Slate Money: “Ban Facebook”

Episode Date: September 19, 2020
Host: Felix Salmon (A), with Emily Peck (B) and Anna Shymansky (C)

Main Theme

The episode explores the week's most significant business and finance stories, with a strong focus on the idea of banning Facebook due to its detrimental societal effects. The hosts also discuss the historic Snowflake IPO, the Nvidia-ARM mega-deal with global political undertones, and the broader phenomenon of politicized capitalism and regulation. Throughout, they maintain a candid, sometimes irreverent tone, frequently looping back to the influence of technology companies on society and democracy.

Key Discussion Points & Insights

1. Snowflake’s Blockbuster IPO

• Snowflake went public in the largest software IPO in history, raising $3 billion.
• The panel dissected what Snowflake does ("cloud data analytics" roughly summarized by Emily), its business model’s stickiness, and meteoric valuation growth from February 2020 to IPO day.
• Insight: The IPO price skyrocketed due to investor froth, Berkshire Hathaway/Buffett involvement, and low trading float leading to artificial scarcity.
• Quote:
  • “One of the reasons why Snowflake is worth…77 gajillion dollars, is because it's incredibly sticky…every customer just increases the amount of money they spend…every year.” —Felix [02:50]
• Buffett’s Involvement: Noted as rare for IPOs; likely the decision of his deputies (the "two Todds").
  • “Warren Buffett is on the record saying an IPO is the worst possible time to buy a stock…But he not only participated in the ipo, he also bought like half of the shares of one of the former CEOs...” —Felix [06:04]
• Valuation Bubble:
  • “Is it remotely conceivable that someone could rationally assign valuation of $75 billion to a business that barely exists?” —Felix [09:32]
• IPO Process Critique: Felix calls out bookrunners like Goldman Sachs for conflicts of interest and allocation practices that favor their preferred clients, stoking opening day “pops.”
  • “It’s bad because it creates a conflict of interest for the bank running the IPO.” —Felix [14:40]

Timestamps:

• [02:00] — What Snowflake does
• [03:51] — Highlights of the IPO and valuation surge
• [08:08] — Reflection on Berkshire Hathaway’s changing investment strategy
• [10:41] — Criticism of the IPO process and underwriter incentives

2. The Case for Banning Facebook

• Trigger: A leaked memo from a former Facebook employee revealed the company’s neglect in responding to foreign and domestic abuses of its platform.
• Emily’s Hot Take: Calls for a temporary or permanent shutdown of Facebook due to its repeatedly harmful societal and political effects.
  • “Maybe it’s time…to shut down Facebook until we can figure out what's going on. To kind of borrow the words of the president, it’s ruining democracies around the world.” —Emily [19:12]
• Culpability: Criticism is not limited to neglect, but also actively mollifying those in political power and failing to act on known hate speech/incitement.
  • “Facebook only really cares about these issues if there's a news story about it…They'll go wherever the sunshine is, but they're not proactively fixing their network.” —Emily [18:12]
  • “It doesn't matter why they're making these decisions. The fact is they have made these decisions.” —Felix [27:00]
• Facebook and Politics: The company bends to US political pressure, with Republican interests especially influential; its global influence vastly outpaces its willingness or capacity to police harm.
  • “At the top levels of Facebook…there’s a very strong libertarian Republican, maybe just cynical, we will do whatever the party in power wants us to do tendency.” —Felix [25:17]
• Conspiracy Ideologies: The hosts highlight Facebook's enabling of QAnon and right-wing ecosystem dominance ("the top posts…are overwhelmingly right wing" —Felix [27:57]).
• Policy or Platform? Discussion of whether the answer is regulation, internal reform, or outright banning; increasing frustration with incremental measures and “edge case” excuses.
  • “No one’s talking about edge cases anymore. This is a company that is allowing governments and troll farms and militants to use its platform to organize, to incite hate and actually is getting people killed.” —Emily [31:14]
• Counterpoint: Anna is skeptical of “Facebook is evil” rhetoric, emphasizing practical solutions rather than demonization, but also stating that responsibility is unavoidable at such scale.

