Little Googlets

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S1: This ad free podcast is part of your Slate plus membership.

S2: Hello, welcome to the little Googolplex episode of Slate Money, your guide to the Business and Finance News of the Week.

S3: I’m Felix Salmon of Axios. I’m here with Emily Peck of Huff Post. Hello. I’m here with Anna Romanski of Breakingviews. Hello. And oh my God, this was a busy week. I wrote in my axios capital newsletter this week, which you should all subscribe to, that there was this long list of announcements just this week from Perdu and Google and Goldman and Brockmann and all of this like claim crackdown is happening in the world of white collar crime. So that’s really what we’re going to talk about, although we’re also going to talk about weibe, because on this week, we have to talk about Kobe. Right? Kobe is an amazing story. If you wanted to burn through one point four billion dollars in six months, could you do it? Because Jeffrey Katzenberg. So we’re going to talk about Kwame. We’re going to talk about Purdue Pharma and the eight point three billion dollar fine on them and whether it’s really real or not. But first, we’re going to talk about Google, this big antitrust case, which is really important. So stay tuned for that. It’s all coming up on Slate money. So here’s something which I didn’t realize up until this week, which is that antitrust cases, you hear about them a lot when they’re emerges, right? One company announces it’s going to buy another company and then everyone’s like, well, assuming it passes antitrust filters and sometimes it doesn’t. And the EU government or the US government says you can’t do that merger because it wouldn’t be anti-competitive. That’s basically all of antitrust. If when the government just goes along to a company where there’s no merger involved, it’s just a very big monopolistic company and says you’re a monopoly and that’s a problem and that’s illegal and you’re behaving anti-competitive, that effectively never happens. The only time that’s happened since like nineteen eighty was Microsoft in nineteen ninety eight. And then before that there were a few, you know, there was Alcoa and IBM and but like it’s extraordinarily rare. And that’s why this week’s news that Google has been hit with this suit is such a big deal because this never happens. And honestly, this isn’t the end of it. Like now that the floodgates have opened, I kind of think that Facebook and Amazon and possibly Apple are going to get hit with this, too. I said that’s why I’m thinking that this Google case is a really big deal. It’s.

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S4: Almost unprecedented just to Google, and it could be the beginning of a whole new era, we should say, to get the news out there very explicitly, that we’re talking about the antitrust case filed against Google by the Department of Justice this week, alleging that it’s anti-competitive because of the way it bundles its search engine into phones, both Apple’s iPhone and Android devices.

S3: Just to get that out of the way, we should say that and this is a very narrow antitrust case against Google. I mean, it’s not even an antitrust case against Alphabeat. Right. Which is the parent company is just the antitrust case against Google. It doesn’t talk about all of the crazy, monopolistic, anti-competitive stuff that Google does by locking you into its ecosystem with Google Maps and Gmail and YouTube and all of this kind of stuff is just really super narrow, concentrating on search. And it doesn’t even talk about the search engine results page, which is a whole other kettle of fish with which the EU has been looking into for many years. It’s just looking at what you said of said Emily, which is Google is forcing everyone to use its search, basically, and is doing that anti-competitive ways. It’s paying Apple like ten billion dollars a year or whatever to make sure that it’s the default search engine in Apple. And as a result, it has this insane market share north of 90 percent on on just about everything. And that’s a monopoly. And so they’re saying you are behaving illegally here.

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S1: So this is very, very similar to the Microsoft issue. The one thing, though, I would say is that after Microsoft, we didn’t necessarily see a huge wave of antitrust, even though it was similarly and not unprecedented, but not too much precedent. Although I do think, Felix, you’re right, that this time is probably different, because at the time you didn’t necessarily have as many companies that you could point to in the way you could point to Microsoft and say quite clearly you’re engaging in monopolistic behavior, whereas now you can first, there’s no question Google search has a monopoly on phones of any type on your computer.

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S4: There is no Google, laughably is arguing that there are alternatives to its search that you can use. But that’s just it’s absurd on its face. We all know that, like I tried to use other search engines this week and wound up having to Google, use Google to find the search engines. And I mean, it’s just a joke. There’s no there’s no actual substitute for Google search. But then the issue a lot of times in antitrust cases is what’s the consumer harm? And, you know, there’s a lot of talk right now about typically consumer harm. You look at just prices. Are consumers paying more for this for the stuff? Because there’s a monopoly. And with Google search, obviously it’s free. So there’s a lot of discussion going on about, well, what’s the actual consumer harm? And I was really kind of struggling with that myself because it’s like, well, Google search is really, really good. I remember when I first came out and being just blown away by it right before Google search, we had, like Felix remembers, Alta Vista. And I do remember it was a joke, Ask Jeeves, and clearly it was better. And now we’re stuck only with it and there’s no innovation. So is that consumer harm that so we don’t know.

