The Near Memo, Episode 3

The Near Memo is a weekly conversation about Search, Social, and Commerce: What happened, why it matters, and the implications for local businesses and national brands.

Greg: All right. Welcome to the Near Memo. This is episode three, exciting to be here again with Mike and David and where we talk about the big news of the week and share our unadulterated, unvarnished opinions on what's important and why?

Mike: In my case, I have to say I do adulterate in my opinion, slightly, for the air, As a note.

David: No FCC violations, I guess.

Greg: So David, what was, what was interesting to you this week?

David: Well, your most recent daily hit a couple of items that caught my eye. but I'll take the ongoing battle between Facebook and the Australian government which comes on the heels of the battle between Google news and the Australian government.

There's the Australian government trying to restrict. the usage of links on by big tech companies that are published by Australian news groups without proper compensation.

Facebook hates this. And so they made the decision this week to restrict. sharing of news articles.

I actually happened to see this when a fairly well-known SEO, Brody Clarke on Twitter, posted an image. He tried to share a link from his blog that was blocked. Facebook had a big modal window saying that he couldn't do that.

And I just think personally, although Greg, as you said in the newsletter, you know, the crafting of this law is a little bit inartful and clunky, but, I'm happy to see governments sort of making an effort.

And I think that it's somewhat crazy to me that Facebook would degrade its product so badly to try to stand up to this law. But they're really it goes back to the old saying, you know, that we are the product of Facebook. That's very clear  because they're degrading our experience or Australians users with this decision.

So I think it's just an interesting story to follow. I'm not sure which way it's going to turn out, but  I applaud the Australian government for at least making an effort to try to reign in some of these big tech practices.

Greg: What do you think about, Casey Newton's position that ultimately this just creates a kind of dependency on Google and Facebook and whoever else participates by news news organizations. And that was also in Kara Swisher's New York Times piece, which I didn't link to. I think she expresses a similar sentiment that this just doesn't help the business model of journalists.

David: I'm not sure about that. Honestly. I think there are plenty of other outlets, email being one and Twitter being another, that are very pro journalist.

And we talked about it on a previous podcast and it's sort of product iteration and positioning. People will go out of their way to find stories.

I mean, if all Facebook becomes is sharing cat photos, I think that people are going to be spending less time on it and they're going to seek out new sources elsewhere.

So I'm not sure that I'm not sure that the effect on journalism could get any worse with what Facebook and Google have done from a financial perspective so I don't see it as a major contributing factor, but Kara Swisher is a very smart woman. And, I haven't read her piece.

Greg: I may be misstating.

Mike: Just the fact that it's probably an inartful. I mean, linking is sort of the nature of the internet and Facebook may very well be right in their objection.

That being said, they've proven in one fell swoop, that they have too much power in our society by shutting off Australia. So they've managed to create a PR problem for themselves, even if they are right.

Which to me is totally ironic and seems to be Mark Zuckerberg's forte is creating PR dilemmas for this company, you know, by taking these kinds of stands.It just proves how much power they have in their society, and really speaks to the fact that we need as a society to assess that and limit it. Maybe this isn't the right case for that, but it certainly is problematic.

David: I guess I would say, to me, it not only cedes a little bit of power to Twitter, which I think is a good thing to sort of balance out the duopoly / hegemony but it also could lead to new social networks that are geared around news articles, which I don't think would be the worst thing in the world.

So yeah.

Greg: So, there's a lot more to say on this particular topic. It's a fascinating topic. and it plays into the larger discussion of sort of government intervention in the industry. There's a lot of activity going on around taxes elsewhere that we aren't going to get to today, but let's move on to my item since we're a little short on time today, which is ghost kitchens, which I think is a really interesting. development.

I mean, we talked before about the Mr. Beast burger phenomenon, this YouTuber opening 300 restaurants, but more or less simultaneously relying on ghost kitchens and DoorDash, essentially and it's like, just add water, just add, you know, Coke. And you've got an instant burger chain.

It's a really, really fascinating development in the industry.  David, you had some thoughts about it. What are your thoughts?

David: Yeah. I mean, I think the article that you referenced is a fairly negative take on this as a development, I think that it's not necessarily, like it's focusing on the sort of, almost instant chains or instant franchises that, that you're talking about.

I think it by and large could have a really positive impact on a lot of solo entrepreneurs or just chefs and food entrepreneurs who are just getting started because the cost to start the business and to get it going. It's so much less.

If all you're doing is renting space, then you really have a chance then to win over customers with your product without a huge fixed cost. Which I think is a great development.

I actually work with a lot of entrepreneurs, part of the Prosper Portland Mercado's program. A lot of them actually had already been using a shared kitchen to kind of get their businesses off the ground.

And, for many of them, that shared kitchen is kind of the catalyst. They need to get their business going. And then they opened a full-time location of their own, you know, if, and when it makes sense. So I see this as a pretty positive trend overall for mom and pop SMBs. And as you pointed out in your article, it actually might threaten QSR as much more than it does mom and pops.

Greg: I think  it's almost like an incubator situation. What you're describing,the article is worried about mediocrity and I think in the end bad restaurants with some exceptions really don't survive. I think that the food will have to be good enough or cross some threshold of quality to survive.

