Is it Time to Breakup Google? & Disney Fights Wrongful Death Suit
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Kyle Hagee. Today, Google could break up, but hey, it's not you. It's the DOJ. And why Disney Plus has found itself as the main character of a story that is truly stranger than fiction. It's Thursday, August 15th. Let's ride.

Yet another business leader is walking back comments about how remote work is destroying companies. During a talk with Stanford Online that was posted this week, former Google CEO Eric Schmidt criticized the company's remote work policies in a response to a question about the Google Open AI rivalry. Schmidt said Google decided that work-life balance and going home early and working from home was more important than work.

winning the reason startups work he said is because the people work like hell after backlash schmidt decided he wanted a take back sees in an email to the wall street journal he said he misspoke about google's work hours and regretted his remarks it seems like he misspoke because he might have used gemini to write a script or something but i love when people are like the this young generation they're soft you got to like have a grind set and then they get any backlash and they're like i'm so sorry i take it back if you're going to criticize people for being soft

man like you got to own it don't walk it back i'm a little disappointed in eric and meanwhile he was talking about the google open ai rivalry and about how google is behind in ai development and if you actually look at their remote work policies google and open ai have the exact same remote work policy you have to go in three days a week but you can work from home two days a week so there's not that much daylight between the two and i think once that was pointed out to him he's like uh

Yeah, I definitely misspoke about the fact that Google people could stay at home and open AI people had to go to work. And now a word from our sponsor, Beehive. I'm going to interrupt you, Neil. You know, I've been listening to you and Toby pitch Beehive for the past couple of weeks. You're doing a good job, but I think you haven't emphasized a certain feature enough that really separates this newsletter platform from others. And what's that?

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Like a guy's hair about one week after they get it cut, the U.S.'s inflation picture just keeps looking better and better. Yesterday's consumer price index showed that July prices grew 2.9% from a year earlier, the first time it's come under 3% since 2021. Meanwhile, core inflation, which strips out volatile goods like food and energy, ticked up just 0.2% from the previous month, another sign that wild price increases are a thing of the past.

In all, this makes four straight months that inflation has eased, and we're pretty much back to normal levels of inflation at this point. This is great news for you because who likes paying more for things? And also the Federal Reserve, which desperately wants to cut interest rates from 23-year highs but needs assurances that inflation is under control before it does that. Well, this report didn't throw any curveballs. September's rate cut is still a go, and the question now is not if they'll cut rates or

but by how much? Kyle, if high inflation was a three-hour horror movie, the credits would finally be playing and the house lights have gone up. It sure seems like it, and I think this was a report exactly like you said, no curveballs, and probably exactly what we wanted to see. I remember we were talking about the...

jobs report maybe last week, everyone was up in arms. We need an emergency cut. We need it now. It seems like everyone is kind of cooled down. They're like, okay, it is going according to plan. And so I think the Fed has done a pretty good job of bringing inflation down at the rate we needed it to, and that they're more focused now on the labor side of things. And that's what they're going to talk about at their symposium. In recent comments, the Fed has said that inflation is less of a worry for them and they are more focused on

a slowing economy, a slowing job market, which is why they are teeing up a rate cut in September. So what drove like inflation did increase 2.9 percent from a year ago. So what was driving the increase? It appears just to be one sector. Ninety percent of the monthly increase in inflation was due to shelter costs, a.k.a. rents.

That is, first of all, very important because that is a huge expense for people. Economists also consider shelter costs in the CPI to be somewhat of a lagging indicator.

Private data indicators show that rents and home prices are decreasing or slowing growth. So that's why they're not so worried that 90% of the increase is due to shelter costs specifically, just because they view that as somewhat of an anomaly and not a perfect symbol of what is going on in the economy. But obviously still a huge concern for people as housing prices keep going up. The rest of

the goods and services in the US economy though, pretty much growing at 2% or less, which is what the Fed wants to see. I'm going to need Jay Powell to put on a construction hand and just start building some homes. That might be our solution here. I will say eggs were up 5.5%. So if you're a big omelet guy like myself,

You're still getting hurt. Eggs are probably the symbol of inflation of food inflation over the past couple of years. But I do want to point out that the food inflation we all experienced when we went to the grocery store and saw the price of eggs, saw the price of food, fruits and veggies just skyrocket 20% over the past couple of years. That is also a thing of the past food, food prices, especially groceries have just barely increased for the past six months. Last, uh,

