The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google

by Scott Galloway

The Four are engaged in an epic race to become the operating system for our lives. The prize? A trillion-dollar valuation, and power and influence greater than any entity in history.

We require a second year so we can charge tuition of $110,000 vs. $50,000 to support a welfare program for the overeducated: tenure. If we (universities) are to continue raising tuition faster than inflation, and we will, we’ll need to build a better foundation for the second year.

Ultimately, then, why should Amazon, the king of online retail, get into multichannel retail?88 Because e-commerce doesn’t work, isn’t economically viable, and no pure e-commerce firm will survive long term.

The wealthiest man in the twentieth century mastered the art of minimum-wage employees selling you stuff. The wealthiest man of the twenty-first century is mastering the science of zero-wage robots selling you stuff.

Consumers no longer go to stores for products, which are easier to get from Amazon. They go to stores for people/experts.

What’s clear is that we need business leaders who envision, and enact, a future with more jobs—not billionaires who want the government to fund, with taxes they avoid, social programs for people to sit on their couches and watch Netflix all day. Jeff, show some real fucking vision.

Some digital companies also lag. Twitter, for example, doesn’t know much about its customers. Millions of them have fake names, and as many as 48 million (15 percent) are bots.

One way to appreciate the brilliance of this acquisition is to look at Instagram’s “Power Index,” the number of people a platform reaches times their level of engagement. This social index reveals Instagram as the world’s most powerful platform, as it has 800 million users, a third of Facebook’s, but garners fifteen times the level of engagement.

Facebook argues that the phone isn’t “always listening” and that it never stores the raw audio when it is listening. The platform said explicitly on its help pages that it doesn’t record conversations, but that it does use the audio to identify what’s happening around the phone.25 Then again, it doesn’t need to record conversations. All it needs is a few keywords. Note that this is presented as a friendly service. The help page used to read: “If your phone’s microphone has trouble matching what you’re listening to or watching, the room you’re in may be loud or a commercial may be on.”26

That entailed sharing your data with third-party apps without your knowledge, and despite being warned specifically against this practice by the FCC in 2011.33 The FCC found Facebook had been releasing personal data to third-party apps without users’ permission, and that it had been sharing much more personal data than the apps needed. Facebook promised to comply with the consent decree, but didn’t.

The Times agreed to let Facebook post its articles natively on the platform. That means you can read the whole article without leaving Facebook and stepping onto the Times’ site. The quid pro quo was that the Times gets to keep the ad revenues. Sound familiar? That may sound good, but the reality is that it leaves Facebook in control. That means it can increase or decrease its customers’ exposure to the Times as it chooses, and swap in and out other media content when Facebook feels like it. This reduces what was once one of the proudest institutions and brands in American media to a commodity supplier. Facebook decides which content is best suited to convey advertising, and who will see it.

In late 2016, the Times pulled from the Instant Articles program, as the revenues were immaterial.39 So, the Times was (again) willing to sell its future, but fortunately the bid wasn’t compelling.

Experiments in late 2017 and early 2018 around making the news feed more focused on content from family and friends, versus paid content, actually increased the amount of fake news.

Moderates are hard to engage or predict. Picture a video with some guy in a cardigan sweater discussing, in a balanced tone, the pros and cons of free trade with Mexico. How many clicks would that get? Marketing to moderates is like fracking for gas. You only do it if the easier alternatives aren’t available. Thus, we are exposed to less and less calm, reasonable content. So, Facebook, and the rest of the algorithm-driven media, barely bothers with moderates. Instead, if it figures out you lean Republican, it will feed you more Republican stuff, until you’re ready for the heavy hitters, the GOP outrage: Breitbart, talk radio clips. You may even get to Alex Jones. The true believers, whether from left or right, click on the bait. The posts that get the most clicks are confrontational and angry. And those clicks drive up a post’s hit rate, which raises its ranking in both Google and Facebook. That in turn draws even more clicks and shares. In the best (worst) cases—we see them daily—the story or clip goes viral and reaches tens or even hundreds of millions of people. And we all step deeper into our bubbles.

Another reason they don’t want to be positioned as media companies is more perverse. Respectable companies in the news business recognize their responsibility to the public and try to come to grips with their role in shaping the worldview of their customers. You know: editorial objectivity, fact-checking, journalistic ethics, civil discourse—all that kind of stuff. That’s a lot of work, and it dents profits.

Fake news stories are a far greater threat to our democracy than a few whack jobs wearing white hoods. But fake stories are part of a thriving business. Getting rid of them would force Facebook to accept responsibility as the editor of the world’s most (or second most) influential media company. It would have to start making judgments between truth and lies. That would spark outrage and suspicion—the same kind that mainstream media faces. More important, by trashing fake stories, Facebook would also sacrifice billions of clicks and loads of revenue. Facebook attempts to skirt criticism of its content by claiming it’s not a media outlet, but a platform. This sounds reasonable until you consider that the term platform was never meant to absolve companies from taking responsibility for the damage they do. What if McDonald’s, after discovering that 80 percent of their beef was fake and making us sick, proclaimed they couldn’t be held responsible, as they aren’t a fast-food restaurant but a fast-food platform? Would we tolerate that? A Facebook spokesperson, in the face of the controversy, said, “We cannot become arbiters of truth ourselves.”47 Well, you sure as hell can try. If Facebook is by far the largest social networking site, reaching 67 percent of U.S. adults,48 and if more us, each day, are getting our news from it, then Facebook has become, de facto, the largest news media firm in the world. The question is, does news media have a greater responsibility to pursue, and...

