WEBVTT - Galloway Calls out Facebook for 'Non-Decision' 0:00:00.160 --> 0:00:03.000 So in our world, there are folks that don't need 0:00:03.080 --> 0:00:06.120 any introduction. That really include Scott Galloway, author of many books, 0:00:06.120 --> 0:00:09.360 The for the Algebra of Happiness, most recently Post Corona. 0:00:09.600 --> 0:00:11.680 He's Professor of Marketing at n y U Stern School 0:00:11.680 --> 0:00:14.720 of Business. He has founded several companies, and he's host 0:00:14.720 --> 0:00:16.919 of the upcoming The prop g Show right here on 0:00:16.960 --> 0:00:19.600 Bloomberg Quicktake. Delighted to have him back with us. Scott 0:00:19.600 --> 0:00:24.000 Galloway on the phone in Florida. How are you, um, great? 0:00:24.079 --> 0:00:29.639 Thanks for setting out him. Possibly no pressure there, Mr Galloway, 0:00:29.800 --> 0:00:33.960 I'm not worried, so so listen, we want to hit 0:00:34.000 --> 0:00:35.920 you on a couple of things. First of all, um, 0:00:36.040 --> 0:00:38.519 the Facebook news today, It kind of I think we 0:00:38.560 --> 0:00:40.680 thought there was going to be a solution of Trump 0:00:40.720 --> 0:00:45.080 on or not the platform, and he's banned, but the 0:00:45.120 --> 0:00:47.440 company still has to make a decision down the road 0:00:47.479 --> 0:00:50.360 about ultimately long term. Why do you make of this 0:00:50.479 --> 0:00:53.200 news and how should social be treating people like Donald 0:00:53.240 --> 0:00:59.040 Trump and others? Well, they should be. Anyone who is 0:00:59.080 --> 0:01:02.320 responsible for us sort of misinformation around a specific domain, 0:01:02.400 --> 0:01:05.200 in this case election interference should be banned from the platform. 0:01:05.360 --> 0:01:09.880 So you know this is this is Facebook's attempt to 0:01:09.920 --> 0:01:13.399 abdicate responsibility. This oversight board. I think it's got the 0:01:13.520 --> 0:01:16.280 charm of the legal of Nations, with the effectiveness of 0:01:16.280 --> 0:01:20.040 the United Nations. I think it's a total abdication of responsibility. 0:01:20.920 --> 0:01:23.200 And what they said was we're going to hurry up 0:01:23.360 --> 0:01:26.160 and do nothing. We're going to make them. It's kind 0:01:26.160 --> 0:01:29.039 of the mother of all non decisions. I'm glad he's 0:01:29.080 --> 0:01:33.039 not back on the platform. But it's typical, It's typical Facebook. 0:01:33.120 --> 0:01:35.520 It's it's kind of just more delay an obfuscation. Well, 0:01:36.160 --> 0:01:38.840 how how has it been so easy for Twitter and 0:01:38.880 --> 0:01:41.520 Snap to make their decisions about President Trump, but it's 0:01:41.560 --> 0:01:47.960 been so tortured for Facebook and for Google's YouTube. You know, 0:01:48.040 --> 0:01:50.440 That's that's a really interesting question. I think I think 0:01:50.440 --> 0:01:54.240 Google and uh, Facebook, to a certain extent, are still 0:01:54.280 --> 0:01:57.480 trying to hold onto this myth that they're just a platform. 0:01:57.920 --> 0:02:00.680 I think that they are. They aren't niche kinds. What's 0:02:00.680 --> 0:02:03.320 interesting is that there's definitely sort of a purity trade. 0:02:03.400 --> 0:02:04.720 And what do I mean by that? If you look 0:02:04.760 --> 0:02:08.799 at pinterestome Snap, they've outperformed their peer group and they're 0:02:08.840 --> 0:02:12.720 largely seen as having less noxious, toxic content, and Twitter 0:02:12.840 --> 0:02:15.120 since kicking Trump off the platform had sort of the 0:02:15.240 --> 0:02:18.680 strongest run in several years. So it appears there's sort 0:02:18.680 --> 0:02:21.200 of an immunity trade or a purity trade. I think 0:02:21.240 --> 0:02:23.280 Facebook and Google still want to try and cling to 0:02:23.320 --> 0:02:27.800 the notion that we want all content, all the time, anyone, 0:02:27.919 --> 0:02:30.880 regardless of the damage it does, and they're still kind 0:02:30.880 --> 0:02:34.919 of holding to that kind of zeitgeist there. Um, they 0:02:34.919 --> 0:02:39.160 don't see