Why We’re Jaded with Facebook

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Facebook has been under constant fire for more than a year now and seems unable to answer its critics. Under such criticism the company’s executive team has promised to make user privacy its primary concern, until the next revelation exposes its duplicity. Now it seems every other week another article is written demanding that Facebook be broken up or regulated by government oversight.

We might wonder what exactly is wrong with Facebook and why can’t they fix it?

The answers are in the faulty logic of Facebook as a social network that connects the world and the financial business model required to fund that mission. Both efforts are fighting a natural contradiction when it comes to real reasons people use Facebook.

Let’s address the social aspect first. Facebook started as a on-campus online gossip network at Harvard University. This is the secret of its appeal – people like to gossip about others within their network of peers. The behavior went viral and expanded from Harvard to Yale and Princeton and other Ivys. Then it spread to universities across the country. Nobody really is as concerned with social status as young people between the ages of 13 and 21.

But then Facebook decided its gossip model should go public and proudly marked its rapid growth of the social network across the globe – to the tune of more than 2 billion users. We even got a movie out of it. But let’s consider the logic of such a global gossip network because, frankly, it makes no sense.

Gossip serves a very useful social and evolutionary purpose, despite it being popularly dismissed as “small talk” or “idle talk,” or even malicious or “nosy.” Robin Dunbar (he of Dunbar’s Number = 150) explains how gossip helps us maintain social relationships in groups and also helps community members sanction free riders or those who break established social norms (“Gossip in Evolutionary Perspective”). In this way, gossip provides a means of gaining information about individuals, cementing social bonds, and engaging in indirect aggression; helping people learn about how to live in their cultural society. Gossip anecdotes communicate rules in narrative form, such as by describing how someone else came to grief by violating social norms.

Certainly there appears to be something about gossip that is innate: our entertainment world is pretty much driven commercially by celebrity gossip. But we don’t know these people!

Dunbar actually extended his research to online social networks, specifically using Facebook as a test case of whether network technology relaxes the constraints that limit the size of offline social relationships (link). What he found was that the 150 number still holds for any meaningful social networks. In other words, the human brain is developed enough to maintain 150 social connections, after which the connections fall to the level of casual acquaintances. According to surveys, this is the experience of most Facebook users. Facebook “friends” are not really friends in the vernacular meaning of the word.

So, a network that connects us to roughly 2 billion users across the globe doesn’t make a whole lot of sense for the benefits of gossip. Rather, a gossip network that extends to people we have no personal relationship with tends to reinforce the negative aspects of gossip, i.e., meanness and rudeness. We can observe that celebrity gossip tends to focus on caricatures that emphasize the extremes of hero worship and cruel pettiness. In similar fashion, Facebook is very useful for small friendship networks that cohere around common interests or personal relationships, and the limits on that tend to approximate around 150 people.

The second reason Facebook is failing as a social network relates to its ad-driven revenue model. If I am using Facebook as a way to connect to my friends, I certainly resent a third party advertiser trying to insert itself into the middle of that communication channel (just imagine advertisers interrupting in the middle of your phone call!). How many of us were turned away from Facebook about 2+ years ago when our feeds were suddenly flooded with advertisements for things we had no interest in? The network data Facebook is selling to advertisers is weak, not robust. We know what our friends like, if they are friends, and Facebook algorithms do a poor job of approximating that. “Like” clicks are not really likes and digital advertisers know it.

The problem here is that Facebook ad rates are a function of the number of users FB claims to reach and the flow of network information across those user nodes, even if it’s Candy Crush games or humorous cat tricks. Facebook cannot really evaluate the subjective value of the information flow, so it merely sells it all in targeted user bundles. This does not serve end users (or advertisers) very well and the attrition rate is evidence of general user dissatisfaction. I would guess that most users stick with Facebook for the positive value they receive from far-flung friend networks and the lack of a viable alternative. But then we end up ignoring most of the white noise on our feeds, threatening the financial viability of FB’s revenue model.

So where does this lead?