Last month, month over month, they increased 0.1%. So that's pretty negligible. So the food price inflation that we've experienced does seem to be gone. And I think at this point, every single time the CPI comes out, this inflation report has been huge news. Markets have reacted one way or the other, whether it comes in hot or cool. And I think the muted market response yesterday, there just wasn't a big stock reaction.

price jump one way or the other is because this inflation report just hasn't become that important anymore. Inflation is back down. There are other reports that are more important, like the jobs report. And I think today is something you want to pay attention to because there are two big reports that I think could swing markets more so than the CPI. One is retail sales. We talked about how consumer spending is so important to the economy. And the other is very similar to retail sales. It's just

through the private sector is Walmart earnings coming out before the bell. So those are two reports that may just be more important than CPI these days. Yeah, it seems like this has maybe cleared the path for a cut in September. They're going to get more inflation readings before then and another jobs report. But it seems like it's all going according to plan. It really is going according to plan.

Okay, last week, Google was found by a judge to run an illegal monopoly in its search engine, the most damaging antitrust verdict against a U.S. tech company in two decades. But that verdict is just part one of this saga. Part two is now that Google is found to be a monopoly, what is the judge going to do about it? What are the penalties, whole hand down, to create more competition in this space?

Well, I hope he remembers long division because the DOJ is reportedly considering asking the judge to take the nuclear route and break up Google into goo and goal. Okay, that is a joke that would make my dad proud. But in actuality, the government is discussing proposals like forcing Google to split off parts of its business, like its Chrome browser or its Android smartphone operating system. And if they choose this aggressive path,

It'd be the biggest corporate breakup since AT&T in the 1980s. Less ambitious proposals are also on the table. They include forcing Google to make its vast search data available to rivals or banning those exclusivity deals that Google paid to phone makers. Remember, the crux of this case was that Google pays Apple $20 billion a year to make its search engine the default on iPhones, which the judge said violated antitrust laws.

Kyle, a Google breakup, it is apparently on the table, would be extreme and historic. Yes, I would have used Alphabet as splitting up from A to Z, but I liked your dad joke. I liked your dad joke, Neil. This is a really interesting case. We have J.D. Vance and Lena Kahn agreeing on something as well, which is... Lena Kahn is the F.

chair, which is very notable. It's interesting because Satya Nadella, the Microsoft CEO, was actually part of the testimony. And he said that basically Google has created this Google Web with its relationship with Apple. And it's so dominant in some spaces that

that it's using that dominance to promote basically other products. And so you can't take off Chrome off your Chromebook. You have Android as a brow phone. You can't get Chrome off of that. And that's when I think the Fed or the, the,

The Justice Department starts thinking about, OK, is this actually affecting consumers? And there is a big focus on their ad network where they dominate it so much they're concerned it's hurting consumer and bringing prices up. And that's when I think you start having more serious conversations about monopoly. But the reason I bring up Microsoft is we tried to break up Microsoft in the early 2000s.

And it actually went through on appeals. It was taken back, but they had to do a few things because of that ruling. And it allowed players like Google, early Google to get much bigger. And so even if it doesn't get broken up, I think this is going to create more space for

for startups and for other companies like a DuckDuckGo, other search engines to gain a little bit of market share. So I'm really interested in how this is going to play out. Right. This process is fascinating because what the judge does and what the DOJ does is they go to all of Google's competitors and say,

Hey, what would you do? That's why you talk about Microsoft. So they go to DuckDuckGo and they're like, hey, how would you create more competition? What should we do to Google? They solicit opinions of all of Google's competitors and rivals. And what DuckDuckGo said, so here they said, there's no silver bullet. They did not propose breaking up Google. They said that they should ban those agreements. That seems to be the biggest thing that they could do because if the judge found that those exclusivity agreements to make Google search

the default on iPhones and other devices, if they found that was the problem here, then they probably should ban those exclusivity agreements. That seems like the first thing they should do. DuckDuckGo also talked about data sharing. That was a big part of the Microsoft settlement 20 years ago to give others access to Google's search and its knowledge. Google has 16 times more data through its search engine than its closest friends.

