Mark Bergen on Apple's Threat to the Online Ad Industry

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

Tracy, remember in like the 2000s, or like the financial crisis, and everyone's-

Tracy Alloway (0:21)

I can barely remember last year, but go on.

Joe Weisenthal (0:24)

And everyone said, oh, it's such a tragedy. People could have been curing cancer, but then they were spending their time coming up with like more and more complex derivatives.

And then I feel like for the 2010s, that morphed to all the smart people could have been curing cancer, but they spent their time getting more ads onto like tiny phone screens and stuff like that.

Tracy Alloway (0:43)

This is the whole like software sucking up the entire economy idea. But yes, I do remember that criticism. There was a lot of thought that went into how to best advertise on the internet. And in fact, I think we had an episode at one point about how the internet was actually powered purely by ads, right?

Joe Weisenthal (1:00)

No, I mean, it more or less seems to be. I mean, I guess people do pay for something, but it also feels like that era, both sort of from a macro standpoint and maybe a micro standpoint is coming to a close again, again, another decade pivot, because we have seen a lot of these internet mega companies like meaningfully start to slow growth. The business models aren't firing on all cylinders as they once were.

And then just sort of like tech in general from macro reasons seems to be, it had better days.

Tracy Alloway (1:33)

Right, interest rates are going up. And so a lot of the valuations of big tech companies are coming down.

But also to the business model point, I think this is interesting. Because initially, we talk about very smart people going to tech firms and venture capital and spending a lot of mental energy there trying to figure out the business model. But to some extent, it feels like the easy gains are kind of behind us, right? It was, you create a product, you get everyone on your particular platform or using your product or whatever, and then you make a bunch of money. And now it feels like things are changing.

Joe Weisenthal (2:10)

Absolutely. I mean, look at a company like Facebook, for example, is just this, you know, they're really having to work for it. Like, their model is stressed right now and there is the rise of TikTok and so forth.

Every one of these companies, it feels like to some extent after creating a decade of like the best money vacuuming up machines that were ever created are now like, they kind of have to really work for it now.

Tracy Alloway (2:34)

Yeah, and come up with, let's say, more creative strategies. And one of the things we've seen recently is something from Apple.

Joe Weisenthal (2:41)

Right, and so one of the stories is that Apple has this incredible position in the ecosystem because so many people own an iPhone and they pull out the first thing they interact with is the iPhone to get to the internet. And they have a lot of power over these other companies in terms of, you know, what shows up on that iPhone and how.

Tracy Alloway (2:59)

Right, and again, they're having to be more creative in making money off of those products, right? The iPhone is getting more technologically advanced. You don't have to necessarily buy one every year.

People are holding on to them for longer. So how do you rest more money out of that particular customer base?

Joe Weisenthal (3:18)

Such a tragedy. Companies are having trouble resting more money out of their customer base. What a terrible situation. Anyway, without further ado, I want to talk more about online advertising, this world, the challenges all these companies are facing. We're going to be speaking with our colleague, Mark Bergen. He's a reporter here at Bloomberg, and he is the author of a recently published book, Like, Comment, Subscribe, Inside YouTube's Chaotic Rise to World Domination. So Mark, thank you so much for coming on Odd Lots and congratulations on the book.

Mark Bergen (3:50)

Yeah, thanks so much. Thanks for having me.

Joe Weisenthal (3:51)

So first of all, like why a book about YouTube now? Why'd you do this project?

Mark Bergen (3:56)

Yeah, YouTube is this kind of a sleeping giant in social media. It's someone described it as like this iceberg that no one ever really talks about as much for a variety of reasons. I see YouTube as both the past and now future of social media. And it was the first company to pay online broadcasters and invented the creator economy. And now we're seeing with TikTok, Instagram, Snapchat, Twitch, you name it, are all moving in this direction. Social media is no longer your friends and family and your acquaintances, it is influencers. It is celebrity, it is a game built around commerce.