S2: Welcome to the cloud kitchen’s edition of Slate Money.
S3: Your Guide to the business and finance news of the week. I’m Felix Salmon of axioms. I am joined in the studio by Anish Minsky of Breaking Views. Hello and I am joined not in the studio by Emily Peck of Huff Post. Emily how’s your snowball and what is a snowball.
S4: Hello. First of all the snowball is this cool microphone that is round like a snowball.
S5: I love it. Is it white. It’s actually black as blue on it. So I don’t know what to do about this.
S3: This is the problem with technology if you never really understand it we are going to talk a lot about the way that technology has changed the restaurant industry we’re going to talk a bunch about the way that technology is changing video because we of course we had the big launch of Disney plus this week and we’ll see other thing we’re going to talk about.
S6: We’re talking about the apple pie.
S7: Man Oh oh of course. How could I forget. We’re going to talk about the Apple God.
S8: We’re going to talk about whether or not Apple’s glorious telephone based credit card launched in conjunction with MasterCard and Goldman Sachs is actually sexist. All that coming up on Slate Money.
S9: Let’s talk about the Apple card. I am sitting opposite a blank chair which would normally be sent in by Kathy O’Neill. I feel like Kathy O’Neill is the spiritual presence in the room. She’s actually traveling today but she did give an interview to Aaron Mack of Slate. If you want to read that she this is basically what she has been talking about since the first day she came on to Slate. Money is the idea that disparate impact is the technical term it’s the idea that you can build an algorithm which ostensibly just looks at nothing more than your credit score and your self reported income and a few other things. And then in fact it can wind up giving predictably aggregate lower credit lines to women than it does to men. Now we do not know that that is going on in this case because so far all we have is a bunch of Twitter anecdote. And it is very important data when you have Twitter and not to extrapolate from Twitter anecdote. But one of the big issues here which you know the ghost of Kathy is whispering in my ear is it is very problematic that all we have is Twitter and that we should have much more than just with the anecdote. And Goldman Sachs and Apple should be very transparent about the actual facts of whether or not there’s disparate impact instead of just waving and saying oh we got a third party to you know attest that there’s no disparate impact and it’s to explain what you’re talking about a little bit.
S3: No I feel that’s your job. Emily can you please like rewind and give us a little bit of what the hell are we talking about here.
S4: Sure. Alibaba that’s me rewinding.
S8: I like it. Are you using your snowball to rewind.
S10: I am using my snowball in concert with audacity and other tech marvels recording this from my home today.
S5: I’m very impressed.
S4: So over the weekend David Hyde of Maya Hansen tweeted basically that his wife David had a Maya Hansen is a well-known tech founder developer tweeted that his wife and he both had Apple cards issued by Goldman Sachs but that he had 20 times the credit limit that she had. Even though her credit score is higher they file taxes jointly they you know communal property and they importantly reported the same annual income.
S3: So in terms of the data that Goldman and Apple say that they base these underwriting decisions on she should have come out better than him because they had the same income. But she had a higher credit score right.
S4: And so the tweet just went completely viral and among the people chiming in was the was Steve Wazni act. You know the co-founder of Apple who said a similar thing actually happened to him and his wife where she had a lower limit than he did. And New York State quickly said well we’ll investigate this. Elizabeth Warren chimed in calling out Goldman for not because Goldman has spoken and kind of liked it a not real apology kind of a thing and said something like we hear you and let us know if this is happening to you. But it hasn’t said this is exactly what’s in the algorithm. You know it’s kind of being it’s really hedging on that being really dicey. Weird.
S9: I have asked them. I’ve had conversations with Goldman. I have asked them to send me the details of how they determine whether there’s disparate impact. What was determined in this case I’m not asking them to reveal the entire details of the algorithm but just the outputs of the disparate impact test. And we will see whether they supply that but they certainly haven’t played it yet.
S4: And you wrote in your newsletter Felix that Charles River Associates some signed off on the algorithm before the card was issued and said it wasn’t discriminatory but it’s not really clear what that even means.
S9: So number one it’s not clear what that means. Number two it’s not clear that that is exactly what they did. I have asked them Is this what you did. Did you you know test the algorithm and determine that there was no disparate impact against women and I’ve received no reply from them. The only people saying that Charles River Associates did this is Goldman. I’m not saying they’re lying but like I just would love to hear from Charles River directly to see if they actually did what Goldman says that they did. And they are being super quiet as well and it’s all part of this broad culture of secrecy. Everyone who works at well knows that it is a super secretive place. Everyone I know who works at Goldman knows that it’s a super secretive place and they will do things like try to throw you in jail if they think that you have stolen their secrets. And clearly Charles River is a super secretive place as well as all of the secrecy just doesn’t really work well with the desire of people like me and people like David Hanna My Hansen to see what’s going on behind the scenes of this algorithm.
