Hard Fork: Bluesky’s Big Bet, and Are Deals Dead in Silicon Valley?

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email transcripts@nytimes.com with any questions.

Well, Casey, the Vision Pro came out this week. And I like to do nice things for you. And Valentine’s Day is just around the corner. And so I thought, well, I should get Casey a Vision Pro.

Oh. That’s very nice of you.

So I bought you an Apple Vision Pro.

You did, really?

Yeah. Well, actually, they were out of the Vision Pro model. So I actually got you a Vision Amateur.

(LAUGHING) Oh, no, a Vision Amateur?

Yeah, so here’s your new Apple Vision Amateur.

Are these ski goggles?

Yes. They are. But I think we should wear them and pretend like we’re wearing Apple Vision Pros. See, if we walk down Market Street right now, people will think we’re early adopters, especially if we just go around pinching things and swiping.

I’m watching “Raiders of the Lost Ark” in 4K right now. What are you doing?

(LAUGHING) I’m just appreciating how much you’ve committed to this bit.

These were $6 on amazon.com. They’re doing great things over there, whoever made these. But yeah.

Keep gesturing.

I’m swiping. I’m playing “Fruit Ninja.”

[THEME MUSIC]

I’m Kevin Roose, a tech columnist for “the New York Times.”

I’m Casey Newton from “Platformer,” and this is “Hard Fork.” This week, Bluesky CEO Jay Graber on opening up to the public and whether the world is ready for a decentralized social network. Then, “The New York Times’” Erin Griffith stops by to talk about the turmoil in Silicon Valley after Adobe’s acquisition of Figma fell through. And finally, it’s time for a system update, Kevin.

I hate system updates.

Close your apps. [THEME MUSIC]

Well, Kevin, ever since Twitter died and was replaced by X, there has been a lot of competition to see whether anything can succeed it. And this week, there is another twist in that story because Bluesky, a network we talked about a really long time ago, has now opened its doors to the public.

Yeah, so we talked about Bluesky on the show last year. At the time, it was this invite-only social network. It had spun out of the former Twitter a while back.

And we both got invite codes and joined and talked about how we thought that Bluesky was actually one of the more promising Twitter alternatives because it was, basically — the value proposition was like, this is what Twitter used to be before Elon Musk bought it. But it also has this piece that’s different than Twitter, which is about decentralization and how these networks operate.

Yeah, and I have had my eye on this network the whole time. I’ve been using it the whole time.

You’re still using it?

I’m still using —

I confess I used it once and then a couple of times. I was very impressed, but then it just felt like it — I don’t know. It fell off.

Well, I have been having fun there because it’s been my observation that when I open up the feed at random moments during the day, it just seems like people are having a better time there than they are on a lot of the other places that I’m checking.

OK, so you’re still using Bluesky, but it’s been this invite-only community.

It has been. But at the same time, it’s also truly one of the weirdest and wildest stories in Silicon Valley over the past several years. Jack Dorsey, the co-founder of Twitter, said his biggest regret was that he had turned Twitter into this centralized, big, for-profit, venture-backed thing where some private company has total control over everything that you are saying.

They own the servers. They own the data. They control the whole experience.

Yeah, he said it should have been a protocol instead. So he thought it should have been something like email where anybody could build their own app for it, anybody could host it on their own server, and everything still talks to each other. And Kevin, we should say, at the time, this did not seem like a great idea.

Right.

(LAUGHING) This seemed like —

I remember scratching my head and going, OK, Jack.

Yeah. But he actually pursued it. And he brought in a team, and he funded it. And shortly before Elon took it over, Bluesky spun out of Twitter, which gave it a chance to try to realize some of these ideas.

I’ll just come out and say it. I am skeptical that Bluesky is going to replace Twitter, at least for most people.

I was very optimistic about it when it launched. We did this whole episode. I think the title of this segment we did was “Bluesky Has The Juice” because it really did feel vibrant and fresh and funny, and lots of people were starting over there.

But I think as time has gone on, I’ve just become more skeptical that these kind of decentralized social media apps can move as quickly as you need to to be competitive in a landscape that includes things like Threads from Instagram.

Threads is based on the activitypub protocol. And eventually, plans are that it will be decentralized. So I think there’s a good argument that 130 million people a month are already using a decentralized social app.

And at the same time, Bluesky did not die. It remained relatively vibrant. It continued to grow. Until this week, it had about three million people who had used the app so far.

And that brings us to this moment where we’re about to see a format war, Kevin, because Bluesky and Threads are built on different protocols. And frankly, not since VHS and Beta went at it in the ‘80s, I think, have we seen a fight with quite this much at stake.

Yeah, well, my grandfather died in format war, too. so this is a sensitive subject for me. But I guess we can proceed.

RIP to him.

So look, let me say, this is a bit of a wonky conversation, OK? But if you feel yourself getting bogged into the details as we discuss this, I just want you to remember a lot of people hate social media. And if you want social media to be better, you might actually just need different infrastructure for it.

You might need some different ideas about usernames and servers and how things interoperate and interact. And yeah, it is a little bit wonky. But if you want to see a better future, it’s going to start with conversations like this.

All right. Well, let’s hash it all out with Jay here in the room with us. So today we’re talking to Jay Graber. Jay is the CEO of Bluesky. She’s been working on this project since 2021 when it kind of was spun out of the old Twitter. And she is now opening the gates of this app to the wider public. Well, let’s bring in Jay and see if she can convince you.

[MUSIC PLAYING]

Jay Graber, welcome to “Hard Fork.”

Thanks for having me.

Hi, Jay.

I’m curious to have you just make the basic pitch for a decentralized social network because I think a lot of people are very unhappy with social media these days. But it’s almost never, in my experience, that it’s too centralized.

They’ll say it makes me feel bad, or I spend too much time on it, or it’s got all these polarizing and extreme people on it, or just it’s boring. Very few people that I meet outside the world of tech reporters and tech workers has anything to complain about when it comes to centralization. But I’m curious how you would pitch the average user of a service like X or Instagram or Threads on the benefits of decentralization.

Yeah, I think that’s because decentralization is an abstract idea, and what you really want is social that puts power back in users’ hands. And so we really think of this as social media built for the people, by the people because what decentralization gives you is open APIs for developers anyone can build, and so that unleashes experimentation.

So if anyone wants to try a new way to do a healthier feed, a more engaging way that keeps you more interested, less bored, or a calmer way that gives you a healthier way to scroll, that’s possible. Also, it gives users choice.

So once developers come on and build, because it’s this open ecosystem, then suddenly users have alternative clients to choose between. They have alternative feeds. They can pretty much customize the experience as much as they want.

This also is open source social. And so users who have decided they wanted to search their own posts just went in and added that to the code recently. So things like that can just happen, and that means social media can evolve much faster, not bottlenecking change on one company that controls the experience.

