6 Shocking Ways The World Works (Nobody Told You About)
We all know how big corporations make their money, right? They offer a service or product to us, the consumer, and we pay for it with our hard-earned money. It's the cornerstone of capitalism, and why we no longer have to hunt, build fires, or whittle anything for ourselves. But in reality, the buying and selling of stuff only accounts for part of a corporation's revenue stream. Big businesses have all sorts of tricks and schemes to increase their profit shares, and almost all of them make them look like waxily mustachioed cartoon villains. Like how ...
AT&T Makes Bank By Selling Your Information To The Cops
The reputation of telecommunications behemoth AT&T is roughly as positive as a recommendation letter for a baby-shaking nanny. They're notorious for annoying customers with things like dropped calls, charging its poorest customers higher rates for slow-ass internet, and for generally not giving a single flat fuck. But they've managed to make at least one loyal friend through it all who doesn't care so much about their service issues or sluggish connections: the police. And their cop buddies only want one thing out of this relationship: information on you.
To the FBI.
Selling data to law enforcement has been quite the cash cow for AT&T, and this scheme has only recently come to light. Their surveillance-for-profit program, "Hemisphere," which sounds like a Bond villain came up with it, began as a partnership with the DEA to assist in counternarcotics investigations. That seems like a rather philanthropic thing to do, but it didn't take long for the company to figure out that selling customer data access to local agencies for taxpayer money was a much more profitable venture. So they began keeping detailed records (much longer than other service providers do) for exactly this purpose, with privacy concerns given about as much reasoned consideration as an impatient customer service rep might give an irate caller with an early termination fee complaint.
"And complaining about it has incurred a 'Go To Hell, Steve' surcharge. Wanna keep going?"
Sure, they're helping to crack important cases (up to and including murder), but that's only part of their shitty and expensive package deal -- which is so typically AT&T. Regional police and sheriffs have to pony up anywhere between $100,000 to a million bucks to get their hands on that sweet Hemisphere goodness. And to show how the costs can balloon, let's use Harris County, Texas as an example. Their first payment to AT&T in 2007 was about $78,000 for data access. They must have been thrilled with their purchase, too, because four years later, they happily forked over $940,000 for the same privilege. But it's all worth it to the cops, since buying information from AT&T means they don't need to bother with silly formalities like search warrants. All they have to present is an administrative subpoena, and that doesn't even require probable cause.
It's not just Texas that's taking advantage of this lucrative deal, either. Municipalities nationwide are lining up to make use of the unique opportunities Hemisphere can offer. And the expenditures are routinely paid for by Uncle Sam, using the same federal grant money that some namby-pamby types blame for creating over-militarized police departments.
"You wouldn't believe how much complaints about the meter maids have gone down since we replaced the golf carts with Bearcats."
So for all that squawking about the NSA spying on the populace and whatnot, it turns out that the private sector is all up in our business as well. In fact, the NSA has described AT&T as "highly collaborative" and exhibiting "an extreme willingness to help" when approached in regards to a working metadata-building relationship. And with their trillions of records they have to share and the fraction of government funding they're asking for them, maybe the worst thing about this is that the police are still getting a better deal at AT&T than anyone on one of their phone plans.
Walmart Makes A Ton Of Money By Abusing Food Stamps
With their sales of floral print jeggings and Duck Dynasty "Pink Camo" Microfiber Body Pillows, you'd think Walmart would have all the money they'd ever need. But the mega chain may also be pulling in a sizable portion of their revenue from a rather unexpected source: the federal government. Not by offering rock-bottom prices on gray suits and sensible wing tips, but through a hidden relationship that allows them to make billions off of food stamps. The Supplemental Nutrition Assistance Program (SNAP) -- which is by far the sassiest way to describe the food stamp system -- isn't normally something you'd think would factor much into a mega corporation's bottom line. And far be it from us to suggest that there could be a scam going on here. So let's let this worker's advocacy group do that instead:
Cheat, exploit, and reap. Worked for The Wiggles.
Basically, Walmart pays its workers very little and collects a ton of tax-free income in the form of customers (and employees) using food stamps in their stores. Of course, there's no way of knowing exactly how much welfare money Walmart is funneling to its shareholders, because retailers aren't required to disclose that information. That is, not until a few weeks ago, when a Federal Appeals Court decision stopped the USDA from denying freedom of information requests in regards to how much specific stores are benefiting from government benefits.
