[00:00:00] Jonathan: Welcome to the Difference Engine, the show for tech founders, investors and innovators.
Alright, what's coming up today? Jono, we're talking about Jag, that's Jaguar to you. And I has the big cat finally lost its ninth Life with a fatal branding
[00:00:23] Paul: era. Bitcoin's on the move. Is stablecoin a category contender in this volatile market? But first,
[00:00:29] Jonathan: we've all had difficult breakups, but is it Google's turn for some heartache?
[00:00:35] Paul: As they say. Breaking up is hard to do. I nearly sang that.
[00:00:39] Jonathan: Well, I'm glad you didn't. I'm glad you didn't. Let's talk, let's talk Google Chrome. Um, as we all know, the, uh, disproportionate power of Google, uh, delivered by their category leadership across the globe in, in many markets, um, has been acknowledged for some time.
Uh, and regulators have had a series of attempts to throttle back its power. But so far, the effect has been, Let's say piecemeal, uh, but perhaps not for much longer. Duh, duh, duh. Yeah, what's going on then? Well, a group led by the U. S. Justice Department has tabled a sweeping proposal, uh, to force Google to sell off parts of its business, um, and, you know, this could potentially lead to the first major forced corporate breakup in four decades, you know, ever since AT& T was required to give up the Babybel Regional Operating Companies.
The prospect of this latest action, quite frankly, is if it's successful, it would reshape one of the world's most valuable and influential tech companies.
[00:01:45] Paul: There are, yeah, there's been few companies as valuable as, inherent to the e commerce, And the internet explosion as Google.
[00:01:52] Jonathan: And, um, forgive us. Um, as we now talk a little bit of legalese, we do like a three letter acronym, but now we're going to talk in some legalese.
So as is the American way, the department of justice and the coalition of state attorneys general submitted a 32 page filing for inverted commas, this is legalese. Potential remedies, but they just kept themselves to 32 pages. Well done you guys pretty good. Yeah go lawyers go So but you did say potential remedies we would say ideas and what are these ideas going to do to address Google's monopolies?
primarily In search and search advertising.
[00:02:34] Paul: So this is like when you've got the prisoner tied down and you say, which limb would you like to lose? This is
[00:02:38] Jonathan: serious stuff. Yeah. If you were the prisoner, that would be serious stuff. And again, legalese, um, the proposed remedies framework submitted to us district judge, Amit Mehta, um, some strange and normative determinism going on there.
I think Mehta, Mehta, uh, any, anyway, uh, Mehta has, previously ruled against Google in a landmark antitrust case back in August. So this, um, 32 page document presents a range of options, including behavioral, i. e. thou shalt not do restrictions, and more dramatic, more drastic, structural, for that read, breakup.
Measures so shelter. So the D O J has asked for remedy. Sorry, changes across four areas. Now it's quite a list. They're really not messing around here. So here goes. This is what is hitting Google in those 32 pages. So the first thing is in search distribution. So what they're proposing is Is that they should restrict or eliminate default search agreements, pre installations and revenue sharing deals that Apple should be a little concerned here.
I think they should consider structural remedies to separate chrome play and or android from Google itself. They should limit. Google's control over emerging search technologies, including AI features, implement user education programs to promote informed search engine choices.
[00:04:08] Paul: This is the one I think everyone's got the attention on, and I think this is the one that will most likely happen with Chrome.
[00:04:14] Jonathan: But there's stuff going on in the background, which we may not notice, but is just as important. So, they're proposing that, um, that, uh, sharing of Google's search index data Algorithms and AI models should be mandated. They are saying that there should be a requirement for transparency in search results, features, and ad ranking signals.
They also are proposing to prohibit Google from leveraging non shareable data due to privacy concerns. And lastly, they would like. Google to implement measures to reduce rivals costs for data indexing and retention.
[00:04:51] Paul: I don't see it. And, um, the AI models thing surely falls under the purview of the AI Regulation Act, uh, which as far as we understand is, is under threat.
From the, uh, the new regime. So the idea
[00:05:04] Jonathan: of, um, Google search monopoly being extended, um, the regulators want to limit Google from using contracts to undermine rivals, access to web content, uh, to allow publisher websites to opt out of AI training or appearing in Google and AI products such as the AI summaries.
So definitely on the AI case here. And lastly, um, they're having a go at Google's advertising practices. So they would like to see a scaling back or restructuring of Google's advanced advertising products, including, again, AI driven tools. They want to explore options for licensing Google's ad feeds separately from search results.