Frankly, I would argue Facebook’s longevity under its current business model is challenging. Gossip makes sense and can be tolerated in small community groups, while wider social networks make sense if they are somewhat limited to common interests. Facebook “Groups” seem to exhibit some of these qualities, so perhaps that is a direction FB can move towards. But the problem then is that it is a much less valuable Facebook under its ad revenue model. Market competitions and alternative OSNs may eat into FB’s global network, forcing FB to adapt to a smaller footprint. That is likely to be a difficult financial adjustment for a company of FB’s size and reach. But technology cuts both ways and today’s Facebook may just be tomorrow’s obsolescence. Personally, I would prefer a social network that delivers more meaningful connections to other people and allows me to filter out a lot of the white noise. That can’t happen as long as the network servers make money off white noise.

 

Madmen and the Godless Algorithm

FB-vs-Google

This article from The New Yorker.

Good overview history of the advertising model that has dominated our commercialism for decades. It’s now gone on digital steroids. The disruption of ad technology has interesting implications.

How the Math Men Overthrew the Mad Men

By Ken Auletta

Once, Mad Men ruled advertising. They’ve now been eclipsed by Math Men—the engineers and data scientists whose province is machines, algorithms, pureed data, and artificial intelligence. Yet Math Men are beleaguered, as Mark Zuckerberg demonstrated when he humbled himself before Congress, in April. Math Men’s adoration of data—coupled with their truculence and an arrogant conviction that their “science” is nearly flawless—has aroused government anger, much as Microsoft did two decades ago.

The power of Math Men is awesome. Google and Facebook each has a market value exceeding the combined value of the six largest advertising and marketing holding companies. Together, they claim six out of every ten dollars spent on digital advertising, and nine out of ten new digital ad dollars. They have become more dominant in what is estimated to be an up to two-trillion-dollar annual global advertising and marketing business. Facebook alone generates more ad dollars than all of America’s newspapers, and Google has twice the ad revenues of Facebook.

In the advertising world, Big Data is the Holy Grail, because it enables marketers to target messages to individuals rather than general groups, creating what’s called addressable advertising. And only the digital giants possess state-of-the-art Big Data. “The game is no longer about sending you a mail order catalogue or even about targeting online advertising,” Shoshana Zuboff, a professor of business administration at the Harvard Business School, wrote on faz.net, in 2016. “The game is selling access to the real-time flow of your daily life—your reality—in order to directly influence and modify your behavior for profit.” Success at this “game” flows to those with the “ability to predict the future—specifically the future of behavior,” Zuboff writes. She dubs this “surveillance capitalism.” [I question whether this will really work as anticipated once everybody is hip to the game.]

However, to thrash just Facebook and Google is to miss the larger truth: everyone in advertising strives to eliminate risk by perfecting targeting data.[This is the essence of what we’re doing here – reducing the risk of uncertainty.] Protecting privacy is not foremost among the concerns of marketers; protecting and expanding their business is. The business model adopted by ad agencies and their clients parallels Facebook and Google’s. Each aims to massage data to better identify potential customers. Each aims to influence consumer behavior. To appreciate how alike their aims are, sit in an agency or client marketing meeting and you will hear wails about Facebook and Google’s “walled garden,” their unwillingness to share data on their users. When Facebook or Google counter that they must protect “the privacy” of their users, advertisers cry foul: You’re using the data to target ads we paid for—why won’t you share it, so that we can use it in other ad campaigns? [But who really owns your data? Even if you choose to give it away?]

This preoccupation with Big Data is also revealed by the trend in the advertising-agency business to have the media agency, not the creative Mad Men team, occupy the prime seat in pitches to clients, because it’s the media agency that harvests the data to help advertising clients better aim at potential consumers. Agencies compete to proclaim their own Big Data horde. W.P.P.’s GroupM, the largest media agency, has quietly assembled what it calls its “secret sauce,” a collection of forty thousand personally identifiable attributes it plans to retain on two hundred million adult Americans. Unlike Facebook or Google, GroupM can’t track most of what we do online. To parade their sensitivity to privacy, agencies reassuringly boast that they don’t know the names of people in their data bank. But they do have your I.P. address, which yields abundant information, including where you live. For marketers, the advantage of being able to track online behavior, the former senior GroupM executive Brian Lesser said—a bit hyperbolically, one hopes—is that “we know what you want even before you know you want it.”[That sounds like adman hubris rather than reality.]