Also. Kevin. I would disagree with you. I think people do get frustrated with centralized social networks all the time. They just don’t think of centralization as the culprit. It’s like if you get mad at Instagram, and you just wish you could take your followers to another photo app, you’re mad at centralization. But you’re probably not thinking about it in quite that way, right?

So I think one of the challenges that you have, Jay, is selling all the benefits of what you’re building, even though it does seem super abstract and often, I think, is not the way people are thinking about these things.

Definitely, yeah. Any time somebody thinks like, wow, wouldn’t it be cool if I could build this kind of an interface or have this kind of experience on social? Or what if my feed worked like that?

And then they’re like, oh, well, the company will never implement that. You’re mad at centralization because somebody could come along and do that if you were able to just fork the thing and take it anywhere and start building on it.

Yeah, so there are two things that you’re working on right now. One is Bluesky and the other is the AT protocol. Explain how those things are different but related.

Yeah, so confusingly enough, Bluesky is the name of our app now, but it was also the name of this project that Twitter started to build an open protocol for social media back in 2019.

So when I took over this project in mid 2021, we, at first, were building out the AT protocol, intending that Twitter would run on it. And then, circumstances changed very quickly.

I didn’t really know what was going to happen, but I’d set us up as an independent organization because, based on my understanding of the arc of centralized organizations, the captain can always sink the ship. And so if you have one person at the helm, even if they’re very supportive of a direction, like Jack was at the time, if Jack left, the support could go away.

But what are the odds that Jack Dorsey would ever leave Twitter?

Or that we would have an erratic and unpredictable person in charge of a social network with no accountability.

It seemed like a time in history when we should expect the unexpected.

Yeah, true, true. Yeah, so there’s also something called federation, which I want to have you remind us what that is. And what is the status of federation at Bluesky.

Yeah, so federation also in some ways describes an abstraction. But the most basic thing is letting services talk to each other and getting this interoperability between them. So a protocol is really a language that lets computers talk and exchange information, and we are setting that up so that anyone can connect a service to the network and have it talk with the rest of the network.

Pieces of that have already been split out. So for example, the custom feeds you could say in one sense are already federated because third parties, developers hosting their own infrastructure that were all struggling to keep up with load last night, have set up their own feeds already.

Can I repeat back what I think is true, and you tell me if it’s wrong or not?

Oh, this will be fun. Let’s see.

OK, so right now Bluesky is the only social network on the AT protocol. But through federation, other developers will be able to host their own projects and apps and services on the AT protocol. Is that correct?

Yes, it’s partially, and it’s —

Woo! That’s good, Kevin.

And it’s more than that. Others can host any piece of the social experience themselves. And essentially, I think, actually the highest level way to think about this is a social media experience that’s not all run by one company.

And so anyone can come in. And often there are, once you open up the ecosystem, there are many, many third parties. And in some sense, it doesn’t even make sense to think in terms of third party, first party anymore because your social experience is just composed of all of these different people who have built things that are coming together in your experience.

So theoretically, it would be possible to have kind of an Instagram-like app where the Stories feature was built and run by Snapchat and the shopping feature was built and run by Amazon and the For You page or the Explore page was sort of run by some other startup. That kind of Frankensteinian social media experience would be possible?

That is possible. The way we’ve tried to design this protocol is for composability, and so you can plug these things together. One of the design principles we’ve been trying to follow is “Third party is first party.”

So that’s why when you come in and you see custom feeds and you scroll through them, it’s pretty easy to just select something built by another company or another organization. The For You feed, one of the really good algorithmic feeds that has emerged is built by another company. And it’s great because it provides a different experience to users than the algorithm that we built.

Yeah, and by the way, if all of this is still sounding too abstract to you as a listener, we are talking about something very similar to email, very similar to the open web where it doesn’t matter what server you are using.

Anybody can build software that shows you the web, that shows you your email. You can email anybody on any server, and it just works, email and the web, obviously, two of the most powerful things that have ever been built on the internet.

And what Jay is working on here and what some other folks are working on their own protocols are working on is, can we have a protocol for social networking and for communication? And I just I think it’s super interesting, yeah.

That is the best analogy because we also are very inspired by open web principles, and we try to follow what came before in the web, like letting you use your domain name so you can link your social to your blog.

And essentially, self hosting is basically like anyone setting up their own blog. And then the service that other social companies provide on top of it is that we’ll be providing is like Google going along and scraping all the blogs together and then showing you a search over them.

And then the feed is a bit like your RSS feed in the old days where you got to look at all of the blog posts that people had written, but everyone had set up their own blog out there on their own domains and were running them in different ways, different places.

Yeah, I want to stick with the email example for just a second because I think it actually brings up one of the common objections to or just criticisms of this decentralized idea of social media, which is that it actually ends up not being that decentralized in practice.

With something like email, yes, anyone can run their own email server. It’s an open protocol in that way. But in practice, most people have Gmail accounts, or they have Hotmail accounts, or they have Yahoo! accounts. There are a few big —

To be clear, most people do not have Yahoo! accounts. But don’t worry about that.

Most people over the age of 75 have Yahoo! accounts.

But — [LAUGHS]:: but basically, you end up with a system where because of power laws, and network effects, and just the ability of private companies to move faster in some senses than decentralized projects, you end up with a handful of companies de facto controlling most people’s experiences of the thing you’re building. So how does Bluesky think about that? And would you be happy with the state of decentralized social media if it ended up like email did where there were a few big providers building on top of this open protocol?

Yeah, we looked at this aspect of protocols early on. Most of the early team came from building in decentralized protocols worlds already. And I did this full ecosystem review of all these existing protocols out there.

And it seems to often happen that you get power laws across any sort of dimension. But in thinking about decentralization , we asked ourselves, what do you really want out of this system property? It’s essentially an abstract property of a system.

And what you’re really trying to give in terms of benefit to users here is the right to leave so you can vote with your feet. And you’re trying to give users and developers the freedom to innovate, so they can just unleash their creativity.

And so we designed around account portability, giving users the ability to leave with their accounts, move it to another provider. So if things end up centralizing around a Gmail, then one of the problems with email here is you can keep your contact list, and you can communicate from a Gmail account to a Yahoo! account. But if you change email addresses, you have to start over.

And so the goal here was to let you, essentially, keep your email address, your identity, your user handle if you move services. And then it makes it easier to switch your service provider.

Yeah. I’m curious. We just had Chris Dixon on the show, who was a big proponent of decentralized social media, specifically using crypto and cryptocurrency as a way to finance the creation of decentralized social networks.

You used to work in the crypto industry before you worked at Bluesky. I believe you were a developer on a project called Zcash, which is a Bitcoin spin off. And I’m curious why you decided not to build cryptocurrency and blockchains into Bluesky and the AT protocol. Were there things you learned while working in crypto that were like, maybe we don’t want to go that direction? Because this is something that a lot of people, including, I think, Chris Dixon would say naturally go together. You have decentralized social media and decentralized money, and you have to have both.