And they want to increase transparency for advertisers. by providing detailed auction and monetization data. Yep, there after. DOJ also explains some of its logic around proposed remedies and why currently, I say currently, smaller but potentially much larger revenue sources such as AI based tools should also be included.
[00:06:06] Paul: Yeah, so let me just talk about Google for a second here. So Google, as far as we can see, is being asked to diversify effectively the Chrome Business primarily. Yeah. Now that owns a lot, a lot, a lot of the global search market. That's, that's a lot to ask. And, um, if Google takes this seriously and it comes to pass, that's going to be a long process, which would leave essentially a bad bank type asset.
Yes, it could,
[00:06:30] Jonathan: but you know, they really, really, really are trying to stop Google from repeating its business model. And using its massive distribution, um, to stop it quickly developing more new monopolies, you know, that that's, you know, a very, very, very big shot across the bows.
[00:06:47] Paul: Yeah. And I think, you know, it comes amidst other regulations, EU, the EU is having a pop for Google shopping and search results that's been going on.
For over a decade, it sounds like
[00:06:57] Jonathan: this is
[00:06:57] Paul: all coming
[00:06:57] Jonathan: to a bit of a head. Depends on whether they think, um, the DOJ think they can push through all these changes or essentially it's we've got a very, very big menu of changes. We'd certainly like you to address some of these. But hey. If this doesn't happen, you're a lawyer, you got paid for it anyway, it's all good.
Oh, you know, the lawyers always win. Let's see how this all plays out. Um, but first, of course, the actual processes have to start. Um, and I think we're pretty much at the grandstanding stage right now.
[00:07:24] Paul: I mean, I think that'll suit Google. Google has got a bit of a rep here, and it's only got itself To blame because it's dilly dallied on other things, such as let's not forget the cookie ban.
So this cookie ban that Google said it was going to implement, um, last year, I think, and then this year, and then we're aiming to ban them soon. We will not ban cookies and we have evidence. So there's no light at the latest. I mean, you know, it's all just dancing around. These guys are pretty good at avoiding the purview and the actual, you know, execution of anything that stops the monopoly.
[00:07:59] Jonathan: From my point of view, you know, one of, one of the problems that most successful categories eventually have to deal with is monopoly restrictions. And Google is one of the best cases in point. You know, the danger is it's always going to be an issue for network effect companies that can quickly establish and maintain that massive distribution and the engagement with the community.
With end users, they couldn't create monopoly after monopoly after monopoly.
[00:08:24] Paul: And I think the irony for this right now is Google's done all of that. It's created huge monopolies, et cetera, but they don't need this hassle right now because right now it's business is under direct threat from open AI, Claude, Mr.
L and many others. This search business. So for once, um, And I can't believe I'm saying this, I would advise Google to rage against the dying light here and accelerate its Gemini AI products and whatever else it has in its labs. Um, because search looks like it's going to soon be an X category.
[00:08:53] Jonathan: I guess we have to ask the very big question here.
Is Google's success now that it's actually a break on U. S. or even global innovation? Or frankly, does breaking it up threaten the future? The phenomenal big tech innovation and market making that has seen the U. S. 's GDP surge ahead of Europe since the 2009 financial crisis.
[00:09:17] Paul: I think we need to put a bet on that, what we're saying.
[00:09:19] Jonathan: I think there'll be a little bit of breaking up. I think there'll be a bit of I think breaking up is too hard to do. Yeah, breaking up is too hard to do in this case. It might just be a bit of flaking at the edges, perhaps.
Okay, Paul, let's, um, grab our pitchforks and, uh, join the crew that are currently talking about Jack. So Jaguar,
Tell me. Well, Jaguar is a car brand, and for many years it defined the sport luxury category. It's a British car brand. And, uh, a brand that has created, or created some of the most gorgeous cars ever made. I mean, the XK series, who could forget the E Type, and of course, the lovely Audi. Lovely, lovely mark to saloon.
So that was, you know, three of their models that defined what their brand was all about. And they were so good at sport luxury that other pretenders came and went and Jag. Rule supreme, you know with everybody from villains to cops and particularly aspiring middle managers with their eyes on golf club membership.
Ah, but after years of underinvestment, incompetent management, stroppy unions and political interference, everything that was bad about the British car industry made for really poor quality, uh, low reliability and frankly, Very little value. And of course, customers started to slip away mostly to Teutonic.
Eventually, as Jaguar slowly bled out, it found itself owned by Ford, of all people, along with Volvo and Aston Martin, in a queue, a rash of Ford part bin plastic, suddenly found in supposedly upmarket cars. Jaguar was passed like some form of automotive hot potato onto Tata Industries, but Jaguar languished, even under new ownership.