Worried that Brian Lesser’s dream will become a nightmare, ProPublica has ferociously chewed on the Big Data privacy menace like a dog with a bone: in its series “Breaking the Black Box,” it wrote, “Facebook has a particularly comprehensive set of dossiers on its more than two billion members. Every time a Facebook member likes a post, tags a photo, updates their favorite movies in their profile, posts a comment about a politician, or changes their relationship status, Facebook logs it . . . When they use Instagram or WhatsApp on their phone, which are both owned by Facebook, they contribute more data to Facebook’s dossier.” Facebook offers advertisers more than thirteen hundred categories for ad targeting, according to ProPublica.

Google, for its part, has merged all the data it collects from its search, YouTube, and other services, and has introduced an About Me page, which includes your date of birth, phone number, where you work, mailing address, education, where you’ve travelled, your nickname, photo, and e-mail address. Amazon knows even more about you. Since it is the world’s largest store and sees what you’ve actually purchased, its data are unrivalled. Amazon reaches beyond what interests you (revealed by a Google search) or what your friends are saying (on Facebook) to what you actually purchase. With Amazon’s Alexa, it has an agent in your home that not only knows what you bought but when you wake up, what you watch, read, listen to, ask for, and eat. And Amazon is aggressively building up its meager ad sales, which gives it an incentive to exploit its data.

Data excite advertisers. Prowling his London office in jeans, Keith Weed, who oversees marketing and communications for Unilever, one of the world’s largest advertisers, described how mobile phones have elevated data as a marketing tool. “When I started in marketing, we were using secondhand data which was three months old,” he said. “Now with the good old mobile, I have individualized data on people. You don’t need to know their names . . . You know their telephone number. You know where they live, because it’s the same location as their PC.” Weed knows what times of the day you usually browse, watch videos, answer e-mail, travel to the office—and what travel routes you take. “From your mobile, I know whether you stay in four-star or two-star hotels, whether you go to train stations or airports. I use these insights along with what you’re browsing on your PC. I know whether you’re interested in horses or holidays in the Caribbean.” By using programmatic computers to buy ads targeting these individuals, he says, Unilever can “create a hundred thousand permutations of the same ad,” as they recently did with a thirty-second TV ad for Axe toiletries aimed at young men in Brazil. The more Keith Weed knows about a consumer, the better he can aim to target a sale.

Engineers and data scientists vacuum data. They see data as virtuous, yielding clues to the mysteries of human behavior, suggesting efficiencies (including eliminating costly middlemen, like agency Mad Men), offering answers that they believe will better serve consumers, because the marketing message is individualized. The more cool things offered, the more clicks, the more page views, the more user engagement. Data yield facts and advance a quest to be more scientific—free of guesses. As Eric Schmidt, then the executive chairman of Google’s parent company, Alphabet, said at the company’s 2017 shareholder meeting, “We start from the principles of science at Google and Alphabet.”

They believe there is nobility in their quest. By offering individualized marketing messages, they are trading something of value in exchange for a consumer’s attention. They also start from the principle, as the TV networks did, that advertising allows their product to be “free.” But, of course, as their audience swells, so does their data. Sandy Parakilas, who was Facebook’s operations manager on its platform team from 2011 to 2012, put it this way in a scathing Op-Ed for the Times, last November: “The more data it has on offer, the more value it creates for advertisers. That means it has no incentive to police the collection or use of that data—except when negative press or regulators are involved.” For the engineers, the privacy issue—like “fake news” and even fraud—was relegated to the nosebleed bleachers. [This fact should be obvious to all of us.]

With a chorus of marketers and citizens and governments now roaring their concern, the limitations of Math Men loom large. Suddenly, governments in the U.S. are almost as alive to privacy dangers as those in Western Europe, confronting Facebook by asking how the political-data company Cambridge Analytica, employed by Donald Trump’s Presidential campaign, was able to snatch personal data from eighty-seven million individual Facebook profiles. Was Facebook blind—or deliberately mute? Why, they are really asking, should we believe in the infallibility of your machines and your willingness to protect our privacy?