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S3: I mean, the point the point about the Google search is that we don’t know. Right. Is that Google created a better mousetrap and then no one else creates a better mousetrap. Like not to go is a decent search engine. And it certainly is much better at protecting your privacy. But we we simply don’t know if there had been competition between search engines where the search engine universe would be right now because Google has sewn up the market. And that’s the problem. And this question of consumer harm is a really important one, because this goes back to the late Robert Bork and a whole bunch of reinvention of antitrust is the courts determining whether or not people are being harmed by this. And that’s the only question that matters. And the fact is and the Department of Justice did a pretty good job making this case that anti-competitive monopolistic behavior can be illegal and anti-competitive and monopolistic, even if there isn’t obvious consumer harm, like consumer harm is one of the things that happens when you get monopolies. But that doesn’t mean that if there’s no consumer harm, it isn’t a monopoly.

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S1: I would argue that there is consumer harm here, and it has to do with the fact that we pay in data and we are being asked to produce more and more data. And as a firm like Google, the ability to access all that data then feeds into everything else. It is this essentially new currency and moving forward, that’s what you feed to algorithms. That’s how you’re going to develop machine learning, learning and all of that. So no one, it gives them a extraordinarily large competitive advantage. But it also means that as a consumer, I am required to give more and more of my data without having any ability to. Move that data to another service if I wanted to, right?

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S3: I think that’s that’s key that what Google does insofar as Google is a good search engine and a good consumer product, it is good because it has aggregated a huge amount of consumer data. And the ability to aggregate that large amount of consumer data just makes it better. And on some level, it’s a consumer benefit. Right. If all of the consumers give all of their data to one company and all of that data gets aggregated with one company, which can then use all of that data to become a much better company and produce better products, then that’s good for consumers. On the other hand, you can see the problem here.

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S4: Yeah, you can see the problem here, and one thing I also wanted to mention before I forget is that the monopoly of Google search on phones, that wasn’t actually a given when Apple unveiled the iPhone. You know, there was a lot of discussion about like, is this the end for Google search? Because the iPhone was going to be apps, which meant you didn’t need search the way you need it on a desktop. And I think it’s really interesting that that’s where these claims lie. It’s not that Google has a search monopoly like on our desktops. It’s a Google has a search monopoly on the phones because it had to do that on the phones. It had to make sure it was the default browser. Otherwise we would have gone into some different, like worlds in which we really weren’t using Google in the same way Apple could absolutely have built its own search engine.

S3: And it made a very conscious decision that, like Apple software has never been that great. And rather than try very hard to build up their own search engine, they were just going to collect, you know, ten billion dollars a year in dividends from Google and let Google do the search. And they kind of divvied up the market between them. So Apple got the hardware and Google the search and they both benefit in this kind of duopolistic way. So absolutely they could have built it was by no means. And the same is true of Facebook. By the way, if you remember the Facebook IPO, everyone was saying, well, Facebook is great on desktop, but everyone’s going to move to phones. And who knows whether anyone will use Facebook on their phone. Like there was this moment when the pre mobile era monopoly is like Google and Facebook. There was this moment when maybe they wouldn’t have managed to continue those monopolies into the era of everything happening on phones. But as it happened, they did. And now we are in this world where they’re even bigger and stronger monopolies, much, much bigger than they ever were, pre mobile and Google and Apple working together.

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S4: That seems like two monopolies, like leveraging, making kind of an anti-competitive deal together, which I guess is part of the case against Google right now. Right. I mean, they became friends instead of competitors in this deal, both needing this this deal.

S3: I believe that, like, wasn’t Steve Jobs on the Google that I can’t even remember. But they were they were very close for a while and then they started competing a little bit more. And the cross board memberships and stuff like fell apart. And they’re not friends. But certainly on surge, Apple has made a very strategic decision to cooperate and not compete.

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S1: I do wonder, though, if. We can use basically old fashioned antitrust tools in a very different economy with very different companies, because often when you talk about antitrust, people will just say, well, we should just break them up. And I’m not sure if that necessarily makes sense. I’m not sure if most people would actually want to not have Google connected to many, many different services so that it raises the question of, well, then what actually should the government do?

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S3: Yeah, what’s so so be. Yeah, the remedy question is super interesting. And the Department of Justice was very careful not to include any proposed remedies in its suit, which I think was smart. The breakup remedy is the one that everyone always kind of the mind first goes to is like they could force people to break up. In terms of this narrow thing about search, it’s unclear how you could force Google to breakup or whether it would even be helpful. And if you go back to the relatively small number of antitrust cases against individual companies that aren’t merger related, the breakup remedy is very rare, like it didn’t happen to Microsoft, like it happened to AT&T back in the day, and that was about it. So I doubt the remedy in this particular case will be a breakup unless a Biden administration expands the case to include much more anti-competitive behaviour and with things like bundling with YouTube and Google Maps and Gmail. And if you do if they do that, then maybe that becomes the case for a breakup.

