--:-- Casey Newton, The Verge: Casey Newton, The Verge, you published leaked audio from Mark Zuckerberg this week, and it set the internet aflame. How did you get the audio?
--:-- Host: Well, I mean, I can't say too much about how I got it. But you know, what I can tell you is that in July, Facebook held a couple of open meetings for employees where they could come. And as part of those meetings, they could ask questions.
--:-- Casey Newton, The Verge: Facebook employees are really smart, and they had a lot of good questions. But I think those questions really revealed a lot of anxieties running through the company right now.
--:-- Host: As a dude who writes a lot about Facebook from the outside, how stoked were you to get inside the company like this?
--:-- Casey Newton, The Verge: You know, I'm a Facebook nerd, right? I spend a lot of my day trying to understand this company, how it makes decisions, what the people inside of it are thinking. And so to me, every single question that he answers on this recording is a gift.
--:-- Host: He talks about the rocky rollout of Libra, which is their cryptocurrency that they're developing. The public things, I think, tend to be a little more dramatic. But a bigger part of it is private engagement with regulators around the world. And those, I think, often are more substantive.
--:-- Casey Newton, The Verge: He talks about the rise of TikTok, which is maybe their greatest rising competitor in the social space. And how they're planning to kind of stop it in their tracks. We have a product called Lasso that's a standalone app that we're working on trying to get product market fit in countries like Mexico is, I think, one of the first initial ones.
--:-- Host: So we're trying to first see if we can get it to work in countries where TikTok is not already big or we go and compete with TikTok in countries where they are big.
--:-- Casey Newton, The Verge: And then he just takes these really interesting questions like somebody at Facebook asks, you know, what are we supposed to tell our friends who don't like Facebook anymore? You know, basically, like, what are you doing about the declining reputation of this company?
--:-- Host: Which is all stuff that I find so fascinating, but you just never really get to hear anyone at the company reckoning with in real time.
--:-- Casey Newton, The Verge: For leaked audio, this doesn't sound all that informal. Mark sounds pretty polished. But it's also way less polished than you would hear him in a public interview, right? Like, I think if you ask him about TikTok in a public interview, he's going to demure and say, oh, well, you know, we've got lots of competitors.
--:-- Host: Right. But when an employee asks him, he says, you know, we built a clone and we've rolled it out in Mexico because TikTok hasn't gotten there yet. And hopefully we can figure it out in Mexico. And if we do, then we're going to take it to countries where TikTok is already successful.
--:-- Casey Newton, The Verge: When you published this piece a few days ago, there was one particular exchange that got a ton of attention from people, including a frontrunner in the presidential race. What was the question Mark Zuckerberg was asked here?
--:-- Host: So the question is, with the rise of politicians like Senator Warren, I was wondering how personally worried you are about regulators coming in and breaking up Facebook.
--:-- Casey Newton, The Verge: And so this is the thing that Zuckerberg said that got everybody tweeting. Like Elizabeth Warren, who thinks that the right answer is to break up the companies. You know, if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge.
--:-- Host: So it's so basically it's and so does that still suck for us?
--:-- Casey Newton, The Verge: Yeah, I mean I don't have to have a major lawsuit against our own government, I mean that's not like the position that you want to be in when you're I mean it's like we care about our country and want to work with our government to do good things but look at the end of the day if someone's going to try to threaten something that existential you go to the map
--:-- Host: And that was the thing that made everybody go crazy. Because that's Mark saying we're going to sue the federal government if they try to break us up.
--:-- Casey Newton, The Verge: Yeah, and it's also like an extremely polite tech magnate telling you that he's ready to fight, which is just not language you typically hear from a CEO.
--:-- Host: Did anyone ask like a follow-up question like, hey, Mark, it's not going to make us look that much better if we sue Elizabeth Ward and the federal government?
--:-- Casey Newton, The Verge: There were no follow-ups at this meeting. But I would imagine that the rank and file Facebook employees were probably satisfied with that answer, right? What's the alternative? You could say, look, I would bet that if Elizabeth Warren gets elected, she's going to sue us and we will roll over and give the government whatever they want.
--:-- Host: Right. It's like probably not what he was going to say.
--:-- Casey Newton, The Verge: And then what did she say once you published?