Yeah, so I got pretty deep as a blockchain developer because I like to always get to the center of what I’m building. I was working on a cryptocurrency that introduced a new form of cryptography, zero knowledge proofs, which are very cool. And there was a lot of promise that they would solve problems of privacy and scalability, and so I was working on trying to fulfill some of those promises.

But knowing deeply the limitations, people really struggled with wallets and their personal keys. It was really hard to do anything at large scale in a cost efficient way on a blockchain. And it added a lot of extra complexity.

And so I realized this would just not be the way to go. And our mandate here was to build something in a relatively short order of time that Twitter could run on. And so it was to build a protocol that you could operate at Twitter scale with Twitter standards.

There’s also questions around the immutability of blockchains. I just don’t think that need to have the picture of what you ate for lunch on an immutable ledger forever. Nobody wants that.

My lunches are very important for the historical record.

But what I love about the way this turned out, though, Jay, is that I think you’re now working on a project that, hopefully, will let you prove out the benefits of decentralizing without having to lead everyone down this path of crypto that is super confusing, that is so hard to use, that seems to inevitably result in people losing a lot of money.

And I think there’s just something really interesting about that, that protocols and decentralization may indeed be the answer to some of the frustrations that we have with the internet as it exists today. But you’re not actually going to need to involve a blockchain to solve it.

Yeah, I mean I started off my career as a tech activist. I was working at organizations working on net neutrality, antitrust for tech issues, privacy. And I actually had this realization when I was just getting frustrated that we were doing all of our campaigning on Facebook and Facebook events and Twitter back then, and I wanted to build something that would just give people more power directly. So that’s why I learned to code, and that’s why I eventually circled back to social. It was just this moment of realization that maybe if I learn these technologies well enough, I can someday build things that just give power directly back to people, rather than waiting on regulation.

And that’s something where — I think that when by the time people get around to thinking, oh, we should regulate tech. Maybe we should try to use policy to direct things in a more healthy direction. Power has already and consolidated a lot. And it’s very hard for policy makers who don’t understand the technology to understand the best interventions that can be made.

An interesting point to me when we were talking the other day, that you believe that more Democratic communication networks could result in a more Democratic country. Can you share a little bit about how you think that the way that we communicate influences our politics?

Yeah, so in school, I studied science technology and society, which is a History and Philosophy of Science and Technology major. And I spent a lot of time thinking about how the internet was changing society and the promises and perils of it.

And I think that one thing that seems to have some degree of truth to it is when a society gets a new communication medium, everything gets disrupted, and then also, societies start to take the form of their new communication medium.

In some ways, there’s this mirroring this reciprocal relationship going on. And so if you have a very centralized medium, societies start to take that form because then you give one person a megaphone and the ability to direct everybody or propagandize or just put their thumb on the scale. And then things move very quickly in one direction or another.

That’s one of the benefits of centralization, being able to move fast. But that’s also a downside. And so that’s why I say the captain can sink the ship, because it’s high variance. And so that’s why we have decided, generally, collectively, that democracies are a stable form of governance that we, hopefully — maybe there’s some doubt around that now as well.

But I do think if we want to give democracy its best shot, we need more democratic communications infrastructure so that we’re actually able to tap into the collective intelligence of a pluralistic society and not have it all just swing one direction or the other as soon as something as basic as ownership changes.

Talk a little bit about content moderation on Bluesky and other decentralized social networks because this is a thing that people at the big centralized tech companies will say when you ask them about decentralization, like, good luck moderating that.

So right now we’re having a conversation about AI-generated imagery, for example, on social media and what to do if, as happened just recently, a bunch of AI-generated Deepfake nudes of a celebrity like Taylor Swift are posted. That actually happened on X.

And a lot of social platforms right now are struggling with some of these kind of questions about what do we do about this content? Do we ban it? Do we allow it but make it harder to find? My understanding of Bluesky is that you all have your own content moderation guidelines that are actually stricter than the guidelines for the protocol as a whole.

So if I’m someone who does think that platforms should be showing people AI-generated nudes of celebrities, could I make my own feature on the protocol that would allow that to show up in Bluesky? How does that work?

Well, our design principle is like the open web. So anyone can set up their website to do this, and you could set up your own infrastructure. But essentially, a key aspect of social is interconnection and what you promote.

And this idea of freedom of speech not reach means that anyone can set up their own hosting somewhere, but we don’t have to show it to anybody. So I think we already do a lot of de-promotion of stuff, and then the feeds make different choices.

But each layer of the infrastructure, essentially, is making its own choices about what kind of community space it’s setting. And the Bluesky app is setting certain norms. We have community guidelines that try to keep a good space that don’t allow hate speech or harassment. And we hold to these standards within the app. But then someone can go build a different app.

So I could — if there was someone out there who is interested in seeing Deepfake nudes of celebrities, they could go build a part of the protocol that would allow that. But you’re saying that you as Bluesky the app, not the protocol, the app, could choose to ignore that or not let that onto people’s feeds. Is that what I’m hearing you say?

Yeah, because it’s an open system, there’s things we can and can’t control. And the things we can control is what is within the app, within the app we’ve built, and the infrastructure we run. And then the things we can’t control are when people run their own infrastructure using the same code in parallel.

Right. And is that a flaw of decentralized social networking? Because I think what a lot of people object to about maybe the Taylor Swift nude situation, to be specific about it, it’s not that they just don’t want to see that stuff on their feeds. It’s that they don’t think that anyone should be able to spread that stuff online. So that’s an issue for decentralized social media, isn’t it? You can’t actually stop people from being able to do that.

Well, the internet has different layers of governance. You have sites that set their own rules, and then you have back-end infrastructure like Cloudflare that takes down some of the most serious stuff, and that’s how this ecosystem works as well.

So you have escalating layers of severity up the infrastructure stack. And so the things that I think are more like infrastructure require more social consensus in order to do content moderation on. It’s much harder to get something taken off Cloudflare than it is to get something taken off a social site. And that’s how this works as well.

Yeah, the Bluesky approach is really not all that different from something like Reddit where Bluesky sets a floor, but then individual users can raise the ceiling for moderation. They sometimes describe it this way, where you can sort of add your own rules on top of it. Like, hey, I don’t want to see a lot of curse words. I don’t want to see a lot of nudity, whatever.

And what I think is interesting about this approach is that for the past seven or eight years, we’ve been having this very unproductive discussion about what should the parameters of online speech be? Should we take way more of it down? Should we leave way more of it up?

And the idea in Bluesky is like, well, why don’t we just let users decide what they want to see? If you want to have a really intense environment where people are flinging mud and calling each other names, you can have it. And if you want something where everyone is being super polite and no curse words are allowed, you can have that, too. That is an experiment that I’m very interested to see how that goes.

