GBP Phone Hacking Problems Persist, New FTC Fake Reviews Rules, SearchGPT & the Future of Search

Google's PR Smoke and Mirrors: Old GBP Phone Hacking Problems Persist Despite Promises:

Spammers and scammers have been able to hijack business phone numbers on Google listings with alarming ease, despite Google's assurances that such problems were swiftly resolved. We  conducted an experiment, changing a listing's phone number through a fake business listing. The results were shocking—within minutes, the suggested phone number change was accepted, largely due to the high trust Google places in frequent editors, even those located halfway across the world.

This raises serious concerns about Google's handling of user-generated edits, especially when considering real-world implications, like the previous hijacking of major airlines' contact numbers. Despite Google's claims of quick fixes, the reality shows a continued vulnerability, with significant consequences for businesses globally. 

Cracks Down on Fake Reviews with New Readily Enforceable Rules:

In a significant move, the FTC has officially banned fake reviews and testimonials with a new rule that allows for fines up to $50,000 per instance of abuse. This rule, unlike previous guidelines, has the force of law, giving the FTC more teeth in combating fraudulent online practices. The rule targets a range of deceptive behaviors, including AI-generated reviews, purchased reviews, and insider testimonials. 

Despite the tough stance, enforcement is expected to be limited, focusing on the most egregious offenders. Smaller players and offshore review farms might continue to operate with little fear of repercussions. The new rule marks progress, but without stronger regulations on platforms themselves, the battle against fake reviews is far from won.

Segment 3 Title: SearchGPT & the Future of Search:

SearchGPT, still in its early stages, has shown promise in handling informational queries but lags behind Google in delivering robust local search results. Meanwhile, Apple’s strategic moves, such as making Apple Maps available on the web, signal its growing ambition to challenge Google’s dominance, possibly partnering with OpenAI to integrate local data into SearchGPT.

As Google faces antitrust scrutiny, the future of its lucrative default search deals with Apple hangs in the balance. The potential for divestitures of key assets like Chrome or Android could reshape the industry, but any significant changes are likely years away. With the rapid evolution of AI in search, the next few years could redefine how users interact with these platforms, setting the stage for a new era in digital search.

The Near Memo is a weekly conversation about Search, Social, and Commerce: What happened, why it matters, and the implications for local businesses and national brands.
Ep 171

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Transcript

Greg (00:00.928)
Hey everybody, welcome back to the near memo with Mike and Greg today. David is out and coming off of that really interesting discussion with Morty last week about branded search and how you build a brand and local. We are going to be talking about the FTC and fake reviews, Mike's telephone numbers, switcheroo hack and search GPT and Apple's potential futures search.

Strategy and maybe a little bit about the Google antitrust stuff in the in the mix there so Mike and a lot of people read your article or saw your article on social media about the kind of hack that you Did as a kind of experiment to see how easy it was to swap out a GBP phone number which Fraudsters have been doing in different parts of the world. Why don't you tell us about what what what happened there?

Mike B (00:55.116)
So last year, if you recall, during the airline snafus and all the bad, know, the groundings airlines, during that period, spammers, scammers had hijacked airline service phone numbers on Google business listings, got written up very widely. And Google of course said, well, we don't, always, you know, as soon as we find this, we take it down, we don't tolerate this and we have fixed it, whatever that means, right?

Greg (01:15.862)
We don't tolerate that thing. Yeah, yeah, yeah.

Mike B (01:22.04)
And so I was curious at the time exactly what technique they used. So I bought a, or rented a virtual number and then sort of got busy and do other things. it was, finally got a bill. I noticed my bill from them and I noticed this phone number on it. So I decided just this last 10 days ago to see what it would take to change a listing. happened to have had a fake listing called a Lucery Laptop, which I created in 2011.

demonstrate how easy it was to create a fake listing and Google never took it down. So I decided to enlist three people to change the phone number on that fake listing from the number that was there to this virtual number. And what totally shocked me and what was so surprising to me was that it took literally less than 20 minutes of their action. You know, first person suggested a change that got rejected. The second person.

Greg (02:20.95)
And this was suggested in edit. This was suggested in edit on the profile. Yeah.