--:-- Host: So in the audio, Zuckerberg says that suing the government to stop a breakup would suck. And Elizabeth Warren responded, And remind us why Elizabeth Warren wants to break up Facebook.
--:-- Casey Newton, The Verge: So Elizabeth Warren has talked a lot about the reduction in competition between the big tech companies, right? There are basically five tech giants, Facebook, Google, Amazon, Apple, Microsoft. They all get bigger every year. And the more they grow, the less room there is for innovation.
--:-- Host: At least that's what Warren argues. Fewer jobs get created. All of the gains from those companies go to an increasingly smaller part of the population.
--:-- Casey Newton, The Verge: And as they work on technologies like automation, you know, robots, stuff that could take away human jobs, you're potentially setting up the economy for a really hard time.
--:-- Host: So Elizabeth Warren wants to see us get back to a time when there was maybe a little bit healthier competition between the tech companies and the economy
--:-- Casey Newton, The Verge: And Mark doesn't like that. Well Mark wants Facebook to be as big as it possibly can be. You know, he thinks every person on earth should have a Facebook account and that they should build whatever services they can to both connect people and make money.
--:-- Host: And so he thinks that if you were to, say, force them to spin off WhatsApp and Instagram, which is something that a lot of politicians have called for, they wouldn't be able to fight election interference as much.
--:-- Casey Newton, The Verge: It's just that breaking up these companies, whether it's Facebook or Google or Amazon, is not actually going to solve the issues. And, you know, it doesn't make election interference less likely, it makes it more likely.
--:-- Host: They would just be a weaker company. That's why Twitter can't do as good of a job as we can. I mean, they face qualitatively the same types of issues, but they're, you know, I mean, they can't put in the investment.
--:-- Casey Newton, The Verge: Our investment on safety is bigger than the whole revenue of their company. They literally cannot do it.
--:-- Host: Maybe they wouldn't even be viable over the long term.
--:-- Casey Newton, The Verge: So to him, as he says in the audio, this is an existential fight. Like Mark Zuckerberg doesn't think that Facebook without WhatsApp and Instagram is even Facebook anymore.
--:-- Host: Has Mark Zuckerberg responded to Senator Warren?
--:-- Casey Newton, The Verge: Yes. He surprised me by sharing a link to my article on his own Facebook page.
--:-- Host: Oh, really? Yeah, it was surprising. I was like coming out of a meeting and somebody at Facebook texted me and said, hey, do you know that Mark just shared your story?
--:-- Casey Newton, The Verge: What did he actually say about it?
--:-- Host: He said, even though it was meant to be internal rather than public, now that it's out there, you can check it out if you're interested in seeing an unfiltered version of what I'm thinking and telling employees on a bunch of topics.
--:-- Casey Newton, The Verge: Hmm. What's your reaction to Mark's reaction to what Elizabeth Ward said to what Mark said?
--:-- Host: So I thought this was a brilliant bit of narrative jujitsu on the part of Facebook's communications apparatus, because in one fell swoop, they were able to remove any sense that these remarks were scandalous.
--:-- Casey Newton, The Verge: And then they also inspired a legion of conspiracy theorists to descend on my Twitter mentions demanding to know whether this had all been a coordinated leak from Facebook.
--:-- Host: Really? Yeah. People thought that, you know, Facebook has called me up and said, hey, we recorded a bunch of audio in July and we're just going to give it to you and you could do whatever you want with it.
--:-- Casey Newton, The Verge: Which like, man, my life would be so much easier if that was how journalism worked. But that is not how it works.
--:-- Host: And it was not a coordinated leak.
--:-- Casey Newton, The Verge: It's not that surprising that Mark Zuckerberg really wants to like crush TikTok. And it's not that surprising that Mark Zuckerberg is going to resist, you know, the federal government coming down on on Facebook, being a monopoly and owning most of the significant social media of our time.
--:-- Host: What do you think is the most surprising thing about this audio leaking to you and being out there in the world?
--:-- Casey Newton, The Verge: I don't think that audio like this needs to necessarily be surprising to be interesting.
--:-- Host: And what's interesting to me about the audio is not so much what Zuckerberg says as what his employees are worried about, right? Like, we all think of Facebook as this monolith.