themselves as niche players. I think they're they're more, 0:02:39.760 --> 0:02:44.800 they're they're less less focused on pleasing anyone audience just 0:02:45.120 --> 0:02:48.840 don't want to just they'll be mildly upsetting to everybody, 0:02:49.080 --> 0:02:51.640 you know. Sarah Fryar Bloomberg News putting out a story 0:02:51.639 --> 0:02:54.400 saying that maybe Facebook has to provide more options for 0:02:54.520 --> 0:02:57.079 Donald Trump types, saying that there should be a way 0:02:57.080 --> 0:03:00.560 for Donald Trump, his thoughts and other Trump figures to 0:03:00.600 --> 0:03:03.400 exist on social media without kind of all the amplification 0:03:03.400 --> 0:03:06.359 that many of these platforms provided. These are sours words 0:03:06.400 --> 0:03:08.960 to be fair, Um, do you agree with that that 0:03:09.000 --> 0:03:11.320 there needs to be another option if we believe in 0:03:11.720 --> 0:03:14.440 freedom of speech? And I understand your point about misinformation, 0:03:15.120 --> 0:03:18.640 but how do we treat this? Scott? Yeah, that's a 0:03:18.680 --> 0:03:20.960 tough problem. But I think we can inflate freedom of 0:03:21.000 --> 0:03:24.800 speech with freedom of reach, and that is the conversation 0:03:24.840 --> 0:03:28.320 around anti vac is a worth while conversation we should have. 0:03:28.480 --> 0:03:31.400 There are people who want to have a conversation around 0:03:31.400 --> 0:03:35.080 white supremacy, and those conversations should be had. The question 0:03:35.120 --> 0:03:38.960 is whether for profit entities should have algorithms that purposely 0:03:39.040 --> 0:03:42.960 seek out that type of controversial, very upsetting content and 0:03:43.080 --> 0:03:47.720 elevate it exponentially beyond what it would get organically because 0:03:47.760 --> 0:03:50.400 it is so noxious, because it is so heinous, it 0:03:50.480 --> 0:03:55.000 creates enragement. An enragement equals engagement, which equals more Nissan ads, 0:03:55.040 --> 0:03:59.160 which means that Facebook gets wealthier. So the question is 0:03:59.160 --> 0:04:04.320 should we have this miss models that purposely linked profits 0:04:04.960 --> 0:04:08.960 to the enragement, division and polarization of our society. Should 0:04:08.960 --> 0:04:12.120 there be some sort of tax? But there's notions somehow 0:04:12.200 --> 0:04:16.640 that everybody deserves voice, These firms have, these individuals have 0:04:16.800 --> 0:04:19.640 massive voice. The question is should we the most profitable 0:04:19.680 --> 0:04:21.960 companies in the world be engaged in a business model 0:04:22.000 --> 0:04:24.839 with the end up being handmates This edition or where 0:04:24.839 --> 0:04:27.320 a capital police officer is bludgeon to death with a 0:04:27.360 --> 0:04:32.279 fire extinguisher because these algorithms are amplifying the most controversial content. 0:04:32.680 --> 0:04:35.520 So in our world there are folks that don't need 0:04:35.600 --> 0:04:38.600 any introduction. That really includes Scott Galloway, author of many books, 0:04:38.680 --> 0:04:41.880 the for the Algebra of Happiness, most recently Post Corona. 0:04:42.120 --> 0:04:43.880 He's Professor of Marketing at n y U s during 0:04:43.920 --> 0:04:47.040 School of Business. He has founded several companies, and he's 0:04:47.040 --> 0:04:49.400 host of the upcoming The prop g Show. Right here 0:04:49.400 --> 0:04:51.720 on Bloomberg Quicktake. Delighted to have him back with us. 0:04:51.839 --> 0:04:56.320 Scott Galloway on the phone in Florida. Scott Galloway, Um, 0:04:56.520 --> 0:04:59.680 is Apple taking too much? Does Does Epic have a 0:04:59.760 --> 0:05:01.520 point here? Because at the end of the day, you know, 0:05:01.560 --> 0:05:04.240 Apple's argument is, hey, we are giving you access to 0:05:05.040 --> 0:05:08.039 the customers, and we're making this a safe place for 0:05:08.040 --> 0:05:12.880 our customers to to access your apps. Yeah. I think 0:05:12.920 --> 0:05:15.479 that's the argument. That they've made a staggering investment