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S4: I guess you could argue that even if there is no remedy and the case, Google even wins the case, there is like a chilling effect and a message being sent not just to Google, but to all these big tech companies that they can’t do certain things like the Microsoft case. That’s really what the outcome of. Was that right? It was like, hey, watch out. Like, don’t don’t get too crazy with this stuff. It was just like message sending more than anything else.

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S3: I think I think there will be no chilling effect unless something pretty drastic happens just because the amount of money they make, you know, Alphabeat is worth well over a trillion dollars. It’s the profits are so enormous from behaving in this kind of way that, like the cost of defending against the occasional antitrust case is just a cost of doing business. And there’s not even a particularly large cost of doing business. And I want to quote Peter Thiel, who’s a Facebook board member who I quoted in my newsletter yesterday, because this is, I think, at the heart of what is going on, Google and Facebook and Amazon and even Apple, where he wrote this book zero to one. He said, quote, Tomorrow’s champions will not win by competing ruthlessly. They will escape competition altogether. And this is the way that Silicon Valley thinks. This is the idea. How you get rich in Silicon Valley is by quite explicitly avoiding competition, which is anti-competitive by definition. And the idea that that mindset is going to go away is, I think, utopian in the extreme.

S1: Although I would argue that if you look at a lot of the comments that John D. Rockefeller made, he basically is always saying competition is bad. You can never possibly grow this industry with competition. You can’t just allow free markets. There needs to be more control. And obviously, his form of control is having that Standard Oil trust. And then sentiment changed, the world changed, and eventually his company was broken up. I’m not saying that Google or any of these companies should essentially be broken up, but I don’t think that the current mindset will never change.

S3: No, I think the but I think I do think the mindset from a business perspective has been the same all along. It was the same in Rockefeller’s day as it was today, which is that if you can get yourself a monopoly or like the word that Warren Buffett likes to use because the word monopoly has negative connotations, if you can get yourself a moat, then you can make lots of money. And that’s a great thing to do for business and business. Is he going into areas where there’s like a huge amount of competition? I love going into areas where they can carve out a monopoly for themselves, and that’s always the case. And the only person who’s ever going to stop doing that is the government coming in and suing them.

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S4: The government also hands out monopolies, remember, gives out patents and and grants copyrights and gives companies very cushy, wonderful utilities.

S3: And yeah, it’s up to the government to make sure all of this is regulated because the private sector is never going to do it on its own.

S4: But if they broke up Google, would they make little Google ads?

S5: I flew out there.

S3: So let’s talk about the major platform that launched this year and completely transformed the world of filmed entertainment. Who knew that we would all be glued to our phones watching short form, vertical format, digital video? It has been an absolute explosion. We’re all doing it now. I find myself disappearing down. Tick Tock holds for hours. And so obviously, the main company that is doing this on a professional level with Hollywood stars and one point seventy five billion dollars of funding is Quebec and Quebec. Oh, my God, what a success story. Wow. They really nailed it, right? Well. Oh, wait, you didn’t know. They kind of got it wrong.

S4: Sadly, we only got a quick bite of Quebecer. It only lasted for six months before crashing and burning, just as everyone predicted. I think one of the most surprising things about this is how unsurprising it is when when the company launched and we talked about it, we we said this is like not a good idea. It’s too much money. You get all these videos for free anyway. What is this? It’s not innovative. You can’t that the technology was designed in a way, so you can’t make memes out of the content, which is like a big, big fail in twenty, twenty or so. I don’t think anyone thought this was going to work and then it didn’t work.

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S3: Well, well OK. So, so the interesting question about like who thought it was going to work, the one one obvious answer to that is, well the people who put in one point seventy five billion dollars thought it was going to work. But the interesting thing about that is a lot of them didn’t even think it was going to work because a lot of them were the movie studios and production companies who were being paid out of that one point seven billion dollars to make stuff. So like they were like, you know, if you promise to pay me. Fifty million dollars to make sure I will invest forty million dollars in your company, I just make it like it turns out it was a bad investment for them because their investment kind of went to zero within six months. And so probably they would have been better off not doing that. But a lot of it was kind of circular self dealing. And I think that how Katzenberg managed to get so much money so quickly, I mean, the amount I did the math, he says he’s going to be able to return three hundred and fifty million dollars to investors, which means he burned through one point four billion dollars in about six months. It’s not easy to spend like seven and a half million dollars a day. Like that’s Bruces million is kind of stuff. Right? Like it really takes skill to spend that much money that quickly. I don’t think I could do it.