--:-- Casey Newton, The Verge: And yet when you actually get inside this meeting and you listen to what employees want to know about, they want to know, hey, is the government actually going to break us up? Are we going to get crushed by a competitor?
--:-- Host: What are we doing about our bad reputation with young people? Like there's sort of a sense that there are some employees who might not be as proud as they used to be that they work at Facebook.
--:-- Casey Newton, The Verge: So that is what is interesting. And even if that's all stuff that maybe you could have guessed or like maybe you assumed, it's a very different thing to have the audio where you hear it.
--:-- Host: Do you think because this audio leaked, it's going to set a bad precedent in Facebook and other companies like it, Twitter, Google, where, I mean, it's a big time for whistleblowers, Casey.
--:-- Casey Newton, The Verge: Might there be more things coming out of the tech world than we've seen in the past? It's usually kind of a siloed environment.
--:-- Host: Yeah, I think that for a long time, most tech employees at most companies bought into whatever the stated mission of the company was.
--:-- Casey Newton, The Verge: And it's a reason that they like working there is they feel like they are contributing to some positive purpose that is larger than themselves.
--:-- Host: And I think just as these companies got to be so, so big, and as they became primarily money-making machines as opposed to vehicles for bettering the world, employees have started to push back on the idea that their companies are just unqualified goods for the world.
--:-- Casey Newton, The Verge: And so we've seen more internal organizing at companies over the past years than we've probably ever seen.
--:-- Host: We had the Google walkout last year. We have employees at Amazon protesting its contributions to climate change. We've seen protests of defense contracts at Microsoft.
--:-- Casey Newton, The Verge: So more and more employees are speaking out against what their employers are doing.
--:-- Host: And that is a trend that I expect will continue.
--:-- Host: I spoke with Casey Thursday morning, and not long after that, Mark Zuckerberg made an unprecedented decision to live stream a Facebook Q&A.
--:-- Host: This is an interesting forcing function.
--:-- Host: This week where this thing came out and I was like, all right, let's try to run this as an experiment.
--:-- Host: I don't actually know how this is gonna go. But I guess at this point, it's like I do such a bad job at interviews that it's, you know, it's like, what do we have to lose?
--:-- Host: Mark was anything but apologetic about the stuff that leaked out to Casey.
--:-- Casey Newton, The Verge: You know, all the content that's in there, we stand behind, right? And this is all stuff that you know yeah maybe I said it in a little bit more unfiltered of a way than I would externally
--:-- Host: But fundamentally it like we believe everything that we said that was in there
--:-- Casey Newton, The Verge: And Elizabeth Warren came up again
--:-- Host: You made some statements about her in the past
--:-- Casey Newton, The Verge: And how are you going to stay impartial to what, you know, she continues to say about Facebook and still using our platform?
--:-- Host: All right. Well, let's try not to antagonize her further.
--:-- Casey Newton, The Verge: This time, kind of conveniently, Mark didn't have much to say that was new and interesting.
--:-- Host: But here's something interesting. This country has all sorts of regulations against monopolies.
--:-- Host: In a minute, we'll figure out how companies like Facebook managed to bypass them.
--:-- Host: This is Today Explained.
--:-- Matthew Iglesias: How did all of these huge tech companies get so big when we obviously have, you know, a whole textbook full of antitrust laws?
--:-- Host: Yeah. So one of the big changes is that over time, starting in the 1970s, continuing in the 80s and 90s, the legal doctrine governing antitrust really changed from a sort of holistic but slightly vague concept of what protecting competition meant to a very narrow focus on consumer welfare, which in practice really just meant prices paid by consumers.
--:-- Matthew Iglesias: So that meant that when you got to a free service like Facebook wants to buy a free service like Instagram, well, it's all free. When Google buys YouTube, it's all free. So there's no harm to prices.
--:-- Host: And that's a different way of thinking about antitrust law than we had had in the past.
--:-- Matthew Iglesias: And it's been very important in the technology industry.
--:-- Host: So this isn't like your cable bill that you get every month versus the other cable company. This is something that was all free to begin with.
--:-- Matthew Iglesias: And thus, it just exists in some legal gray area.
