#207—The EU goes after Big Tech gatekeepers

Also, Big Tech's trust deficit and Big Tech regret

Apr 11, 2022

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out last week’s report here.

This week:

The EU goes after Big Tech gatekeepers
Chart of the week—Big Tech’s trust deficit
Tweet of the week—Big Tech regret
What everyone’s reading—Web3’s holy war
Kids bet on the future
Elsewhere in regulations
Hard Yaka invests in Binance.US
Chart of the week—Brazil loves Bitcoin
Elsewhere in crypto
Tweet of the week—Identity is expensive

1. The EU goes after Big Tech gatekeepers

Last week, we talked about how the EU is going after non-custodial or so-called self-hosted digital wallets.

Now, they’re going after Big Tech (again). Here’s Axios:

Europe's new competition rules for Big Tech giants could make their services less secure and more fragmented, tech executives fear. And as a six-month deadline for compliance looms, the new laws aren't yet fully baked.
Driving the news: European regulators came to an agreement last month on a near-final version of the Digital Markets Act, which could force Google, Apple, Meta and Amazon to reshape their businesses after being designated “gatekeepers.”
State of play: As platforms stare down strict new rules and a short timetable, they worry that compliance might mess with what made their products popular in the first place.

European policymakers aren’t interested in breaking up Big Tech. They just want them to follow some rules around interoperability and data sharing. Axios:

How it works: For big companies, complying with the EU law will include:

sharing data with smaller companies;
making sure messaging apps work together with smaller competitors;
asking users for their permission to share data;
not preferencing their own services over those of competitors; and
allowing users to pick default apps on their devices.

Of course, there’s plenty of questions. How will it be implemented? What are the security implications? Will this further fragment our digital spaces?

Others might point to the sweeping privacy rules the EU passed not long ago known as GDPR. The running joke is that even after all those new rules, all we got was an annoying popup.

But one thing GDPR did well is that it followed public sentiment. And tech companies followed suit—at least from a marketing perspective. Axios:

Five years later, companies are still getting massive fines for breaching GDPR.
But tech has also made user privacy a selling principle, which was mostly not the case before. DMA may prove to have the same effect on company marketing strategy long-term.

Across the Atlantic, FTC chief Lina Khan is in full support. Here’s Bloomberg:

U.S. antitrust chiefs voiced support for an American crackdown on gatekeeper tech giants a week after the European Union reached a deal reining in the likes of Google and Meta Platforms Inc.
…
Federal Trade Commission Chair Lina Khan called the law “a landmark proposal to promote fair access to markets controlled by digital gatekeepers.”
…
Khan added that tech giants should be prevented from unlawfully dominating emerging technologies like voice assistance, cloud computing, and virtual reality. She noted that traditional merger rules fail to capture the harms of digital monopoly power, a stance she has voiced throughout her career.

Relevant:

2. Chart of the week—Big Tech’s trust deficit

At the very least, the EU’s timing is good. American trust in Big Tech just hit an all-time low:

Axios:

Why it matters: The decline in trust comes as pressure is mounting for regulators and legislators to more tightly regulate the industry and its perceived excesses.
…

Globally, the tech industry remains the most trusted sector of business, earning the trust of 74 percent of those served, ahead of healthcare and education. By contrast, social media is the lowest ranked sector, trusted by only 44 percent of respondents.
However, only 54 percent of Americans trust tech companies to do the right thing, down three percentage points from last year and a whopping 19 points since 2019.
In the U.S., the decline in trust was seen across a number of the most talked-about sectors, including 5G, artificial intelligence, "internet of things" and virtual reality.

Relevant:

Americans' trust in tech companies hits new low

Meanwhile:

Facebook owner Meta targets finance with ‘Zuck Bucks’ and creator coins
Via /calvinburrows—Musk Gets Twitter Board Seat After Stake-Purchase Surprise

3. Tweet of the week—Big Tech regret

All of this is Jack Dorsey’s fault, according to Jack Dorsey:

Relevant:

Twitter co-founder Jack Dorsey says he's "partially to blame" for damage in centralizing internet

4. What everyone’s reading—Web3’s holy war

That regret (and all those learnings from this last tech cycle) likely also play into Jack’s very public feud with Andreessen Horowitz.