rival, which I don't even know what it is, Bing, DuckDuckGo, something that's not even remotely close to it. They also want to do what the EU does potentially and present users with a choice of what browser and what search engine you want to use when you open up your phone, which is not the case now. But those appear to be all on the table. A lot of tech analysts I follow were like, honestly, I don't see this Google breakup happening. This would be extreme in the sense of

breaking up Google over the fact that you just found these exclusivity agreements to be violating antitrust law. Plus, as you mentioned with Microsoft, it goes through the courts for years. Google is going to appeal something like this to unwind a giant tech company just

You can't snap your fingers and make it happen. But if it has happened before, and I know you went down the rabbit hole with AT&T in the 1980s. Yeah, AT&T was the last. This would be the biggest company to be broken up since AT&T in the 1980s. And they basically broke up and made these baby bells. So AT&T became seven other companies that were regional companies.

It is funny because if you look at it now, they all basically got back together. I think Verizon is the only one that kind of actually stood on its own. So the market brought them all back together. But I do think in the terms of Google, even if the company doesn't get broken up, I picture this as like death by a thousand cuts.

Every day that Sundar Pichai has to think about this court case is that he's not thinking about AI. And so even if they don't get broken up, it is a distraction for Google. And I think it will give some sunlight to other companies. Plus, all these employees are working from home. Maybe Eric Schmidt was on to something.

Okay, Neil, have you ever clicked agree to terms of service without fully reading the terms of service? If you answered no, you're probably lying. And if you answered yes, you're just like Jeffrey Piccolo, who signed up for a one-month free trial of Disney Plus streaming service back in 2019. Now let's fast forward to October 2023. Jeffrey and his wife, Kanika Porn Tank Swan, are

All right.

in steps Disney's legal argument, which feels right out of an SNL courtroom sketch where they claimed he waived his right to sue Disney and instead must go to arbitration because you guessed it. There's a clause embedded in the terms and services of Disney plus streaming service that he signed up for back in 2019.

While this plot feels like something you'd watch on Disney+, I assure you this is real. Piccolo's lawyers have argued that, quote, the notion that terms agreed to by a consumer when creating a Disney Plus free trial account would forever bar that consumer's right to a jury trial in any dispute with any Disney affiliate or subsidiary is so outrageously unreasonable and unfair as to shock the judicial conscious.

Neil, are we going to see Mickey Mouse in a courtroom or do you think this ends up in arbitration? I mean, Disney may be able to protect itself in legal court in this case, but not in the court of public opinion. And ever since this came out yesterday, it has been absolutely hammered for this lawyer trickery that it's trying to pull off, trying to settle this dispute in arbitration, which is which is not a court. It is a private area.

basically where a third party, not a judge, decides this dispute. And it's over $50,000, right? The Piccolo wants $50,000 in damages plus lawyer fees. And it seems like they are... This $50,000 is...

nothing to them compared to how bad they are losing the PR war right now. Uh, in, you know, public opinion has turned so much against them in the past 24 hours by using this clause in Disney. Plus they also are citing a terms and conditions agreement that Piccolo and his wife used to actually buy passes to Epcot where they went to dine in October 23. Uh,

to protect themselves, to shield themselves from liability in court. And these lawyers are saying, I can't believe you're using something from Disney Plus to apply to every single Disney affiliate or subsidy anywhere in the world. Plus, it's not just you. Like, you're trying to apply it to your wife. Your wife had nothing to do with the Disney Plus show. She didn't watch the Disney Plus show. She had nothing to do with it. So you're trying to protect yourselves against the estate of this guy's dead wife. It is a terrible look, and we'll see what happens.

Yeah, it's not a good look. And of course, they do want to go to arbitration because it's more private. They get it out of the public eye. But I think the kind of genie is out of the lamp here. And everyone is focused on this case. What I found really interesting is two law professors from a previous research paper looked at the terms and services of the 500 most popular websites. And they basically found if you actually read them, you need to basically be a lawyer to understand what they are. So I think we have a broader issue, which is these terms and services are so complex

that no one actually reads them. And then to be held accountable for legalese that you can't understand seems to be a tough spot. So there might be something interesting that comes out of this case in terms of terms and services going forward as well. Yeah, a Florida judge will decide whether this case can go to jury trial like Piccolo wants. Up next, how legalized sports betting has impacted people's finances.