S1: Going back to the idea of, well, why do people put all this money? And I think it’s it’s Katzenberg. It’s Meg Whitman. It’s the fact that I think when you have these big name people and you have people who have been somewhat successful in other areas and with Katzenberg in entertainment, and then when you have you see money coming in, even if it’s money that’s coming in, that’s going directly out back to the Hollywood studios, then that can potentially draw more investment. But ultimately, as we said, they they were trying to create a market that didn’t exist. The short video market is not a premium market. And they were trying to make it into a premium market, not because it was, but because they wanted it to be. And that’s always a dubious proposition.

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S4: And I think implicitly, can we say explicitly that we think that Katzenberg this week announced that Quimby would be shutting down and they tried to sell. It didn’t work. So that’s the news we’re here to talk about right now, the failure.

S3: And and I think one of the reasons to Anna’s point, the. You know, this was created by people who really wanted it to exist rather than by people who thought it would do well, they just like it must do well. And what I think was going on behind the scenes, and you can see this in the fact that they sold hundreds of millions of dollars worth of advertising before they even launched is the brand. Their advertisers are really flailing right now as people stop watching ad supported TV and start moving to know that supported TV like Netflix will start moving to user generated stuff like tick tock. It’s very hard for brand advertisers who really care about their image to find areas where they can show consumers they’re beautifully produced, short form ads, and that’s what they want to be able to do. And so they soak weibe is like this Hail Mary pass of like, oh my God, finally we can find brands safe content to advertise against on the phone. And it’s the holy grail of what advertisers will want. And so they all rushed into it. And everyone’s like, this must exist. Therefore it will do well. But the fact is that consumers have no interest in creating platforms that are going to be brand safe for brand advertisers. That’s not our that’s the, you know, brands interest. And what we are perfectly happy doing is disappearing down, you know, tick tock holes or using services like Netflix that don’t have any ads at all. And so this is the failure of Quamby is bad for brand advertisers. But honestly, like, I don’t think too many people are shedding too many tears for them.

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S4: I mean, from what I understand, there were no good shows on be like the one thing that might have proved detractors wrong and saves the platform would have been like a show with some buzz. And they’re just not a single one. Not a single one did well.

S1: And I think right now we’ve seen so much competition in streaming and there’s such a high bar for TV right now that you can’t just have mediocre programming. And you also need a back catalog. I think definitely seeing that with how well Disney Plus has done so they have none of that. And then on top of that part of the way they were incentivized, they were able to incentivize a lot of these Hollywood, you know, companies to fund these shows is that they don’t actually own their own content. Yes, I couldn’t believe that. And this is part of the reason that this failed. They weren’t sold because there’s nothing to buy. Like that is another instance of where it almost seems like a lot of this was a little bit of smoke and mirrors where it appeared like they were getting you know, they had all this content. It appeared like they were getting all of these people investing. But the reality wasn’t wasn’t that right?

S4: And I wanted to emphasize also, like people are trying to argue this was bad timing. The reason Qube failed because it launched right at the start of the pandemic when everything went, you know, so but of course, that’s ridiculous, because the one thing everyone was doing in this and is still doing in the pandemic is watching content on their phones.

S3: You know, I mean, I get my little weekly alert from my iPhone saying your your usage of your iPhone is up to like eight thousand hours last week. Yeah, yeah. If that was good stuff on the phone, I wanted to watch, I would be watching it. But I think I think they also got the timing completely wrong on in terms of how long these contents were. They were like, well, no one wants to sit down and watch the 90 minute movie on their phone. True. They said, well, actually, no one even wants to sit down and watch a half hour TV show on that phone. Kind of true, although people do so they were like, well, OK, what we’re going to do is make these ten minute long episodes as though ten minutes was like on the phone. Sweet spot. It turns out if you look at what people want to do on their phone in terms of video, you know, Vine with six seconds, right. Tick tock tops out at one minute. Like you, these things were obviously if you want to create storylines and arcs and professional productions and this kind of thing, you can see why they would want to be able to give themselves at least ten minutes and ideally, like a whole series of ten minute episodes. But that’s just I don’t think anyone ever thinks, oh, I have ten minutes to spare. They were like, well, the pandemic’s managed to. I mean, that people weren’t standing in line at the grocery store to be able to just, like, flip through their phone and watch it, but no, if you’re standing in line in the grocery store, you don’t have 10 minutes to watch an episode of a thing. Right. You have 30 seconds to watch an Instagram story.

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S4: Like a minute and a half is an eternity when you are on the Internet and everyone knows that already, like, tick is great. But even then, I’m like, OK, that’s a minute. All right, let’s see. And if it’s 20 seconds in and I’m not interested, it’s over like an I mean, we’ve known that for years. There’s those you never click on a link on Facebook or Twitter and you think it’s a news story. And you see it’s a video and it’s just like, oh, my God, I can’t waste my life like this. It’s just there’s something about time and video length that is different.

