:29,080 --> 00:24:32,320 Speaker 2: I don't love digital targeting. I don't love any of it. 423 00:24:32,400 --> 00:24:35,120 Speaker 2: But man, if they have all this data, why are 424 00:24:35,119 --> 00:24:38,160 Speaker 2: all their services so impersonal? They don't feel like they're 425 00:24:38,200 --> 00:24:38,960 Speaker 2: for us? 426 00:24:39,280 --> 00:24:41,360 Speaker 1: And why does Microsoft word always crash? Yes? 427 00:24:41,400 --> 00:24:45,240 Speaker 2: I know that, but that one, that one's it doesn't matter. 428 00:24:45,400 --> 00:24:48,840 Speaker 2: They have the dot doc and dot doc x model. 429 00:24:48,960 --> 00:24:52,280 Speaker 2: They have a tiny little kind of monopoly now though 430 00:24:52,280 --> 00:24:54,680 Speaker 2: they were various sense trust actions have to change. 431 00:24:54,880 --> 00:24:57,200 Speaker 1: Let me actually, let me actually talk push back a 432 00:24:57,240 --> 00:25:00,920 Speaker 1: little bit on generative AI. Okay, because I think your 433 00:25:01,000 --> 00:25:05,760 Speaker 1: statement makes sense. If you buy in that generative AI 434 00:25:06,200 --> 00:25:13,200 Speaker 1: is most productively developed in the form of general purpose 435 00:25:13,320 --> 00:25:19,879 Speaker 1: human like chatbots, they will need like huge amount of 436 00:25:19,960 --> 00:25:22,720 Speaker 1: data because next word prediction is very very inefficient and 437 00:25:22,800 --> 00:25:26,919 Speaker 1: you need to imitate humans and variety of circumstances. But 438 00:25:27,000 --> 00:25:30,040 Speaker 1: imagine that we use generative to AI in a very 439 00:25:30,040 --> 00:25:34,520 Speaker 1: domain specific way. You know, I want to know what 440 00:25:35,240 --> 00:25:40,240 Speaker 1: drug creates, what side effects in conjunction with other drugs, right, Well, 441 00:25:40,320 --> 00:25:43,760 Speaker 1: for that, I don't need my generative AI tool to 442 00:25:44,040 --> 00:25:47,080 Speaker 1: communicate with me in you know, human like fashion or 443 00:25:47,119 --> 00:25:51,360 Speaker 1: write Shakespearean sonnets. I just need some very specific domain expertise. 444 00:25:51,400 --> 00:25:53,600 Speaker 1: But that high quality data is actually not out. 445 00:25:53,400 --> 00:25:55,240 Speaker 3: There, and I fully agree with that. 446 00:25:55,880 --> 00:25:59,880 Speaker 2: And smaller language models focus language moddles does make sense. 447 00:26:00,080 --> 00:26:02,600 Speaker 2: But I think we are actually agreeing because this is 448 00:26:02,600 --> 00:26:06,440 Speaker 2: an incentive problem. The reason open AI isn't really focused 449 00:26:06,440 --> 00:26:08,879 Speaker 2: on that is because it doesn't make that much money. 450 00:26:09,359 --> 00:26:11,560 Speaker 1: Well, open AI itself is not making a lot of money. 451 00:26:11,640 --> 00:26:15,200 Speaker 1: They're not liking No, I think I think they are 452 00:26:15,240 --> 00:26:19,080 Speaker 1: not focused on that because A, if you want to 453 00:26:19,119 --> 00:26:22,560 Speaker 1: get big, very very fast and collect a lot of data, 454 00:26:23,040 --> 00:26:27,240 Speaker 1: domain specific models are not going to work. So creating 455 00:26:27,320 --> 00:26:30,960 Speaker 1: hype around something that sounds very intelligent is a much 456 00:26:31,000 --> 00:26:33,840 Speaker 1: better tool for doing that. And second, I think in 457 00:26:33,880 --> 00:26:39,680 Speaker 1: the industry is still in an unhealthy way, in my opinion, 458 00:26:40,440 --> 00:26:45,680 Speaker 1: preoccupied with artificial general intelligence right, human like intelligent, even 459 00:26:45,720 --> 00:26:47,239 Speaker 1: if that's not what we need, even if that's not 460 00:26:47,280 --> 00:26:50,520 Speaker 1: what's feasible, even if that's got a lot of downsides. 461 00:26:51,200 --> 00:26:54,080 Speaker 1: So that's why they don't, in my opinion, pay sufficient 462 00:26:54,119 --> 00:26:56,720 Speaker 1: attention to these domain specific expertise models. 