Mike B (02:22.912)
suggested it through the public web and these people are nowhere local. One's up in your filly or the first one was a level, let's see, first person suggested it was maybe a level two product expert and they got rejected. And the second person was maybe a, not a product expert, a local guy, it was maybe a level five local guy and they got a pending or maybe it's, no, it's the number two person.

The person who was a local guide too got a pending. I was the second person. First person was a local guide, number five, they got rejected. And then the third person who was a very high stature local guide, 10, was done something like 200 ,000 edits with a 98 % acceptance rate with Google, suggested an edit and his was immediately accepted. The phone number immediately changed. Now, interestingly, this local guide lives in France and obviously, so what...

Greg (03:18.508)
Where is the location of your illusory laptop business? The hypothetical location. Okay, okay, right.

Mike B (03:22.552)
was in, it was, it was in Bradford, Pennsylvania, south of my house. And so his edit immediately changed it. So whether it was the third suggestion or the third suggestion, plus the trusted editor who has done 200 ,000 edits at Google, we don't know what triggered it, but we do know that the second person got a pending and the third person got it approved instantly. Now, when it was approved, which

prized the daylights on them. thought it would take five, six, 10 edits, whatever. When it got approved, Google sent a manager the notice of the phone number change, changed in the dashboard.

Greg (04:02.764)
And when you say manager, was there an actual person there to receive it? Who's the manager?

Mike B (04:07.62)
My brother, I had forwarded that number to my brother's computer repair business in the same town. And I though was the owner of the listing, did not get a list message from Google that it had been changed. So very poor communication about this change, which means that if it happened to a real business, likely it would have just persisted and the business would not have noticed it. The number would have been, you know, gone wherever for some period of time.

Greg (04:35.456)
mean, in fairness to Google here, which is a rare position for me to take these days, had this been a real business and this person, a real manager of the profile, presumably that person would have received the notification and could have responded to it. I your brother is, this is a fake business and your brother is not managing it. I mean, there's in a real world situation that might be.

Mike B (05:01.528)
Well, let's take the real world of Delta Airline phone numbers where they have 10 ,000 phone numbers and who knows who's managing any given set of those. I mean, I think it actually is a bigger problem than that because in the real world people don't. And in fact, just shortly after that in India, a large number of hotel phone numbers were hijacked.

Greg (05:07.69)
Yeah.

It's true. It's true.

Greg (05:23.798)
Yeah. Well, the

Mike B (05:24.72)
you know, major hotels. So clearly it's a problem globally and it continues to be a problem despite what Google said, which is really my objection. Not that users can edit a phone number. My objections are twofold. know, Google obviously trusts users to edit phone numbers and that one assumes that trust comes from a history of and knowledge of those edits that person has made. But they trust them often more than a business, which maybe again is,

Maybe that's the right way to do it. But Google allows users to change phone numbers. Now, two things about that. It's probably okay, but there should be more notification of the business. The bigger problem is the way Google responded to the PR. The Russian Post picked this article up and Google, like they always say, we don't tolerate this sort of abuse. We've, you know, we're going to fix it right away. They fixed it by, by...

by suspending the fake business is how they fixed it. you know, this is exactly what they said the last time. And if you go back and you look at the history of these hacks from when I first identified the locksmith hacks in 2008, 2009, Google always says the exact same thing. In fact, two years ago, I was working with the CBC in Toronto on appliance repair spam in Toronto widespread.

Google said we don't tolerate it. We fixed it. We've tightened things down. And now in the Google forums, I'm finding massive amounts of reports of appliance repair spam in Toronto. So the bigger problem I have is with a company like Google, essentially glad handing the press with the same statement. And then six months later, everything is exactly as it was. And there are no fundamental changes to how Google local works. It's still.

They prefer easy to edit user edits over security.

Greg (07:19.212)
Well, that's the Web 2 .0 kind of bias is we're going to crowdsource everything. if we get enough eyes on something, then it's going to be corrected because it's kind of a quaint assumption behind the scenes, which is humans are basically good, and they're going to do the right thing, and they're going to be truthful and ethical, which is great. It's great.

Mike B (07:46.008)
and that we can moderate this in an automated way, that we don't need a human to check this.

Greg (07:51.104)
Well, clearly though, they have fallen down on that side of things. I think the stakes are so high for everybody now with Google visibility and scammers too are sort of seizing these opportunities that the old method no longer works because there are predatory elements seeking these vulnerabilities to take advantage and they consistently do it.