S3: So someone sent me this late at all. If you want to understand the Google antitrust, just click this. It’ll explain everything. And I clicked it and it was a 15 minute long video. I will never watch that video.

S4: Never, never, never, ever. But I don’t know. I mean, I know that people like YouTube videos that explain the news and stuff. I just I agree with Felix. Ten minutes, that awful choice.

S1: You can watch YouTube videos like on your computer.

S4: Yeah, yeah, yeah. Oh. What about the Peter Kafka piece that Felix sent around? He thinks this was a good thing.

S3: OK, happened even though. No, he’s not saying it was a good thing that it happened. But I think Peter Peter Kafka record made a very good point when he wrote about this, which is that the kind of media that we consume is we as a society want to support is like. People making bets on like, I’m going to make a TV show, I’m going to make a movie, I’m going to make a short film video type thing that you can watch by rotating your phone. I’m going to do all of this stuff and then people are going to want to watch it. And then if they decide to watch it, then I will make money. And if they don’t decide to watch it, then I will lose money. That’s how movies always work. That’s how TV shows have always worked, and that’s how it would be worked. And people decided they didn’t want to watch it and they lost money. And that’s how these things work. But that’s how it should work. What Peter’s point was, is that increasingly we have moved to a very different world, which is I’m going to build a platform where I spend no money on content at all. I’m not going to risk any of my money making any content. I’m just going to create musically or take talk or Instagram or Facebook or whatever it is. And it’s going to show user generated content for which I pay zero. And then people will be able to pick and choose whatever they want. But there’s not going to be any risk taking really in terms of me trying to create good content. And I and those are the platforms which are really succeeding. And on some level, it is sad and bad and depressing, but also true. The. We you know, we are moving away from this world of people being willing to take risks by making content and hoping that people will want to watch it, because it turns out that you can make much more money by not making content and just like doing UGC thing.

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S4: I don’t think that’s true. I mean, we have Netflix, HBO, Max.

S1: Yeah, yeah. Netflix has really just been throwing money at productions, so I don’t know if I totally buy that. Yeah, yeah. I mean Netflix.

S4: There’s HBO, Max, there’s Disney plus like there are and yeah they are making content and you know we pay for them.

S3: Netflix in particular spending much more money than like all of the rest of them combined. Pretty much. And that’s good. And I’m glad that Netflix is doing it.

S4: My daughter thinks that TV is Netflix.

S1: Well, my four year old nephew thinks that YouTube on my sister’s phone, I guess, is is the entire world basically.

S4: Yeah. So, I mean, there are plenty of platforms that are creating content and a few that are using free stuff to sell ads. But I don’t I don’t think there’s a dearth of of the content creating platforms. I think there’s probably a glut.

S3: That is, it was bad news that there is a dearth of content. There is a dearth of advertising supported content creating advertising like Hulu. Hulu is basically the only one. And so but yeah, as we said, there’s no rule which says that brand advertisers have to have access to enormous platforms they have for a while and maybe they don’t know.

S4: And maybe the brands need to wield some of their brand power on the platforms that are free so that we don’t see as much trash content there, which they are doing to some extent. You know, they like if their issue is we don’t want to show our beautiful stuff next to Q and on or I don’t know, whatever other stuff, like wield some more power in those in those spaces like adapt to the new world. Don’t try and go backwards with something like Kuban, Jeffrey Katzenberg.

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S3: But the whole point is that they’re forced, they’re forced to advertise on YouTube precisely because there is no quality ad supported content out there for them to advertise against. That’s why everyone wants to work. That’s why everyone wants Hulu to work, is because they don’t have you know, they don’t have any good content where they if they could advertise on Netflix, they would love to, but they just can’t get their foot in the door.

S4: Wait, Felix, did you call? Did you call? Could be a well timed stimulus for people in the entertainment industry.

S3: It really would. Just like we’re going to we’re going to just pump one point four billion dollars into Hollywood when Hollywood really needed the money. So that was nice. OK, so let’s talk about something serious now, which is the opioid crisis and Perdu Pharmaceuticals, which is in bankruptcy because everyone wants to sue them for basically killing millions of Americans. And the Department of Justice just announced an eight point three billion dollar settlement with Purdue Pharmaceuticals and like, wow, that’s great that Purdue is having to spend eight point three billion dollars to settle all of its malfeasance over the years. And that money can go to try and help people get off opioids. Except it turns out that because Purdue is in bankruptcy, basically that eight point three billion just gets added to the pile of creditors who are fighting for the scraps which are left over from the company. And no one is going to get eight point three billion. It’s this weird sort of exaggerated number that like if the Department of Justice had wanted to billion say, they wouldn’t just say give us two billion. They would say give us eight billion, because that way if we get twenty five cents on the dollar will wind up with two cents. It’s a kind of a fake number. And Emily, I’m sure you’re going to talk about this. It doesn’t really affect the people who made all of the money from Purdue and who extracted all of the dividends and profits, which is the second family. That big Sakala settlement is still unknown whether it will ever happen.

