Mar 26, 2019

Axios Future

By Bryan Walsh
Bryan Walsh

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Any stories we should be chasing? Hit reply to this email or message me at steve@axios.com. Kaveh Waddell is at kaveh@axios.com, and Erica Pandey at erica@axios.com.

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1 big thing: The squeeze of monopolistic platforms

Illustration: Aïda Amer/Axios

By now, Big Tech is following a familiar pattern: launch in a single lane, expand, kill competition, capture more and more of your users’ waking hours, kill more competition, expand more, and all the while deaden any public suffering with free services.

Erica writes: With immense, monopolistic power, Big Tech platforms — Apple, Amazon and Google — are behaving like governments, taxing competition with usurious fees and marching across industries.

Driving the news: Yesterday, Apple announced its latest gambit — movie, music, news and banking services, following Amazon and Google, which have both ballooned far beyond their original business lines.

  • In its new news service, Apple demanded a 50% cut of the take from newspapers and magazines, much higher than its already-controversial, approximately 15–30% slice off the top of other sales on its platform.
  • The Wall Street Journal, the New Yorker and the LA Times signed on, while the NYT and WP refused.

How Apple can pull it off: It shares an effective duopoly with Google in mobile app stores. "That is why they can set their tax so high," Jonathan Tepper, author of "The Myth of Capitalism," tells Axios. "They can dictate terms for buyers and sellers."

The NYT and WP were public with their disgruntlement.

  • In an interview with Reuters, NYT CEO Mark Thompson said, "We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else."
  • "We create journalism that is worth paying for, so having a direct relationship with our audience is essential," a NYT spokesperson told me.
  • Shani George, the Washington Post's director of communications, told me, "Our focus is on growing our own subscription base, so joining Apple News+ did not make sense for us at this point."

But not all businesses are powerful enough to dodge the tech platforms.

Amazon's role as both the online mall and a store within the mall has long made it a target of critics and regulators on both sides of the Atlantic.

  • As we've reported, the EU is in the middle of a probe into whether Amazon's mountain of data on what people are browsing and buying gives it an inherent — and unfair — advantage over the small sellers on its marketplace.
  • India has prohibited Amazon from selling its own merchandise while also marketing that of others.
  • But everywhere else, businesses like booksellers that directly compete with Amazon have to use its platform.

Roundabout Books, an independent bookstore in Greenfield, Massachusetts, has split its store in half. The front is a showroom, and the back a warehouse from which the staff ships about 100 books per day, owner Raymond Neal tells me.

  • Selling on his own website isn't enough, Neal says. He relies on Alibris, eBay and Amazon, among others, but Amazon charges the highest fees by a long shot.
  • In 2017, Amazon raised its cut per book from $1.35 to $1.80 and started taking 15% commission on the cost of shipping as well as the cost of the book itself.
  • For example, for a $10 book, Amazon's share increased from 22.5% to 33%. That amounted to a $30,000 hit to Roundabout's revenue, says Neal.

"My least favorite place to sell is Amazon because their fees are just oppressively large," Neal says. But "Amazon accounts for about 70% of all our sales, so they are essentially the only game in town."

2. Automation and party

Mercedes plant in Vance, Alabama. Photo: Andrew Caballero-Reynolds/AFP/Getty

Job automation has become a key factor in economic anxiety in recent years. As 2020 campaigns begin, Republicans are far more likely than Democrats to live and work in regions with highly automatable jobs, according to a new analysis.

In a blog post, Brookings' Mark Muro, Jacob Whiton and Robert Maxim find a correlation between susceptibility to automation and red congressional districts.

  • In the 2018 midterms, they found that 46 of the 50 congressional districts most exposed to automation elected Republicans. Similarly, all 50 of the least-exposed districts are represented by Democrats.
  • The analysis builds on a paper published a year ago by Carl Frey and two Oxford colleagues about the impact of robots on the 2016 election.
  • They found that President Trump's support was far higher in local labor markets with higher exposure to robot automation.

Kyle Kondik, managing editor of Sabato’s Crystal Ball at the University of Virginia, tells Axios that he sees no opening for Democrats to exploit worker anxiety caused by layoffs and the threat of more.

  • Trump's get-tough platform on trade has resonated in these Republican-held districts, Kondik said.
  • "Democrats did hold versions of some of these districts prior to 2010, but they have become so Republican now that they do not seem like viable targets in 2020."
3. A new way to sell video ads

Photo: Edward Berthelot/Getty

Some free games or airport Wi-Fi login pages ask people to watch a short video ad before giving them what they want — internet access or a new power-up.

Kaveh writes: Users are held captive while the short ads play, but they can just put down their phones and come back when it's done.

  • Not for long, if ex-MoviePass CEO Stacy Spikes has his way.
  • Forget the old, easy-to-ignore 30-second ad. Spikes wants users to watch 15–20 minutes of video advertisements in exchange for a free movie ticket, according to TechCrunch.

But how to know that people aren't starting the ads and then wandering off to do something fun until they're over? Spikes' proposed solution: facial recognition.

  • His new app, PreShow, selects a package of videos that users have to watch in order to get a ticket to their chosen movie.
  • Spikes demoed the app for TechCrunch's Anthony Ha, who reports on its attention-seeking attributes: "Any time he looked away from the screen or moved too far away from his phone, the ads would stop playing." No ads, no free stuff.
4. Worthy of your time

Illustration: Aïda Amer/Axios

The 42-year-old NBA rookie (Matt Giles — Longreads)

Corruption anxiety (Felix Salmon — Axios)

China's big materials science play (Sarah O'Meara — Nature) (h/t Azeem Azhar)

The Google products that died (Naeem Nur —GCemetery) (Again, Azeem)

Celery is the new new thing (Hailey Eber — LA Magazine)

5. 1 lost thing: The stuff left in Ubers

Photo: Ed Jones/AFP/Getty

The items most often left in Ubers are pretty much what you'd expect: phones, wallets, cameras, keys and, of course, vapes.

Kaveh writes: But plenty of unexpected things have been left in Ubers, according to the company's latest "Lost & Found Index." A sampling:

  • An 8-week-old Chihuahua
  • A set of 18-karat gold teeth
  • A propane tank
  • White leather snakeskin Louboutin heels
  • A fish tank full of water and fish
  • A shopping cart (???)

Uber says the prime times for losing items are between 11 pm and 1 am, and on Saturdays and Sundays. The company doesn't say why this is, but we can think of a popular nighttime activity that might be associated with forgetfulness.

Bryan Walsh