to 0:05:15.600 --> 0:05:18.479 ensure safety, and they've made a huge investment in laying 0:05:18.480 --> 0:05:20.120 down the rails, and they should be able to charge 0:05:20.120 --> 0:05:23.000 what they want to access those rails. The question is 0:05:23.040 --> 0:05:25.680 if you start seeing everything that's being transported on those 0:05:25.800 --> 0:05:27.840 rails and you see that certain goods are going to 0:05:27.880 --> 0:05:31.560 a certain area and you decide wow, based on that. Inside, 0:05:31.560 --> 0:05:34.440 we'd like to start a competitive business Apple Music, and 0:05:34.440 --> 0:05:38.800 we're going to tax our competitor and maybe promote our 0:05:38.839 --> 0:05:42.400 own products. Are you, in fact in a monopoly position? 0:05:42.880 --> 0:05:46.000 The app store really is the regulatory achilles heel. I 0:05:46.279 --> 0:05:48.400 think they're gonna lose on this one. I would have 0:05:48.440 --> 0:05:52.279 gone further than this, but this is it's very difficult 0:05:52.279 --> 0:05:55.760 to argue that they're not imposing or not taking advantage 0:05:55.760 --> 0:05:58.479 of the fact they own the rails to compete with 0:05:58.560 --> 0:06:00.960 the with the other products that access those rails. So 0:06:01.000 --> 0:06:03.880 it's in fact there's monopoly power here at scale, and 0:06:03.920 --> 0:06:06.039 an argument that they need to have one player and 0:06:06.040 --> 0:06:08.560 that size is good for everybody. Then they're a utility 0:06:08.720 --> 0:06:10.760 and their prices should be regulated. I think they're all 0:06:10.760 --> 0:06:12.359 wet on this one, all right, playing a little bit 0:06:12.360 --> 0:06:14.599 of Devil's Advocate, And maybe it's not apples to Apple, Scott, 0:06:14.640 --> 0:06:17.000 But what about a Walmart that you know how it 0:06:17.040 --> 0:06:19.479 squeezes its suppliers or an Amazon where it gets a 0:06:19.480 --> 0:06:22.320 piece of everything that's sold on its platform. Um, I 0:06:22.360 --> 0:06:24.960 know it's not, like I said, maybe an equal comparison 0:06:25.040 --> 0:06:29.400 but is it that much different? Yeah, I think it is, Carrol, 0:06:29.440 --> 0:06:31.800 because I think Walmart is about eight or nine percent 0:06:31.839 --> 0:06:34.559 of retail and the app store on iOS is about 0:06:35.200 --> 0:06:37.800 of all dollar volume that goes through apps. So if 0:06:37.800 --> 0:06:39.560 you want to be a player in the app economy, 0:06:39.839 --> 0:06:42.520 there really is only one place. An iOS is where 0:06:42.560 --> 0:06:45.359 the majority of people go to actually spend money on apps. 0:06:45.400 --> 0:06:49.040 So if Walmart gets market share of all retail, then 0:06:49.080 --> 0:06:51.600 it's apples to apples, all right, So listen, one thing 0:06:51.720 --> 0:06:53.400 you know. I wanted to ask you. Tim and I 0:06:53.440 --> 0:06:55.800 both wanted to We were thinking about coming off of 0:06:55.839 --> 0:06:58.760 Warren Buffett and Brickshire Hathaway's annual meeting this past weekend, 0:06:59.160 --> 0:07:00.960 and Warren Buffett put up a slide. It was the 0:07:01.000 --> 0:07:04.840 top twenty market cap global companies in nine. It was 0:07:04.920 --> 0:07:08.160 named like Toyota, General Motors x on, IBM, six U 0:07:08.279 --> 0:07:11.240 S companies fourteen from other countries. He pointed out Scott 0:07:11.280 --> 0:07:14.040 that none of the twenty are on today's list of 0:07:14.040 --> 0:07:16.600 the top twenty market cap companies, and he says it's 0:07:16.600 --> 0:07:20.920 a reminder of extraordinary things that happen in nine. Not 0:07:21.080 --> 0:07:23.920 the Dark Age is not a backward time. So I'm curious, 0:07:23.960 --> 0:07:27.120 how do you think about today's top ME market cap companies, 0:07:27.120 --> 0:07:29.920 whether it's Apple, Google, Amazon, you wrote about them in 0:07:29.960 --> 0:07:33.520 the four Should we think in twenty years from now 0:07:33.640 --> 0:07:35.680 or I don't know, ten years, they're not going to 0:07:35.760 --> 0:07:41.040 be the juggernauts that they are. Well, look, a basic 0:07:41.080 --> 0:07:44.360 truism is that everything everywhere eventually ends, and at some 0:07:44.440 --> 0:07:46.880 point these companies will be de thrilled. The question is 0:07:46.920 --> 0:07:50.240 what kind of damage do they do between here and 0:07:50.280 --> 0:07:53.239 now by not returning to our proud legacy of anti trust. 