It had just, lost its sport luxury category to the Germans. No wonder JAG appear to have stopped making cars. Now we are told though, interestingly. Now it's a new light, it's a new beginning. We hope so. We're told JAG is changing its brand in readiness for being an electric only manufacturer. Hurrah, that's good.
You know, it clearly needs to get rid of its Surrey gin and golf image, but now appears to be aiming Hmm. At other minorities.
[00:12:04] Paul: So let's talk about this advert then shall we?
[00:12:07] Jonathan: I'm not sure if our, if our listeners have seen the ad, but they should. Anybody who's on
[00:12:12] Paul: any social media will have seen this. This thing blew up.
Let's call out, uh, the, uh, a couple of the reactions here. You know that a launch has gone bad for your brand when a category leader like Ireland's own John Collison of Stripe goes to his ex and bothers to write in highly satirical tones, We need a total and complete shutdown of branding agencies. until we can figure out what's going on.
And just to
[00:12:39] Jonathan: give you
[00:12:39] Paul: some idea of
[00:12:40] Jonathan: what this advert looks like, it is a bunch of people prancing around in orange jumpsuits and possibly even tutus, while meaningless phrases such as create exuberance, live vivid, delete ordinary, break moulds, copy nothing. Ah, now let's pick up on copy nothing. Are
[00:12:55] Paul: streamed underneath it.
So, so copy nothing. One might think that's a version of be different, which is sort of what we say a lot, right? Yeah, right. But, um, just to show you how undifferent copy nothing is, Our good friends at the German value supermarket chain Aldi literally reposted Jaguar's new brand, uh, where they said copy nothing and that's all they said in their tweet and Aldi wittily reposted with You sound like our legal team.
[00:13:24] Jonathan: Yeah. I mean, the point is it could be an ad for any fashion brand that thinks it wants to be different and inclusive, but it's as vacuous as any fragrance ad that we yearly assaulted with in the run up to Christmas, you know, people might buy a flippant luxury product to feel good and never really need it or use it, but, but a car is a thing that is expensive and it's used for a purpose.
Daily it has to pass the real test of utility. It's not an ephemeral fashion item
[00:13:51] Paul: So let's call out the genius behind this move and we're gonna be careful what we say here But the genius behind this move is diversity, you know, they're trying to do something different So why are we giving them such a hard time about it?
Why are we doing this? Well because at best as
[00:14:05] Jonathan: best as we brits would say, uh, this is I'll just give you some examples of success stories from the automotive industry. I mean, look at the progress of Skoda and the VIG's ownership. You know, Skoda, a few decades ago, only a few decades ago, was once the butt of skip jokes.
And they just put their effort into improving the product first, so that it grew into an emerging, Quality value category capable and it has done squeezing out the likes of Ford and Stellantis, which was formerly Vauxhall Opel, um, after GM basically gave up on Europe now once they had proven. The improvement in the product, did they mess around with the visual brands, the little stalk and the typography, you know, they started saying we should pronounce it schkoda, you know, and concentrated on addressing the people that would actually buy the proposition.
[00:14:58] Paul: And this is what we say to people when we do category work, figure out the customer's problem
[00:15:02] Jonathan: first. And only then when you have built your, your market, can you start playing around with the brand to build it further? It's only recently that, um, Hyundai, as we used to call them, have corrected us with the pronunciation, which is actually Hyundai, you know, Kia's new visual brand was similarly built on achievement and real engagements with its customers.
Um, you know, even Lexus launched by being the best quality and everything. It wasn't about the L logo or some vague attempt to sell to a self defining group. It's just about people with money that wanted to change. Actually, probably from Jaguar at the time.
[00:15:42] Paul: So also, I think the irony here of this Jaguar's version of be different, which is copy nothing, is the ad.
As you said, it looks like a billion other woke fashion brands, including phone manufacturers, which I understand some of the marketing team have got a background in. It well may be that the target of the market for future Jags is a more metropolitan, metrosexual consumer. But they're in danger of offering that Those consumers, nothing different and consumers ain't mugs for sure.
One thing this has achieved is for Jag is almost certainly already lost. They're admittedly dying out target market of aspirational boomers, but they've done much more, much, much worse here. They're just offering bright colors to a brand and they hope that younger consumers. Uh, we'll find that attractive.