463 00:26:56,920 --> 00:26:59,960 Speaker 2: So if for you, I actually agree, But also then 464 00:27:00,000 --> 00:27:02,960 Speaker 2: and that is an economics problem, that is a these 465 00:27:03,000 --> 00:27:06,120 Speaker 2: companies are incentivized to grow at all costs, to get 466 00:27:06,160 --> 00:27:09,159 Speaker 2: as big as possible. Is what you're suggesting that they 467 00:27:09,160 --> 00:27:10,080 Speaker 2: shouldn't it is. 468 00:27:10,280 --> 00:27:12,560 Speaker 1: It is not just an economics problem, but it has 469 00:27:12,560 --> 00:27:16,679 Speaker 1: an important economic leg If we did not have venture 470 00:27:16,800 --> 00:27:20,439 Speaker 1: capital be so important, this model would not have gotten 471 00:27:20,480 --> 00:27:21,040 Speaker 1: off the ground. 472 00:27:21,760 --> 00:27:24,160 Speaker 2: So how do we push back on the VC model? 473 00:27:24,200 --> 00:27:28,000 Speaker 2: How do we actually make technology work without that model, 474 00:27:28,000 --> 00:27:30,800 Speaker 2: because I agree it's the growth of all costs. Build 475 00:27:30,800 --> 00:27:33,400 Speaker 2: as big as possible, then IPO and everyone gets rich 476 00:27:33,400 --> 00:27:34,280 Speaker 2: other than the user. 477 00:27:35,440 --> 00:27:37,520 Speaker 3: Well, what are the alternatives? 478 00:27:37,680 --> 00:27:40,880 Speaker 1: I don't know. I mean, I am not so much 479 00:27:40,880 --> 00:27:43,080 Speaker 1: of an interventionist that I'm going to say, you know, 480 00:27:43,320 --> 00:27:47,680 Speaker 1: you should tax VC as well. But I think one 481 00:27:48,200 --> 00:27:53,000 Speaker 1: thing that encourages the VC grow at all cost model 482 00:27:53,080 --> 00:27:56,120 Speaker 1: is that we don't have any anti trust right there 483 00:27:56,200 --> 00:28:04,000 Speaker 1: was very strong anti trust and implementation. Then becoming so 484 00:28:04,000 --> 00:28:07,440 Speaker 1: big wouldn't be so attractive, and you wouldn't be able 485 00:28:07,480 --> 00:28:10,040 Speaker 1: to acquire all your competitors in the process as well, 486 00:28:10,080 --> 00:28:12,280 Speaker 1: which is a very important part of this get very big, 487 00:28:12,359 --> 00:28:20,240 Speaker 1: very quick. So I think our big failure of you know, 488 00:28:20,359 --> 00:28:24,840 Speaker 1: upholding existing antitrust laws and introducing new anti trust laws 489 00:28:25,119 --> 00:28:28,439 Speaker 1: appropriate for the digital age, I think has contributed to 490 00:28:28,480 --> 00:28:29,800 Speaker 1: this problem. 491 00:28:29,920 --> 00:28:32,879 Speaker 2: Is there a way of incentivizing vcs? So actually this 492 00:28:33,000 --> 00:28:34,640 Speaker 2: is how we are. This is the final question, because 493 00:28:34,640 --> 00:28:36,879 Speaker 2: you might actually have an answer here. How do we 494 00:28:36,960 --> 00:28:41,719 Speaker 2: incentivize venture capital and the startup industry to start investing 495 00:28:41,800 --> 00:28:45,080 Speaker 2: at the earlier stage because a big fund just gave 496 00:28:45,240 --> 00:28:49,840 Speaker 2: back a chunk of their fund because they were not 497 00:28:49,880 --> 00:28:53,200 Speaker 2: finding as many opportunities in the late stage, and it 498 00:28:53,480 --> 00:28:55,560 Speaker 2: like most of the money goes into that late stage. 499 00:28:55,600 --> 00:28:57,760 Speaker 2: How do we incentivize that. 500 00:28:57,760 --> 00:29:02,640 Speaker 1: That's a much harder problem, because even well qualified vcs 501 00:29:04,040 --> 00:29:07,800 Speaker 1: are not going to have an easy time recognizing a 502 00:29:07,880 --> 00:29:10,760 Speaker 1: very promising product when it's in the garage stage. Right. 503 00:29:11,640 --> 00:29:16,240 Speaker 1: But and this brings another, you know, set of issues. 504 00:29:17,040 --> 00:29:25,800 Speaker 1: The fact that we tax capital so lightly contributes to this. Again, 505 00:29:25,840 --> 00:29:28,880 Speaker 1: we're subsidizing vcs because if you make your money via 506 00:29:28,960 --> 00:29:34,880 Speaker 1: vcs as sort of investment on your capital, you pay 507 00:29:34,960 --> 00:29:38,560 Speaker 1: very little tax. You know, if you are you know, 508 00:29:38,600 --> 00:29:43,040 Speaker 1: a tech billionaire, I want name names, you don't even 509 00:29:43,080 --> 00:29:46,560 Speaker 1: pay yourself a salary. You keep on borrowing money from 510 00:29:46,760 --> 00:29:52,120 Speaker 1: venture capitals or other specialized financial vehicles, and you pay 511 00:29:52,160 --> 00:29:54,560 Speaker 1: yourself out of that. Everything is capital income. You pay 512 00:29:54,600 --> 00:30:00,880 Speaker 1: minimal taxes. So our tax system, already a big contributor 513 00:30:00,920 --> 00:30:05,440 Speaker 1: to inequality, actually also distorts