Ad agencies and advertisers have long been uneasy not just with the “walled gardens” of Facebook and Google but with their unwillingness to allow an independent company to monitor their results, as Nielsen does for TV and comScore does online. This mistrust escalated in 2016, when it emerged that Facebook and Google charged advertisers for ads that tricked other machines to believe an ad message was seen by humans when it was not. Advertiser confidence in Facebook was further jolted later in 2016, when it was revealed that the Math Men at Facebook overestimated the average time viewers spent watching video by up to eighty per cent. And in 2017, Math Men took another beating when news broke that Google’s YouTube and Facebook’s machines were inserting friendly ads on unfriendly platforms, including racist sites and porn sites. These were ads targeted by keywords, like “Confederacy” or “race”; placing an ad on a history site might locate it on a Nazi-history site.

The credibility of these digital giants was further subverted when Russian trolls proved how easy it was to disseminate “fake news” on social networks. When told that Facebook’s mechanized defenses had failed to screen out disinformation planted on the social network to sabotage Hillary Clinton’s Presidential campaign, Mark Zuckerberg publicly dismissed the assertion as “pretty crazy,” a position he later conceded was wrong.

By the spring of 2018, Facebook had lost control of its narrative. Their original declared mission—to “connect people” and “build a global community”—had been replaced by an implicit new narrative: we connect advertisers to people.[Indeed, connecting people on a global basis for human interaction really doesn’t make a lot of sense. A global gossip network? Unless, of course, you’re trying to monetize it.] It took Facebook and Google about five years before they figured out how to generate revenue, and today roughly ninety-five percent of Facebook’s dollars and almost ninety percent of Google’s comes from advertising. They enjoy abundant riches because they tantalize advertisers with the promise that they can corral potential customers. This is how Facebook lured developers and app makers by offering them a permissive Graph A.P.I., granting them access to the daily habits and the interchange with friends of its users. This Graph A.P.I. is how Cambridge Analytica got its paws on the data of eighty-seven million Americans.

The humiliating furor this news provoked has not subverted the faith among Math Men that their “science” will prevail. They believe advertising will be further transformed by new scientific advances like artificial intelligence that will allow machines to customize ads, marginalizing human creativity. With algorithms creating profiles of individuals, Airbnb’s then chief marketing officer, Jonathan Mildenhall, told me, “brands can engineer without the need for human creativity.” Machines will craft ads, just as machines will drive cars. But the ad community is increasingly mistrustful of the machines, and of Facebook and Google.[As they should be – the value has been over-hyped.] During a presentation at Advertising Week in New York this past September, Keith Weed offered a report to Facebook and Google. He gave them a mere “C” for policing ad fraud, and a harsher “F” for cross-platform transparency, insisting, “We’ve got to see over the walled gardens.”

That mistrust has gone viral. A powerful case for more government regulation of the digital giants was made by The Economist, a classically conservative publication that also endorsed the government’s antitrust prosecution of Microsoft, in 1999. The magazine editorialized, in May, 2017, that governments must better police the five digital giants—Facebook, Google, Amazon, Apple, and Microsoft—because data were “the oil of the digital era”: “Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the ‘data economy.’ ” Inevitably, an abundance of data alters the nature of competition, allowing companies to benefit from network effects, with users multiplying and companies amassing wealth to swallow potential competitors.

The politics of Silicon Valley is left of center, but its disdain for government regulation has been right of center. This is changing. A Who’s Who of Silicon notables—Tim Berners-Lee, Tim Cook, Ev Williams, Sean Parker, and Tony Fadell, among others—have harshly criticized the social harm imposed by the digital giants. Marc Benioff, the C.E.O. of Salesforce.com—echoing similar sentiments expressed by Berners-Lee—has said, “The government is going to have to be involved. You do it exactly the same way you regulated the cigarette industry.”