--:-- Host: Well, and it stays free, right? It's true. You know, people could say when airlines merge, well, maybe there will be less competition. And that means they'll charge higher airfares.
--:-- Matthew Iglesias: That's what current antitrust doctrine looks to. When Facebook bought Instagram, when Facebook bought WhatsApp, they didn't use that to jack up the price. Google Web Search, still free. Gmail, it's free.
--:-- Host: So, you know, antitrust law really sort of gives a green light to all kinds of mergers in that industry.
--:-- Matthew Iglesias: So then what's the argument that these companies are monopolies to begin with?
--:-- Host: So a guy like Tim Wu, who's a progressive law professor, one of the sort of originators of net neutrality, Ken Rogoff is a right-of-center economist.
--:-- Matthew Iglesias: They say that if we take a more holistic look at what competition means, that you see things like when diapers.com entered the market, Amazon sought to really aggressively undercut them on price.
--:-- Host: And so Amazon was losing money on every diaper it sold, but it was going to drive diapers.com out of business, eventually force diapers.com to sell to Amazon.
--:-- Matthew Iglesias: Or you look at something like Facebook buying Instagram, much less cutthroat. In both cases, the concern is that by sort of killing off competing startups or gobbling them up, you're not raising prices, but you're reducing innovation.
--:-- Host: You're not letting different kinds of e-commerce giants come up. You're taking advantage of the sort of incumbent network effects to sort of stomp on or buy off all new entrants.
--:-- Matthew Iglesias: And you're creating a less rich, competitive, innovative landscape.
--:-- Host: Given that Elizabeth Warren is the person that seems to be worrying Mark Zuckerberg the most, at least in this audio that we heard earlier, how does she frame this argument about monopolies, about antitrust in Facebook?
--:-- Matthew Iglesias: Her particular proposal is to sort of break up these big conglomerates and she means that in two ways. One is sort of horizontally, you would say, and that's just kind of divide Facebook from Instagram from WhatsApp.
--:-- Host: She also wants to divide some of these conglomerates vertically and to say that if you're Amazon, you can't be running a marketplace and also selling things on the marketplace.
--:-- Matthew Iglesias: That's very important to Google, for example, because you go to Google to search and what you find a lot now is not just Google ads, but Google's first party products.
--:-- Host: When's the last time a big breakup like this happened?
--:-- Matthew Iglesias: So the government has broken up companies occasionally in the past, AT&T most famously in the 1980s. But that is a drastic remedy. It is difficult to get the courts to agree to that.
--:-- Host: Anything tech-related though more recently?
--:-- Matthew Iglesias: So one example we could look at is the government in the late 90s sued Microsoft and they tried to order a breakup of the company.
--:-- Host: They tried to say that you couldn't be sort of in the operating system business with the Windows monopoly and also selling web browsers and software that ran on top of it.
--:-- Matthew Iglesias: The government couldn't get the courts to agree to that. But Microsoft agreed to a lot of strict what is called conduct remedies to basically make it easier for third-party browsers to be used.
--:-- Host: And that why you know first Firefox and then Google Chrome really became popular browsers on Windows desktops and it never became integrated the way mobile Safari is with iPhones
--:-- Matthew Iglesias: So that attempt with Microsoft didn even really work in the courts
--:-- Host: Do you think this could?
--:-- Matthew Iglesias: Zuckerberg thinks this would be terrible for Facebook. Could it be good for people like you and me?
--:-- Host: I think it would clearly be good if we had real competition in the sort of Facebook-y space.
--:-- Matthew Iglesias: I think the question to ask about this is like, is that realistic in this kind of online services space?
--:-- Host: Because the thing that makes Facebook so compelling, right, is that's where all your friends are.
--:-- Matthew Iglesias: If your kid's soccer team wants to put up a notice someplace, they'll put it up on Facebook. You can't single-handedly like opt out of that and say, well, I'm going to just go use this other hypothetical service that President Warren created.
--:-- Host: The more people use Google, the better the data Google has to make its searches better. So if you try like Google search, they seem like a monopoly. They dominate the market.
--:-- Matthew Iglesias: But they're also genuinely better than competitors. And one reason they're so good is that they have so many users.