Yeah. I think I and a lot of other people, we choose social networking apps based less on technical features and more on vibes. What does it feel like to use this thing? Are the people on there funny and interesting? Are they telling me — are they making me laugh? Are they informing me? Am I having a good experience?

So talk a little bit about the vibes side of Bluesky and how you’ve tried to cultivate the right community there. And what do you think it’s going to take to get more people interested? Is it celebrities moving over? Is it comedians? Is it developing niche interests like that? What are the keys to cultivating a good vibe on a new social app?

Yeah, I think all of the above goes into adoption. But so far, it’s been really fun. And it’s quite chaotic, I think, because a lot of people coming on were coming through invite codes passed around on other social apps.

Everyone was posting heavily. And so there was lots of back and forth, very casual posting, a lot of shit posting, and this has made it, I think, a very active culture.

Yeah, the platform attracted early shitposters like Casey Newton.

There’s Truly demented stuff going over — going over at your account.

Dril comes in to comment on every big news of the day.

Yeah, I think he had one of the most — Dril, of course, the former King of weird Twitter, D-R-I-L, the pseudonymous poster. And yeah, he had one of the most popular posts.

In fact, maybe it’s even worth reading this because it suggests to me that he wanted a response. And what he said was, “I do not fucking recall them asking the Bluesky elders’ permission to open registration to commoners.” So Jay, I guess, how would you respond to the idea that you didn’t have permission to open up the network that you’re building?

Well, if we wanted to keep it a secret, we had to keep it a secret because it’s hard to keep a secret with 3 million users. But we couldn’t, psst, psst! tell them. But it was also very funny because Bluesky Elders has been a meme for a while. And it’s like Dril knows the deep lore of what happened on Bluesky over the last year.

I don’t even know. It’s been very funny to get to a place where there’s a very active poster culture when people are coming on. Because often when people come on to a new social network, it’s a ghost town, and then people have to figure out what the norms are.

And people have gotten creative. They’ve really taken it and turned it into something that they want. And also the fact that the app is open source means that users that came on who are developers who are like, why can’t I look at videos?

Someone went in and just added a way to do YouTube embeds because they got frustrated with not having that in the app. And that’s one of the great things about open source social. Anyone can come in and modify it.

Yeah, I was on Twitter a long time ago. I was on Twitter before this of Notorious Four quadrants post, which is when the company came in to an ecosystem that had a lot of different developers building their own clients.

It really was a very decentralized world. And Twitter came along and said, actually, you have to stop building your own clients. We’re going to build our own client because we want to centralize this. We want to be able to show ads. The only way we can do it is that way.

And I think in a very real way, that marked the beginning of Twitter’s decline. They just — they stopped innovation dead in its tracks when developers and users had been giving them so many good ideas and, actually, then building good ideas for them.

So it’s possible that I’m getting carried away. But when I look at Bluesky today, I think we are getting a second chance to run the experiment. We are getting to see what would happen if Twitter had actually just let 1,000 flowers bloom, see what happens, see what people build, see what kind of fun they can have.

And while I do think — you got a long road ahead of you, Jay, but I’m at least excited — I’m at least excited that somebody is trying because we have not had enough experimenting in social networking over the past decade. And so I’m very interested to see what happens now.

Yeah, social should be a playground again. It’s where we spend our time talking. Why is this thing controlled by one company, where we can’t play around and try new ideas.

People give me new ideas for how they think social should be better or have some fun, quirky idea for a new thing to do all the time. And I just want a world where people can freely build that and play with it. And we’ll see this profusion of all sorts of new experiences come about.

Yeah, that’s pretty good.

Anything else that you would point out or something that we didn’t ask about or feedback on any of Kevin’s posts?

I’ve only made three Bluesky posts. I’m sorry. [INTERPOSING VOICES]

You had your viral sandwich as —

It’s true. I did have a sandwich post, and it performed very well. But then I was so intimidated. I knew I could never live up to the sandwich post.

Jay Graber, thank you for joining us.

Thanks, Jay.

Thank you. [MUSIC PLAYING]

When we come back, Erin Griffith from “The New York Times” tells us how regulators are screwing up the life cycle of Silicon Valley.

[MUSIC PLAYING]

So Casey, what do you know about design?

I know that it’s something I hire other people to do for me. It’s really not my forte.

Well, there is an app in the design world called Figma, which is like an app that people who build apps and services use to design them. And the analogy I’ve heard used is that Figma is to Photoshop as Google Docs is to Microsoft Word. It’s like a more collaborative online way of doing designs, especially with a team.

Yeah, when it first came out, people started calling it multi-player Photoshop because in addition to running in a browser, which was like a cool enough party trick on its own, multiple people could work on the same file at the same time, which at the time was really a revolution.

Yeah, it was a fast-growing product. Designers really loved it. And then something happened, which was that in 2022, Adobe announced that it was going to buy Figma for $20 billion.

Making it one of the biggest acquisitions of that year.

Yeah, so Adobe is this sort of giant in the world of design. They make Photoshop and Premiere and all these other tools that designers and film editors and other people use for work.

And this deal was a big deal in Silicon Valley. And it also caught the attention of regulators who said, wait a minute. This looks like a big company acquiring a company that might potentially compete with it, and maybe that’s going to harm competition and innovation in this market. And so the companies pulled back from the deal, and it fell through.

Yeah, and at that point, you might say that the deal for Adobe was just a Figma of its imagination.

[LAUGHS]: That’s pretty good.

Thanks.

So why are we talking about this story now? Well, I’ve been fascinated with this whole Figma story because one of the biggest changes in the tech world in the past few years is not actually what’s happening in Silicon Valley, it’s what’s been happening in Washington.

We’ve talked on this show with Lina Khan, the chair of the FTC, and Jonathan Kanter, the Assistant Attorney General who’s in charge of their antitrust enforcement. And both of them have made the point that one of the things that harms innovation and competition in the tech industry is this pattern of small startups growing very quickly and then getting acquired by these big tech companies who are afraid of competition.

Effectively knocking pieces off the chessboard to ensure that they will always win.

Exactly. And so their point is that, well, if you want to increase competition in the tech industry, you have to actually make it harder for these big tech companies to acquire smaller startups, especially when there’s a direct competitive threat to the bigger company.

And so this Adobe-Figma deal, I would say, is one of the first major test cases for what happens if you actually just tighten the rules on these kinds of acquisitions and make it harder for big tech companies to acquire small, promising startups, and how does that ripple throughout the tech industry.

And so that’s what I wanted to ask my colleague, Erin Griffith, about today. Aaron covers startups and venture capital, and she just wrote a big story about this Figma-Adobe deal falling through and what it means for Silicon Valley as a whole.

Let’s bring her in here.

Erin Griffith, welcome back to “Hard Fork.”

Thanks for having me.

So this deal between Adobe and Figma fell through in December. You’ve just written a story about what happened at Figma after this deal collapsed. Just tell us what you found in your reporting.