Cries for regulating the digital giants are almost as loud today as they were to break up Microsoft in the late nineties. Congress insisted that Facebook’s Zuckerberg, not his minions, testify. The Federal Trade Commission is investigating Facebook’s manipulation of user data. Thirty-seven state attorneys general have joined a demand to learn how Facebook safeguards privacy. The European Union has imposed huge fines on Google and wants to inspect Google’s crown jewels—its search algorithms—claiming that Google’s search results are skewed to favor their own sites. The E.U.’s twenty-eight countries this May imposed a General Data Protection Regulation to protect the privacy of users, requiring that citizens must choose to opt in before companies can horde their data.

Here’s where advertisers and the digital giants lock arms: they speak with one voice in opposing opt-in legislation, which would deny access to data without the permission of users. If consumers wish to deny advertisers access to their cookies—their data—they agree: the consumer must voluntarily opt out, meaning they must endure a cumbersome and confusing series of online steps. Amid the furor about Facebook and Google, remember these twinned and rarely acknowledged truisms: more data probably equals less privacy, while more privacy equals less advertising revenue. Thus, those who rely on advertising have business reasons to remain tone-deaf to privacy concerns.

Those reliant on advertising know: the disruption that earlier slammed the music, newspaper, magazine, taxi, and retail industries now upends advertising. Agencies are being challenged by a host of competitive frenemies: by consulting and public-relations companies that have jumped into their business; by platform customers like Google and Facebook but also the Times, NBC, and Buzzfeed, that now double as ad agencies and talk directly to their clients; by clients that increasingly perform advertising functions in-house.

But the foremost frenemy is the public, which poses an existential threat not just to agencies but to Facebook and the ad revenues on which most media rely. Citizens protest annoying, interruptive advertising, particularly on their mobile phones—a device as personal as a purse or wallet. An estimated twenty per cent of Americans, and one-third of Western Europeans, employ ad-blocker software. More than half of those who record programs on their DVRs choose to skip the ads. Netflix and Amazon, among others, have accustomed viewers to watch what they want when they want, without commercial interruption.

Understandably, those dependent on ad dollars quake. The advertising and marketing world scrambles for new ways to reach consumers. Big Data, they believe, promises ways they might better communicate with annoyed consumers—maybe unlock ways that ads can be embraced as a useful individual service rather than as an interruption. If Big Data’s use is circumscribed to protect privacy, the advertising business will suffer. In this core conviction, at least, Mad Men and Math Men are alike.

This piece is partially adapted from Auletta’s forthcoming book, “Frenemies: The Epic Disruption of the Ad Business (and Everything Else).”

 

I would guess that the ad business will be disrupted further as we find new ways to connect consumers with what they want. This will reduce the power of the Math Men at centralized network servers.

I also suspect search will become a regulated public utility. A free society cannot tolerate one or two private corporations controlling all the information data that flows through its networks.

 

From Disruption to Dystopia

Very interesting article by Joel Kotkin, who researches the economics and politics of cities. It portrays a future that resembles feudalism more than free market democratic capitalism. I’d optimistically venture there will eventually be a more humanist backlash against the future dominance of technology.

From Disruption to Dystopia: Silicon Valley Envisions the City of the Future

The unaffordable Bay Area, Google’s new neighborhood ‘built from the internet up,’ and China’s police state each offer glimpses of what the tech giants plan to sell the rest of us.

by Joel Kotkin

The tech oligarchs who already dominate our culture and commerce, manipulate our moods, and shape the behaviors of our children while accumulating capital at a rate unprecedented in at least a century want to fashion our urban future in a way that dramatically extends the reach of the surveillance state already evident in airports and on our phones.

The drive to redesign our cities, however, is not really the end of the agenda of those who Aldous Huxley described as the top of the “scientific caste system.” The oligarchy has also worked to make our homes, our personal space, “connected” to their monitoring and money machines. This may be a multibillion-dollar market soon, but many who have employed such devices at home—appliances that track our activities and speak to us like loyal servants—find them “creepy,” as they should, given that their daily activities are fed back to enrich the high-tech hive mind. Both the city and house the future may owe more to Brave New World than Better Homes and Gardens.