It’s easier to fool people than to convince them they’ve been fooled.

But AI has biases as well. It’s programmed, by humans, to select the most clickable content. Its priorities are clicks, numbers, time on site. AI is incapable of distinguishing fake news, only at best to suspect it, based on origin. Only human fact checkers can ascertain if a story is fake or not, and how high on the scale of credibility.

The majority of media firms accept the responsibility of applying an expensive attribute: discretion.

A disturbing aspect of today’s media duopoly, Facebook and Google, is their “Don’t call us media, we’re a platform” stance. This abdication from social responsibility, enabling authoritarians and hostile actors to deftly use fake news, risks that the next big medium may, again, be cave walls.

we confide in Google at a level and frequency that would scare off any friend, no matter how understanding.

The irony is that Google’s victims invited the company in, letting Google crawl their data. Now Google’s extraordinary market cap is equal to the next eight biggest media companies combined.17

In fact, Google and Facebook do a better job extracting value from Times journalists than the management of the Times. I believe if the Times had refused to let any of its content on the Facebook or Google platforms, those younger companies would be worth at least 1 percent less. New York Times articles give these platforms tremendous credibility, and the Times in return gets . . . very little.

The Times should immediately turn off Google—and henceforth the company should refuse to allow Google, or any other company, to crawl its content. Then, if Google or another internet player wanted to license the content of the New York Times, it would have to pay for it—and pay more than anybody else. Google, Bing, Amazon, Twitter, or Facebook could provide their users with unfettered access to our content. But only one of them—the highest bidder.

My plan was to form the consortium, lease our content, and start pushing back on tech firms that had built billions in stakeholder value based on our content.

More than providing financial ballast, Bezos turned the Post toward the web with a vengeance. Its online traffic doubled in three years, leapfrogging the Times. And the Post developed a content management system that it’s now leasing to other news outlets. According to the Columbia Journalism Review, this CMS could generate $100 million a year.

The one thing we still had of value was our content—and the professionals who generate it. Yet, instead of making that content scarce—shutting off and suing any digital platform that repurposed our content—we decided that we should try to drive more traffic by prostituting our content . . . everywhere. This was the equivalent of Hermès deciding to distribute Birkin bags through walmart.com so hermes .com could get more traffic. We committed one of the great missteps in modern business history. Overnight we took a luxury brand, spread it through sewer-like distribution, and let the sewer owner charge less for it than we were charging in our own store, through subscriptions.

I had turned $600 million, of other people’s money, into $350 million. As part of our board compensation, we were granted options. Mine were worth around $10,000 or $15,000. I just needed to fill out some paperwork. I decided not to; I didn’t deserve it.

Leave aside the likelihood that once the company becomes old news, Congress and the Justice Department might just decide the search engine is a public utility and regulate the firm as such. Google is a long way from that fate—but notice that it too is basically a one-trick (and one trick only) pony.

Mayer, then an executive at Google, sat before Congress and told a bunch of mostly white, mostly old, mostly men that newspapers and magazines had a natural obligation to let information be crawlable, sliceable, query-able, and searchable . . . by Google.6 Stories provided by Google News, she said, “are sorted without regard to political viewpoint or ideology, and users can choose from a wide variety of perspectives on any given story.”7 A thousand flowers would bloom in the ether, she implied; we’d maintain the country’s DNA of innovation, and inner-city kids would get their book reports done. It was similar to PBS hauling out Big Bird when it wanted its subsidy renewed. Who wants to kill Big Bird? Indeed, Mayer testified, Google provided “a valuable free service to online newspapers specifically by sending interested readers to their sites.”8 She sounded disappointed that the New York Times and the Chicago Tribune weren’t thanking Google for all it had done for them. Perhaps this was because Google’s “valuable free service” was, in fact, rapidly gutting the advertising base of the American media—and rerouting all those revenues to Google.

the fourth factor in the T Algorithm. Bill Gates and Steve Ballmer were neither likable nor cute. In fact, the room got brighter whenever they left it. So, when Microsoft achieved a certain level of influence, district attorneys and regulators woke up one morning all over Europe and decided the easiest way to the governor’s mansion, or Parliament, was to go after the Wizards of Redmond. The less likeable a company, the sooner the regulatory intervention—antitrust, antiprivacy—as questions about its supply chain or any manner of rational concerns are irrationally selected and applied.

Facebook: Nobody wants to be seen as a company not on board with Facebook. Old CEOs want to put Mark Zuckerberg on stage with his hoodie. It doesn’t matter that he is neither charming nor a good speaker—he’s the equivalent of skinny jeans and makes every company that tries on Facebook look younger. Sheryl Sandberg also has been key—she’s hugely likable, and is seen as the archetype of the modern, successful woman: “Hey everybody! Lean in!” Facebook has not come under the same scrutiny as Microsoft because it’s more likable. Most recently, Facebook has attempted to skirt responsibility for fake news, claiming it’s “not a media company, but a platform.” Hiding behind freedom of speech and a word, Facebook may have committed involuntary manslaughter of the truth on an unprecedented scale. It’s good to be prom queen.