In 2014, Walmart executives reported to investors that they raked in $14 billion for the fiscal year, which accounted for 18 percent of all food stamp spending nationwide (and over half in the entire state of Oklahoma). And while that tidy sum may have only been 4 percent of their total annual gross, this means no one is more afraid of government cutbacks than Walmart, which must be why they spend another small fortune on lobbyists to pressure Washington to keep the SNAP program up and running.
Maybe they like all the pretty designs.
As we mentioned, in addition to their profiting mightily from federal largess, a good number of Walmart employees are on food stamps themselves. So Walmart is exploiting a program designed to help people who don't earn a living wage without putting anything into the program themselves. It's kind of hard to make ends meet if your employer is pulling the strings from both ends.
Uber's Surge Pricing Contributes To Higher Customer Satisfaction (While Still Being A Ripoff)
Customers and fellow private transportation professionals alike have found a lot to hate about the creep-in-a-taxi service known as Uber. From sabotaging the competition with phony service calls to numerous kidnapping allegations to violent hammer attacks, Uber is perhaps the best-ever argument made for drunk driving. But probably the most infuriating practice the San-Francisco-based company routinely engages in is "surge pricing," in which they jack up their prices to exorbitant amounts exactly when you need a speedy exit.
Yeah, we'd still pay nine times anything to get out of Florida.
But here's the crazy part: Uber's surge pricing is actually good for the customer. What to a rational person might seem to be little more than garden-variety price gouging ensures that more drivers will congregate where they are needed the most. Uber recently conducted a study on themselves during one of their peak business events and came up with some interesting results. During an Ariana Grande concert -- an apocalyptic scenario during which most sensible people would need to quickly flee -- the study showed that when the rates began to go up, the incentive created for drivers to go against every instinct in their body and rush toward the show resulted in a perfect balance between supply and demand. Yes, it cost more to get a ride, but at least now you were in the car of someone motivated enough to plow through a tsunami of overexcited teenagers.
The flat line could also accurately represent your heart rate should you fail to adequately communicate your destination to the driver and end up at a Smash Mouth concert instead.
The jagged little mess on the left side of the above graphic tells the story of when Uber's algorithm briefly went down during 2014 New Year's Eve celebrations in New York City, which resulted in their completion rates (successful transports in relation to app requests) dropping to less than 25 percent, forcing a lot of drunk people to find shelter inside the nation's countdown clocks. So while not all Uber drivers are on board with the system (though many think it's great), it at least creates an environment in which nobody has to spend the night haunting a Brooklyn alleyway waiting for a taxi to show up.
Amazon Makes More Money From Their Cloud Service Than Their Store
For over two decades now, Amazon has been making its name as the biggest store on the internet. If it exists, Amazon can put it in your hands in five to seven business days. But it turns out the biggest source of revenue for the company isn't all the bullshit they sell, but their cloud services, of all things. While Amazon has often been a laughingstock around the business world's water coolers for their habit of barely (or not even) breaking even with their retail services, they've apparently made up for it by thinking outside of the rain-soaked, half-crushed box. This past summer, their reported net earnings shot from $92 million to a whopping $857 million, thanks in large part to their cloud computing unit, Amazon Web Services.
They host the porn you watch while using the special lube you ordered with your Prime account.
AWS, as the cool kids call it, kicked off a little over a decade ago. Today, it is responsible for massive quantities of data storage and all of Amazon's media uploads. It has also grown to become Amazon's biggest source of revenue, to the tune of 56 percent of its total profits in 2016. That percentage staggered even Amazon, as AWS only made up 9 percent the previous year. And it appears to be headed toward becoming a $10-billion-per-year windfall.
Analysts are befuddled at the unexpected success, as AWS has rapidly muscled past corporate giants Google and Microsoft in the race to become the undisputed master of the cloud. The sky appears to be the limit, and the words "monopoly" and "Amazon" in the same sentence may soon mean a lot more than the 200 different versions of the board game they sell.
The clues were in front of us all along, and are now available on Kindle.