S11: Yeah I think it’s a fair point. You know when you’re talking about how credit scoring is probably going to change as we move forward and people are increasingly using complex algorithms the more complex they get the more the people who created them probably don’t even fully understand what exactly is going on. And also from a legal perspective I’m guessing that they probably don’t really want to know entirely what is going on. And so I’m kind of curious in terms of the auditing of the algorithm that was done. Like what does that actually do to kind of give them a little bit of cover but not tell them so much that then later they can be sued. I’d just be curious right.
S10: And I think one thing we should really highlight here is that Apple. This is the apple cart. After all it’s not the Goldman card. I mean Goldman does the back end but Apple has all this language marketing language about how this is an apple card not a bank card. They have been silent. They’re not really talking about this very much at all.
S3: I think it’s kind of amazing to see them throw Goldman under the bus here because the marketing slogan is designed by Apple not a bank. And then the minute that the question about well let Can you talk to us a little bit more about how this is designed because the design looks like it’s sexist. They’re like Oh yeah that’s the bank.
S11: They probably like everybody hates Goldman anyway.
S6: I mean someone pointed out I think it was in the Vox piece you linked to in your newsletter Felix but someone pointed out it would be like if there were bugs with the iPhone it’d be like Apple saying you have to talk to Foxconn about that our factory in China is responsible for that like Apple needs to take responsibility for the products that its marketing and that it’s claiming to be its own. Yeah but as it abdicate responsibility for it.
S11: Yeah I feel like as Apple though increasingly kind of moves away from their wheelhouse as they’re kind of trying to expand what they do I’m guessing that this is going to happen more and more because they’re going into industries that frankly they they don’t know as well.
S9: You don’t actually want Apple to be a bank. I mean no one wants Apple to be a bank. The whole there is a huge amount of regulation around bank holding companies and who can own banks and who can be banks. And I think the world would would be terrified if any of those tech giants became a bank because financial data and health data are the two big types of data that people really want ultra secure and they don’t just want sort of floating around in on Facebook.
S12: Although interestingly as this was the past few weeks we’ve had Google coming out talking both about having health data and potentially checking accounts.
S9: Yeah Google checking account sounds like really weird. I have no idea how that would work. But yeah they they say they want to do that. Facebook is getting back into payments for I think the fourth or fifth time you know we’ll see whether that works. Apple obviously has this card which has you know I mean before this has managed to get enormous adoption and have some enormous percentage of all contactless payments in America were made on an apple card. And so Apple is actually becoming an important force in payments now and all of this is happening. You know people would be worried about it if it was banks because people don’t trust banks and you know mistrust of banks is something we’ve talked about a lot on this show. But I don’t think anyone is any is reassured if it becomes tech giants right because I don’t like tech giants are kind of becoming the new the new bad guys right.
S12: No it’s not it’s unsurprising that the you know Apple had that slogan. We are not a bank. But now they can’t exactly say we are not a tech company right.
S4: I just think this whole episode highlights the danger for tech companies already losing or have have lost the trust of a lot of Americans another venturing into a sector where Americans like absolutely no one likes their bank. No one likes the credit card companies like tech companies or reputations are already suffering and now they’re getting into financial services and I don’t see how this ends that well.
S11: I mean I think they’re all clearly and I probably said this a million times but I think they’re looking at China and they’re seeing these models of like Ali Baba and Ali PEI and how how lucrative those are becoming and it make and it makes sense to a certain extent if you’re saying like we already have all these people if we could kind of just connect these buyers and sellers then we can also expand beyond adds validity blah all of that like you can see where that makes sense. But the problem is that is just simply a lot harder to do in the United States than it is in China.
S9: And I want to talk a little bit about brand value Apple is a hugely admired brand in America. And on some level it makes sense that people would much rather have an Apple credit card than a Goldman Sachs Credit Card or Wells Fargo credit card or something like that because people don’t like Goldman and they do like Apple. And yet it turns out that the reason people don’t like banks is not so much just they have bad brands but just because these financial services are really nasty and make you feel bad and upset you know this is a credit card that charges you interest and you know it does it in a slightly better way. And actually in a much better way than most other credit cards you know the the little behavioral default in the Apple card are much better designed from a consumer perspective than defaults on most credit cards. But in the world of Twitter anecdote here you know I wanted to see for myself I have a credit card. My wife and I have the same income for the purposes of this credit card. We both know my my my income all goes into a joint checking account. So it belongs to both of us. And I. I asked my wife for my hey why don’t you apply for an apple card and let’s see how your credit limit compares to my credit limit and we’ll see whether you know you have the same result as if that was had. And so Michelle went ahead and applied for the credit card and the screen came up saying like can you upload a photograph of the front and back of your state I.D. which is not a screen that most people get. And I did a little quick unscientific Twitter poll it only seems to be about 30 percent people get that screen. The screen came up and then nothing happened for a few hours and then a few hours later they said oh there’s a problem with your I.D. you’ve been declined. And then she tried again it was like a better quality photograph of the idea. And then she was declined again. And this is like an unpleasant experience which makes her and me feel worse about Apple. And this is I think the thing that a lot of these tech companies don’t understand is that people feel good about Apple Apple has good Rand very precisely because it’s not in financial service it isn’t if they move in the financial services people will feel worse about now.