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S4: Right. I mean, the the salaries are really getting off easy here, just like they did more than a decade ago when there was another big case against them that people were like, we’re going to get them this time. And they wound up kind of getting off easy. And then in anticipation of this settlement, according to some reports that I read, they actually took a lot of their money and put it offshore and have sort of hidden their wealth in other ways. Their net worth is still like 13 billion dollars. And I think from what I read, they’re going to have to pay from this settlement just two hundred and twenty five million, which wouldn’t be that much to them. It’s still possible that they could face criminal charges, but they haven’t yet. And there’s still more outstanding litigation, which makes you think it’ll probably wind up again like this. Like what looks like the headline number looks big. But in reality, this family, these people are going to kind of skate on justice.

S1: And one of the other odd things of this suit is that part of it is the actual company, Purdue Pharma, is they’re going to actually end up becoming this government run company that will continue to sell OxyContin. So the government will now be benefiting by selling opioids.

S3: Right. And so this is this is one of the really weird bits of the settlement, because with this settlement, the government becomes by far the largest creditor of Purdue Pharma. What happens in bankruptcy, as we all know, is the largest creditor effectively winds up taking over the company of this big sort of debt for equity swap. I have debt. And so then that becomes equities. And so now I own the company. So the government ends up owning the company. And now it’s like the government then winds up in this weird position of both trying to spend money to remedy all of the harm done by perdu while still also trying to extract money from it. So there is a group of attorneys general who are opposed to this settlement for precisely that reason and saying, no, what we should do is just sell it to someone else who might want to buy it for whatever reason, for whatever sale price we can get. Use that money to remedy some of the failures that Purdue did over the years. And then we can still keep a very close eye on Purdue Pharma at arm’s length as part of the private sector and make sure they don’t continue to do anything bad.

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S4: I really was thinking about this this morning. Like, if I went out and acquired some OxyContin or heroin, say, and sold it and got caught, I would face more punishment. I would be more liable and held more responsible than this company that created this super addictive drug and fraudulently sold it to millions of Americans, causing a massive drug crisis in this country that’s responsible for the deaths of at least 400000 or more Americans. And that has cost us at least two trillion dollars, like they’re facing fewer consequences than I would face for just like dealing drugs, which it just I feel like with all these cases now that we’re hearing about where companies do wrong and they get to have to pay a bunch of money and we’ll talk about Goldman in the plus, it’s like it’s good to be a company. You can do bad stuff and like.

S3: OK. I mean, it does remind us of the reminds you a little bit of Robert Smith as well, right. Who admitted to a whole bunch of criminal behavior. And as far as we can make out, his still retains his job as CEO of the equity partners and is not going to jail and is facing like very little actual practical consequences beyond get this. Well, he doesn’t get to take the tax deduction for his charitable donations and say, oh, come on, you know, it’s still and it’s good to be a company.

S4: It really is. It’s it’s it’s very protective in the United States.

S3: I mean, that’s what L.L.C. stands for, right?

S1: Yes.

S3: That’s the reason why people set up companies is to limit their liability.

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S4: Right. Right. And because of the public interest rate, there’s a good there’s you limit your liability and you create jobs and you invent something amazing like search or, you know, you sell something everyone wants. But like in the case of Purdue, I think you lose it. You should lose your liability if you create a drug that addicts like a good portion of the of the country and sets off this like huge health crisis. Right.

S3: There should be money. And it was a family owned company. Like this is the other thing. Like, it’s it’s not like this. SEC lives were just sort of shareholders in some big pharma company and they got the profits just like any other shareholders they own, like all of the company, and they control what it did. And they were in charge of what it was doing. And it is the buck stops with them. One hundred percent.

S1: Also, the the government was able to get them using anti kickback laws. So it really wasn’t the we sold all of these drugs that killed all of these people. It was that we bribed some doctors to prescribe more of these drugs. And the thing is, the Sackler family has tried to really distance themselves, always making the argument of like, oh, no, we didn’t approve of that. But the thing is, if you kind of look like every marketing plan that was clearly indicating this type of behavior was directly approved by the Sackler family so that there are definite grounds moving forward, potentially for, as we said, the criminal charges against the families themselves.