The Information’s recent profile of the two is worth the long read. But here’s why Jack’s annoyed:

Dorsey is a Bitcoin maximalist, an economic idealist who believes that Bitcoin must be the only digital currency. If Bitcoin is sullied by associations with dubiously made crypto coin competitors, it can’t achieve what Dorsey believes it has the potential to do: replace every country’s legal tender; topple corrupt authorities; allow people to pay each other directly, freeing them from the tyranny of banks; protect people’s privacy from corporations who stealthily sell their data and authoritarian governments who surveil them; and allow everyone to profit from their own content. Most importantly, Bitcoin’s code, as written by the pseudonymous entity Satoshi Nakamoto, dictates that all the rules governing the currency are decided solely by coin holders and not by some board of directors in Silicon Valley.
…
Dorsey argues that while Andreessen Horowitz is marketing its Web3 investments (that is, companies dealing in crypto, non-fungible tokens, the metaverse and anything on blockchain) as power to the people, the firm is going to wind up with as much power as it had in Web 2.0 and the people with just as little. His side likens Andreessen Horowitz’s influence on crypto startups to the power they exert on giants like Facebook, where Andreessen has been a board member since 2008. All the perverse incentives that warped the previous generation of ad-targeted, user-tracking tech companies, including Dorsey’s Twitter, will come into play again if Andreessen’s vision of crypto is realized.

Relevant:

Jack Dorsey, Marc Andreessen and the Makings of a Crypto Holy War

Meanwhile:

The Metaverse Has Bosses Too. Meet the ‘Managers’ of Axie Infinity

5. Kids bet on the future

But the fact that this debate is even happening at this stage is constructive for the ecosystem at large.

There’s the sense that the future is being written as we speak, and the kids want in on it, according to two separate polls/surveys.

First, Axios:

More than 1 in 4 young American adults are invested in cryptocurrency — and it's people under 25 who express the most excitement about everything from electric vehicles to smart home technology, an Axios-Momentive poll found.
The poll was conducted in conjunction with Axios’ inaugural What’s Next Summit today. (Register here to watch virtually.)
Why it matters: Young consumers' enthusiasm about trending tech is reshaping mass-market preferences and lifting society toward a more sustainable, convenient and connected future.

Also, T. Rowe Price. Here’s Blockworks:

Fifty-seven percent of kids surveyed said they were familiar with cryptocurrency, compared with 47% of parents. Among the parents who are familiar with cryptocurrency, 32% say that their kids actively trade crypto more than they do.
Asked what they would do if given $100, 29% of the children said they would invest it. Of those, 57% said they would invest it in cryptocurrency, while 38% said they would invest in traditional stocks.
Forty percent agree that “cryptocurrency is the future of investing,” the survey also found, though parents don’t seem as convinced — 28% of surveyed parents said they invest in crypto. 53% of those invested or familiar with the space worry that crypto is “a bubble that will burst,” and 52% fear it is a “short-term fad.”

Relevant:

6. Elsewhere in regulations

7. Hard Yaka invests in Binance.US

It’s their first seed round. TechCrunch:

Binance.US raised over $200 million in its first external funding round, putting its pre-money valuation at $4.5 billion as it builds out a roadmap for an initial public offering (IPO), its CEO Brian Shroder told TechCrunch.
The company is targeting an IPO in two to three years from April 6, Shroder said. This is the first time Binance.US has taken external investor capital, and no valuation has been shared publicly before, he added.

We’re also on the cap table with FTX and Coinbase.

8. Chart of the week—Brazil loves Bitcoin

Axios/Gemini:

9. Elsewhere in crypto

10. Tweet of the week—Identity is expensive

Avi Schiffmann (via /vs):

USBC

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