--:-- Host: And even if you do some kind of breakup, right, there's going to be a winner in that market.
--:-- Matthew Iglesias: And it's in some ways I think a harder question than even the breakup people realize.
--:-- Host: So breaking them up won't be enough it sounds like.
--:-- Matthew Iglesias: It depends what you're trying to accomplish.
--:-- Host: Electrical utilities is a good example, right? There's just never going to be a world where there's like eight or nine different companies with electrical lines running all over town and you get to pick from whichever utility you like best.
--:-- Matthew Iglesias: So we don't even try to create competition in the electrical utility market. We try to regulate the utilities.
--:-- Host: Another thing that's useful to look at is communication regulation from the 1940s and 50s, right? When you had broadcast television, you couldn't just let anybody open up a television station, right? The signals would interfere with each other.
--:-- Matthew Iglesias: So it was going to be a market with limited competition and you were going to need a special license from the government to have a TV station.
--:-- Host: And then we regulated that industry in particular ways because we were concerned about the health of democracy.
--:-- Matthew Iglesias: And we didn't want two or three rich people to be able to buy up all the television stations in the country because they would control the communications environment, could have enormous influence on politics.
--:-- Host: But right now, there's only one Google. There's only one Facebook. And the decisions they make have an incredible impact on the future of media, the future of politics, swaying election outcomes.
--:-- Matthew Iglesias: That's scary to think about.
--:-- Host: And the kind of older-fashioned broadcast television and communications regulations might provide a sort of a template for thinking about dealing with that problem.
--:-- Host: What would regulations on a company like Facebook, for example, look like?
--:-- Matthew Iglesias: We could, for example, force them to make some of their algorithms publicly available so that we could scrutinize them and at least see what's going on with these kinds of changes.
--:-- Host: They would say right now, like any company, well, these are trade secrets. It's going to put us at a competitive disadvantage.
--:-- Matthew Iglesias: Right. But if we think that Facebook is so big and it's so menacing and it's hard to compete with it, we wouldn't mind putting them at a disadvantage and we would benefit from more publicity and insight into what's actually happening.
--:-- Host: And if we don't do that right now, of course, heading in to another presidential election, what are the consequences of leaving Facebook, especially completely unregulated and as big as it is?
--:-- Matthew Iglesias: I'm not going to accuse them of anything, but you could see in that audio, right, like Mark Zuckerberg, he doesn't want Elizabeth Warren to be president. Her being president would be bad for him.
--:-- Host: He foresees a lot of litigation. He has the power right now to just like downrank any article that's favorable to her. Right. And to uprank articles that are critical of her. And we would never know that he did it.
--:-- Matthew Iglesias: And that's frightening.
--:-- Host: If you own a newspaper, a website, a podcast, whatever it is, and you want to be relentlessly critical of Elizabeth Warren, like that's your right. It's a free country.
--:-- Matthew Iglesias: But Facebook has such a dominant position in the distribution of media that their potential ability to swing public opinion on important topics, be a vector for political movements, is a matter of public concern.
--:-- Host: But right now we treat it as if it's just like one of many podcasts out there. When it's not, right? Like Facebook is by far the most influential force in media right now.
--:-- Matthew Iglesias: It's not really subject to traditional competition of any kind.
--:-- Host: And we are going to need to do something to indicate that this is a matter of public concern and not just up to Mark Zuckerberg and his employees.
--:-- Matthew Iglesias: Matthew Iglesias writes about the economy and politics at Vox.com.
--:-- Host: I'm Sean Ramos from This is Today Explained.
--:-- Host: The show is produced in association with Stitcher.
--:-- Host: We're part of the Vox Media Podcast Network.
--:-- Host: Its executive producer is Irene Noguchi.
--:-- Host: The engineer is Afim Shapiro.
--:-- Host: Noam Hassenfeld, Bridget McCarthy, Amina Alsadi, and Halima Shah produce all the episodes.
--:-- Host: And the mysterious Breakmaster Cylinder makes most of the music.
--:-- Host: Our friends here at Vox Media are conducting an audience survey with the hopes of better serving you up these podcasts you listen to.
--:-- Host: It takes all of five minutes to complete and you can find it at voxmedia.com slash pod survey P-O-D survey thanks