Mike B (08:20.856)
The other response Google has to these things is that it happens in a very small percentage of cases. by, well, exactly, that's exactly right, right? There's only 5 ,000 airlines in the world. If the hundred biggest airlines were hacked last year and there's 230 million businesses in the world on a percentage basis, it is very, very small, but the harm.

Greg (08:26.518)
ball for them.

Greg (08:44.106)
Right, so it's a technically true statement.

Mike B (08:47.16)
Technically true statement, that's absolutely true. And they do this and they've had the same PR playbook since time immemorial. I mean, it goes back just beyond, it came out just beyond the 10 commandments somewhere. I don't know exactly in the history of things, but somewhere.

Greg (08:57.174)
Well,

Greg (09:00.596)
Yeah, yeah. Right. BCE. Well, that's sort of, so anything you want to sort of say in a conclusory fashion about that? I mean, this is kind of a theme that we come back to again and again and again, which is Google's not really sort of holding it up its end of the bargain to deliver accurate information or to make the world safe for its users. It's allowing, it's like the Death Star, right?

Mike B (09:05.238)
Right.

Greg (09:29.004)
the in in star wars so the death star is this enormous machine that is in vulnerable except for this tiny little vent or whatever that they target the bomb into and that's kind of an analogous to what's going on here if you're flying below the radar you can do a lot of havoc before google will notice and you do anything

Mike B (09:50.154)
I would say that the, you know, I've been at this for a number of years, hoping that Google would accept your sons, but it finally dawned on me that maybe it was Marks that said this. You blame the cat. should blame the capitalist, the least there. Google is doing what they do because it maximizes profit, which is what is expected of them in a market economy. It is the logic of the market. And so my point here is that if we expect Google to self moderate and self regulate.

Greg (10:08.812)
Well, that's the logic of the market. That's the logic of the market. mean, yeah.

Greg (10:19.478)
It won't.

Mike B (10:19.488)
We will continue, it won't, right? And the only choice here in the end is for people to realize that some amount of government regulation is necessary to keep companies, not just Google, but Google, Amazon, Apple, Facebook, all these guys on the rails.

Greg (10:30.719)
And not just

And not, right, right. And not just regulation, but regulation with teeth, which, you know, brings us to the FTC and the sort of fake review moderation issue. So yeah, what happened?

Mike B (10:46.978)
Sure.

So let me start that. They finally passed a rule banning fake reviews and testimonials. Now you have to understand the language of the FTC. There have always been guidelines which banned fake reviews and testimonials and various other behaviors. Guidelines are the FTC's, it's a technical term, but does not give them as much enforcement capacity as a rule.

Greg (11:09.932)
It's a technical term. Guidelines is a technical term.

Mike B (11:18.614)
A rule has the force of law, a guideline, a business has to be, you have to prove that the business is aware of the guideline and you have to, if they aren't aware of the guideline, you have to educate them about the guideline. So they get sort of a second bite at the apple as it were with guidelines. Because the Supreme court ruled that the FTC couldn't singularly assign a fine in the case of guidelines without going through a judicial process.

Greg (11:30.816)
Right, give them a second chance. Yeah.

Mike B (11:47.8)
The FTC decided they wanted to make it into a rule. A rule requires public hearings. had two or three. They have to publish the rule and wait for objections, whatever. Anyways, they've now finalized the rule and the rule basically is more limited than the guideline, but it allows them to fine people $50 ,000 per instance of abuse. And they basically defined a number of things as abusive.

reviews that are fake that haven't been, that are either written by AI or written by somebody that doesn't have direct experience with the business that are either, you know, purchased, buying, buying reviews from customers, like giving them stuff, you know, particularly if it has a valence to it to give us a positive or give somebody else a negative review, that's illegal. Test it, but.

Interestingly, and then finally insider reviews, you can't have your aunt or your uncle or other business members.

Greg (12:51.392)
And you can't operate a site that contains a bunch of, sort of have a site that sort of contains a bunch of right, right, precisely.

Mike B (12:58.584)
company controlled review website that has fake reviews. And then you can't do review suppression, or whatever that legal, well, they don't say that. say legal threats, physical threats, intimidation, false public accusations. You can't do any of those things.