S11: But I guess if they could do a little better job people would be a little bit better. But I think they’re going to be the problem too it’s like it’s almost reminds me of like Tesla where they’re kind of like let’s just get the humans out and we’ll bring robots in and everything be better and it’s a disaster. And I wonder if similar things are happening here too. It’s like they’re just they’re using again more complex algorithms maybe automating a bit more. And so then you’re getting these results that they did not anticipate.
S4: I will say though one thing to think about is I don’t think credit cards are issued to couples based on like. I don’t think a credit card company looks at a couple where the say one spouse stays home the other one works. I don’t think the stay at home spouses income is counted the same as the working out spouses.
S3: So I can jump in here and like having done a bunch of reporting on this I can explain what’s happening here and this does explain why people are upset about the apple cart and why the apple cart is unique for the time being. Pretty unique for the time being. Most of the time let’s say the my wife and I apply for Amex card. We will make one application between us for the Amex card and we will get two cards one in my name one in her name but it’s one account and you only apply once and it kind of doesn’t matter which one of you applies whose name the primary account holder is. You only make one application you get one response and so you don’t realize that if you applied individually you might have gotten different results. The Apple card is not set up for multiple cards on a single account.
S9: It’s only set up for individuals which means that married couples who generally share accounts when it comes to credit cards have to apply separately for the Apple card and that’s something which is extremely rare and because it’s so rare you know it just means that this these kind of disparities in underwriting outcomes become visible in the way that they are just not visible elsewhere because that’s the situation almost never turns up in the wild anywhere else.
S13: I think it does sometimes turn up in the wild because I have my spouse stays at home and like when we apply for credit things like that like we need. Yeah. We need to do it jointly like you’re saying Felix. I mean we have separate cards were treated differently so this claim from Hanna Meyer Hanson and others you know who said that you know we’re the same. We have the same income we share joint income whatever it’s just that’s not the reality of financial services and underwriting and that’s like I think a bigger question that needs to be asked because if if that’s not addressed then there is going to be this disparate outcome that seems success.
S3: You know that sort of like baked into the system beyond Apple and Goldman and addressed in a in a pretty transparent and open way because again right now all we have to go on is Twitter anecdote ran you know I keep on going back to this one guy on Twitter who’s in the app replies to the H H on Twitter and he’s like Yeah my wife and I both applied for an apple cart and she has a higher credit score and a higher income than I have and she’s still got a lower credit line right.
S6: That’s a big question. I saw some of those two and that’s yeah that’s a good omen and Apple need to answer for this. Yeah.
S11: Yeah because I mean of course the other questions are going back and forth about like who’s actually making all the payments.
S3: Yeah I mean a lot of things go into these credit scores but I think you’re right at the end of the day it doesn’t matter what goes into the credit score if the credit score is higher then you should get a higher credit line. No I agree. And so what we need to do is work out like Is this true. Like you know is this common and all of these questions that just we’re not getting clear answers to.
S4: And it’s worth noting that in the EU and the GDP are there are some regulations that were just put in place on what they call automated decisions where consumers have a right to understand what goes into these kinds of decisions made by algorithm. Yeah.
S3: Yeah I mean I feel like I feel like in the case of the apple cart they’re being very they’re saying quite explicitly Well it’s your credit score your credit history and your self reported income. And it’s just like really if that’s like it doesn’t explain these outcomes but maybe maybe there will be a little bit more forthcoming given this outcry Emily Yeah. Tell me about your restaurant habits. Do you do you generally eat out or do you generally order in.
S4: Well we used to be in order and kind a family in Brooklyn but now we live kind of in the middle of nowhere. So we do a lot of cooking. I’m sad to say I’m happy to say because I think it is healthier.
S5: Cooking is definitely healthier and cheaper definitely over the years.
S13: I’ve switched from restaurant to ordering and kind of person I would say yeah. Felix I know you’re a restaurant person. I feel it.
S3: I am a restaurant person. I you know I think there’s a lot of experience all wonderfulness that one gets from eating at a restaurant that you don’t get from ordering in from a restaurant on the other hand. I don’t have kids you know and I totally understand that that alone changes the calculus enormously and I do not judge.
S9: I will never judge people for ordering in. What is interesting to me is that the ordering in economy which you know insert some weird unscientific generalization about Millennials here is does seem to be growing that economy has been swarmed by big Silicon Valley tech giants like Uber and Door Dash and Grubhub and they are taking really significant chunks of every check when you order delivery. They don’t just take that delivery fee they actually take a commission on top of that. And restaurants a lot of restaurateurs that I’ve talked to are feeling kind of unhappy about this because they see those deliveries as on the one hand being like people who might otherwise have come into the restaurant and spent more money especially on things like alcohol and on the other hand it’s like well they make less money because they have to give a huge chunk of that check to the GrubHub is an uber Reids of the world. And then it’s not the only place that tech is sort of taking you know extracting rents from the restaurant industry it’s happening in a bunch of other areas as well. And I was particularly interested in this new company called seated where you get like up to 30 percent of your check back in the form of Amazon rewards basically and it’s like wow and now and now Travis Kalanick has gotten a bunch of new Saudi money to make things even worse for the restaurants of the country is that that’s why we’re talking about this now.
