01:21:46 · Rodrigo Liang, Ben Thompson, John Coogan, Jordi Hays
[01:21:46] S4: Mhmm. [01:21:47] S8: But I don't know. I mean, I don't envy I don't envy Xbox's leadership at all. It's gonna be a very tough thing, but I I I can totally understand how they are where they are. [01:21:56] S1: Probability of a spinout. [01:21:58] S8: I mean, I think it I think it needs to happen. Like, I I but, you know, this is again, the regret is this was my take for years and years and years. I'm like, okay. Fine. Xbox Game Pass. That kind of seems kinda interesting. Let's go for it. It should've stuck to my guns. They're like, no. Stop. This is gonna be a disaster. I think, yeah, I don't I I I don't get it. I just don't I didn't see it before. The thing that got me to say, okay, let's give it a chance didn't work. [01:22:24] S1: Mhmm. [01:22:24] S8: I don't see it now. I mean, I think it does give me pause. They hired Matthew Ball who had Valens Retecery multiple Yeah. As their chief strategy officer, have a lot of respect for, you know, his takes. So I'm curious what he's thinking about. Yeah. This gets to the question before. Is there a bit where they just write off these acquisitions [01:22:43] S1: Mhmm. [01:22:44] S8: And say, actually, all this stuff's gonna be exclusive now. We're like Call of Duty, buy an Xbox. Wow. Like, basically giving into the FTC's worst fears, which, but they those fears didn't make sense at the time in the context, because it's by writing off [01:23:03] S0: What's funny what's funny is [01:23:04] S8: that we lost billions and billions of dollars.
01:23:04 · Ben Thompson, Jordi Hays
[01:23:04] S8: that we lost billions and billions of dollars. [01:23:06] S0: Yeah. And it would it would test. It it would be a good pricing test for the power of a triple a game to say, okay, you can only get Call of Duty on Xbox now. And you would see, like, how, like, how many incremental Xbox sales do you get? Because that means the real value of the game is actually in the hundreds of dollars if people have PlayStation. Yep. And then they'll try something new. Switching gears a little bit. We keep having this experience where there's a company, you know, an AI company, let's say an application layer company that is or lab that is, you know, hot but then you don't hear very much for a few months and you write them off and then they come out and they've like added hundreds of millions of dollars in revenue and are doing a crazy up round. And And it's this weird thing where, like, even, you know, historically, you know so there's power laws everywhere. But I feel like in this moment, we're seeing more and more examples where, like, the tenth best company in the category is still having the financial performance that a company that would have been the leading company in their category five years ago. What do you make it what do you make of that? [01:24:13] S8: This is just a thing in tech in general that that is always sort of stuck out at me. I mean, I I think I Has it [01:24:19] S0: been has it been though, but like like CRM, for example. Like, if you go back to like 02/2015 was like the 10 best CRM company, like, actually printed it.
01:24:19 · Jordi Hays, Ben Thompson
[01:24:19] S0: been has it been though, but like like CRM, for example. Like, if you go back to like 02/2015 was like the 10 best CRM company, like, actually printed it. [01:24:30] S8: No. No. The the the the example I always go back to is the the I think it was 2014 or so when Apple bought Beats. And they bought Beats for $3,000,000,000, and everyone's got the tech press is going crazy. Everyone's writing thought pieces about it. And I'm like, you know, of course, writing about it. I'm like, $3,000,000,000. Like, Apple is a $500,000,000,000 company. What does $3,000,000,000 matter? And what's funny about that take is number one, was right. Who cares about $3,000,000,000? That's in our couch cushions. Like, people were spun up also. Didn't really matter. Number two, Apple is only a $500,000,000,000 company. Like, the the astronomical increase in valuation and numbers around this is absolutely crazy. So to your point, yeah, a 2019 CRM company, number one, they probably wasn't a number 10 even then. But, yeah, the numbers are not even remotely tied to, like, any I just sort of let them go and be like, I write down the numbers, and they don't really mean anything to me. But it's very hard to keep track of. Like, the inflation in tech numbers specifically, you know, you think that what was I complaining about pricing before? Oh, yeah. Lemonade stands are bad. The Silicon Valley lemonade stand inflation is absolutely the worst in the world.
01:25:38 · John Coogan
[01:25:38] S1: On mergers and acquisitions, there's this news today about Getty Images calling off Shutterstock deal after UK regulators said that they would have to sell the editorial business for the merger to be approved. And it seemed very odd to me that a merger would be blocked by a regulator when that industry that is consolidating and is maybe becoming more monopolistic is under such insane attack from generative AI. I can't imagine a better defensive move than putting Getty Images and Shutterstock together.
01:26:14 · Ben Thompson, Rodrigo Liang
[01:26:14] S8: This happens this this is this happens every single time. Like, the the natural response to your overall category being threatened by an external force is consolidation. Like, it's the only way to defend yourself to sort of, you know, you get synergies. Like, even, like, all these companies are pretty established, so it's actually fairly easy to price. You know exactly what things are. It's a much like, if you have growing companies, you wanna merge them or acquire them. It's really unclear because how do you sort of price out the future? These companies are declining. So it's very easy, like, you could do a discounted cash flow and understand exactly how much they're worth. It's a very straightforward negotiation. It makes total sense for them to consolidate date. But precisely because they're knowable and understandable, it's very easy for regulators to block them. And you see this happen again and again. You see, like, pushback on you saw this with TV and, like like, different networks getting together and the various pushbacks happen to that or in telecoms. Like, the this happens this is a natural pattern. The moment that a company, an industry wants to consolidate, needs to consolidate is the moment regulators are most likely to stop them consolidating. And whereas the acts would time when action would matter Yep. Like when it when it's growing and a company is making the right acquisitions to take over an industry [01:27:31] S4: Yep.
01:27:31 · Rodrigo Liang, Ben Thompson, Jordi Hays, John Coogan
[01:27:31] S4: Yep. [01:27:31] S8: Regulators don't do anything and also rightly don't do anything because you're dealing with the future and it's unknown. You don't wanna screw it up. It raises the question of what you do regulators sort of do anyway. In broad broad strokes, I used to be I've sort of, you know, I think that they probably do more harm than good as far as a lot of these sort of blocking mergers and things go. But I don't know. I'm the one that just said maybe Microsoft should take Call of Duty exclusive. So so who knows? Maybe I'll Yeah. [01:28:03] S0: We had a funny moment because we were looking it's a $3,700,000,000 deal. But I'm like, how is this a $3,700,000,000 deal? Both these are $2,300,000,000 ish market cap companies. And it was because they pry the deal was, like, priced back in January 2025. And so both companies had declined so much. [01:28:22] S1: Combined market got under 1,000,000,000. [01:28:23] S0: Over the last eighteen months. [01:28:25] S1: So maybe they should do the deal anyway. Don't know. [01:28:27] S8: I mean, it could be worse. You could be Netflix and have the stock market and sort of like make a bid for Warner Brothers that the stock market hates abandoned the deal, but they already decided you did the deal because you're desperate. You're you're screwed anyway. So, yeah, they again, you don't even get what you bid for. So Yeah. Maybe that's what happened here. I don't know.