Greg (13:07.55)
Revugating,

Greg (13:18.39)
Well, so that's an interesting question because they came out in a big way against review gating, of selectively publishing reviews or sending negative reviews in one path and positive reviews in another. And does this in any way revise that if that's not explicitly discussed?

Mike B (13:35.64)
Again, these rules and the rules and guidelines are separate. And so you can have more extensive guidelines and you have rules. So the rules are just more limited. So it doesn't, it does not make gating illegal. In other words, that falls under the guideline. And so one of the reasons that the FTC sent out 700 letters to review gathering companies was so that they would be on notice that review gating.

Greg (13:44.01)
Mm

Mike B (14:04.182)
would be considered a violation of the guideline. So if they were caught re -review gating, they wouldn't get a second bite. That was their notice, right?

Greg (14:08.918)
than consequences.

All right, so there's a story in the Washington Post today about how all these companies are now, the tuck companies are sort of behind this FTC regulation, which is sort of a rarity, celebrating it. this is very supportive of it, right?

Mike B (14:31.8)
And that's because most of the large tech companies aren't affected by it, This, you know, Google is protected as you've noted under section 230, does not require them to have any stronger review moderation or review, you know, review procedures. And because of that, and because of the fact that most fake reviews are purchased offshore, it's gonna be very difficult to...

Greg (14:35.253)
Right, of course.

Greg (14:46.496)
Well, and it

Mike B (14:58.032)
you know, to enforce this. Now, one of the things they said in this was that if a business was, should have been reasonably aware that the reviews accruing to their business were fake, then they are still liable. So they have expanded sort of the definition. In other words, a business imputed knowledge is now a reason to be considered guilty.

Greg (15:16.052)
Imputed, imputed knowledge.

If you can infer from the circumstances, if there was something fishy going on and you should have been able to infer from the circumstances that it was not kosher, so to speak, then you can be stuck with the liability.

Mike B (15:28.812)
Right.

Mike B (15:35.65)
So even if a marketing manager that you didn't know was doing this somehow secretly engaged a Ukrainian company to leave fake reviews, if they're popping up, you're still probably guilty.

Greg (15:40.619)
Right.

Greg (15:47.648)
Well, it's sort of case by case. You have to prove it based on the facts of this case. So.

Mike B (15:52.586)
right. But so the reason the tech companies are happy is because now there are legal grounds to go after people who buy and sell reviews and businesses who procure fake reviews. also we haven't mentioned this, but fake social profiles. It's illegal to buy fake social likes or followers.

Greg (16:03.86)
Well, so let's,

Greg (16:09.536)
Yeah. Any, any sort of false representation of, of, advocacy, you know, around businesses. So let's, so let's talk about, let's talk about the impact of this. So there are sort of arguably four populations here. There's the tech platforms, Google, Yelp, TripAdvisor, et cetera. There's the businesses themselves. there's business competitors, which is a sort of a, know, cause they get involved in, in fake review generation to some degree. So the businesses, includes.

Mike B (16:17.484)
Right. Yes.

Greg (16:39.69)
the business and its competitors. And then, so it's three populations really. And then the third one is the fake review ecosystem, the people in the offshore environments that are generating these and AI.

Mike B (16:52.608)
And then the fifth one is companies who help businesses get reviews, right? So there's five.

Greg (16:56.716)
OK, so right, the sort of unethical reputation management companies, sort of smaller players that are operating in some gray area or black hat. So as you said, Section 230 of the Communications Decency Act protects Google Yelp TripAdvisor at all, inoculates them from any liability for content that appears on their site. So they have no liability. There are no consequences for them if they're

riddled with fake reviews.

Mike B (17:27.836)
And this allows them to go after people they've determined that are doing this at scale with a legal cudgel. So they can, I think, team up with FTC.

Greg (17:38.88)
Well, that's a big question. So what does enforcement on the ground look like? Because as we've discussed in the past, the FTC has very limited resources. They're involved in a lot of things. It's a small group. Alina Khan has talked about this publicly, about their enforcement capabilities limited by their resources. So we're not going to see, this is not like the

the police that are going to investigate every instance of a review fraud situation. This is going to be a handful of very high profile cases in the hope of creating deterrence among sort of businesses at large.

Mike B (18:22.264)
Correct. But with a significant fine of $50 ,000 per instance, which I take to mean per fake review. So it could be very significant.