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Welcome to Neal's Numbers, the segment where I share three stats from the week's news that will make you seem smarter than when you put on glasses. My first number is $30 billion, which is how much the candy giant Mars is paying to buy Kelanova, the maker of Pringles, Cheez-Its, Pop-Tarts, and other snacks that your no-process food rule doesn't apply to.

Yup, you might remember hearing rumors of this acquisition coming together a few weeks ago, but yesterday it was official and it is mega. Mars' $30 billion purchase is one of the biggest M&A deals of this year so far and one of the biggest deals in the food industry ever. Who are the players and what's the strategy? Well, you've got Mars, which is known for its candy and chocolate brands like M&M's, Skittles, and Juicy Fruit Gum. It is a massive company among the biggest privately held firms in

the entire country but cocoa prices have skyrocketed nobody's chewing gum anymore and it's thinking it has to add more punch to its brand portfolio and that's where kela nova comes in while kela nova sounds like a moon of the planet mars it's actually a piece of debris from when kellogg split up last year into two companies kela nova makes a bunch of salty snack brands like pringles and salty snacks are one of the few areas of growth in packaged foods so mars decided to pounce

Kyle, would you pay $30 billion for Cheez-Its? I would pay $30 billion for Cheez-Its, hands down. It's interesting. I think the M&A environment has been pretty tough in the U.S. the last couple of years, and so I wouldn't be surprised if antitrust regulators do actually go and look at this deal. But also...

Did they forget about Ozempic? Like, no one's snacking anymore. So maybe they have some inside intel here and they think snacks are going to rebound. Well, here's the thing. People are snacking. Snacking is huge right now. Nearly half of U.S. consumers eat more than three snacks a day, which is up 8% in the past two years. And U.S. snack sales rose 11% last year from the year prior to $181 billion. So whatever...

impact Ozempic and Wigovi are having, it does not appear to be curbing Americans' appetites. Americans love their little treats. What can I say? My second numbers are some concerning findings from recent studies into sports gambling, which show how the rise of sports betting is linked to negative financial health outcomes in states that legalized it in the past few years.

Let's take one study led by management professor Brett Holenbeck at UCLA. His team looked at a consumer credit data set of 7 million people to learn how online betting impacted their financial health, and it was not a pretty picture. In states where online betting is available, average credit scores drop by 1% after four years compared to a credit score drop of 0.3% in states where legal gambling is available of

any kind. In states that allow online betting, the likelihood of filing for bankruptcy increases by up to 30% after three to four years. Collection on unpaid debts also increased by about 8% in those states. And these negative outcomes aren't spread evenly across the population. They disproportionately affect young men in low-income counties who experience more credit card delinquencies, higher financial distress, and higher rates of bankruptcy than other groups.

Kyle, since the Supreme Court lifted a nationwide ban on sports betting in 2018, 30 states have made it legal. Sports betting ads are everywhere, and Americans wagered $120 billion on legal sportsbook last year, up from $93 billion in 2022. And we're only now just learning about how it's impacting people's personal finances. Yeah, this is super interesting, and I think Nate Siller was quoted in one of the stories about this, our favorite elections forecaster, who basically said...

These companies are hiring, like, MIT aerospace engineers to figure out how to hack your phone and hack you so you keep gambling. And it, I think, is drifting into predatory zone. And so it'll be very interesting to see, and I think...

It also was mentioned that they don't want to stop just at a casino in your pocket. They want like this thing called iGaming, which is like the Holy Grail, which basically allows you to bet on anything in the world, essentially from your phone. I think we're going to look back on this in like, you know, two decades and be like, we probably should have had a little more regulation here. But it's tough because it does get to this freedom question of what should an adult be able to do on their phone. So I can see the arguments for the other side as well.

My final number is about the rise of a new type of lawnmower, mini farm animals. Interest in pint-sized goats, cows, donkeys, and other farm animals that stand just three feet tall have skyrocketed during the pandemic, and demand has stayed high, according to the Associated Press.

Take mini goats, for example, the most popular entry-level mini animal. In the past year, breeders registered 8,330 mini goats, a 73% jump from the 12 months before July 2021. Meanwhile, the retailer Tractor Supply has increased its selection of treats for mini goats and mini pigs to help customers feed their new exotic pets.

