Scott Galloway: It’s Time to Break Up Amazon, Facebook, Google, and Apple – Business Casual

Check out the Business Casual Episode Page

Exploding onto the podcast scene, Kinsey Grant (@KinseyGrant) hosts the Morning Brew podcast, answering the most serious questions from Wall Street to Silicon Valley in a not-so-serious way.

Key Takeaways

  • It’s time to break up the “Four Horsemen”: Google, Facebook, Amazon, and Apple
  • Why must we break them up?
    • Innovation is lacking within their sectors (and fewer companies are being started)
    • They don’t pay their fair share of taxes
    • Teen depression is skyrocketing
    • They can display manipulative ads (which influence elections)
  • Facebook and Google are probably the two horsemen that will get broken up first
  • Apple is probably the last horsemen that will face a breakup
  • Mark Zuckerberg is more dangerous than Fidel Castro
  • Scott predicts that by 2023, Amazon and Amazon Web Services (AWS) will be two separate companies, with AWS becoming the most valuable company in the world

Intro

The Four Horsemen

  • Who are they? – Google, Facebook, Amazon, and Apple
    • These companies have grown so big that they’ve become equivalent to an invasive species, and the sectors that they occupy are lacking innovation
    • “I would argue that the four have become so dominant that they’re actually suppressing innovation; we’re overdue for the DOJ or FTC to step in, oxygenate the market, and break them up.” Scott Galloway
      • “I would argue our prices as consumers are skyrocketing. So I think, even on the consumer side, if we look at the overall cost to society, these companies are well overdue to be broken up.”
      • Once AT&T was broken up, innovation skyrocketed in the space and the world was given the internet, cell phones, and more
        • “I would argue that you want to unleash innovation and you want to keep this economic growth… The fastest way to do that is to break these guys up.”
  • Why the hate against the big four?
    • Fewer companies are being started
    • They don’t pay their fair share of taxes
    • Teen depression is skyrocketing
    • They can display manipulative ads (which influence elections)
  • The breakup of big tech is beginning
    • “48 attorney generals, basically everyone but Puerto Rico and California, have said that they’re going after Google. And nine states have said we’re going to look at Facebook.” – Scott Galloway
    • Both Democrats and Republicans are for breaking up big tech
      • Scott has received calls from both Senator Elizabeth Warren’s and Senator Ted Cruz’s offices for comment
  • Facebook and Google are probably the two horsemen that will get broken up first
    • “It’s because they’re in the business of data and there are privacy concerns. They also have the ability to shape public opinion so they’re more dangerous, if you will, when they’re weaponized.” – Scott Galloway
  • Apple is probably the last horsemen that will face a breakup
    • They’ve taken a real stance on privacy unlike Facebook, Google, and Amazon

Problems With the Big Tech CEOs

  • Mark Zukerberg is more dangerous than Fidel Castro
    • Castro oversees a nation of 19 million people, Zukerberg can control the content seen by over a billion people
    • “If you look at the individual, this is somebody who dropped out of college for his professional endeavor, created a website that evaluated women on their physical appearance, screwed over his close friends in college, then royally fucked over his best friend right after college. What could go wrong?” – Scott Galloway
    • Tump will be out of office in 14 or 62 months, Putin will be out of office in 6-10 years, but there’s no term limit for Mark Zuckerberg
    • No one individual should have that much influence over our society. It almost always leads to very bad things.”Scott Galloway
  • The FTC needs to do a better job of putting checks and balances on big tech
    • The FTC fined Facebook $5 billion and their stock went up $10 billion in one day
      • “The FTC isn’t a regulatory body doing its damn job, it’s an insurance company that gives big companies the best deal in the world” – Scott Galloway
  • “The mother of all welfare queens is the richest man in the world, Jeff Bezos”Scott Galloway
    • Amazon gets billions of dollars worth of tax breaks by having municipalities play against each other 
    • Jeff doesn’t sell any stock, he simply borrows money against his stock from the banks – another tax loophole
      • “He is exploiting loopholes that our elected officials and our taxation authorities have put in place. I think it’s our job to make sure that those loopholes don’t exist, we have a progressive tax structure, and people pay some semblance of their fair share.”

Breaking Up the Big Four (Predictions)

  • Scott predicts that by 2023, Amazon and Amazon Web Services (AWS) will be two separate companies, with AWS becoming the most valuable company in the world
    • AWS is probably worth between $300 billion alone with the potential to reach a trillion dollars
      • “This is the fastest-growing, most profitable part of our economy right now – the cloud.” – Scott Galloway
  • Facebook will likely have to spin-off WhatsApp and Instagram
    • Instagram alone is probably worth $200-300 billion!
  • Google will likely have to spin-off YouTube

Additional Notes

  • Amazon has only paid $1-2 billion in taxes in the last 10 years!
  • The fifth horsemen could be Microsoft, Disney, or possibly Netflix
  • “My only investment advice to all your listeners is to always invest in unregulated monopolies. That’s the only investment advice you ever need.” – Scott Galloway
  • For news intake, Scott reads Morning Brew, Business Insider, Twitter, and the Financial Times
  • “WeWork IPO is the Pets.com of your generation. It’s where the markets finally throw up and say enough already.” – Scott Galloway
  • Scott’s favorite person to follow on Twitter is @naval 
    • We agree! Check out what we learned from Naval’s “How to Get Rich” podcast here!
  • The Airbnb IPO is a great move for the company – it has the potential to be worth $100-200 billion at some point
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