Farhad: This was an interesting move. I’ve been thinking a lot about the huge companies that rule the internet — the Googles and Facebooks of the world, which together account for 20 percent of all money spent on advertising in the world. It’s tough, in that environment, to cobble together a medium-size internet business. But IAC has done just that with dating services — it owns Match, Tinder, Plentyoffish and several others — and now it’s doing so with home services sites, too. I don’t know if it’ll work in the end, but cornering specific high-value niches seems like a good plan.
Also, I’m really upset that I missed the chance to found Farhad’s List.
Mike: Over in Facebook Messenger land, you can now play little mini-games while chatting with your friends. I like the idea of beating you in Space Invaders and sending you little chats telling you how “owned” you are.
Farhad: There’s no way you can beat me at Space Invaders, Mike. No way.
Mike: Mmm hmm. Apple made a bazillion dollars last quarter yet still managed to disappoint Wall Street expectations. Facebook made a lot of money, too, but they have a big problem with people literally killing each other on live video on the network, so investors were slightly less jubilant than they would normally be.
Oh, and Wall Street burst into applause when Twitter didn’t self-immolate on its quarterly earnings call last week. Good for them.
Farhad: That was a wonderful rundown of earnings. You should go work for CNBC. Please.
Mike: Yeah. It was actually kind of an embarrassing week for Facebook. WhatsApp suffered a giant outage, which forced people to express dismay on Twitter, of all places. Then Facebook decided to close down its Oculus VR studio and leave the content-making up to the universe of, well, VR content makers out there. I imagine there was no traction whatsoever for Facebook to have to take that drastic step.
Farhad: On the other hand, Mark Zuckerberg, their C.E.O., did announce that the company would be hiring 3,000 more staff members for its video flagging team, which I thought was a good move. It will probably give Facebook some more bandwidth to tackle the terrible stuff — of course, now there are thousands of people whose job it is to watch videos of people literally killing each other. What a world.
Mike: Right. Let’s get to our ever-topical topic, Uber.
The company is having a rough week — which is a phrase I use so often I should look into securing the rights to it — and things aren’t looking up. On Thursday, we reported that the Department of Justice is investigating whether or not Uber broke the law by using its Greyball tool, a piece of software I uncovered back in March that essentially let Uber escape the hands of the law in cities they were not yet allowed to operate within.
In my legal opinion, this sounds “very bad.”
Farhad: Thanks, Perry Mason.
Mike: Moreover, Uber could also be forced to halt all of its work on self-driving vehicle technology, depending on the decision of a rather amusing judge, who also happens to be a longtime technology litigation veteran. Do you recall the Oracle vs. Google trial? I slept through it, but I heard it was nuts.
Anyway, this is all just bad, bad, bad. Is this Uber’s second, dramatic act before it rises on the wings of success in the days ahead? It all reminds me of the narrative arc of a movie.
Farhad: I think I’m turning into an Uber bear. I don’t mean a very awesome bear — I mean, I’m getting pretty skeptical of the company’s long-term prospects. Uber has sold itself to investors on the theory that in the long run, it will own a huge share of the multitrillion-dollar global transportation market. At the moment it doesn’t make any money. It’s spending vast sums to expand globally and on new tech, like self-driving. But the theory is that the market is so large that profits will come, one day. It’s essentially the Amazon model for cars instead of retail.
But as Timothy Lee points out in Vox, Uber faces a lot of disadvantages that other tech giants don’t have. Its internal culture is screwed up, the boss admits he needs to grow up, drivers kind of hate it, and now it may lose the self-driving race to Google. If it starts to look as if Uber’s long-term vision may not pan out, won’t employees start to leave? Won’t investors lose confidence? Is a sudden death spiral really out of the question?
Mike: Who knows? All I know is I am a big fan of bears. So, I guess we agree this time.
Till next week?
Farhad: See you!