Episode 217: Chopping At The Golem

February 28, 2023

Central Thesis

Ad-supported media, embodied by the "Golem" of Aleph Bet (Google), corrupts the free market by monopolizing online advertising, thereby stealing revenue from publishers and ultimately harming public discourse.

Key Arguments

• Aleph Bet is a Golem

Jim argues that Aleph Bet, like a Golem from Jewish folklore, is a monstrous entity built from acquired companies with the single mission of enhancing shareholder value, achieved through dominating the online advertising market. Its creation involved a legal incantation (articles of incorporation) that brought this monster to life.

• Monopoly and the Death of Journalism

The episode contends that Aleph Bet's dominance in ad-tech has led to the financial ruin of newspapers by stealing their advertising revenue. The argument is that newspapers aren't failing because they can't adapt, but because Aleph Bet uses its monopolistic power to extract value from them.

• The Mechanics of the Steal

Jim explains that Aleph Bet operates the software managing the complex financial market where user eyeballs are bought and sold. It takes a cut from billions of transactions daily, essentially controlling the flow of money in the online advertising ecosystem.

• Antitrust as a Solution (with caveats)

Jim highlights the DOJ's antitrust suit against Aleph Bet as a potential remedy, referencing Matt Stoller's analysis. He emphasizes that the suit seeks a breakup of the company, a jury trial, and is filed in a fast-moving court. However, he cautions that even a breakup might not be a permanent solution, citing the example of Ma Bell.

Notable Passages

• "Like the Golem-building rabbi mystics of yore, folks at the Searchies bought other companies that provided video hosts, and email services, and blogging platforms, and a whole bunch of others...Instead of building a simple clay man, though, with a couple of arms, a couple of legs, a body, and a head, and all that shit, I imagine this concoction of weird parts that still kind of fit together was more like what we kids used to call a starfish."
• "This particular antitrust suit involves display ads on the open web, which are what you find on the websites of various newspapers or cable news outlets...If a user goes to the site of a newspaper, unbeknownst to the consumer, a highly complex financial market kicks into gear...How much the newspaper gets has been reduced enough to bankrupt most of them."
• "The advertising market has turned to a complex financial marketplace where your eyeballs are bought and sold. These are very complex marketplaces, and regulators and enforcers need to actually start looking at them so that we can actually address it."
• "When you swing an axe, as the Department of Justice seems to have done here, you have no guarantee that what you strike with that axe will split, or even splinter. So, even if the chopping results in the Aleph Bet losing a few of its Swiss Army Knight pseudopodical attachments, there's no guarantee another won't regrow in its place, or simply be bought, or even re-bought."

Rhetorical Approach

Jim uses analogy extensively, comparing Aleph Bet to a Golem and a Swiss Army knife sea star, and uses the Clackers as a Terry Pratchett shout-out. He employs sarcasm and humor to criticize those who defend corporate power (like Jim Cramer). The references to history (Standard Oil, Ma Bell, Franklin Roosevelt) lend weight to his arguments. Also, the episode relies on expert opinion via Matt Stoller's work.

Connections

• References Matt Stoller's book Goliath and his newsletter, Big.
• Refers to a previous episode, "Episode 131, The Keys to the Treasure," which covered similar ground.
• Mentions the Sherman Antitrust Act and the DOJ's legal brief.
• Allusion to Lord of the Rings and Gollum.
• Terry Pratchett with the "Clackers" reference.