S3: But when you arrest those criminal charges, take a very long time to show up, like we saw this with Krugman and, you know, we saw that with Goldman Sachs as well. These cases take, you know, a decade to happen. And in the case of the cyclist, where the fact that a lot of the cyclists farmed out around the world, I mean, it’s hilarious. There’s three Goldman Sachs bankers. I’m not going to mention this in this bit like who were found criminally responsible for what happened at Goldman. Tim Lifeson has already pled guilty and has been extradited to the United States. And then on the call, there’s his third banker who they didn’t name on the call, who they said is a fugitive from justice and like the long arm of the law, might reach him eventually. And it was like this idea that, like, somehow he’s like hiding from justice or whatever. His name is Andre Avella, and he’s living in Hong Kong. And it’s very easy to just, like, look him up. And it is probably in the phone book, you know, like it’s not like he’s hiding. It’s just like these cases take a really, really long time to work their way through, especially when you’re dealing with people who are out of the country and a lot of the Cycloset out of the country.

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S4: Two things. First, in Patrick Bradon O’Keeffe’s New Yorker story, there was this little tidbit. The cyclists have said look like the FDA approved OxyContin, like they thought it was fine, don’t blame us. And then there’s this, like, little detail that the man that they work with inside the FDA who worked on the drug’s approval a year later after it was approved, started working for Purdue Pharmaceuticals for three times his FDA salary, which I thought was really interesting, especially these days when we’re kind of counting on the FDA to do the right thing with this vaccine and every which is exactly the kind of corruption that UNH was talking about, you know, a couple of weeks ago.

S3: Once state money, it’s like it’s corrupt, even if it’s legal. You don’t need to be illegal to be corrupt.

S4: Do we have to say anything at Purdue’s side of the story here.

S3: Are we being too hard on this company like Purdue has admitted to all of this? This is the amazing part of this whole story. Purdue, the company and the Sangla family are actually very, very far apart, pretty much like the Purdue. The company is like, oh, man, Maxima culpa. We did terrible things. We are very, very bad. We are super, super sorry for all these terrible, bad things we did. We have pled guilty to crimes. We are making this eight point three billion dollar fine. Come punish us. We deserve it. Purdue is in no way pushing back against this. It’s the cyclers who is saying, oh, we did nothing wrong.

S4: Yeah, it was. The New Yorker or The New York Times piece that had back to back quotes, one from Purdue saying, I’m sorry, and then the next from the Sackler saying, like, no, we did nothing. We we acted ethically and lawfully.

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S3: They said in their statement, let’s have a numbers round. Emily, do you have a number?

S4: Yes. OK, this number comes from the Week Junior, which I’ll show you guys. My kids get this every week.

S3: Oh, like it’s an actual paper magazine. Yeah, I remember this.

S4: So fun. It’s a roundup of the news for kids and I sometimes read them when I come across them because it’s fun. This is the October twenty third edition and this might be old news to some people, but it’s cute. The number I would like to do is seven. Forty seven. That is the name of the bear. Who won that, Burwick?

S1: Oh, the back, huh? Yeah, he won in Alaska, right?

S4: Yes. And Cat, my cat May Katmai National Park in Alaska. They have a competition. Who’s the best, fattest bear before hibernation season starts? And this year it was a bear named 747. He weighed about, let’s say they estimate his weight at fourteen hundred pounds. He got so big that his stomach was dragging on the ground. And honestly, I relate to this because I’ve been snacking lot that I’ve been good.

S3: Yeah, it’s really cute. I wouldn’t want to get too close to him, but well done, 747. You deserve your prize. He’s too full to bother you now. Felix, what’s your number?

S1: My number is five dollars and fifty cents a bushel. So Joni Ernst, the Republican senator from Iowa, was in a debate and she was asked, what is the price of soybeans in Iowa? The break even price? And she went on this whole tangent of talking about other things. And then the moderator was like, well, no, no, no, actually, actually, what’s the price? And she said, five dollars and fifty cents. It’s over ten dollars. Just to be clear of. And Junior is just someone who ran on being just a farmer, literally had like pigs in her videos saying, I’m going to make them squeal and I’m going to cut the pork. And so then for her to not even know what this is, the price of that incredibly important crop to her state’s economy was telling and her Democratic opponent was asked, I think it was maybe corn and she nailed it. Like to the penny Iowa politics.

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S4: Does Senator need to know the price of soybeans, though?

S1: Yes, because in Iowa, Senator, probably in Texas, would you want to know the price of oil like it’s important in New York?

S3: You know, the price of money, the price of money is very cheap there in my mind. No, I’m going to tee up the sleepless segment is five point five billion dollars. I did a bunch of math to get there, but that is the total amount of money that Goldman Sachs is paying pretty much to settle the one IMDB allegations globally between how much it’s paying the Department of Justice and how much it’s paying the government to Malaysia and how much it’s paying the Hong Kong. And then you duplicate it. It comes to just over five billion dollars, which, you know, to put that in context, the total fee income they got from all of those deals with six hundred million. So they are being you know, it’s not it was not a good deal for them. On which note, I think we will wrap up the main part of this show, we will go on to record a fabulous slate plus about what is going on at Goldman. We do thank you for listening to this show. I particularly thank Jasmine Molly for hosting me, seaplane and other studios in Brooklyn, which is why I sound so good today.