Greg (18:30.092)
Well, if you're somebody, you, per fake review, 50, 50 K. So that's meaningful. If, if, if, if you've got, you know, if you're a big company that has been enlisting internal employees to fabricate reviews, for whatever purpose, consumer persuasion or ranking or both, that's meaningful, right? So that that's meaningful. But, but for everybody above, but below the radar, which is

most of the businesses probably that are engaged in some sort of review, dubious review, solicitation or outright fraud, there's going to be no consequences in all likelihood. mean, what remains to be seen, but I mean, Google has not been good to focus on them. Google has not been good about their own enforcement, right? The hacking illustration just a few minutes ago. So what mechanism, and we've talked about layoffs at Google Local, know, so what mechanism are they going to use

Mike B (19:09.154)
Yes.

Greg (19:26.774)
to do this enforcement at the behest of the, sort of with the FTC in the background? Are they gonna change anything? Are they gonna be more diligent?

Mike B (19:34.424)
I think they're like the FTC are only gonna go after the most egregious offenders, not the average business.

Greg (19:41.013)
Right.

Well, it's like the PR thing. When something rises to the level of public visibility in a national publication that makes Google look bad, they take action.

Mike B (19:54.808)
Right. And their algorithm does take action a lot wrongly. And they've made that very difficult now with some recent changes to dispute. So if you're in a home service business, you're likely not getting as many reviews as are being left. Google is filtering them and they've made it very difficult to get those back. So Google can still claim they filtered 25 gazillion reviews, but they may or may not be justified. So.

Greg (20:23.082)
Yeah.

Mike B (20:23.532)
Google is not going to do much. They might again, like the FTC go after big offenders. One of the things that bothers me about this though, is the fact that incentives are still not illegal. They're still allowed both under the guidelines in here. It's a very subtle distinction here. They're not here. It's only illegal if the, if the incentive causes is predicated on a rating, but under the guideline, you can use incentives.

Greg (20:39.909)
it's a meaningful, it's meaningful.

Greg (20:49.834)
Wink wink, nudge nudge.

Mike B (20:52.244)
Right, but under the guideline, you'd have to explicitly express that it was incentivized, which creates this very weird conflict because Google doesn't allow them because there's no way to note them being incentivized. Yelp doesn't allow them. if you then incentivize reviews for Google, it's technically a violation of the guideline. The guideline is probably gonna be enforced even less than the rule now because the rule is the easier thing to enforce.

So I see a problem with people misunderstanding and continuing to do inappropriate incentives for Google and Yelp reviews.

Greg (21:29.546)
Well, I mean, there's sort of the innocent violator who just doesn't really know what the rules are and can say, you know, we'll give you a free cup of coffee if you leave a review. And that may be entirely.

Mike B (21:42.26)
If you leave a, well, if it's a rule, you have to say free cup of coffee if you leave a positive review. If it's under the guideline, you just have to state that you gave them a free cup of coffee.

Greg (21:50.292)
Yeah, I mean, my point is that there are people that don't know the intricacies of these rules, and they're not bad actors, right? And then there's a bunch of people who are going to take advantage and, know, wink, wink, you know what this is about. Give us a review, we'll mean whatever the quid pro quo is. So I think this is good, just to summarize. I think this is obviously a very good development.

However, the absence of any consequences for the platforms that encourage more aggressive moderation is problematic. And the inability to get at the review farms offshore is also quite problematic. The DSA in Europe, the Digital Services Act, does preclude the platforms from, I don't know what the precise

situation is, but that's about content moderation, broader than reviews, obviously.

Mike B (22:54.454)
Well, but in reviews, we have an interesting case study in reviews where Google has this bug now. When they suspend a business, they often lose their reviews. They used to be able to find, when the business is determined to be legitimate, reinstated. Historically, Google was able to reassustate the reviews with the business, of late, they, well, they end up with a new one and they could find reviews. Now they can't. Now, interestingly, in Europe, you can file,

Greg (23:06.112)
Yeah.

Greg (23:13.93)
the CID or whatever it is.

Mike B (23:23.946)
a mediation request to get those reviews back. And in the one case I saw when a business did file a mediation request, Google, instead of going through all the legal lyrical mall, managed to find the reviews. Which means they can, but it means that they don't have an easy app to do it or an easy interface to do it, which means that support people can't, it takes an engineer. And so currently those reviews that have been missing for these businesses have been missing.