But I think it's a really, really interesting development. and you know, one of like a number of big things that are going to be really different industries that have been changed forever post COVID, versus what existed before, even though this trend predates COVID, I think it's pretty, pretty interesting.

Mike, what are your thoughts?

Mike: My thought is that it's one area where DoorDash really offers value. As opposed to extracting value from existing standing restaurants, which is what they do. This actually contributes value to new restaurants that are trying to find customers and don't have a delivery mechanism,DoorDash really fills that well.

So I seeDoorDash model is ideal for this. I don't know if their business can survive on just this. but I see it then as a good match in an appropriate place for DoorDash in our society, as opposed to ripping off real restaurants, which seems to be their current MO.

Greg: So DoorDash has this convenience store concept called DashSmart, which is a virtual convenience store. I mean, might these companies like Uber eats and DoorDash and others go into the restaurant business themselves and own these.

Mike: Yeah, absolutely. In fact I thought I saw that [Travis] Kalanick (previously of Uber) was opening up ghost kitchens.

Greg: Yeah. For sure. He's been in that space for awhile,

So let's, let's go to you now, Mike, with your, with your, item of the week.

Mike: The Brookings Institute, which is a, slightly left of center think tank. I mean, I suppose they could be called liberal, wrote an article about something I've been thinking about for a long time, which is the disturbing implications of increasingly narrow political ad targeting.

The algorithms of Google and particularly Facebook are heavily criticized for surfacing the information that we want to see, right. Or that we click on. And thus, we see more of it. Thus accentuating radical thoughts. The legitimate criticism, but politicians have been leveraging this capability for their ad campaigns and others, you know, integrating third-party data to literally micro target voters.

And to me, this is a much more problematic issue because it allows politicians to literally deliver individualized messages to various small groups of voters.

Promising the thing that that voter wants, well, never being held accountable at scale to the benefit of the greater society. So I see it as a very divisive and problematic thing that Obama started in 2008 with, along with the advent of the targeting technology, but which has been largely weaponized to the point where now they can target literally individual legislators walking into the Capitol building with messages.

And I just see it as really bad. I mean, obviously the state of our politics is bad. I see this as being a major contributor to that.

David: And not just politicians, but actors without our best interests at heart. Right. I mean, the Russians clearly took advantage of this in 2016. I would also note that it's, it's shocking to me the degree to which YouTube has this.

They escaped oversight and scrutiny with this practice, because I think you pointed out Google's algorithms are just as good at micro-targeting as Facebooks are. All of this focus has been on Facebook, Facebook, Facebook, and YouTube is still the second largest search engine, second largest, all of these things and the targeting implications and messaging are just the same.

Mike: As to geo-targeting. I think Google is better at geo-targeting.

Greg: As you pointed out, David YouTube has not received the kind of scrutiny that Facebook has, but it's at least as responsible for any whatever we want to call it - Radicalization of, of, of people, you know, I don't know if it was in that article, Mike or another one that I saw about the, about the geo propaganda. Was that the Brookings piece?

Mike: GeoPropaganda?

Greg: Yeah. Sort of using, using location data to identify who's been at a particular rally or who's been in a particular location, which is one of the powerful things about it. And then, and then coming back at those people with retargeting messages that are very, yes.

Mike: And it turned out that both Trump and Beta O’Rourke were sharing phone numbers back up, you know, were gathering phone numbers and then using them for retargeting.

Greg: So, what's the solution for this? I mean, it's a problem we're all concerned about, but what's the solution.

Mike: I think at a political level, the solution might be to run campaigns that are a month long and publicly funded rather than, you know, putting these extreme burdens on representatives to constantly go into re-election mode as soon as they're elected and then having to use raise a lot of money so that they can do this microtargeting.

Greg: So those are, those are major structural changes in the way that we run campaigns that are. Unlikely to happen, perhaps in our lifetimes, given the political situation. How do you in terms of the algorithms or the regulating political advertising?

Mike: I'm not an expert on it, but I am skeptical of politicians using micro-targeting to run their campaigns.And I think it should be off the table by either by law or by agreement.

David: I would say that a couple of things, one, I want to give some credit to Facebook. I think that they did make a genuine effort to try to make their political ads more transparent this past cycle.

So number one, you know, not, not always the biggest fan of Facebook, but wanted to get that out there.

Number two, it still doesn't address potential direct-mail targeting, which campaigns have been using, you know, since, I don't know, since the time of Kennedy, at least right. To  target individual voters or segments of voters with a very narrow message. So, I'm not sure there's a solution. That's, that's a digital only solution.

I think that, campaigns will continue to find a way to micro target and a lot of other ways.

Mike: Right. And the problem is it allows them to escape responsibility for what they're saying to a large extent.

David: That's a problem, although at least with printed mail, there is a record if the wrong person receives it.

Greg: All right. So I think we've come to the end of our time today. I want to encourage anybody listening to give us feedback. We're eager to hear from you on the, on the newsletter, on the site, on these podcasts. we're excited to hear from you and to keep going with this.

Thanks for joining us.

David: Thanks for listening.