S11: Cloud kitchens. Yeah. Although the thing I’ll kind of say though is that part of the reason that people would probably invest in that part of the reason that this is happening is because people’s eating habits are changing. And so we can talk about this and yes this is putting restaurants at a disadvantage but it isn’t just you know tech bro’s taking advantage of people. It’s that people’s habits are changing.
S4: And I actually was thinking because so Travis Kalanick has this company called Cloud kitchen which basically gets rid of restaurants entirely and they just have you know these kind of industrial kitchens where you order the take out in the sun the take out. No one sits anywhere and he just got like 400 million dollars for it from the Saudi division funder.
S5: Has a five billion dollar valuation at a five billion dollar valuation which I love the idea of what this does to Travis Kalanick net worth.
S3: He was already like a billionaire from Uber and now he’s just added a couple billion dollars to his net worth by raising money at the five billion dollar valuation. Oh great. So glad that Travis got even richer.
S11: But I mean it’s essentially like what he’s talking about is almost like you know when you have the the trucks that everybody gets their lunch out like it is. You know I I think of like back in the past where you know people actually eat their lunch out they didn’t just eat it at their desks or the fact that you did have people regularly going out to eat. And as I’ve said like I feel like regardless of the tech people coming in I think it’s hard to believe that people were just going to continue doing the same things they did 20 years ago. So I guess the question then is well I believe that. But is that good. I mean like things change you don’t people know why things at home and eat at home say no.
S3: I mean I I genuinely believe that in a world where people are increasingly valuing you know face to face real world experiences this should be a boom time for sit down restaurant experiences that should be growing not shrinking. And I don’t entirely understand what it is about the present moment that makes that 180 degrees false and why people are eating out at restaurants less and getting food delivered more.
S4: I mean I can’t really wait. People are increasingly valuing face to face interactions. Is that true.
S5: I feel like people see it now. Yeah.
S3: That’s why I like the conference economy is booming. That’s why you know that’s why the music industry as is is moving overwhelmingly to live events.
S11: You know I think you also have revealed preference to a certain extent to right. Is that part of the reason that a lot of these companies like your Doordarshan would never have done well is because people have found hey it’s actually really nice to eat good food at home and put on Netflix. It’s easier and if you have kids it’s a lot easier. Yeah.
S10: So super convinced you don’t even have to. I mean the appeal. I always thought of like GrubHub or door dashes. You pick up your phone you press a few buttons you talk to no one you don’t even have to call you don’t call the restaurant anymore and go through like that sort of like torture of ordering off the menu blah blah blah. You just press a few buttons. Someone shows up at your door hands you a bag. You don’t even have to talk to them. I mean it’s all about you know it’s all part of this. This phone society we live in where we were just texting no one wants to pick up the phone anymore and say it sounds horribly dystopian and yet.
S11: A very realistic guess because if people didn’t like doing it it wouldn’t be successful.
S9: So my feeling is that you’re right about diagnosing what is going on even though I’m sad about it. I think that this is absolutely correct but one of the implications of that is the restaurants as an industry are going to wind up spending more. Higher and higher rents on tech services and I feel like the restaurant industry was precarious enough to begin with and that if they wind up having to spend a CEO wind up paying a whole bunch of money to Doordarshan agrees as well as people like Open Table as well as people like seated as well as people like Yelp or whoever the services are that get them good reviews on Yelp because without a good review on Yelp you’ll never make any money. You know all of these kind of services add up and they all eat into your profit margin and it just makes trying to open the restaurant more more precarious in a world where restaurants have historically been one of the foremost ways in which immigrant families especially can you know enter the middle classes. This just gives me a bit of a sad.
S6: Yeah. No it’s definitely sad and I think there.
S4: I mean I’m not happy about this sort of retreat this retreat from the public sphere and this sort of dying of the rise of take out is sort of hastening this kind of public retreat where we’re all like just going back home and to our apartments and staring at screens while we eat our sad takeout.
S10: I think it’s really bad and I think that there are real benefits to having restaurants and places where you gather and have to sort of interact with each other and there can be really interesting encounters. I think we saw last year or maybe it was this year where you know people from the Trump administration tried to eat at restaurants and they had to encounter the public and it was very uncomfortable for them. And that’s sort of like a very extreme example but there is a benefit to having to go out into the public sphere in a democracy you know. So in addition to being bad for immigrants because owning a restaurant or working in a restaurant is sort of like a step up into the economy it’s just bad for the citizen. I think maybe a little.