Greg (23:36.832)
Which means they can. Which means they can.

Mike B (23:52.088)
for six or eight months in some cases. And Google is saying, you know, has no ability to seem, seem to have no ability to find the reviews or get them back easily or whatever. So there is a difference in outcome because of the DSA, as as I'm concerned.

Greg (24:06.284)
Yes, and in general, there is no Section 230 in Europe. so, you know, the platforms can't hide behind this sort of legal immunity. And at a certain level of visibility, I mean, I'm sure the European Commission won't go after the platforms for isolated instances of fraud, but there may be some things that rise to some level of enforcement, but we'll see. But the larger point is that the DSA is supposed to preclude

large scale review fraud. And there's no kind of corresponding section 230 to protect platforms against exposure in that situation. We've already seen in certain instances the sort of impact of that on the US market just because Google is trying to play globally and doesn't want to have different systems in different situations. But let's move on to the third items plural.

which is search GPT and then kind of the Google antitrust and, Apple and what's sort of going to happen in the near term with the Google Apple relationship and Apple search engine, Apple's relationship with open AI and it's Apple intelligence. just, real quickly, you know, I got access to search GPT about a week ago or so, whenever they sort of broadened it out, which apparently they've turned off, meaning they they're not like letting more people in.

I guess they have enough. I saw somebody who posted.

Mike B (25:36.354)
Yeah, sure. I'm not able to get in at this point.

Greg (25:38.772)
Right. you know, I have access to it. It looks exactly like the screenshots. Basically, there's a single column format. There's a pane on the left that you can open up and it has, it can show images and it can show different sources. There's a very heavy publisher presence on there. Links are clearly marked. There's publisher logos and all kinds of stuff. So it's very publisher friendly in a certain way.

And my kind of informal, I haven't done any sort of systematic testing of queries with the exception of local a little bit. my, my informal sort of testing of it is my conclusion is that it's pretty good. does a pretty good job today of dealing with informational queries and local is kind of the weak area. gives you local results. So if you ask for best brunch in Buffalo, New York, it'll give you a bunch of restaurants.

They may not be quite as good as Google, but you get restaurants, get results, or whatever the query is. They are populating the SERP with stuff, and it's credible, but it's not as good as Google. So it has a way to go. And by vertical, it's different. The sort of quality is different. But it's pretty good today, and the UI is preferable to me to the Google UI. I mean, I'm a critic of the sort of

Las Vegas style cacophony of stuff that's showing up. So it's a cleaner UI. There's no ads. it also has the advantage of being able to ask follow -up questions, which in theory you're supposed to be able to do on Google or at some point you will on Google. So for example, if you do a hotel search and you say, want 4 .2 and above star hotels in New York, and you get some set of results.

You can refine, you could say Midtown Manhattan or whatever your refinement is. You can do that without initiating a new query exactly, although you might argue that this is the same behavior. And so you can drill further and further down on that initial set of results, which I think is a good experience in many cases where you don't want to initiate a new search and then have to go back through.

Mike B (27:59.36)
So it understands, it theoretically understands context. Although I was looking at some private research yesterday where they had compared local results across perplexity, CHECHIPTE, Gemini, and I guess some other one. And what they found was that as you did these follow -up searches, the hallucinations became more significant, more pronounced, and that the initial stuff was pretty good, particularly on perplexity.

Greg (28:02.379)
Yes.

Greg (28:20.524)
Got more pronounced?

Mike B (28:27.842)
or one of them on maybe Chetchipi -Tea. But it was just interesting that as you went further down that funnel.

Greg (28:32.394)
was probably perplexed because they're licensing Yale.

Mike B (28:35.382)
Right. And maybe Claude wouldn't even give you an answer. Just sort of said, look, I don't know anything about local.

Greg (28:38.964)
Yeah, Claude often does that, will punt in certain situations where it doesn't have data.

Mike B (28:47.565)
But he pointed out that as the context evolved, it got worse and worse in terms of the accuracy of the answer.

Greg (28:53.494)
So that's interesting. I mean, obviously I haven't done any systematic approach to it.

Mike B (28:59.436)
But I have, so I know we talked about this pre and obviously local is an area where Google has a huge advantage. We've talked about this in the past. have the best knowledge graph. Right.

Greg (29:08.157)
It is the advantage that they have, I think.