Well, let me tell you about younger consumers. I employ a bunch of them and they're very price driven. They will bring their own lunch to work rather than prop up prep. They will buy a Samsung despite the fact they're aching to buy an iPhone because it's cheaper. And if they really need a car and fewer and fewer of them think they will, they will buy or rent a Chinese box, which looks and has the same functionality as a Jag before they, For an
[00:16:50] Jonathan: automotive category perspective, you know, this, this move is, is the ultimate applying of lipstick to a pig.
I mean, I think it represents the worst bit of automotive marketing hubris since GM thought that rebadging Daewoo, a Chevrolet in the European market was a great idea. And then they signed a lengthy contract to put that new brand front and center as shirt sponsors on that other massively declined brand.
Manchester United.
[00:17:18] Paul: Let's not go there. So, but I also think it's really serious from a, um, you know, UK economic perspective. The FT's, uh, editorial leader on the UK car manufacturing's future prospects said, and I quote, Britain should not gamble with its car industry again. And if this isn't a gamble, I don't know what is.
Stellantis CEO, Carlos Tavares, who described the UK's new EV rules. Remember where we're going to Um, move faster than anybody else to mandate EV driving as terrible and warned of bankruptcies. Seems like nobody at Jaguar reads the FT or lives in the real world of technology and commerce.
[00:17:56] Jonathan: From our point of view, we think this, this strategy is going to make absolutely no difference to any renaissance of Jaguar.
And the danger is, It only highlights its demise and possibly before the cars are even scheduled to be launched in 2026, you know, you have to build it from a clear category position and Jaguar has completely lost what it was and doesn't know what it is. And, and, you know, we have to remind everybody strategy is not brand.
Say that again. Strategy is not brand. Brand is simply one expression of strategy, and that strategy has to reframe consumer expectations about what they can expect from a company or product. You know, people prancing around in orange with meaningless slogans won't cut it. Porsche realized, you know, Porsche, one of the great success stories of, of the, um, automotive industry in recent years, they realized long ago that everything from the design of their showrooms to the quality of their accessories had to be rooted in the customer.
Core engineering and performance values over the product. You know, great showrooms with rubbish cars in it, won't cut it. So JAG needs to reinvent from the ground up. Tinkering won't do it. Um, they are promising three new cars. It is these that will ultimately reframe, Consumer expectations if they get to market not fiddling with typography and logos, you know What they have done is set off a focus on the company That is likely only to go one way.
We don't
[00:19:20] Paul: think that's going to be the right one. Damn shame jaguar
[00:19:29] Jonathan: Okay, so paul stablecoin appears to be on the roll. Do we think it's in danger of becoming the the crypto? Um, currency category leader, or are we just seeing another blip, another potential false dawn?
[00:19:42] Paul: Well, I think to coin a phrase, so I did that, I think we are seeing the stablecoin revolution.
[00:19:47] Jonathan: Well, indeed.
Yeah, we did talk recently about Europe's favorite fintech and category leader Stripe, um, punting 1. 1 billion on a crypto startup called Bridge. Now, London based Neobank, which was recently issued with a UK Banking license after a three year regulatory approval process that makes them a bank. Now,
[00:20:10] Paul: well, I mean, you need to get a banking license and it's currently be granted by the bank of England and they were messed.
They messed them about royally for the last three years and a lot of people were saying, what's wrong with the company? Um, you know, the, the founders, an interesting character with some Russian connections. So, um, they eventually granted them the, um, The license. So yeah, uh, it doesn't say a lot about the speed of, um, regulation in this country, but hopefully if they've done the job, right.
I don't know. No reason to think they haven't. It means that. Revolut is, has got somewhat of a thumbs up from the Bank of England.
[00:20:42] Jonathan: So I think we can now call Revolut a bank. We can. But what's interesting us is that it's reportedly about to join the burgeoning stablecoin market, uh, according to people familiar with the matter.
That doesn't usually mean people that actually work in the company, but don't want to be named.
[00:21:01] Paul: I think it's called lobbying. I think this is what public affairs people get paid for leaking. I mean, uh, doing. Well, I couldn't
[00:21:07] Jonathan: possibly confirm or deny that Paul. But anyway, it is rumored that Revolut has already made significant progress in creating its own stable coin.
And, um, with a stable coin launch, Revolut would be joining the likes of PayPal and crypto company Ripple. And they've already launched their products. Um, and. Revelate would be adding to a market that's grown actually to a market cap of over 170 billion. Um, and it, but it's interesting is that there's a sort of semi monopoly in this market with tethers, USDT stable coin dominating with 119 billion of that market cap.
