The GiD Report#138 — The age of antitrust, Stripe is Windows for fintech

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GlobaliD

7 min readDec 8, 2020

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. You can check out last week’s report here.

Three emerging narratives for this week — the building momentum around antitrust, crypto rising, and building fintech shovels for a COVID-accelerated digital reality:

The age of antitrust
Crypto rising
Ben Thompson: Stripe is Windows for fintech
Aaron Schwartz hacker law revised + digital services tax
Tweet of the week: SSI is a 3-sided market
Stuff happens

1. The gravity, pull, and sway of large, powerful corporations has always been a reality — but today, we find ourselves at a point in the cycle where there seems to be a general consensus that it’s time for a correction. We’re seeing it in Big Tech (as we saw it with Too Big to Fail during the last financial crisis). We’re seeing it in payments Visa (and on the other side of the coin, the rise of crypto).

The pull of that gravity is often subtle early on, its impact only clear through hindsight — particularly around metrics concerning competition and innovation. But the stakes have never been higher.

One example is Slack being bought out by Salesforce in response to competition from Microsoft (and Teams), the OG Big Tech antitrust case.

There’s also the recent news of Google and firing of a prominent AI ethics researcher is another reminder of that fact. Google, given its resources, expertise, and business alignment, is a leader in AI tech. They’re also known for a historically academic culture within the firm.

Sometimes, however, those two forces are in conflict. Sometimes business wins over academics. The fear, of course, is that the weight will continue to shift toward business. After all, we’re talking about a company that is taking a pivotal role in defining our AI future.

The waters are further muddied when plenty of voices believe that company is also a monopoly.

In that sense, antitrust isn’t just about taking down big and powerful companies. It’s about creating an environment, incentive structure and competitive landscape whereby society can evolve in ways we collectively believe best — rather than ways that benefit said companies at the expense of our future.

And so today, where seeing these little skirmishes across industries and across borders and across realities.

For instance, Facebook trying to take ownership over VR:

Facebook Accused of Squeezing Rival Startups in Virtual Reality

Rulemakers waving Section 230 around as a threat:

Europe’s continued efforts to keep Big Tech in check:

U.S. Tech Giants Face Tighter Regulation in Europe

The Dutch taking on Apple Pay:

Apple Pay limitations spark Dutch antitrust probe

And the DOJ’s ongoing battle with Visa:

Visa defends Plaid deal to DOJ, asserting data’s vital new role in payments

Axios on Visa:

Companies have two basic choices when faced with an antitrust lawsuit from the U.S. Justice Department: Fight or flee. Visa plans to fight.
Driving the news: The credit card giant filed its legal response to DOJ’s efforts to block its $5.3 billion purchase of fintech “connector” company Plaid. Its primary arguments are that regulators gerrymandered an industry definition and conjured competition.
Industry: The DOJ believes that Visa is a monopolist in the online debit card space, arguing that its market share exceeds 70%. Visa doesn’t dispute that figure, but instead argues it’s arbitrary.

Visa claims that the relevant industry is online payments, which would include not just online debit, but also credit cards and services like Apple Pay. Or at least would include other methods of direct debit from bank accounts, such as PayPal and using routing numbers to satisfy utility bills, etc.
Also worth noting is that Visa’s overall debit card market share drops to 60%+ when in-person purchases are included (it increases for online since few e-commerce merchants accept PIN cards).

Competition: The DOJ argues that Plaid could become a major competitor in the online debit space, and that Visa’s acquisition is designed to extinguish that nascent threat.

Imagine for a second that Facebook wasn’t allowed to take over Instagram and later WhatsApp (and in turn use Instagram to try and crush Snapchat). Imagine for a second that all of those platforms were independent companies today. Might it be reasonable to think that Facebook would be less inclined to try and push a singular, proprietary solution and that the industry at large would be more open to interoperable solutions?

Relevant: The NYTimes on why WhatsApp matters.

2. If that’s the top-down approach, you might describe the rise of crypto as the bottom-up method. And crypto is rising.

Also, this week in the dollar:

The dollar’s decline could add huge challenges to the recovery of some economies

S&P:

The big picture: “Economies are not going back to their pre-COVID-19 configuration,” S&P Global chief economist Paul Gruenwald said in a recent report. “[T]he composition of output will change and this process has already begun.”
“As a result, new firms are starting to form in growth sectors (and exit shrinking ones) and workers are starting to move toward these growth sectors (and away from the shrinking ones), in what is known as ‘creative destruction.’”

3. The other big narrative are the players building next-gen fintech platforms and tools that will enable the COVID accelerated financial and digital economy.

A big player is Stripe, which just introduced Stripe Treasury (via /pstav)

Here’s Ben Thompson’s take (comparing the new platform to Microsoft Windows):

This is a textbook example of the power of platforms; consider an operating system like Windows: any number of applications can run on any number of computers thanks to there being an abstraction layer in the middle:

This is analogous to the layer for banking that Stripe is offering with Treasury:

This explains that API call above: a Rocket Rides pilot doesn’t have the wherewithal to open a business bank account at Goldman Sachs, and Goldman Sachs doesn’t have the flexibility to offer a banking account to individual entrepreneurs. This, though, is the exact sort of problem platforms solve: they provide an abstraction layer that connects different sides of a market, even if those different sides have dramatically different needs and capabilities.

Check out the entire post:

Stripe: Platform of Platforms

Relevant:

4. This week in rule changes:

The Supreme Court is reviewing a key hacking law:

Several Supreme Court justices Monday seemed to signal that they’re interested in narrowing a landmark cybersecurity law that critics have long charged is overbroad, Axios’ Kyle Daly reports.
Catch up quick: The Computer Fraud and Abuse Act of 1986 has been the basis for a number of controversial criminal cases, most infamously the prosecution of activist and hacker Aaron Swartz, who died by suicide while awaiting trial after downloading a large number of academic articles.
Why it matters: Narrowing the law could prevent overzealous prosecutors from going after internet users engaging in relatively innocuous activity.

BTW, Greg was a producer for the Aaron Schwartz documentary.

Also, the “looming” digital services tax:

A fight over foreign countries’ efforts to tax big American tech companies’ digital services is likely to come to a head in January just as Joe Biden takes office, Axios’ Ashley Gold reports.
The big picture: Governments have failed to reach a broad multilateral agreement on how to structure such taxes. That could leave the American firms that dominate consumer digital services — including Google, Facebook, and Apple — stuck with massive tax bills from different countries.
Why it matters: The fight over digital service taxes has become a proxy for larger international conflicts, pitting European resistance to the power of American tech giants against a Trump-style “America First” protectionism in Washington.
Catch up quick: A digital services tax calculates what portion of gross revenue a company like Facebook or Google earns from activities and users within a nation’s borders and requires the company to pay a percentage of that amount.

5. Tweet of the week:

Drummond Reed (via Josh):

The GiD Report#138 — The age of antitrust, Stripe is Windows for fintech

2. If that’s the top-down approach, you might describe the rise of crypto as the bottom-up method. And crypto is rising.

3. The other big narrative are the players building next-gen fintech platforms and tools that will enable the COVID accelerated financial and digital economy.

4. This week in rule changes:

5. Tweet of the week:

6. Stuff happens:

Written by GlobaliD