S9: Even though ordering GrubHub is nice and convenient there is something demographic about restaurants. I mean obviously some very exclusive. But the countries with restaurants the countries that didn’t used to have so much of an ability is like that. What you often find if you look back on history the history of people having food cooked for them is very much the history of people being able to employee servants to make food for them. And then there’s this massive Revel democratic revolution where people don’t need to employ a full time cook to make food for them and they can just go out to a restaurant and just pay someone to make food on a you know occasional basis. And it really revolutionizes how people eat. And it was a wonderful revolution. And you know maybe this is the next step of that. You don’t need to go anywhere to pay to pay someone else to cook for you. You can just press a button on your phone and someone in Travis clinic’s cloud kitchen will whip up you know a tie com guy or something and deliver it to your house. I just. I do agree with Emily that that is a backward move in terms of civil society. Oh.
S12: No I just think it’s a lot of. I. Think it’s nostalgia for the way things were and this idea that change must always be scary and bad. And yeah right now I’m not saying there are some downsides but it also works really well for a lot of people. And we’ll see what happens in the future.
S8: Emily it’s we have a new Netflix on the block. It’s called Disney plus and it launched with great fanfare. Did you sign up.
S6: I did not sign up. I have a horizon as my internet provider and then I heard we could get free Disney plus. But alas it’s not true. Not all Verizon subscribers can get Disney plus.
S4: But anyway yeah this little company you may you may have heard of called Disney is now doing streaming all Disney’s content. So all the movies that everybody loves plus all the Star Wars stuff.
S3: Well let’s let’s rewind it is far from all of it. Eventually in many years time it will be all of it. But Disney signed multi-year deals with a whole bunch of online services which they need to honor. So you can’t just turn on Disney plus and see all of the Star Wars movies you can or all of the Marvel movies or all of the Pixar movies. You do get a bunch of their back catalog and you do get the Simpsons. Yes for seven dollars a month which is cheaper than Netflix or free if you manage to have the right kind of Verizon account or stuff like that. I mean we just had the launch of Apple TV plus as well. And a lot of these things in trying to make a dent against the two big giants in the space which are Amazon Prime and Netflix basically signing up people for massive free trial yearlong free trials that kind of thing in an attempt to hook people. I can tell you I I got my free trial to Apple TV. Plus I watched about 10 minutes of the morning show and I gave up it was atrocious.
S11: So I’m not quite sure how much there is although I feel like I have a little bit more faith that Disney is going to do this well than Apple. Yes. Disney has been in the content business for a while.
S3: So Disney had an enormous number of sign ups it was like 70 million or something. Raise 0 7 really not 10 million 10 million. Anyway millions of sign ups and people really want to watch the man the Laurin I think which is some star wars thing. And and there was of course the inevitable tech glitch and everyone got blue screens of death and couldn’t sign up and that kind of thing because Disney had only spent three billion dollars buying a streaming company bam tech to make sure it was all seamless and could scale without any problems. But like I think the general consensus is that they will figure out the tech problems that the IP is incredibly compelling that they have all of these franchises that people are going to want to watch and that really Disney plus could well be powerful enough to be a compelling alternative or at least addition to well and that has X and Amazon.
S11: Yeah especially cause it has such good content for kids not that Netflix does it. But obviously Disney is gonna be better and I do think though this kind of idea like the streaming wars that you kind of hear about. Yeah I question that a little bit because I do think that we’ll probably get to a point where people aren’t just an old one the streaming service.
S3: You know people who already own two or three especially if they have Amazon Prime which they don’t think of as a streaming service. The interesting thing about Disney plus is that Disney is bundling it with Hulu and ESPN in like a big bundle for like 15 dollars something like that. And that’s a pretty compelling thing because the one thing which you’ve never really been able to get on O.T. up until now has been sport like sports and so now you get ESPN the like boom now get everything.
S12: Otherwise you have to go to your parents Dish Network.
S13: I’m not saying I did that last weekend but I think one thing this shows is that there is no there’s no one streaming service that has it all like as more and more people unplug from cable and nothing is actually replacing cable that we’re all using this kind of like mishmash of different streaming services and it at some point it’s just going to be the sort of polarized kind of you know choose your own adventure landscape.
S3: And although I feel I’m saying no I mean now that they’ve bought fogs now that you have this bundle of Disney plus Hulu and ESPN that really does come as close as I think anyone’s gonna get to a one size fits all. All you can eat kind of bundle like yeah you miss out on that Netflix show or that HBO show or the Amazon Prime show. But in terms of being able to just turn on your television and want and watch something which you will enjoy watching it will serve that purpose. Great.
S11: I mean I think because Netflix almost is increasingly becoming like a channel as it creates more and more of its own content and is less reliant on the content of others. So it’s like you go to Netflix for specific shows in the same way that you’d go to HBO for specific shows whereas it does seem like as you you were describing this kind of bundle that’s a little bit more like cable. You know.
S3: I do think you could get to a point where people are spending as much as if not more what they were previously spending on cable however although that’s pretty hard cable bills were enormous and you know I feel like no one’s going you don’t need more than that. I feel like if you have that Disney bundle of Disney plus Hulu and ESPN and that’s like 15 ish dollars and you have Netflix for another fifteen dollars and you have prime anyway so the marginal cost of prime this hero and maybe Showtime maybe a but like even though you know that’s 30 bucks which is way lower than the cable bill and it’s pay for their high speed Internet access.