[00:21:50] Paul: And there's some, uh, classic category craft there. Yeah. Um, calling it USDT. Yep. Bye. Borrows all of the credibility from U. S. U. S. D. S. And as a T. So, uh, hats off to the, the, the craft of category building. That's
[00:22:07] Jonathan: the underlying pegging showing its face, isn't it? Very publicly. So, um, in the past, a revolute has, has not been entirely.
Devoid of some bad headlines as my esteemed colleague has referred to a couple of times already in this this segment But reveler is being a bit or trying to be a bit high and mighty on this one and apparently a company spokesman Presumably, a person very familiar with the subject, apparently, said Revolut is taking a compliance first approach to its expanded product offering as it builds a safe harbour for the entire crypto community.
I mean, how very generous of them.
[00:22:49] Paul: But how very bank like. That's bank like behaviour. You'd want to hear that if you were going to put your life savings into, and please don't, no financial advice here, please don't do that. If you want to put your life savings into a stable coin. Yep. Then you'd want to hear that sort of, uh, very conservative language.
[00:23:05] Jonathan: However, they're trying to frame it, um, revelates apparent expansion plans. We'll see it join one of the fastest growing crypto segments. We saw recently circle, uh, it's a FinTech building up a new internet financial system, USDC stable coin, but with local banks down in Mexico and Brazil. And, of course, that paved, that should pave the way for the businesses to directly acquire digital currencies through national payment rails.
But, um, also, um, in the UK, there was a case brought by Mr. Fabrizio D'Aloia, who said he was the victim. of a cryptocurrency scam concerning the crypto exchange platform Bitcub. Now, UK courts actually ruled that Tether's USDT stablecoin counts as property. Um, and, you know, the government has a new classification for property that specifically covers cryptocurrencies.
I. e. that cryptocurrencies can be your property. That wasn't clear before.
[00:24:11] Paul: But, so, like, why would Uh, stable coins be counted as property if just normal sort of bitcoins aren't.
[00:24:19] Jonathan: Well, surely if you lose a tenner in the streets, um, you know, you've lost something which belongs to you. But, you know, do we think there's at least some sign of the categories built on the blockchain succeeding?
I think there's some signs.
[00:24:32] Paul: Yeah, absolutely. And, um, it's about time because this thing's been out in the cold forever. I think in my view, what I think is that there's going to be. Uh, a bunch of different types of subcategories within digital currency and, and, and blockchain, um, technology. So, this new U. S.
regime, by the way, is very crypto friendly. Trump said he will never cash in the U. S., uh, the U. S. 's stash of Bitcoin. Right. Um, And that's pretty genius, actually, because they didn't mint that Bitcoin every, as far as I know, all the Bitcoin that Trump owns has been seized from criminals. That's
[00:25:07] Jonathan: sort of ironic, given that it sort of would function as an additional reserve currency, wouldn't it?
[00:25:12] Paul: Yeah, it's sort of an additional reserve currency that they didn't pay for, you're right. And that's neat, because if that all comes from criminal, it's sort of Poetic financial justice. It's the ultimate payback to society because you've been naughty and and tried to hide your ill gotten gains But I think longer term with clearer and lighter touch regulations.
Um, certainly in the u. s. If not over here um, there could be a bunch of Various digital currencies that which find their own categories. Let's say so bitcoin for instance could be for very risky um Value storage heading. Yeah hedging. So if you're unsure where the economy was gonna go just like gold You might chuck some money in there.
Yeah for the time being. Yeah Dogecoin and other silly coins that the people on various sort of Subreddits like they could be just held for giggles. Why not? Um, if you make some money, it's, um, it's shingles and giggles. Um, and there are other types of activities, um, that you might want other currencies to do to use other currencies for things patched up when your priest or rabbi seeing, um,
[00:26:16] Jonathan: spoke like a good Catholic.
[00:26:17] Paul: Um, so maybe just maybe. This is the new dawn for crypto. It's been a long time coming.
[00:26:23] Jonathan: Yeah, certainly. And, and, you know, one of the defining aspects of category leadership, as we will say, is, is the ability to build or have built around you, uh, your technology, uh, an ecosystem built around your technology. I mean, after years of launches and crashes, perhaps, perhaps, just perhaps we're seeing the emergence of stablecoin as a de facto leader that will bring currency in as an enabler of.
Of an everyday commercial environment. Are we quietly optimistic? Quietly optimistic. But, you know, could be another false dawn. Could be.
Thank you for listening. If you want to learn more about category design, head to becategorical. com. If you need help designing and dominating your category, then get in touch. Contact details are in the show notes.