Timestamps:

• [16:47] — Introduction to the week’s Facebook scandal
• [17:55] — Employee memo, global impacts, and previous Myanmar example
• [19:39] — Emily’s shutdown proposal
• [25:17/27:00] — Facebook's political bias and impact on democracy
• [28:34] — Platform’s right-wing content dominance

3. Nvidia’s Attempt to Purchase ARM (Geopolitical Tech M&A)

• The Deal: Nvidia (US) buying ARM (UK) from Softbank (Japan), raising global regulatory scrutiny, especially from China.
• Insight: The deal’s significance lies in ARM’s role in global smartphone infrastructure and the complex regulatory implications, including a “tech cold war” backdrop.
  • “Should we start looking at China and Chinese regulators as a potential obstacle to big M and A transactions as well?” —Felix [33:38]
• Chinese Reaction: Anna notes China has a track record of stalling or quietly blocking deals; Nvidia’s global business may constrain its actions.
• Broader Implication: The US, under Trump, is politicizing major tech transactions (see also: TikTok, Huawei), which is now boomeranging back as global regulatory scrutiny blocks US business interests abroad.
  • “The politician politicization of deal making is kind of infecting everything...” —Emily [37:09]

Timestamps:

• [33:03] — Introduction of the Nvidia-ARM deal, regulatory focus
• [35:25] — Links to US-China political tensions
• [37:44] — Politicization of dealmaking and comparison to free-market conservatism

4. The Erosion of Free Market Ideology in US Policy

• The politicization noted above marks a stark turn away from traditional Republican “free market” rhetoric, with Trump’s administration functioning more like a “personality cult.”
  • “He ran...by basically saying, yeah, you thought the Republican Party was about free markets. No, it’s not. I’m going to really politicize markets to a degree that they’ve never been politicized before.” —Felix [40:56]

5. Numbers Round

Lighthearted and Topical Stats:

• Emily: 7 billion — Number of Chuck E. Cheese tickets to be destroyed after their bankruptcy. [41:54]
• Anna: $3,000/month — Paid to a Citigroup IT director for running a QAnon website (without compliance approval). [43:28]
• Felix: 3.7% — Federal Reserve’s revised 2020 GDP shrinkage projection (better than the previous -6.5%). [45:51]
  • Subsection: Discusses the “K-shaped” recovery, racialized unemployment, and how economic improvement masks deeper disparities.
  • “The black unemployment rate is 13% and the white unemployment rate is 7.3%...the resurgence in the economy is super racialized.” —Emily [49:09]

Notable & Memorable Quotes

• “Maybe it’s time…to shut down Facebook until we can figure out what's going on. To kind of borrow the words of the president, it’s ruining democracies around the world.” —Emily [19:12]
• “The fact is they have made these decisions...they have left the Trump post up...allowed these governments around the world to subvert their own democracies. Like that's just how it is.” —Felix [27:00]
• “You thought the Republican Party was about free markets. No, it's not. I'm going to really politicize markets to a degree that they've never been politicized before.” —Felix [40:56]

Segment-by-Segment Timestamps

| Segment | Key Timestamps | |-------------------------------|---------------| | Introduction & Overview | 00:09–02:03 | | Snowflake IPO & Markets | 02:03–16:47 | | Facebook Critique & Ban | 16:47–33:03 | | Nvidia-ARM/Global M&A | 33:03–41:39 | | Numbers Round/Racial K-shape | 41:39–50:14 |

Tone & Language

• Candid, at times exasperated (“77 gajillion dollars”).
• Wryly irreverent toward tech hype, IPO excess, and especially toward Facebook’s repeated PR failures.
• Emphatic urgency in discussing the threats posed by Facebook and the upending of long-held economic norms.

Conclusion

The episode blends technical business analysis (Snowflake’s IPO, M&A logistics) with passionate debate about the larger ethical failings and systemic risks of the modern tech industry, particularly Facebook. The hosts agree that while some issues are complex, Facebook’s continued inaction is indefensible, and the current US administration’s anti-market interventions are both ironic and damaging.

Listeners are left with a sense of both astonishment at current financial mania (Snowflake, IPOs), deep concern at political interference and technological influence in democracies, and a reminder of persistent and growing inequality during the pandemic recovery.