Mike B (29:13.192)
And the only company that I can see that has act, mean, Bing has worked on it and has a somewhat of a decent knowledge graph. Facebook, you know, they've gone and come and gone and gone again. Apple, seems to me to be the one company that's seriously attempting to build a knowledge graph that a worldwide knowledge graph that could compete with Google. have a question for you. The other last, or, you know, July 24th.

Apple announced that they would make Apple Maps available on the web. And then July 25th, ChatGPT announced Search GPT. Do you think that Search GPT will now scrape Apple Maps data for the local stuff they announced?

Greg (30:00.874)
Well, so the answer is probably yes, because these companies are sucking up whatever data they can get access to. So independent of the relationship between the two companies, I would think the default position is we're going to, it's the beg for forgiveness position. We're going to take everything we can and see who sues us. I assume that there's been some explicit conversation between Apple and OpenAI about these kinds of things. And so your thesis, I think is,

which you can articulate is that these are going to be enormously valuable things that can go be incorporated into search GPT. that not?

Mike B (30:39.808)
I think it is. I mean, think Apple is likely a choice for Chet GPT to offer local through. I mean, I think that clearly Google's not going to partner with them. they may partner with Bing and Bing may offer up some data. But I think the most obvious choice for navigation and mapping is Apple at this point.

Greg (31:03.786)
Well, think certainly for any kind of mapping or navigation, Apple Maps is now the number two and preferred by Apple users in many instances. So let's talk a little bit about antitrust, which has been a favorite topic, obviously. So I think we had, I don't want to be smug, but the liability finding is something that we talked about and I predicted.

Now the hard question is what happens at the remedy phase, which is going to start in September. And we don't need to sort of review all the potential remedies. I think we're going to see the end of the default search relationship, at least technically. That was perceived by the court as an obstacle to Apple creating its own search engine and competition for Google, because the incentive to keep sucking at the teat of the Google payments was just

too great for Apple. The temptation was too great.

Mike B (32:05.848)
Right, although the court, I mean, Cantor made clear in an interview recently, Cantor is the DOJ lead on this, that the problem with just that would be that users might still choose Google and Apple would be out to $20 billion and nothing would change. And he made it clear that he did not think that that sort of, that that was an adequate resolution to this insufficient. That's correct.

Greg (32:19.626)
Of course. Of course.

Greg (32:27.116)
It's insufficient, right? That is not enough. I would predict that the court will order some sort of divestiture of something, whether it's Chrome or the, yeah, go ahead.

Mike B (32:37.005)
And if that's the case, I would predict it takes three to four years to resolve.

Greg (32:42.27)
Right, let's assume that JudgeMeta is, which is a great name, or Meta, depending on how you pronounce it, which is a great name for this case, or a great judge name in this case. Let's assume that he takes a bold course and orders some divestiture here, kills the default search relationship, and then orders some divestiture of Android or Chrome or both.

And so then your inter -year scenario, is there's an immediate appeal. Google asks, depending upon what the trial court judge has ordered, for some stay of any structural remedies during the pendency of the appeal. So nothing changes, hypothetically, during the appeal process, which could last, as you said, three to five years.

Mike B (33:34.698)
And one has to believe that Google will milk their default position as long as possible because it's very profitable for them, even at the extreme prices they're paying. still profitable because they're so big, so efficient. make money on it. one assumes, who knows, maybe somehow it'll have to end sooner, but if the appeals defer everything that gives three years of money of Google being in the same position.

And it also, and if you look at Apple's hardware evolution, basically only the iPhone 15 Pro and any new hardware will be compatible with their AI stuff, which means basically a replacement, full replacement cycle before they have AI features across their whole product line. Three to four years, about the same timeframe. And if you look at the evolution of search, like is search going to become AI search?

Greg (34:21.322)
Which is what? Three years. Which is three years.

Mike B (34:32.736)
search GPT, you know, it seems like search is going there. I think Apple is betting that we don't know what search is going to be. We're going to sort of take three years to take a look. And in the meantime, we're going to slowly release these features out to our user base in a way that makes sense for the user base. I mean, so it's going to be, it's hard to know in that context. You've thought that the logic for Apple was inexorable towards a search engine. I would suggest that

It is, we don't, it may or may not be.

