WEEK IN REVIEW: Warren Proposes Breaking Up GAFA, Leichtman Report Shows Cord Cutting Still Not Really A Thing

1. Warren Proposes Breaking Up GAFA

In an article in Medium just prior to her appearance at SXSW, Senator Elizabeth Warren, a 2020 presidential candidate, proposed using antitrust legislation to break up the GAFA companies (Google, Amazon, Facebook and Apple) claiming they all had too much control over the economy and our lives.

Why It Matters

This is a long time coming—we’ve written about this in the past and the notion that GAFA should be broken up has been bubbling under the surface for quite some time.

What’s significant is that Senator Warren got very specific about which pieces she thought should be split up and why—here’s the link to her Medium piece, but our TL;DR version is that companies shouldn’t be able to own both the market and the marketplace (Google Search and Google Advertising) nor should they be able to sell user data to third parties (Zuck!.)

Apple, which she actually called out in a follow-up interview, would have to separate out its app store. She also wants to hold GAFA to net neutrality like standards in terms of who has access to their platforms.

In addition to Warren getting seriously granular about how her proposal would work, the news is significant because it’s coming at a time when Americans are increasingly skeptical over the power that these companies seem to possess, the lack of any real competition now or in the future, and the general “soak the rich” undercurrent currently happening in America. (Amazon’s recent troubles with New York City and subsequent decision to abandon the Long Island City HQ2 plan is a prime example of the issues big tech is facing. Pun 100% intended.)

From a TV perspective, it means that the digital ad business might get blown wide open if the Duopoly no longer has access to the sorts of data that give it so much power and that they won't be able to wiggle their tentacles into TV.

The regulations could trickle down though—if Google can’t use its data to fuel an ad business, then there's a good chance AT&T and Comcast can’t either.

It’s a long way from happening, but the fact that no one seems all that bent out of shape about the proposal means that other politicians may adopt it in some way shape or form as well.

What You Need To Do About It

Obviously if you’re one of the GAFA companies (or AT&T or Comcast) then it’s time to lawyer up, or at least think about lawyering up.

One thing you’ve got going for you is that Warren is one of the few politicians in either party who seems to understand both antitrust law and the internet well enough to actually craft coherent legislation and so if she doesn't get elected you could be in the clear. OTOH, not understanding something has never stopped Congress before, and in less capable hands, the result could be something unenforceable or already out of date.

Mostly though, we’d suggest getting out the popcorn and seeing how this plays out, whether other candidates jump on the bandwagon or whether GAFA lobbyists manage to head it off at the pass. Both outcomes seem equally likely, though public opinion is very much on Warren’s side these days as tech, Facebook in particular, seems unable to do anything right.

2. Leichtman Report Shows Cord Cutting Still Not Really A Thing

The Lechtmann Report is out again—and so are the “cord cutting is happening!” headlines.

Only it’s not happening.

Still.

Why It Matters

Leichtman totals up subscriber figures from the largest MVPDs in the US, companies that represent 95% of the market.

On the surface, those findings look pretty grim:

A net loss of 2,875,000 video subscribers or a little over 3% of the total of 89,144,000 total subscribers.

The satellite providers, Dish and Direct TV were the hardest hit, losing 2.36 million subscribers between them.

Now, Leichtman factors in two vMVPDs to get their overall totals—Sling and DirecTV Now— but leaves out both Hulu Live TV and YouTube TV.

That matters, because according to Bloomberg, those two services ended 2018 with 3 million subscribers between them (2 million for Hulu and 1 million for YouTube).

And if we’re doing our math correctly from the numbers we found back in February 2018, that means Hulu gained around 1.55 million subscribers this year and YouTube gained around 700,000, or 2.25 million new subscribers all together.

So subtract that from Leichtman’s 2.875 million losses and you’ve got a net loss of 625,000.

Meaning that in 2018, the pay TV industry only lost around 0.68% of all subscribers.

Now granted that number does not factor in people downgrading subscriptions or the lower prices paid by vMVPD subscribers.

But here’s the rub: CBS, Discovery, Turner, ABC et al aren’t affected by how much Sling subscribers are paying. They’re still getting their usual carriage and retrans fees.

So there’s that.

What You Need To Do About It

At the risk of sounding like a broken record: stop repeating fake stats. Check to see how various reports are sourced, what inputs they’re using, how many people they talked to, is the report “I plan to do X in 2018” guesswork or is it “in their Q2 earnings report, public company X said…” facts?

The more diligent you are, the less likely you are to jump to decisions based on bad data.

(And if you really want to see cord cutting happening, wait for the Flixcopalypse, which keeps getting pushed off and is now much more likely to go down sometime in 2020.)