S2: Thank you all for writing in Slate Monday at Slate dot com. Thank you for writing lovely things about The Onion, an episode which I think people really love. Thank you for writing us on that for or anywhere else and telling people about it. And we will come to you next week on sleep money.

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S3: OK, I think it’s time to have a slate plus about the great vampire squid. Anna, if you had to compare one IMDB to Abacus and all of the malfeasance that Goldman got up to during the financial crisis, which one would you say was worse?

S1: Definitely the former. I mean, look, we all know that what happened with what IMDB was. Unconscionable. It was really bad for Malaysia and also just profound mismanagement at every level. But comparing the outcome of that to what happened with and I’m not trying to say Goldman Sachs is responsible for the financial crisis, they’re not. But I think a lot of the activities that were happened before the financial crisis were, in fact, worse.

S4: So why did they have to pay so much more money?

S3: Well, Goldman paid a lot of money in fines after the financial crisis as well. Like, you know, everyone paid a lot of billions of the financial crisis. The the big difference is the financial crisis wound up having these sort of domino effects and it hit the entire world in terrible ways. The one IMDB scandal hit. The Malaysian populace in the public fisc like and honestly with the sentiments from Goldman, most of that money they’re giving back, they’re actually pretty much getting made whole now because it’s not just this five point five billion in fines. There’s also one point four billion in assets that Goldman has guaranteed that they will be able to get back that was stolen. So if you add that up, it comes up to six point four or five billion, which is actually more or less the amount that was issued in the bonds that were stolen. So it looks like at the end of the day, this is going to work out a little bit like the Madoff case, that if you stuck through all the court cases as a matter of creditor, you probably got made whole and maybe Malaysia is going to get made whole, too. So perhaps this is justice actually working for change.

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S4: You haven’t even mentioned yet the executives or have you that have to give back some of the money they made to which is pretty unusual. And some people are saying it’s a new a new era where the executives of respectable.

S3: So it’s interesting that there are two different layers of clawback, if you will. There’s the current execs and the former execs, the former executives, like five executives who were in charge in 2011 when all of this went down, that Lloyd Blankfein, of course, it was the sea CEO, David Binya, who was the CFO as Gary Cohn, who was the CEO. And basically the board has said you guys all got paid gazillions of dollars in 2011 in recognition of how amazingly profitable the bank was. Turns out we were doing fraud’s. It was bad. And so you need to give back a large chunk of that money that you earned for 2011. And they’ve all agreed to do that except for Gary Cohn. Then there’s the current executives. There’s David Solomon and the people who are in charge right now, and they are being docked a bunch of pay for this year because Goldman is having to pay this massive fine and they’re in charge. And so they don’t deserve to make a lot of money this year. And I together, it’s like nine people.

S1: And I do think this is a is definitely a good thing. I think it goes back to what we were talking about before, that as a company, you know, you pay the fine when you’re an individual, even if you’re an extremely wealthy individual, it’s still a lot of money. And so I do think that people, just individuals feel this more than a company feels this. So if you do want to alter behavior moving forward, I think it’s a it’s definitely a good thing if this happens in the future.

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S4: It’s interesting to think about this with Goldman and compare it a little bit to Purdue, which we talked about in the main show. It’s like and Goldman and Madoff, like Felix just mentioned, it seems like when it’s almost like a smaller fraud and that there are no ripple effects, like you were saying in the financial crisis, the things that they the banks did had ripple effects and hurt people throughout the economy in the United States and in the world. That’s really hard to remedy. And the same with Purdue. Like they did bad stuff and didn’t just hurt investors. They hurt like people throughout the country. You know, people who died became addicted to drugs, like the harm was widespread. And it seems like when the harm is widespread that we do not have the tools in the US government to remedy that harm in a way that effectively.

S1: Yeah, well, and I think yeah. And I think partly it’s also because unfortunately, often some of the worst things that people do that have the largest impacts are not necessarily actually illegal. And so in order to get them on anything, you have to like with Purdue Pharma, use the anti kickback laws. And and, you know, to a certain extent, this is a risk of the system that we have. And I think that there are a lot of good things about the system that we have. But there is always a risk that companies are going to behave in ways. They’re going to follow all of the rules or at least the shadow of the laws and engage in behavior that is not illegal but has dropped dramatically bad consequences. And really, there isn’t a great remedy for that.

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S4: Or they fight really hard against great remedies like the gun companies, you know, who aren’t held liable for bad stuff that happens with guns, they fought really hard to make that happen. So there are things that can be done, but we let companies, lobbyists and convince us that it’s not necessary.

S3: Sometimes, as ever, the way to make sure that you get away scot free from harmful behavior is to make sure that you lobby to make it legal. And as long as it’s legal, you can do whatever you like. And that’s the lesson of this week. Sleepless.