This is a vision of the urban future in which the tech companies’ own workers and whatever other people with skills the machines haven’t yet replaced are a new class of urban serfs living in small apartments, along with a much larger class of dependent persons living on “income maintenance” and housing or housing subsidies provided by the state. “Bees exist on Earth to pollinate flowers, and maybe humans are here to build the machines,” observes professor Andrew Hudson-Smith, from University College London’s Centre for Advanced Spatial Analysis. “The city will be one big joined-up urban machine, and humans’ role on Earth will be done.”

Read more

Can’t We All Just Be Friends?

This is the nefarious side of social media. A NY Times article on how Russian hackers used Facebook to try to influence the US and French elections.

Will Mark Zuckerberg ‘Like’ This Column?

tuka offers a bit of an alternative to uncontrolled social media. First, there is no anonymity. Second, the user feed is content only, not status or opinion or any other distracting things like cat and food photos. This means we know who is posting and what they post is tangible creative content. These two criteria ensure that the connections people make on tuka are meaningful and real.

The final caveat here is to remind ourselves not to be so easily manipulated by emotional triggers.

The Thing That Devoured the World

Interesting take on Amazon’s dominance reprinted from PJ Media.

The ‘Amazon Washington Post,’ and Why It Needs to Be Destroyed

By Michael Walsh 2017-07-22

As readers of PJ Media’s daily feature, Hot Mic, are aware, I’m not a big fan of Amazon. In the guise of ease, efficiency and allegedly low prices, it’s crushing the life out of the retail sector in the United States, demolishing bookstores, big-box stores, department stores, grocery stores, record stores, and even smaller retail outlets, putting small businessmen, struggling authors and garage bands out of business. In so doing, it’s also killing job prospects for entry-level workers who might actually not want to work at McDonald’s.

In their place, it offers you Alexa, your very own electronic monitor and spy, sleeping right next to you on the nightstand in the innocuous guise of your smart phone or your tablet, monitoring your porn searches while it pretends to buy you Doris Kearns Goodwin’s latest book or a tin of Acai berry powder.

In publishing, where I earn part of my living, it forces authors to compete with themselves, offering marked-down used versions of works still in print, thus depriving us of royalty payments. At a time when advances — except to celebrities famous for something other than their literary skills — are a tenth of what they used to be, working writers must now depend on quickly earning out the initial advance (based on — you guessed it — royalties) and then getting subsequent paychecks at six-month intervals for as long as the book continues to sell new copies.

Don’t even get me started on Hollywood.

Well, you say, that’s my — and Roger’s and Richard’s and Drew Klavan’s and Roger Kimball’s and David Goldman’s and VDH’s and Andy’s, among other PJ colleagues — tough luck. True enough. But, wait — you’re next.

Shares of  Home Depot and  Lowe’s were slammed Thursday, along with  Whirlpool, after  Amazon threatened to take on the appliance market in a much bigger way in a deal with  Sears Holdings.

The market cap loss in Home Depot, Lowe’s, Whirlpool and Best Buy was about $12.5 billion by the end of the day, after falling to more than $13 billion. Amazon stock was up slightly, and Sears closed up about 10 percent.

But the early read from some analysts was that the sell-off has created a buying opportunity for home improvement retailers Home Depot and Lowe’s, which have proven themselves to be somewhat “Amazon-proof” and among the best performers in the sector. Best Buy, already battling Amazon in electronics, ended the day about 4 percent lower.

Sears, which has been losing share in appliance for years, saw its stock rally as much as 25 percent early Thursday, soon after it announced it would sell its Kenmore-branded appliances on Amazon.com. The products will be compatible with Amazon’s Alexa platform.

God knows, Sears can use the help, as the pictures at the link show. Even if it comes via the Trojan Horse of Alexa. Having been beaten nearly to death by its own ineptitude and electronic retailing, Sears has finally decided that if you can’t beat ’em, join ’em.

The department store chain announced plans on Thursday to sell Kenmore-branded appliances on Amazon.com. Sears also said its Kenmore Smart appliances will be integrated with Amazon’s Alexa platform. Shares of Sears’ stock were climbing more than 25 percent at one point in trading before the market’s open following this news.

