Our thoughts on Amazon; How YouTube Radicalized Brazil; The Phony Patriots of Silicon Valley; Patrick Byrne resigns from Overstock
1) In one of our webinars last fall, Glenn Tongue and I shared our in-depth thoughts on Amazon (AMZN): Diving Deeper Into Amazon (9 minutes).
2) Speaking of the tech giants, this article on the front page of last Tuesday's New York Times, How YouTube Radicalized Brazil, is pretty darn scary. Excerpt:
Members of the nation's newly empowered far right – from grass-roots organizers to federal lawmakers – say their movement would not have risen so far, so fast, without YouTube's recommendation engine.
New research has found they may be correct. YouTube's search and recommendation system appears to have systematically diverted users to far-right and conspiracy channels in Brazil.
A New York Times investigation in Brazil found that, time and again, videos promoted by the site have upended central elements of daily life.
Teachers describe classrooms made unruly by students who quote from YouTube conspiracy videos or who, encouraged by right-wing YouTube stars, secretly record their instructors.
Some parents look to "Dr. YouTube" for health advice but get dangerous misinformation instead, hampering the nation's efforts to fight diseases like Zika. Viral videos have incited death threats against public health advocates.
And in politics, a wave of right-wing YouTube stars ran for office alongside Mr. Bolsonaro, some winning by historic margins. Most still use the platform, governing the world's fourth-largest democracy through internet-honed trolling and provocation.
YouTube's recommendation system is engineered to maximize watchtime, among other factors, the company says, but not to favor any political ideology. The system suggests what to watch next, often playing the videos automatically, in a never-ending quest to keep us glued to our screens.
But the emotions that draw people in – like fear, doubt and anger – are often central features of conspiracy theories, and in particular, experts say, of right-wing extremism.
As the system suggests more provocative videos to keep users watching, it can direct them toward extreme content they might otherwise never find. And it is designed to lead users to new topics to pique new interest – a boon for channels like Mr. Moura's that use pop culture as a gateway to far-right ideas.
The system now drives 70% of total time on the platform, the company says. As viewership skyrockets globally, YouTube is bringing in over $1 billion a month, some analysts believe.
Zeynep Tufekci, a social media scholar, has called it "one of the most powerful radicalizing instruments of the 21st century."
Does an article like this change my view that YouTube is one of the world's most valuable businesses, and also a big reason why I'm bullish on shares of Alphabet (GOOGL)? No. YouTube will fix this problem...
3) The tech giants are scrambling to ward off regulation and calls to break them up, so naturally they're wrapping themselves in the flag – a strategy that this New York Times article rightly mocks: The Phony Patriots of Silicon Valley. Excerpt:
Not long ago, many leading technologists considered themselves too lofty and idealistic to concern themselves with the petty affairs of government. John Perry Barlow, a lion of the early internet, addressed his "Declaration of the Independence of Cyberspace" to the "governments of the industrial world," saying that for him and his fellow netizens, these creaky institutions had "no moral right to rule us nor do you possess any methods of enforcement we have true reason to fear."
But that was before privacy scandals, antitrust investigations, congressional hearings, Chinese tariffs, presidential tweets and Senator Elizabeth Warren.
Now, as they try to fend off regulation and avoid being broken up, some of the largest companies in Silicon Valley are tripping over their Allbirds in a race to cozy up to the United States government. These companies' motives vary – some are vying for lucrative public-sector contracts, while others are lobbying against regulation by painting China as a red menace that must be defeated for the good of the country.
Either way, the game is the same: Salute the flag, save our bacon.
4) A quick follow-up... In last Friday's e-mail, I wrote about Overstock (OSTK) CEO Patrick Byrne, who I said was "completely nuts, trafficking in all sorts of wacky conspiracy theories," and highlighted "the latest bizarre story he's associated with (which has crushed his stock)."
Apparently, Overstock's board finally had enough, as Byrne resigned yesterday. (Here's his resignation letter.) Investors breathed a sigh of relief as the stock popped 8%.
Best regards,
Whitney