Yeah, so I talked to just about everyone that I could, employees, former employees, soon to be former employees, investors, people from all sides of the spectrum. And the main thing is that there’s just relief that the deal is over.

It’s been a year and a half or more of just being in limbo, which, for a startup, is so hard. Momentum is so important. You have to be constantly growing, and there are a bunch of employees that are potentially millionaires that don’t actually know if they’re going to see those millions or not.

And so there’s a little bit of relief that it’s just over. But there’s also these questions of, OK, well, when will I see those millions? Or will I — the company’s in a weird place right now. They had this really rough year and a half where now they’re picking up the pieces.

Right. So it’s obviously been a rough time at Figma. There are a lot of people who thought they were going to be rich this year who are either going to be rich potentially a long time from now or maybe even never.

But your story also goes into a different kind of shockwave that this sent through Silicon Valley, which is that acquisitions are a big part of how this town works, right? And that acquisitions are how our money and talent get recycled into the ecosystem. It provides this launching pad for all the next generations of startups. So how has Silicon Valley reacted, in general, to this news?

I’m actually surprised by the reaction a little bit. I’ve been asking investors about this for five years. I don’t know if you guys remember —

Wait, you knew that the Figma acquisition wasn’t going to go through?

Yes.

And people are confused, and yeah. No, no.

So I don’t know if you guys remember Harry’s, the razor company sold. But that deal got broken up plaid. The payments company was supposed to sell to Visa. That got broken up. Both of those companies were able to raise money later, but they still haven’t exited. So the investors are painting an optimistic picture. But it could be a really long time before they exit.

And most of the investors I talked to don’t seem that concerned. They’re like, oh, well, yeah, Apple, Amazon, the big tech companies that are under antitrust scrutiny, they’re on the sidelines. But there are other buyers.

And I kind think it’s a bigger deal than that because — just to take one step that I found, 90 percent of exits in 2019, which was a big year for IPOs, were acquisitions not IPOs. And the IPOs are where the big money exits come from. But the vast majority of startups end up selling, and that’s how.

I think this is a point that we should take a beat on because I think this is something that may not be obvious outside the tech industry. When venture capitalists put money into a startup, there are two things that they’re going for.

One is that the company becomes huge and goes public, right? And then they can pull money out then their shares get converted into shares of the public company, and they get to sell, and they get a return from that.

The other, and what you’re saying, the more frequent outcome for a venture-backed startup is that it would get acquired. And then the investors who supported the startup from the beginning get paid as part of that acquisition.

So those are the classic exits in venture capital. And it sounds like — beyond just this Figma case, it sounds like the exit strategy of “Let’s sell this startup to a bigger company” is becoming much more challenging.

Totally, yeah. And that is the way this industry works. The venture capitalists get that money back. And then they use that to raise their next fund because their investors are happy, and they want to give them more money.

Angel investors, who are the first people who put money into startups, they use that, and they invest in their friends companies. And it’s all incestuous, but it’s like a circle of life that perpetuates the new creation of startups.

I talked to one investor in the story of Adam Nash. He used his earnings from the startups he worked at like LinkedIn to invest in more than 130 of his friends startups. And that’s how this works.

And so all these Figma employees that would have now become angel investors are not. And a lot of these venture investors, they made their reputations like, Figma, I got this big winner! I got this $20 billion exit! And that’s not the case anymore.

I talked to one investor, he was upset to get paid on Figma’s exit from six different entities. So that’s like how incestuous this is, and that’s actually just what makes it work here. And so if those acquisitions dry up, that can have a really big chilling effect on an industry that’s already outside of AI, struggling.

So let’s talk about why. What changed that these acquisitions are just having a harder time getting through?

Regulatory. [LAUGHS]

Yeah, which regulators?

Yeah, so, obviously, there’s Lina Khan. And the FTC has been scrutinizing every single deal, including now minority deals. She just said that she’s looking for —

Minority deals meaning a deal in which an investor would buy a minority stake in the company.

Yeah, so Microsoft’s investment in OpenAI I and Google and Amazon’s investments in Anthropic, the AI companies. Those are minority stakes, but they are now investigating those for potential antitrust problems. So that’s going even a step further.

But what killed the Adobe-Figma deal was the British regulators, the CMA, which is the authority there. They essentially looked at this deal and said, well, Figma and Adobe could potentially have been competitors down the line. Therefore, this deal is eliminating competition, and we think that it’s bad, and it’s stifling innovation. So they’re taking an even stronger stance against this.

So yeah, as one investor told me, it’s raising the bar for even engaging in acquisition talks for a startup because this is a huge risk that the deal might not actually go through. And one thing that Figma did that’s really smart is raising the bar for breakup fees. Figma is getting paid $1 billion as a breakup fee from Adobe, so that’s —

Breakup fees or fees that get paid when a deal doesn’t happen.

Right.

This has always been my dream, by the way, to get paid $1 billion for just nothing happening.

You should know that the “Hard Fork” breakup fee is $1 billion from you to me.

Oh, no! Oh, Kevin!

So if this show breaks up, you owe me $1 billion. That was in your contract.

— before I signed it, yeah, yeah.

So I think a lot of people listening to this might be saying, what’s the big deal? We have this regulatory regime that’s gotten tougher on startups being acquired by tech giants.

So far, it seems like from your story, the people who are most affected by that are Figma employees who don’t get their huge paydays from this deal. And you have venture capitalists who are unhappy that maybe they can’t as easily sell their portfolio companies to large acquirers and get paid.

But why does this matter beyond the world of tech investing? What are the stakes of this new regulatory environment for average users?

Yeah, I guess it impacts the incentives for people who are maybe interested in starting a company and think that they could follow in the footsteps of many of our most famous and powerful and, frankly, admired business leaders.

And often the way to do that is to build a company and sell it to a larger one. It impacts the way that this innovation is going to be funded. And I’m not saying it’s necessarily a good or a bad thing, but it’s definitely going to change the way the system works. And I think we’ll be seeing the ramifications of that playing out for a long time.

I can tell you, when I started “Platformer,” it was with the goal of selling it to Adobe for $20 billion. And now I’m like, in this regulatory environment? I don’t think so, honey. So that’s going to be a challenge.

But let me throw a couple of counter examples in here, Erin. Because while everything that you said is true, at the same time, Microsoft was somehow able to buy Activision Blizzard for almost $69 billion, which was just a clear case of a giant company getting even more giant. So that seems to me to suggest that at least some window is still open.

And I have to say, when I saw that Adobe was acquiring Figma, my first thought was the cost of Photoshop is going to go up. Figma is going to get folded into the Adobe Creative suite, and the price is going to go up.

And so you don’t even have to be a hipster antitrust person to find an excuse to block this deal. You could just say, this just seems like maybe we shouldn’t allow it. So is the Figma deal maybe an outlier in this whole thing?