“The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears CEO Eddie Lampert said in a statement. “At the same time, Sears Home Services and our Innovel Solutions unit will benefit from the relationship as more customers experience their quality services for Kenmore products purchased on Amazon.com.”

Sears said a new “Kenmore Smart” skill for Amazon Alexa will allow customers to control their appliances — changing the temperature on an air conditioner without leaving the sofa, for example.

Now there’s progress for you — progress toward the further coach-potatoing of America, perhaps, but progress. Naturally, there’s a downside for Sears:

In partnering with Amazon, Sears is looking to expand its reach and grow the Kenmore nameplate. However, the move is a double-edged sword, because it also gives shoppers another reason to avoid heading to a Sears store.

But hey — in the brave new Amazonian jungle, there’s even an upside to the downside!

Appliances are one of the categories that have helped draw customers. Just last month, Sears opened a store — the first of its kind for the company — that only sells mattresses and appliances. Plans are also underway to open additional freestanding Sears stores dedicated to these two categories — what Sears has called “two of its strongest.”

“This is consistent with Sears’ aim of becoming more of a remote seller of strong brands without the encumbrance of expensive real estate,” GlobalData Retail Managing Director Neil Saunders told CNBC. “The move makes sense as it puts Sears’ brand products where customers are shopping and gives them a better chance of selling.”

“That said, in the short term it may create even fewer reasons to visit Sears’ shops, which could put further pressure on that side of the business,” Saunders added. “It also puts Sears into a marketplace which is very price competitive and where fulfillment costs are high; this is something that may be challenging for margins.”

Translation: Sears is doomed, but this will prolong the death throes for a while longer, while the last generation of Sears execs can pull the cords on their golden parachutes.

Now, in many ways, Amazon is the logical successor to Sears, which invented the concept of the department store and, through its mail-order catalog, delivered goods and goodies across a rapidly expanding America; you could even buy your house out of a Sears catalog.  On the other hand, there’s an important difference: with Sears you could pay C.O.D.; with Amazon, you either use a credit card (at 18% interest) or you’re out of luck. Do business in cash? Tough. Like to avoid finance charges? Too bad, unless you pay off your balances every month. Don’t want to go into debt over that irresistible offer Alexa just chirped to you? Fuhgeddaboutitt.

Meanwhile, the FTC is sniffing around Amazon’s business practices:

As part of its review of Amazon’s agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe.

The FTC is probing a complaint brought by the advocacy group Consumer Watchdog, which looked at some 1,000 products on Amazon’s website in June and found that Amazon put reference prices, or list prices, on about 46 percent of them.

An analysis found that in 61 percent of products with reference prices, Amazon’s reference prices were higher than it had sold the same product in the previous 90 days, Consumer Watchdog said in a letter to the FTC dated July 6. Following receipt of the letter, the agency made informal inquiries about the allegations, according to a source who spoke on background to preserve business relationships.

This can’t be good. Enough alarms have been set off by Amazon’s tender for the Leftist sacred cow of Whole Foods, its new partnership with Sears, and its entry to the meal-kit market to finally get the attention of federal authorities.

The review of Amazon’s discount pricing is an indication the FTC is taking a serious look at the e-commerce company’s agreement to buy Whole Foods, a deal that critics say could give Amazon an unfair advantage. Consumer Watchdog argued that the deceptive list prices make Amazon prices look like a bargain, and asked the FTC to stop Amazon from buying Whole Foods while the deceptive discounting is occurring.

The FTC plays a dual role of probing charges of deceptive advertising and assessing mergers to ensure they comply with antitrust law. Amazon said in June that it would buy the premium grocer for $13.7 billion. The FTC’s “Guide Against Deceptive Pricing” warns against using a “fictitious” or “inflated” list price for the purpose of making the price charged look like a bargain.

Amazon settled similar allegations with Canada’s Competition Bureau in January. It paid a fine of C$1 million ($756,658.60) as part of the settlement.