Facebook Holds A Monopoly On Your Time
Facebook is such a globally addictive waste of time that we probably could have figured out a way to become immortal by now without it. But just how much of the world's free time does the Zuckerbergian Sarlacc eat up? Well, enough to suspect that Facebook might have an actual monopoly on it. And that's bad, because like the mighty Sarlacc, it feeds on our remains.
This is the way the world ends. Not with a bang, but with a cat GIF.
While Google's approach to making money appears to be presenting solutions that save you time (even if you didn't really need to know what year Joe Pesci's The Super came out), Facebook's strategy is the opposite. The social network seems hellbent on sucking as much time away from their users as possible, like some sort of chrono-vampire. And if that's truly their goal, no one has ever been more successful at it.
If you take away the search function (which Google still has its own monopoly on), Facebook wields control of a full third of the social media game -- as well as a third of the total time we spend on mobile devices. Our eyeballs are staring at pokes and friend requests from crazy-looking strangers five times more than Twitter, and seven times more often than anything Apple or Pandora has cooked up. And while idiotic mobile games are still ridiculously popular, the top four downloaded apps (that aren't peddled by Kate Upton or helping Arnold Schwarzenegger pay child support) are all owned by Facebook.
Who's spending 4 percent of their time online being "productive"?
At this point, the average Facebook user spends 50 minutes of every 24-hour period hammering like buttons and being outraged at fake news. While that's a staggering amount, it's obviously less time than we watch TV on a daily basis -- but maybe not for long. It has been projected that by 2018, advertising will spend as much or more on digital media than it will on television. So soon, the reason you waste so much time at work that you lose that promotion will also be sponsored by all the shit you won't be able to afford because of it.
YouTube Makes More On The Ads You Skip
For how much YouTube was promised to be the new alternative to TV, it sure is looking more and more like the old box with every day. The worst offenders are the constant ads. Want to see a music video? Here's an ad. Want to see someone in a basement review different types of hot sauces? Here's an ad. Want to watch the trailer for a new video game? Here's a worse version of that exact video as an ad. Still, the good people of YouTube sympathize with our plight. That must be why they've added those skip buttons, right? Unfortunately, just like lab rats trying to get to a pellet, desperately clicking that "skip ad" countdown button is exactly what YouTube wants us to do.
5, 4, 3, 2, 1. Go ahead and click now to continue reading this article.
YouTube's current approach (called "TrueView") is to hit the viewers with two types of advertising. The first is the skippable kind that starts before the video (called "in-stream"), and the other consists of the little windows that pop up in the corner of the video that you have to click on to see (called "video discovery"). And while the former aren't worth jack unless the viewer sits though a full 30 seconds, the latter pay out if they simply get clicks. That might seem like a losing proposition, until you realize that the TrueView model has been called "one of YouTube's revenue growth drivers for the quarter."
40 percent of viewers are still (we assume accidentally) letting the in-stream ads run their course. But the 60 percent who don't are giving YouTube something even more important -- they're showing that they are paying attention. And it's that level of interaction (i.e. clicking cards on the screen) that advertisers pay top dollar to get. That's why they're implementing all sorts of on-screen nuisances, like cards and bumper ads, to better exploit people's desire to interact with whatever pops on their screen. For the media, it's a win-win situation. For us, it's the example we'll use when we try explaining a catch-22 to our kids.
"I've seen some shit, man."
But marketing's keen understanding of why we hate advertisements so much might have a silver lining. You see, YouTube's findings have led them to test out their ultimate chimera, the "unskippable" ad. This was first pioneered by Geico, who made their commercials so short that they fit entirely within the 15-second window before viewers could skip them -- and then dicked around for the remainder of their ad time. That means that even the most swift-fingered among us will soon be unable to block ads because they're too short for us to even register that we've seen them. Hooray, The Future!
Think Nana and Pop-Pop's loving 60-year monogamous relationship is quaint and old-fashioned? First off, sorry for that disturbing image, but we've got some news for you: The monogamous sexual relationship is actually brand-new, relative to how long humans have been around. Secondly, it's about to get worse from here: monkey sex. On this month's live podcast, Jack O'Brien and Cracked staffers Michael Swaim and Teresa Lee welcome Dr. Christopher Ryan, podcaster and author of Sex at Dawn, onto the show for a lively Valentine's Day discussion of love, sex, why our genitals are where they are, and why we're more like chimps and bonobos than you think. Get your tickets here!
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