No, I don’t know about that. But I will agree with your point that there are a lot of Figma customers that were celebrating this. And I think that just in general, even if you’re not a Figma user, a lot of people complain about the power of big faceless corporations and how they are constantly finding new ways to screw customers.

So in general, I can see the concerns and why you would prefer that this product that you love that’s pretty cheap and not corporate and tries to do right by its customers stays independent.

So I think there were a lot of Figma customers that were celebrating this, and a lot of people who maybe don’t like certain Adobe policies or the way that they sell or package their products.

So yeah, I can definitely see an argument for that.

Do you hear from any founders who are thinking about their exit strategies differently in light of these new regulatory pressures?

One complaint that you’ll hear from venture capitalists about the aggressive regulation of tech mergers and acquisitions is that maybe someday the next Kevin Systrom and Mike Krieger don’t start Instagram because they know that even if they succeed beyond their wildest dreams, they’re not going to be able to sell their company to Facebook for billions of dollars.

You might see a drop off in startup founders deciding to take a risk on something new because one of these two classic avenues for getting rich on a startup is now not closed but harder.

Totally. And I’ve heard that argument before, not ever from a founder, though. It’s more from the commentators or VCs. And it’s BS in a way because the other thing that they’ll turn around and say is, well, no one aims to sell their company. Their goal is always to go public.

And that’s — people start it with the biggest possible dream, and maybe selling is the second best. And I think there’s always going to be people who are wildly ambitious and trying to start new companies and hoping to make it rich that way. So I don’t see it stopping that.

And investors, being always very optimistic about everything — that’s their job. They see another a whole world of other potential buyers who maybe aren’t as well known as Google, Apple, Amazon, that are now taking advantage of this moment. Like Salesforce, for example, companies that are big, have a lot of money, and haven’t quite caught the regulatory scrutiny yet that some of the biggest ones have.

Yeah. And do we think that there are going to be any kind of new exit strategies for startups? If you had the classic model of you either go public, or you get acquired as the ways to succeed and get rich during a startup, are founders, are people at these companies and investment firms thinking about other ways that they could potentially cash out?

I’m glad you asked that, actually, because I’ve been having this conversation with a lot of people. The secondary market is very hot right now.

Explain what that is.

And the secondary market is, essentially, a fancy way of saying it’s a private stock market. So startups own shares that are private, and only sophisticated investors like venture capital investors can buy them.

However, there is a growing market of people who are buying and selling shares in privately held stock. It’s called the secondary market. And it got a lot of attention right before Facebook’s IPO because people were trading private Facebook stock before it went public. And over the last decade or so it has gotten bigger and bigger.

And so there is generally a market for people to buy shares in these private startups before they go public, and that is becoming increasingly robust. And so that’s a way that some investors are being able to cash out before an IPO can happen.

Yeah. And of course, Kevin, don’t count out that other classic way for a startup founder to make money, crypto scams.

And what do you think this means for the tech giants? Because, historically, buying smaller startups has been a way to extend their relevance. I’m thinking of Facebook buying Instagram and WhatsApp, which became the next phase of that business’s growth.

So if you are a Facebook, if you are an Amazon, if you are a Google, are you really worried about it now being tougher to acquire some of these fledgling, promising young startups?

Definitely. That is essentially how these companies stay relevant. They try to build something innovative in house. They’re too clunky and slow moving and out of good ideas, so they buy something and hope that infuses them with new life. And their stock lives to see another day. That is not happening at the big tech companies at all. And so I would be nervous if I were them.

Microsoft has obviously found a way around that by investing in OpenAI without buying it outright and being very careful to not own more than 50 percent of the company. But even that’s now being scrutinized. So yeah, it’s definitely a signal to big tech companies that they need to start building their most innovative stuff in house.

Yeah, and I should say that is actually what the regulators want to happen, right? That is part of the hypothesis here. If you force — if you make it harder for tech giants to gobble up smaller potential competitors, then it will actually result in more innovation, overall, because the big companies will have to stay ahead of the small startups, and the small startups will be able to flourish independently without getting gobbled up by these larger institutions.

Yeah, that’s — if you read the CMA’s investigation of Adobe, they had this — they this project that was ongoing called Project Spice. And it was —

They had other names, too, but they mostly called it Project Spice.

I think I saw that on Cinemax when I was a kid. Anyways.

And it was —

And it was essentially going to compete with Figma, and they canceled it one week before the acquisition of Figma was announced. And they said in their responses, this was never going to compete with Figma. And it was a failure, and we canceled it because it was really bad, and we could never compete with Figma.

But that makes the point for the regulators, too. You couldn’t compete, and so you bought this thing instead. So yeah, that’s a perfect example of what you’re talking about.

Yeah. As you’re describing what happened at Figma, I’m sort of thinking, isn’t this just a case study of how regulation works and how it should work? Isn’t this a success story for regulators?

Because it sounds like what you’re describing is a company in Adobe that now has to develop its own independent strategy for competing with Figma, which it can no longer buy. You’re also describing a Figma that now has to think about how to compete with Adobe, rather than just being swallowed up by it.

So it seems like there is more competition in that particular market than there would have been if this deal had been allowed to go through. So isn’t this just kind of proving what regulators have been saying all along?

Well, that was very well articulated, but I think I have to step in here and give the company’s perspective on that, which would strongly disagree with you. They’ve obviously fought this every step of the way, and they’ve expressed their disagreement with the British regulators findings, that they were taking competition out of the market.

They believe that they were not competitive. But yeah, your point is well taken that, yeah, regulators dug into this, concluded that these two companies would have been competitors had they — had they not decided to merge, and said, we want to block this.

And then they asked for some really absurd remedies. They were like, OK, well you guys can merge, I guess, if Adobe spins off Photoshop or Illustrator. Or Figma spins off Figma design, which is essentially all of Figma. And so of course, the companies were like, no.

So yeah, essentially, yes, this is regulation working. I think a lot of people in the tech industry, obviously, including Adobe in Figma, would say it’s an egregious overreach, and they don’t like the way they’re interpreting the law.

So Erin, you’ve written among other things about the culture of Figma, whose employees, I believe, call themselves Figmates. How is the culture changing in response to this deal falling apart?

It’s probably the same. My understanding of the culture of Figma is very earnest. They like to sing. They have a theme song, or they had a theme song.

Wait, they have a theme song?

They had a theme song that —

How does it go?

The chorus was, Figma I dig ya. Design used to be such an enigma.

I’m not going to sing it.

And it had a rap verse that referenced Adobe at one point. I think it said, 10 or 15 years from now, people are going to say, who the heck is Adobe? Figma is here to stay.

Wait, they made a software diss track?

Yeah!

I don’t think it was meant for public consumption. I saw a video of it. But unlike their musical, which they put out in the quarantine, which is on YouTube and is —

Required viewing for “Hard Fork” listeners.

Wait, there’s a Figma musical?