S3: Right. But often you are paying for high speed Internet access anyway even when you have cable TV.
S11: Right. But I would I also think is interesting though about this model that is obviously all different the cable is that you can often kind of start and stop a lot. Right. Because I mean I know that with Netflix like if I want to watch something on netflix I’ll do it.
S6: And then if I don’t watch TV for six months I won’t pay for Netflix for six months and then I’ll start it up again which I think that that’ll be an increasing strategy like succession found sign up for HBO max which is coming out soon.
S4: I mean there are a couple of services still to come out. HBO Max and Peacock which is like NBC is going to be NBC is free streaming service and they they took back friends in the office from from Netflix which was like very big draws for Netflix. And one point I think is interesting to contemplate would be the effect of it if net neutrality kind of really goes away. The streaming services that are tied up with Internet providers may wind up with some kind of sinister advantage here.
S3: You know like HBO is now owned by AT&T. Right.
S6: Right. Exactly. And the other one I’m thinking of. Oh yeah. And this peacock service three is owned by Comcast Comcast.
S3: So there may be you know down the line those kinds of services might be much cheaper because they have their own pipes and or they can monetize the pipes in some other way or if you know if you’re getting AT&T cell service and you get HBO Max for free and then they manage to target ads that you bet. I do think that the evolution of ads on these services is going to be super interesting one that we’ve had this kind of golden era where Netflix Amazon and HBO have all been basically ad free and people have become accustomed to that. And I think it’s one of the reasons that Hulu doesn’t have the same salience in the culture areas that people like you know I need to watch ads like technically there’s a version of Hulu you can buy which doesn’t have ads but they don’t really push it very hard they want to have that outlet. They want to have inventory for advertisers they want to be able to make money from advertisers. I think Peacock is the same way. But to be super interesting to see whether people are willing to pay money for an online service that also includes ads beyond the I don’t know how many subscribers Hulu already have since quit.
S11: I think it’s like yeah you know I mean I will be interested to see what happens with Netflix especially if the economy turns a little bit. Just because Netflix unlike a lot of the others is a pure play. Right. Just pure play streaming and it doesn’t have the back catalog that a lot of these other guys have. And it has so much debt it has all these content liabilities it’s already paying a fairly high rate on its debt. And so I will be interested to see I think that they even though right now they appear obviously like the leader beyond anyone else. I’ll be really interested to see what happens in a more significant downturn.
S6: And the one other thing I wanted to say was how I see this fitting in with the restaurant conversation we just had to watch enough. I mean we are connected and they are connected.
S4: So back in the days before there was cable and everyone watched the same like three or four channels we had a public discourse that was far less polarized. And that’s not a coincidence there been studies and research that backs this up. Basically we have sort of a shared understanding of the truth because we all connected on the same media. We all watch the same news. We all saw the same movies basically but then cable came along and kind of blew that up. And now we see what happens when you have like a fox news and an M.D. members NBC News and people are getting different versions of the truth and our public discourse has you know along with that become much more polarized. And now with the rise of streaming that polarization and I think that disconnect from you know civic society essentially is going to is becoming much worse and will get much worse and we’ll sort of deep in the world we live in where no one has the same kind of. No one has a shared reality or a shared culture.
S3: I feel like Disney plus is our shared reality. Like Disney plus we all watch Frasier crosses all political divides it brings everyone together. With the possible exception of evil like the Handmaid’s Tale on Hulu which is definitely a blue state thing. But I mean I you know sports is largely universal. Star Wars is universal. The Avengers a universal frozen two is going to be universal. Disney has done a good job of being universal. I like that idea. I do just when I was the one thing though when she’s talking about this coming downturn and how Netflix will fare. Do you mean an economic downturn. I mean I feel like on some level Netflix is a little bit like cheap beer. It’s like one of those things which can actually outperform in an economic downturn that people like retreat into their homes and just do and just do you know just do Netflix instead of going out to the movies or you know.
S11: That is actually an excellent question because I would argue it’s less of just like kind of recession thing you know as I would say it is you could think of it’s like lipstick and the idea of it’s this it’s a small little treat that doesn’t actually cost that much. You’ll actually have more of than a downturn ie more talking if you actually went into like a financial downturn where the access to capital was a little bit harder and a little bit more expensive. You’ve a company that’s so debt dependent that’s where I think they could get into a little bit of trouble.
S8: No that lumbers around. Okay.
S3: Gonna go first because I know you’re worried that someone else will have your number. So what is your number 22. I do not have twins for Emily. Do you have 22. I do not. Okay. You can breathe a sigh of relief. No one else has 22 what is twenty two.
S11: That is the weight of Viktor the cat. Oh.
S7: It’s Viktor the Russian and yes I love Viktor the Russian guy.