In the background, but very much part of the conversation, is Amazon’s engorgement on the The Washington Post company, a once-honored (Watergate!) news organization that Amazon boss Jeff Bezos essentially bought for parts — the main part being the still-influential newspaper in the Imperial City of Washington, D.C. This isn’t so much of a financial investment as a form of protection money — although Bezos had the chutzpah recently to whine about the deleterious effect of Google and Facebook on print’s advertising base, and to make a pitch to the U.S. government for anti-trust protection:

Four years ago, Amazon founder Jeff Bezos was asked if his company’s “ruthless” pursuit of market share was driving book stores out of business. “The Internet is disrupting every media industry,” Bezos said. “People can complain about that, but complaining is not a strategy. And Amazon is not happening to book selling, the future is happening to book selling.”

The future is also happening to newspaper publishers, and their latest effort to stave off change — a bid for an antitrust exemption — is unlikely to succeed, according to legal experts and Silicon Valley insiders who spoke with CNNMoney.

Earlier this week, the News Media Alliance — which says it represents over 2,000 newspapers in the U.S., including The New York Times, The Washington Post and The Wall Street Journal — said it would begin seeking an antitrust exemption from Congress in order to negotiate collectively with Google and Facebook, which together receive an estimated 60% of all U.S. digital advertising revenue.

Good luck with that — because here comes the Big Dog:

The president here puts his finger on Bezos’ long game in buying the Post — with its long-burnished connections to the deepest of the Deep State swamp creatures, the always-wrong CIA — and its past journalistic credibility. Owning the Post gives him leverage over not only Trump, but the federal government as well; it’s worth almost any amount of money that Bezos wants to spend in order for his to be the public voice of the most important city in the world, a city made of money, dedicated to the pursuit of power, and determined to keep the good times rolling without grubby outside interference from the likes of the nouveau-riche Trump family.

The outer-borough Trump, whose never-lost Queens accent set him apart from his tony mid-Atlantic Manhattan counterparts, may have made his new money in the low-rent residential real estate business, but the D.C. elite came by theirs the old fashioned-ways: through the Old-Ivy higher education networks (Hotchkiss and Andover to Yale and Harvard) and generations of familial political connection and, often, corruption.

Bezos, like Trump, is an outsider. But rather than run for president — that piddling office — he busted up American retailing and grabbed the Post to ensure that trouble from 1600 Pennsylvania Avenue and Capitol Hill would be kept to an absolute minimum. With the example of Bill Gates and Microsoft still fresh in everyone’s memory, why wouldn’t he?

… In a much-­anticipated decision, Judge Thomas Penfield Jackson declared that, by exploiting its monopoly power to try to crush its competitors, Microsoft had violated federal anti-trust laws. Judge Jackson didn’t just buy some of what Boies, representing the United States government, was selling in the case: that Microsoft had illegally used its stranglehold over computer operating systems to intimidate or eliminate its rivals; he bought it almost verbatim.

Was United States v. Microsoft a tough case? a New York Times reporter asked him before the trial. “Not really,” he replied. And Microsoft—having produced reams of self-­incriminating documents and a parade of witnesses who came to court overconfident or inept or deceitful or ill-­prepared—made it easier for him than he ever imagined.

And the best part about Amazon’s climb to monopolistic supremacy? You’re subsidizing it:

Like many close observers of the shipping business, I know a secret about the federal government’s relationship with Amazon: The U.S. Postal Service delivers the company’s boxes well below its own costs. Like an accelerant added to a fire, this subsidy is speeding up the collapse of traditional retailers in the U.S. and providing an unfair advantage for Amazon.

In 2007 the Postal Service and its regulator determined that, at a minimum,  5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from  Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip—a gift card from Uncle Sam.
Amazon is big enough to take full advantage of “postal injection,” and that has tipped the scales in the internet giant’s favor. Select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for “last mile” delivery at cut-rate prices. With high volumes and warehouses near the local depots, Amazon enjoys low rates unavailable to its competitors. My analysis of available data suggests that around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.
Enjoy your “savings” and “convenience,” folks. After all, you’re paying for it — boy, are you ever.