Yes. It is very elaborate. It’s about the early days of quarantine. I actually had to turn it off because I was having flashbacks to all the jokes that we made about, oh, we’re all stuck inside, and how traumatizing that was for everyone.

Anyway. So yeah, they’re a little dorky. This is not like the Uber culture of let’s be hardcore and step on toes and just — [LAUGHS]

Yeah. Uber also actually had a musical. It was — I think it was called, “It’s Not A Crime If You Don’t Get Caught.”

Yes, yeah. (LAUGHING) That was the showstopper.

(LAUGHING) It was — it had the big number closing act one.

And actually X actually had a musical. It was called “Scamilton.” It was — it was a great one. Erin Griffith, thanks for coming on “Hard Fork.”

Thanks for having me. [MUSIC PLAYING]

When we come back, it’s time for our new segment, System Update.

[MUSIC PLAYING]

All right, Casey, we got a new segment this week, and it’s called System Update. Can we hear the theme?

[THEME MUSIC]

Sounds like the system just threw up. But I like it! Now, listen, Kevin, every week on the show, we bring you the most fascinating stories from in and around the world of tech and the future. But we don’t always return to those stories to tell you what happened after we shut up.

Yes, sometimes we do not actually get the last word on a subject.

Devastating.

Events continue to unfold. And so this is a segment where we take things that we’ve talked about on the show before and tell you what’s happened since we talked about them.

That’s great. Well, let me ask you a question, Kevin. Remember when we talked about those ancient scrolls? Whatever happened to those?

God, this is one of my favorite stories from last year.

Let’s get into it.

So Casey, back in October, we interviewed a man named Brent Seales on the show. Brent, as a reminder, was a scientist who had been working on a project involving some ancient scrolls. And these were scrolls that had been buried and burned in the eruption of Mount Vesuvius roughly 2,000 years ago.

They were the original doom scrolls.

Oh, come on.

That’s pretty good. You have to admit.

(LAUGHING) That is pretty good. So Brent told us about this effort that he’d been embarking on to decode these scrolls, basically by using computer vision and AI to be able to read what was inside them without actually opening them, which would destroy them.

And he, in combination with some investors and entrepreneurs in the tech industry, had set up something called the Vesuvius Challenge, which was basically a series of prizes that would be given out for deciphering fragments of these ancient scrolls.

Right, and not to be confused with the Vesuvius challenge on TikTok, which is where you try to escape an erupting volcano.

[LAUGHS]: Exactly. So when we talked to him back in October, this contest had produced some intermediate results. There was a college student, Luke Farritor, who had been able to actually detect one word from the ancient scrolls that translated to the ancient Greek word for the color purple. “Color

Purple,” great movie, great book.

[LAUGHS]: yeah. So back in October, they had made this intermediate prize award to this researcher who had come up with this one word. But there was still this idea of a grand prize for someone who could decipher much more of these scrolls. And Brent and his team, they didn’t know whether anyone would actually be able to do that.

But just this week, the organizers of the Vesuvius challenge announced that they had, in fact, awarded a grand prize to a team of three individuals, Yousef Nader, who is an Egyptian PhD student in Berlin, Luke Farritor, who is a 22-year-old college student who actually won that prize that we mentioned the last time we talked about this, discovering the word purple, and Julian Schillinger who is a Swiss robotics student based in Zurich. They will share a $700,000 prize as a reward for deciphering a much larger fragment of these ancient scrolls.

All right. And I would like to know, Kevin, what did the scrolls say?

Well, so we still don’t know exactly who wrote these or what they’re about in their entirety. But the passages that historians and papyrologists have been able to decipher are, basically, talking about pleasure.

The author of — I’ll just read one of these passages. It says, “As to in the case of food, we do not right away believe things that are scarce to be absolutely more pleasant than those which are abundant.”

Go off, King.

[LAUGHS]: Yeah, so we don’t know exactly who wrote this. There are some theories that it might have been Philodemus, who is an ancient Greek philosopher and writer who is associated with the Epicurean movement.

But basically, this is a text — the organizers of the challenge compared it to a 2000-year-old blog post. So in addition to referring to the color purple, apparently this text also makes some reference to capers, the thing that you put on a lox bagel.

Not crimes.

Yes, not crimes. But basically, these texts, or what we know of them so far, they are about pleasure and how to live the good life. And they appear to be from someone who’s sympathetic to or associated with the Epicurean movement, dunking on this other group of philosophers, the Stoics, who believed that virtue was all that mattered.

Epicureans were much more into pursuing pleasure as the highest good. And so some historians who have looked at this text think that this was basically an Epicurean philosopher dunking on stoics.

This was history’s answer to the quote tweet, basically. It’s what we’re finding in these scrolls.

[LAUGHS]: Exactly. So the challenge has awarded this $700,000 prize to this group of three researchers. And they are launching yet another challenge. The organizers said that in 2024, their goal is to go from deciphering 5 percent of one scroll to 90 percent of all four scrolls that they have scanned, and to lay the foundation to read all 800 scrolls in this collection.

And those are their scroll goals. So you now have those.

Their scrolls, if you will.

Scrolls, if you will. Now, Brent worked on this for 20 years, which is so incredible that you could spend two full decades of your life working on something, and then it pays off. Did you get in touch with him? What did he have to say about this?

Yeah, so I emailed with Brent this week after this prize was announced, just asking, how do you feel that this project that you’ve been working on for 20-some years has finally paid off?

And he wrote back. He said, “I can tell you I’ve never had a sweeter more satisfying feeling than knowing we’ve done it. We’ve demonstrated we can read Herculaneum scrolls with the right tech and that my 20-year pursuit will be seen as successful. The fact, I waited two decades for this moment almost certainly makes it all the more delicious.”

That is fantastic, almost as delicious, I must say, as grapes and capers. No, seriously, congratulations to Brent and everyone who solved that challenge, and we look forward to seeing what AI reveals on the rest of these scrolls.

Yes, congrats to the team. It’s a huge feat. I love this story. I think it’s one of the most feel good stories in tech over the past year. And I think it is also just a very clear example of how AI can actually do things that, I think we would all agree, are pretty good.

All right, let’s move on to our second update.

Yes. This one is about Bard, the AI chat bot from Google.

And without knowing anything about this update, Kevin, I think what I would just say is, Bard, one of the great Google brands, and I hope it never goes away.

Well, I’ve got some bad news for you on that front because this week, Google announced that it is ending the use of the Bard name and that Bard the chat bot will be rebranded as Gemini, which is also the name of their latest and greatest AI model.

And our mutual Zodiac sign.

Yes.

So Kevin, you’re telling me that this Bard was not immortal?

Oh, come on!

Shakespeare is safe!

[LAUGHS]: So Google, this week, announced that they are rebranding Bard. It will now be known as Gemini. They’re also launching Gemini Advanced, which is a paid version of Gemini that will give people access to Gemini Ultra, which is their largest and most-capable AI model. Gemini Advanced will be available through the new Google One AI premium plan. [LAUGHS]

Kevin, I just have to ask real quick. Are you having a stroke?