S12: He’s he’s a little bit chubby he’s he’s big boned he’s in his 20s he’s not 22 kilos he’s ready to take power back. Yeah. So there is this guy who was trying to take his cat on board this Aeroflot flight and they were like. Your cat is too fat. So he was like I know what I will do is I will put I will delay this flight and I will find someone in Moscow who has a smaller cat. And so he did. And so then you checked into the new flight with this smaller cat. Sophie I believe the name of the cat. And then once he was checked in. He swapped out for Viktor. The cat got on his flight and then he posted a Facebook a Facebook post where he was kind of bragging about this with some delightfully cute photos.
S3: Viktor was looking out of the window. He was on his lap. And then the the mean people at Aeroflot wound up seeing the Facebook post and said You cheated. And then they stripped him of his airmail. They did. They did a lot of miles. But the Victor got to fly in that way. Is he going on a diet now. That’s a good question I think. I think there was some talk about Victor going on a diet so that he can get back onto a plane you know legitimately but it’s an awesome story. Yeah. My number since and I didn’t do it. I’m going to have to mention this. My number is one point to five billion dollars which is the amount of money that we were contrived to lose in the third quarter alone which is kind of amazing that you could lose one point eighty five billion dollars and in one quarter especially given that you didn’t even IPO often the quarter after you IPO is an expensive quarter because there’s a lot of weird stock accounting which happens. But this is the quarter. OK. We work was meant to go public and they presumably spent a bunch of money that is hiring to go public but it’s not like a billion dollars and they have never lost so much money in one quarter. Not even close. So they have their work cut out. They do.
S13: Maybe John like Eric can fix it all.
S3: Oh yeah. That’s the idea. We’ll just get the guy from the phone company to come in and we were. I love the idea of John Major coming into to take over we work. I’m going to put the probability of this happening at about 4 percent. I just don’t think it’s gonna happen. Only needs seems to know so many people that yeah. So Marcello Klawe who’s the chairman of we work used to run sprint when Sprint was fighting with T-Mobile and Sprint of course is owned by SoftBank and now T-Mobile is buying Sprint. And like the whole thing is so incestuous. Emily what’s your number.
S6: I’m going to go with 45. I like that number. OK.
S4: Forty five is the number of consumer CEOs that have left under pressure in 2019 alone which is a rate like double what it was two years ago because the whole consumer sector is being Broyles right now by the Internet and other stuff so like that’s the CEO of the gap has gone McDonald’s Tupperware bunch. People sort of an interesting statistic about how consumer retail is doing what the CEO of Tupperware left.
S5: Yes CEO of Tupperware which who even thinks about Tupperware not me.
S3: That’s probably what I mean I live I live in the household I have to admit with a surprisingly high Tupperware usage. Well no I’m not I’m not sure. Tupperware brand. It’s just like it’s a thing recyclable containers have some brand. I don’t dunno if it’s Tupperware brand but I can tell you that it never occurred to me that you know Tupperware had a CEO who might be forced out because that’s something something internet was something because you were buying the top of Tupperware and I was like I don’t know why the Tupperware CEO has left actually.
S5: But we were just talking about Tupperware parties recently at work. Again I don’t. That’s right.
S3: They had they had the craziest sales force situation. Yeah I know.
S6: Here’s here’s the headline was that resigns after stock falls 73 percent.
S7: That’ll do it. Oh yeah yeah.
S3: Yes. Really all you need to know if you’re the CEO of a company whose dog full 73 percent then yeah I think that’s it for us this week. Unless you’re a Slate Plus listener in which case you will be treated to an ashram and skis Bolivian stylings cause. Yeah we want to talk about Bolivia a bit we’ll do that on Slate Plus otherwise many things to just mean Molly for producing many thanks for listening.
S2: Do keep the e-mails coming on Slate Money at Slate dot com and we will talk to you next week on Slate. Money.
S3: Bolivia. Bolivia. Ever Morales is in Mexico. Yeah. All right.
S11: So first question who is ever Morales so Eva Morales was the president of Bolivia. He had served three terms and was trying to get a fourth term.
S3: No president ever manages to last that long why why was he so keen to just stay on when the population was getting a bit sick of him.
S11: Yeah that’s a very good question. So the thing with Morales are so two things. On the one hand you have to give him some credit because he did oversee a period when Bolivia’s poverty rate declined significantly. Granted that was helped by the biggest commodity boom in modern history. But having said that he did a lot better than a lot of his neighbors. However he also basically just wouldn’t leave. And he seemed to have a little bit of this kind of messianic sense that only he could lead Bolivia. And so basically what happened are a few things. One he was not supposed to be able to run for a third term and then he had a referendum to try to see if he could run for. I’m sorry you can not run for a fourth term. He had a referendum to see if he could run for a fourth term. He lost the referendum and then he had their basically their Supreme Court which are kind of packed with his people say no it is a violation of his human rights to not allow for a fourth term. So so then he runs for this fourth term and then the election the the first election he was running against Carlos Mesa was very very close and it appeared that he was not going to get the 10 percent margin he needed in order to avoid a runoff. So what happened is that they were doing this count and then all of a sudden the count just stopped inexplicably. And then like about almost 24 hours later it just restarted again. And then lo and behold now we have the 10 percent margin he needed and people were like that seems suspicious. And so consequently you had a lot of protests which then became fairly violence. And so you had a number of the police the military the church basically everyone telling Morales he’s got to go.