The surge in mini farm animals can be linked to a number of trends. Americans moving to rural areas during COVID with more space, social media influencers on YouTube and TikTok going viral, showing off their own mini farm animals and the desire to pretend you're running a farm without actually running a farm. Plus, Americans just love having pets, whether exotic or more standard. According to the census, there are more U.S. households with pets than with children. Kyle, could you see yourself as a mini donkey dad?

100%. I could be a mini donkey dad. I want to hate this story, but I can't. Like, I love the idea of a mini goat as a lawnmower. That is fantastic. Maybe feed the goat some Cheez-Its that you just got from Mars and you could have a really good time. But it's clear that people like cosplaying as farmers.

They really do. And I don't think usually with these things, you think these are regret purchases like, oh, there's so much work. I'm going to give it back. That is like a big concern when you're actually buying. These are literal farm animals. They might they might be small, but some of them can weigh 500 to 600 pounds. They eat a lot of food. They require a lot of space, a lot of upkeep, a lot of maintenance, a lot of vet trips.

But from this article interviewing these new owners, they seem like they're quite happy with their purchase. They get this lawnmower. They don't have to mow their lawn. They, you know, sometimes get milk and eggs from their chickens, too. I do think this is an extension of those backyard chicken markets.

surge that we saw during the pandemic. A lot of people bought chickens to have their own eggs and they thought, okay, maybe I can handle these chickens. Maybe I can level up to a donkey or a goat, especially if they're mini sized. So this is kind of a fun trend that actually, if you're, if you breed these things, you're making a lot of money. Yeah. They saw the egg prices in the inflation report and said, I got to bring this in house.

I have some breaking news for you now on the podcast. It turns out millennials could in fact afford all that avocado toast. There's new data that suggests millennials are not wealthier than previous generations were at their age. The median household net worth of

older millennials rose from 60K in 2019 to 130K in 2022. And for Americans born in the 1990s, that's me. Shout out to 1993. This includes the generation's youngest members. Median wealth more than quadrupled to 41K for Americans born in those 1990s.

In early 2024, millennials and older members of Gen Z had, on average and adjusting for inflation, about 25% more wealth than Gen Xers and baby boomers did at a similar age. And the biggest driver of this was real estate. Millennials' housing wealth grew $2.5 trillion after accounting for the additional mortgage debt that they took

Neil, is this a big W for our cohort? It seems like it. How are we going to celebrate? I think so. I mean, you heard all of these reports over the past decade being millennials, millennials,

came, you know, came into their working lives in the aftermath of the Great Recession. They are not as well off as baby boomers or Gen X or other other generations. But if you look at the actual data, which we're looking at, their wealth has boomed in recent years. I think a lot of that has to do with especially if older millennials, which are now in their young 40s. I think the oldest millennial is 44. If you bought a house in 2019 or

or in winter 2020, your wealth grew a lot because housing prices have grown 20% over the last four years. And that is a huge source of wealth. Another source of wealth that I want to pinpoint is retirement accounts. So over the last couple of decades, employers have started auto-enrolling you and their employees in retirement accounts. And before you had to opt

opt into that now you are automatically enrolled in a 401k at many places and that and with the stock market booming that has also led to a major increase in wealth in millennials who are now have now been working for 10 to some of whom have been working for 10 to 15 years now so couple real estate uh growth with uh with these retirement accounts with the stock market going going haywire then you know you you get a lot of wealth and and apparently they are now better off than boomers and gen x

at those particular ages. It's a big win for us and

The professor, a psychology professor at San Diego State University said exactly what you said. Basically, one of the biggest wealth divides for millennials is did you buy a house in 2020 or before or after? And if you did before, you're ripping. So we really messed up, Neil. And also, we're just seeing the power of compounding interest, being in those retirement accounts, letting them grow, and the market's been ripping. Yeah. So kudos to millennials for saving for a rainy day because millennials do know that there are plenty of

of rainy days. Okay, let's wrap it up there. Thanks so much for listening and have a wonderful Thursday. Kyle, appreciate you stopping by, but your work here is not done. You're coming back tomorrow morning. Back to back. Maybe we'll even put Kyle Tork responding to listener questions in our inbox. If you've got feedback or thoughts on the show, send an email to morningbrewdaily at morningbrew.com.

Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Uchenawa Ogu is our technical director. Billy Menino is on audio. The hair and makeup monopoly could be split up. Devin Emery is our chief content officer, and our show is a production of Morning Brew. We'll see you tomorrow.