[LAUGHS]: I might be.

So they also announced that Duet AI will become Gemini for Google Workspace and Google Cloud.

None of this is real. This is real?

[LAUGHS]: So basically what this boils down to is that they are changing some names. They are also introducing a paid product that will, for $20 a month, give you access to their top of the line AI models. And they are also changing a lot of their different AI products like Google Assistant, which is their version of Siri on Android devices. You can now run Gemini on that, too.

So Casey, I want to tell you what I think is a true sentence.

OK, let’s hear it.

If you used to use Duet AI for Google Workspace, instead you will now use Gemini for Workspace and Google Cloud. And if you upgrade your existing Google One subscription to a Google One AI premium subscription, you will now get access to Gemini Advanced, which is powered by Gemini Ultra 1.0.

This is one of the richest and most powerful companies in the entire world. They could hire any marketer they want, any brander they want. This is what they came up with.

If you work for Google, and you worked on any of this, please message us. We won’t even use it on the show. I just need to know for my own knowledge how this happens. I’m someone who cares about this so much, and I could not parse even 5 percent of what you just said.

[LAUGHS]: Yeah, it is truly a hilarious combination of product names and just an absolute chaotic nightmare to try to make sense of it.

I went to this briefing where they rolled out these changes, and I was just sitting there taking notes, trying to draw flow charts of the various names and how they all relate to each other. But basically —

It would be easier to pass Calculus than to just repeat what you just said to me.

So yes, all of this is sort of silly because they’re just changing the names of a bunch of stuff. But I think what this boils down to is that Google has now built this model that they say is state of the art. And they are trying to roll this model out to as many customers as possible.

So they are going to start putting it into things like Google Docs and Google Sheets. If you use Gmail, you will have the option of maybe using this model to write some of your emails or get you started on some of your emails. So this effort by Google to jam generative AI into as many products as possible seems to be picking up pace.

And we did talk last year about the fact that this is Google’s big swing. This is their effort to catch up to the model that OpenAI has released. And I will say, I am really looking forward to putting this, I believe it is called Gemini Ultra, through its paces to see how well it stacks up.

Yeah, so it’s a little interesting the way they rolled this out. So instead of being a standalone product, this new tier of Gemini that gives you access to Gemini Ultra, it runs through Google One.

If you have ever encountered Google One, it’s probably because you ran out of space on your Gmail account, and you had to pay them to upgrade your account. That is what Google One is.

So if you need more space in your Gmail, you can buy more space through Google One. And now when you go to Google One, you’ll also be able to buy this new AI premium plan that gives you access to their high end model.

That’s great. I’m picturing listeners listening to all this information and then just swerving off the road because their brain completely shuts down.

Yeah, and what’s most amazing about this is that they are pitching this as a simplification of their existing product names.

Clearly, yeah.

And so I would just say, the simplification effort is not complete.

We’re not — yeah. That’s —

But I’m a little sad because Bard was actually one of my favorite of the AI chat bot names, and I’m just sad to see it go.

Yeah, RIP, Bard. If you miss Bard, you can actually play a Bard in “Baldur’s Gate 3,” one of the great video games for 2023. That’s my advice.

Wow, Kevin, that was really one of the biggest updates we’ve ever heard on the show. And by biggest, I mean most confusing. So let’s move on. Is there a final update?

Yes, TikTok.

Oh, yes. Kevin, what is happening with TikTok?

So we’ve talked a lot about TikTok on this show. Most recently, we talked with John Herman about TikTok’s shopping features and how they are starting to change the platform.

You may remember we’ve recently gone viral on TikTok.

Yes! And now there’s another big change on TikTok, which is that the Universal Music Group, one of the biggest music labels in the world, has pulled its licenses from TikTok.

Do they have any of the good artists?

So they do. They have many, many artists, including Taylor Swift, Bad Bunny, Drake, and Billie Eilish. And so if you made a video that included a Taylor Swift song or a Drake song in it, that video now has had the music stripped out of it. So you can still watch the video, but now it just is silent in the background.

Yeah, we’re reinventing silent films just through copyright measures.

[LAUGHS]: Yes. So Universal Music Group and TikTok have been renegotiating their contract that allows TikTok to basically use these artists music in videos.

These talks did not go well. And ultimately, Universal Music Group published an open letter saying that TikTok was trying to, quote, “build a music-based business without paying fair value for the music.”

They’re also mad that TikTok is allowing its platform to be flooded, they say, with AI-generated recordings. And they’re worried about the hate speech, bullying — they’re worried about the hate speech, bigotry, bullying, and harassment that UMG artists are met with on the platform. So now this contract has expired, and music from Universal Music Group is unavailable on TikTok. So what do you make of this?

Well, so this really surprised me. Because the one thing I can tell you for sure is that TikTok can afford whatever UMG was asking for, right? TikTok, which is owned by ByteDance, is doing very well, financially. They could afford to pay the rate here.

When I first saw this, I thought, OK, this is some hardball negotiating. I do expect that UMG will be back on TikTok in some relatively short period. But at the end, they did say, OK, we’re actually going to go to the trouble of pulling the rights. And that did surprise me.

What I wonder is how big a deal is the AI thing. And was that maybe one of the top reasons that this all happened? Or is it really just about dollars and cents?

My hunch is that it’s mostly about dollars and cents. TikTok, it’s still a huge part of the music industry. We’ve seen over the past few years artists like Olivia Rodrigo who blow up on TikTok and then go on to become huge celebrities. We’ve also seen TikTok bringing songs out of obscurity. You remember the Fleetwood Mac song that got popular after it was used in a TikTok video.

I would say it was repopularized.

Repopularized, yeah. Gen Z rediscovered it after it went viral on TikTok. So TikTok and the music industry have been deeply intertwined for years now, and this just seems like maybe a disagreement about how much music is worth on TikTok.

Well, hopefully, this will all get smoothed over. But in the meantime, Kevin, I’ll tell you what I’m hoping for out of this situation, which is that we see a lot more public domain music going viral on TikTok.

I would like to see “She’ll Be Coming Around The Mountain” maybe hit number one on the charts this week and really send a message that it’s not all copyrighted music all the time and that there’s some really beautiful songs that have recently come out of copyright.

Yeah, if you are a Gregorian Chant artist, this is your moment to shine on TikTok.

Get to chanting.

[LAUGHS]: And that’s our System Update!

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“Hard Fork” is produced by Rachel Cohn and Davis Land. We’re edited by Jen Poyant. This episode was edited by Paula Szuchman or fact checked by Caitlin Love. Today’s show is engineered by Alyssa Moxley.

Original music is by Elisheba Ittoop, Marion Lozano, Rowan Niemisto, and Dan Powell. Our audience editor is Nell Gallogly. Video production is by Ryan Manning and Dylan Bergersen.

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