0:07:53.280 --> 0:07:55.600 And that is a T and T eventually would have 0:07:55.640 --> 0:07:57.320 been unseated, but we went in and broke it up 0:07:57.320 --> 0:08:02.200 into seven companies and we on unleash treme disinnovation, cell data, Fiber. 0:08:02.280 --> 0:08:04.360 Each of those seven companies ended up being worth more 0:08:04.360 --> 0:08:07.600 than the original within ten years. So my argument is sure, 0:08:07.720 --> 0:08:10.480 at some point everyone is dethroned. But between now and then, 0:08:10.560 --> 0:08:13.320 is there an opportunity to oxygen a the economy, to 0:08:13.400 --> 0:08:17.320 increase job growth, increased taxation, increase M and A by 0:08:17.360 --> 0:08:19.600 doing what we have always done, and that is when 0:08:19.600 --> 0:08:22.720 a company becomes an invasive species, we go in and 0:08:22.760 --> 0:08:26.160 we break it up. It's overdue. Anti trust is absolutely 0:08:26.200 --> 0:08:28.680 overdue here which companies need to be broken up right now? 0:08:29.760 --> 0:08:34.280 The answer is yes, but like I mean, well, except 0:08:34.360 --> 0:08:36.560 for Apple. Apple would be hard to break up because 0:08:36.600 --> 0:08:40.040 elegant anti trust means you unlock value. It's not a punishment, 0:08:40.080 --> 0:08:43.800 it's a liberation for all stakeholders. All stakeholders except the 0:08:43.800 --> 0:08:45.679 CEO who wants to sit on the iron throne of 0:08:45.720 --> 0:08:47.800 Olive Estro. It's not just the king of the North. 0:08:48.480 --> 0:08:51.080 Apple would be tough because who would get rights to 0:08:51.120 --> 0:08:53.920 the brand? So Apple ends up You regulate the app store. 0:08:54.440 --> 0:08:58.760 But Amazon gets broken up, as does Facebook and Google. Wow. 0:08:59.800 --> 0:09:01.920 And by the way, yeah, I owned shares and all 0:09:01.920 --> 0:09:04.280 those companies except Facebook, and we're all going to make 0:09:04.320 --> 0:09:06.840 money on the day of their breakups. Talk about that though, 0:09:06.960 --> 0:09:09.000 Is it because you know a w S by itself 0:09:09.080 --> 0:09:11.520 is worth more than a w S as part of Amazon? 0:09:12.760 --> 0:09:16.280 That's that's exactly the correct question. In two the most 0:09:16.320 --> 0:09:18.400 valuable company in the world will be an AWS. It 0:09:18.520 --> 0:09:22.280 was fun prophylactically, the fastest growing, largest player and the 0:09:22.320 --> 0:09:26.160 most profitable, most fastest growing sector in history. The cloud 0:09:26.520 --> 0:09:29.800 will be the stock that every hedge fund manager, every 0:09:29.840 --> 0:09:31.880 girl who gets her bombits that gets as a gift. 0:09:32.280 --> 0:09:35.000 Everyone will own a w S stock. Most valuable company 0:09:35.000 --> 0:09:37.360 in the world in four years is AWS. It'll be 0:09:37.360 --> 0:09:38.920 an n f T though right it's not going to 0:09:39.000 --> 0:09:42.600 be an actual certificate. We're back at it, Carroll. I know, 0:09:42.840 --> 0:09:46.680 I know, well, you know you wrote about these four companies. 0:09:46.720 --> 0:09:49.720 I mean, who are the companies who are there? What's 0:09:49.720 --> 0:09:53.600 the technologies that you think are going to be kind 0:09:53.600 --> 0:09:55.400 of the replacement for the Apples and Google? Today you 0:09:55.480 --> 0:09:57.680 talked about the cloud. I get that. Are there other 0:09:57.720 --> 0:09:59.920 things on your radar that you're thinking Listen, we're just 0:10:00.000 --> 0:10:02.160 not talking about it enough. But these are the ones 0:10:02.200 --> 0:10:03.960 that are going to be the big market gap companies 0:10:03.960 --> 0:10:08.360 of the future. There's a lot of