Amazon reconsidering New York?; Facebook in China; Twitter is in trouble; Don't ignore crypto; Matt Yglesias upsets his fans; and more.
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Issue 10/2019: Innovate don't regulate


Good morning and welcome to the first Issue of the all-new EconByte weekly newsletter! Well, kind of; it's actually Issue 10/2019. Let me explain:

Rather than producing two different products twice a week - the Monday morning in-depth article and Friday's Assorted bits - I decided to amalgamate the two into one update, set to arrive in your mailbox every Tuesday or Wednesday morning.

Why the change? Believe it or not, my day job takes up a fair bit of my time. Writing this newsletter along with various hobbies, a couple of huskies and a wife doesn't exactly leave that much time to compile the EconByte website and newsletter.

So from now on, every Issue of EconByte will have a similar format to this update, with something I've written at the top, followed by a collection of interesting articles I've read, topped off with an image (usually a chart, but not always). If something looks out of place, please let me know.

Anyway, I hope the new format is to your liking (or at least, the silent majority's); enjoy the rest of this week's Issue!

— Justin 

Social Media

Assorted bits

"Gilder, a Founding Father of the vast right wing conspiracy, is not at all hostile to Google, Facebook, or any of the current Masters of the Universe. Why not?.. [because] free enterprise is already developing and swiftly implementing solutions. Solutions, that is, if we don’t strangle innovation in the cradle with misguided legislation and heavy-handed regulation."

I've said it before and I'll say it again.

I wrote back in Issue 1/2019 that regulating Facebook could potentially 'utilitise' it, entrenching it as the social media gold standard. I stand by that and still believe that "regulating Facebook would be a win for Facebook, regulators, politicians, lawyers, accountants, content screeners, the NSA, etc., but would represent a large unseen loss for consumers who will be stuck with Facebook and its data abuse for far longer than they should".

"Twitter’s monthly user count has fallen for three quarters in a row, so to address the issue, Twitter has decided to stop announcing how many users it keeps losing... In place of monthly users, Twitter will now disclose how many daily users it has — a figure that, at least from this initial disclosure, is at least slightly rosier."

RIP Twitter?

Twitter is in trouble, but not in the way that say Facebook would be if its active user growth were declining. Twitter has a loyal, established userbase but I just can't see it ever going as "global" as the other social networks, given at the end of the day all it does is publish text messages on the internet. When it had the opportunity to do so, it was too slow to react and so missed the Instagram (images) and YouTube (video) boat. Competitors such as Reddit are nipping at its heels.

"In total, Facebook’s revenue from Chinese-based advertisers reached an estimated $5 billion in 2018, or about 10 percent of its total sales, according to Pivotal Research Group. That would be enough to rank Facebook somewhere around the seventh-largest listed internet company in China."

China still matters.

Facebook won't be able to grow its user base forever. It's an advertising company and due to the Great Firewall, China is still an emerging frontier for such businesses. 10% of total revenue is huge, and it will continue to grow... until the government bans them to help out a local competitor, that is.

"I recognise that the reduction in this sector, which now includes online media, is not solely due to the growth of the major digital platforms like Facebook and Google," an advance copy of Mr Sims' speech reads, "but their commercially focused and highly effective advertising businesses are clearly part of the issue."

When all you have is a hammer...

What an incredibly linear, static view to hold as the head of a competition bureau. How does Sims know that 2006 had the optimal number of 'news producers', given the arrival of news aggregators such as Facebook? If something is "commercially focused and highly effective", what does the competition regulator care? Sims' solution is as you would expect: a new government body to oversee the advertising market and to scrutinise Facebook and Google's "secretive algorithms" (no doubt answerable to the ACCC). I've written extensively about this issue; see here and here.


Assorted bits

[Speculative] " is reconsidering its plan to bring 25,000 jobs to a new campus in New York City, according to two people familiar with the company's thinking, following a wave of political and community opposition."

Yeah, nah.

Amazon will still open its campus in New York, because it makes sense even at zero subsidies. At this stage, the only way Amazon doesn't open its campus is if New York-based politicians create obstacles so costly that, to borrow from Game of Thrones, they would be happy to see New York to burn so long as they can rule the ashes.


Assorted bits

"[Walmart's] project launched in 2016 and in the summer of 2017 the first trial runs started by tracking the entire distribution process from pork and mango suppliers in China and the US... The company goes as far as stating they expect every supplier of leafy green vegetables to upload their data to the blockchain by September 2019."

Don't ignore crypto.

The "Bitcoin bonanza" of 2017-18 was exactly as I said it was at the time: a bubble, destined to end the same way as all other asset price bubbles. But that doesn't mean it should be cast aside forever. The market has matured, prices have stabilised and real world use-cases are emerging everywhere. Ignore it at your peril.

Image of the week

View source

Matt Yglesias on the moon landing

This is a bit of a controversial image of the week, not because of what was tweeted but because it has since been deleted. Apparently, many of Matt Yglesias' 419,000+ rabid Twitter followers didn't appreciate him questioning the merits of a massive government spending program, so he caved.

It's important to remember that just because there are visible benefits to an option, it doesn't mean it's worth doing; alternatives, including the do-nothing option, may produce greater benefits relative to the costs.

That's all for now. If you enjoyed this issue, share it!

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Issue 10/2019 was published by Dr Justin Pyvis. Feel free to send feedback, suggestions for future issues, ideas, insults, or pretty much anything that crosses your mind to his Keybase chat.