S3: And so he went and so he went. So this is this is democracy working as it should. They put the people rose up in protest and he got the message and he got on the plane to Mexico and now Bolivia can live happily ever after and not so much.
S11: I mean on the one hand he’s saying this was a coup. And I think that’s questionable. I think unless you have the. I mean how do you define a coup right. Like I feel like unless you have somebody a military in a bar right on state television saying this is not a coup it’s you know I think this is not a coup.
S14: So however that has created this kind of position right now in Bolivia where you just have actually still a lot of violence. You have people are not stopping protesting. And you also though and you will basically have an interim leader now people don’t really know what’s going to happen. So it’ll be interesting because as we’ve talked about multiple times on this show a lot of things are going on in Latin America right now.
S3: You’re seeing a lot of well I mean one of the other things that’s going on in Latin America right now is that Lula has got out of jail in Brazil. Lula and Morales ideologically very close there.
S11: They’re all part of this big pink tide of these leaders these kind of quasi socialist or actually socialist leaders who came to power during the during the commodities boom. And yeah I mean it’ll be interesting I mean it’s not shocking that he went to Mexico because that’s where you have undressed Manuel Lopez Obrador who is also a kind of crazy socialist leader there. So you are you know getting this this to this point right now in Latin America where you are seeing the rise again of some of these pretty leftist leaders similarly in Argentina with Fernandez coming in. But then on the other hand you have places like Brazil where the actual president is pretty far right. So to me what this says kind of ultimately the big takeaway is that Latin America is at a very challenging place right now and it’s really not surprising because you did have a period of time where you created an actual middle class and a lot of countries granted still relatively poor middle class but a middle class. And then everything kind of stopped progressing because the commodity boom ended. And so now it’s unsurprising that a lot of people are kind of pushing back because nobody really knows what happens next.
S3: So I have a slightly different question which is in the 1980s Latin America in general was known for its military junta. That it was all very military dominated. More or less across the continent. And then in the 90s there was this big sort of democratic wave and there was definitely this feeling I know because I was covering it in the late 90s in the early 2000s that that Latin America had become this glorious democratic continent. You know Chile was a great democracy. Bolivia was a democracy. Brazil was democracy. Venezuela was like they all were democracies. Now you know the faith in democracy seems to have disappeared. You need riots on the streets to get the president out of power in Bolivia. No one believes that Venezuela is a democracy. There were riots in the streets even in Chile. The Brazilians have elected this far right. You know authoritarian like is are we seeing the end of liberal democracy. And did it really not last very long.
S11: I don’t know if it ever existed to begin with fully. I mean I yes. I’m not saying that there I should obviously qualify that like yes I do think we had some really great movement some better than others that in terms of bringing democracy to Latin America. However you continue to have very corrupt political classes in essentially every country. And I think that as people have gotten a little bit richer actually in a lot of places they’re just less and less tolerant of this. They’re the faith in government. It has just been declining. And so to me that’s it. This isn’t overly surprising because of that because it’s not like you had democracy and then you had these you know great super clean parties that really represented the you know the rights of the people you’ve instead had this kind of movement back and forth between the more like far right in the far left. So you know it’ll be interesting to see what happens moving forward. I really think it depends on the types of leaders that come forward because what you I personally think you don’t want to have happen are more of these kind of Messianic leaders because that tends to not lead to anything good.
S13: It seemed to me reading about this and learning about this that what happened in Bolivia although not ideal for democracy was somewhat encouraging because here’s a guy who’s you know using the old dictator playbook basically just trying to stay in charge you know forever. And here is a society maybe bolstered like you said and by a burgeoning middle class that pushed back on it. I mean the way it happened unfortunately involves violence but it was kind of encouraging to me as as an observer just to see people pushing back like. I think one of the things that people have pointed out in the United States right now is that even though we have all this evidence of corruption and wrongdoing coming out of the White House there’s not like people marching in the streets or anything like that. And it’s sort of I don’t know. To me kind of encouraging to see it somehow.
S11: I actually think you’re right. I think that when you have this kind of precarious Middle class of people who’ve kind of just recently become middle class that they really have a lot to lose. I think it’s not surprising that those people are going to be more apt to really push back. And while yes it is true that a lot of these protests have gotten very very violent and it is obviously not a good thing. I think the pushback to morality that we’ve seen in the last few years has actually been a really good sign of people really across the spectrum saying we’re not okay with this kind of creeping authoritarianism and it’s the same thing in Brazil the fact that you had this pushback against these you know entrenched leaders that created this enormous corruption scandal. But the fact that people cared that there was this enormous corruption scandal in a way is actually kind of a good thing because it suggests that people have something to lose and something they’re kind of willing to fight for. Yeah that’s what scares me right now in the U.S. it’s like why are people. That.
S5: We have we have too much Netflix and or too. I think that might be true. We’re home with our takeout.