the digital landscape. So one 514 00:30:05,600 --> 00:30:08,800 Speaker 1: simple thing, again, which is probably even less likely to 515 00:30:08,800 --> 00:30:12,240 Speaker 1: be implemented in our current polarized environment, is let's tax 516 00:30:12,320 --> 00:30:15,960 Speaker 1: capital and labor at a flat rate the same or 517 00:30:15,960 --> 00:30:17,920 Speaker 1: you know, you can act whether a progressity you want, 518 00:30:17,920 --> 00:30:20,800 Speaker 1: but you do not distinguish capital and labor income. If 519 00:30:20,840 --> 00:30:23,880 Speaker 1: you're going to tax labor income at thirty percent tax 520 00:30:23,920 --> 00:30:24,920 Speaker 1: capital at thirty percent. 521 00:30:25,600 --> 00:30:27,000 Speaker 3: I agree on that one. 522 00:30:27,400 --> 00:30:29,640 Speaker 2: It just feels like it would be great if there 523 00:30:29,680 --> 00:30:32,800 Speaker 2: was a way of just almost because you're talking a 524 00:30:32,800 --> 00:30:35,520 Speaker 2: lot about taxation such and I agree that we need 525 00:30:35,560 --> 00:30:38,360 Speaker 2: those controls, But is there a way to incentivize them 526 00:30:38,400 --> 00:30:42,600 Speaker 2: to put more money earlier make more risky bets. I'm 527 00:30:42,600 --> 00:30:45,920 Speaker 2: not saying a deduction, because that would be crazy, but 528 00:30:45,960 --> 00:30:48,800 Speaker 2: it feels like that would also solve, in part in 529 00:30:49,000 --> 00:30:52,040 Speaker 2: concert with these taxes, a way of getting that money 530 00:30:52,240 --> 00:30:53,560 Speaker 2: into the early ecosystem. 531 00:30:53,720 --> 00:30:57,560 Speaker 1: There may be, but I don't know exactly. We should 532 00:30:57,600 --> 00:30:59,840 Speaker 1: think more about it, but there is an alternative solution 533 00:31:00,480 --> 00:31:04,840 Speaker 1: yet another policy proposal, as we fund a federal agency 534 00:31:04,840 --> 00:31:09,280 Speaker 1: on AI which is tasked both by communicating and developing 535 00:31:09,320 --> 00:31:13,240 Speaker 1: best standards on things like privacy data you know AI standards, 536 00:31:13,240 --> 00:31:16,960 Speaker 1: security safety, but also has deep enough pockets that it 537 00:31:17,000 --> 00:31:20,880 Speaker 1: can play that incubator role for especially for technologies that 538 00:31:20,920 --> 00:31:23,239 Speaker 1: are deemed to be socially beneficial. So if we have 539 00:31:23,280 --> 00:31:27,240 Speaker 1: technologies that actually protect in users of privacy and enable 540 00:31:27,640 --> 00:31:30,480 Speaker 1: users to make better decisions. That's the kind of thing 541 00:31:30,520 --> 00:31:33,320 Speaker 1: that the government should put money in early on. Some 542 00:31:33,360 --> 00:31:34,960 Speaker 1: of it will go to waste, some of it will 543 00:31:35,000 --> 00:31:37,440 Speaker 1: go bankrupt. But if a few of them are successful, 544 00:31:37,480 --> 00:31:40,240 Speaker 1: that's great. And if the alternative is that the vcs 545 00:31:40,240 --> 00:31:43,320 Speaker 1: are going to develop the technologies that are most manipulative, 546 00:31:43,640 --> 00:31:45,880 Speaker 1: there is even more reason for putting this money. 547 00:31:46,520 --> 00:31:48,640 Speaker 2: Thorne, thank you so much for joining me again. It's 548 00:31:48,640 --> 00:31:49,520 Speaker 2: been such a pleasure. 549 00:31:49,800 --> 00:31:52,560 Speaker 1: Of course, this was my pleasure. Thank you for being 550 00:31:52,600 --> 00:31:55,480 Speaker 1: interested in these issues and such by having such a 551 00:31:55,480 --> 00:31:56,320 Speaker 1: great conversation. 552 00:31:56,680 --> 00:32:07,800 Speaker 3: Thanks so much. Thank you for listening to Better Offline. 553 00:32:07,920 --> 00:32:10,360 Speaker 2: The editor and composer of the Better Offline theme song 554 00:32:10,440 --> 00:32:13,080 Speaker 2: is Mattersowski. You can check out more of his music 555 00:32:13,080 --> 00:32:16,760 Speaker 2: and audio projects at Matasowski dot com, M A T 556 00:32:16,760 --> 00:32:21,200 Speaker 2: T O s O W s ki dot com. You 557 00:32:21,240 --> 00:32:23,720 Speaker 2: can email me at easy at Better Offline dot com, 558 00:32:23,840 --> 00:32:26,120 Speaker 2: or visit Better Offline dot com to find more podcast 559 00:32:26,200 --> 00:32:29,520 Speaker 2: links and of course, my newsletter. 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