incredible companies. The 0:10:08.840 --> 0:10:11.240 incredible technology is. The unfortunate thing is it's usually the 0:10:11.280 --> 0:10:14.640 same players that we're The biggest unlock coming out of 0:10:14.640 --> 0:10:17.480 the pandemic is we might have an opportunity. Virtual visits 0:10:17.520 --> 0:10:20.640 to doctors went from less than one percent. There's an 0:10:20.679 --> 0:10:23.920 incredible opportunity to start pushing out primary healthcare to hundreds 0:10:23.920 --> 0:10:26.520 of millions Americans and take healthcare from the disease driven, 0:10:26.520 --> 0:10:30.280 defensive industry to a defensive, health driven industry. That's a 0:10:30.320 --> 0:10:32.320 good news, it's going to create trillions of dollars in value. 0:10:32.360 --> 0:10:34.160 The bad news, the company that will be the fastest 0:10:34.160 --> 0:10:38.079 growing healthcare company in the world will be Amazon. The 0:10:38.200 --> 0:10:42.640 voice is the most exciting technology. Who dominates that? Amazon? 0:10:42.800 --> 0:10:45.839 The cloud? Who dominates that? Microsoft? Amazon? And oh y 0:10:45.880 --> 0:10:49.240 a Google. So there's some incredible companies just off the list. 0:10:49.320 --> 0:10:53.079 The shopifies the rope, who's the salesforces the Ali baba. 0:10:53.400 --> 0:10:56.080 But these companies continue to outpace all the rest. A 0:10:56.120 --> 0:10:58.360 lot of big numbers doesn't seem to apply to these guys. 0:10:58.360 --> 0:11:00.800 I don't know if we've watched Apple's earning of fifty 0:11:00.920 --> 0:11:04.720 plus percent of the revenues I phone up sixty plus 0:11:04.760 --> 0:11:08.240 percent sales in China, when they increase their margins and 0:11:08.240 --> 0:11:11.680 their services revenue, it's just it's just staggering. Hey, Scott, 0:11:11.679 --> 0:11:13.760 I want to end just with a personal question to you. 0:11:13.880 --> 0:11:15.360 So I know it's something that you think about a lot. 0:11:15.400 --> 0:11:17.319 After I read the Algebra Happiness. You talked about it 0:11:17.320 --> 0:11:19.800 with Jacqueline Novograts on your podcast The Prop Show a 0:11:19.840 --> 0:11:22.680 couple of weeks ago, um about what it means to 0:11:22.679 --> 0:11:25.200 be a good parent. You asked her that question, and 0:11:25.200 --> 0:11:26.840 I know it's something you think a lot about. But 0:11:26.920 --> 0:11:29.880 as I'm raising my young son, talk to me about 0:11:29.920 --> 0:11:32.120 what you've learned raising a couple of kids. And we 0:11:32.320 --> 0:11:38.319 have about asked you and you got, oh gosh, we're 0:11:38.320 --> 0:11:40.400 gonna need a bigger bout. So first off, if you 0:11:40.640 --> 0:11:42.600 if you drove by my house and you heard the screaming, 0:11:42.640 --> 0:11:45.400 you might not want to ask you that question. Look, 0:11:45.520 --> 0:11:48.760 I think what I've the takeaway I've got coming out 0:11:48.760 --> 0:11:51.599 of this pandemic as a dad is that my I 0:11:51.600 --> 0:11:54.360 always saw my role is to discipline and to teach 0:11:54.720 --> 0:11:57.480 and to backup mom and to set boundaries. And what 0:11:57.600 --> 0:12:00.240 I've come to the conclusion of is that what I 0:12:00.280 --> 0:12:02.480 need to do more of is just be someone who 0:12:02.520 --> 0:12:06.600 loves them and demonstrates and cements that every day we're 0:12:06.600 --> 0:12:08.480 going to leave it on that. That's a great, great 0:12:08.480 --> 0:12:10.600 way to finish up. Hey, Scott, thank you so much, 0:12:10.679 --> 0:12:13.240 take care of yourself and and look forward to uh 0:12:13.320 --> 0:12:15.680 talking to you again. And I always appreciate all the 0:12:15.679 --> 0:12:18.240 time you give us. Scott Galloway, Professor of Marketing, ny 0:12:18.320 --> 0:12:20.400 uster In School of Business, author of many books check 0:12:20.480 --> 0:12:24.120 them all out, and uh he's doing things in education 0:12:24.160 --> 0:12:27.120 too with his Section four companies so highly recommend you 0:12:27.160 --> 0:12:27.880 Google that as well.