Greg (35:03.926)
Well, I think Apple is ambivalent about a search engine because I think they know what it would cost and what it would take to truly compete. And I think that they have a lot of ambivalence about spending that money and devoting those resources.

Mike B (35:08.247)
Right.

Mike B (35:18.264)
And in the end, they still, even though it's going to cost them $6 billion more a year beyond what they're spending now, they would then maybe capture up to 30 % of the searches. may not still give them enough volume to compete with Google because ultimately it's search volume that drives quality, which drives efficiency, which drives profit and ads. Clicks. That's what I mean, right?

Greg (35:36.076)
Well, and also clicks, right? Also clicks. And so I mean, the reason that Google, according to the DOJ antitrust trial exhibits, one of the primary motivations for Google building Chrome was to get clickstream data on users, to watch users as they went across the internet. That's why Google keeps prompting me to sign into Chrome wherever I go, is to watch my behavior and get

you know, some visibility on that holistic purchase journey. you know, arguably Apple wouldn't have enough of that click date. And that's what Microsoft, that's what Sachin Adela testified to is.

Mike B (36:17.452)
Right. And in the hearings, Apple said Microsoft couldn't, you know, they would have to pay us more than a hundred percent of their profit and they still wouldn't be good enough. And we don't want something for our customers that isn't good enough, which is the other issue. it's, mean, to me, Apple is ambivalent right now. They're sort of spreading their bets across the board with chat, GBT, and one presumes search GPT and waiting to see how the court case comes out. All of that stuff is likely.

Greg (36:29.418)
Right, yeah, I'm...

Greg (36:36.277)
Yep.

Mike B (36:44.972)
take three years, it would take three years for Apple to build the infrastructure.

Greg (36:48.436)
Right, and it's really kind of a lifetime in a way. So anything can happen. It's business as usual. It's unclear how the election will affect the resolution of this case, because of course, in the Microsoft instance, Thomas Penfield Jackson said Microsoft needs to be broken up into two or three parts. And then that was reversed on appeal. And then when

George W. Bush was elected president in 2000. He came in and they settled the case. His justice department settled the case. Nothing happened to Microsoft. And so it's.

Mike B (37:26.604)
Although they did behave a little nicer after that and they did give a little more breathing room to Google. And the irony is that Google came out of that.

Greg (37:29.854)
Yeah, yeah. So, but nothing like...

Yeah, nothing like the divestiture scenario that was being contemplated at the trial level. So, whatever happens in the election could impact this case because it will be the next administration, whether that's Harris or Trump, God forbid, that deals with this. And so it's really hard to predict how that will impact the ultimate resolution. But in the interim,

we're likely to see business as usual. And for marketers, it's going to be no change probably from what you're Yeah, for the next three years. But I think the evolution of search and the experience of search and what we call search and people's expectations does change. think what we're in the pro, this, even if Google emerges kind of unscathed, relatively unscathed, we are in the process of a transition from what search has been to something else.

Mike B (38:10.434)
for the next three years, right? I mean, or at least insignificant changes for the next three years.

Greg (38:33.452)
And it may be the case that that's a kind of bifurcation between informational queries that get addressed by these AI like experiences and something which is more commercial and transactional, which Google holds onto because it's got better data. You know, I don't know, but I think, I think, you know, five years from now search will not look as it has looked for the last 15, 20.

Mike B (39:02.722)
That's a great way to conclude this with Hell knows.

Greg (39:07.082)
Yeah, well, I think something is changing. It's just the precise contours of that are unclear at this point. And it will be fascinating to see how gutsy this judge is. mean, this is a real, to use the sort of vulgar expression, come to Jesus moment here. And we'll see what this judge does. If he's going to slap Google on the wrist or if he's really going to go for it and say Google is a problem.

Mike B (39:11.145)
It is.

Mike B (39:14.743)
Exactly.

Greg (39:36.992)
We need to open up the market. It's going to take the best to sure to do that. We're going to cut off Android. We're going to cut off Chrome and, you know, and, and go forward. We'll see.

Mike B (39:52.119)
It'll be a fun ride. I'm there, ringside, the whole way.

Greg (39:57.258)
Yes, all right. OK, and then, yeah. And on that sporting note, we will be back next week, hopefully with David and in the interim. Tell your friends. Thanks for listening, and we'll see you next time.

Mike B (39:59.084)
How's that for a sports analogy?