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Andy Yen, CEO Of Proton, On The Tech Giants That Dominate The Internet, The Web’s Future

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Andy Yen is the co-founder and CEO of the Proton company: a privacy-oriented collective that aims to provide an alternative vision for the Internet. Instead of an Internet where users’ privacy is the product, Proton aims to prove that people will pay and sustain models that help them better ensure their web traffic isn’t used for advertising, or to violate their privacy. I sat down to talk with him during Collision Conference about the future of the Internet, what Proton is building, and what Andy thinks is happening with the bitcoin ecosystem — while Andy was preparing for a trip to Washington DC to address American legislators on these very issues.

Note that the annotation here is based off a copyedited, transcribed recording of the interview, and that this interview was conducted during summer 2022.

What are your thoughts on the current landscape of big tech, anti-trust, and what are you hoping to get out of your trip to Washington DC?

Well, it’s the first trip that Proton has actually probably ever made to DC since we began. So it’s different from that regard. And I think it’s also very timely because for the first time ever in, in a century actually, we’re considering, at least in the US, anti-trust legislation. And this is particularly focused on tech companies, where is today where we have some of the strongest monopolies or duopolies in the world.

And the influence of legislation that is being considered for passage the next couple of weeks is nothing less than groundbreaking, it will completely revolutionize and open up the tech industry in ways that were never imagined possible even a couple of years ago. And I think it’s why it’s a very important moment for us to be in DC to have these conversations. And to make sure we can give policymakers and regulators all the support they need to get these bills across the finish line.

Give a brief overview of this legislation for those who aren’t familiar.

So there’s two acts that are advancing in Congress today (Author note: the two bills referenced are the Open App Markets Act which deals with app store pricing, and the American Innovation and Choice Online Act, which deals with tech giants advertising their own products), and what they’re really trying to tackle is the abusive behavior that big tech companies are engaging in, in order to ensure that they can protect their market dominance.

And for the uninitiated, you might not see any of these things happening. But the reason big tech is so dominant isn’t because other companies are not innovative or there’s not other startups that have been successful. It’s really that they have rigged the game and they break the game in a major way that makes it impossible for any other company that is innovative to grow and to also gain market share.

I can give two examples of this. One example is the 30% fee they charge for all payments on mobile whether this is Android or iOS, which effectively dominate the entire market.

So, today Protonmail is competing with Gmail. They’re our biggest competitor. Yet for us have access to Android, which is today the biggest mobile platform especially in the mobile-first world, we are forced to give 30% of our revenue — this is revenue, not margins, or profit, 30% of revenue as a fee to Google
GOOG
, which is our biggest competitor. You can hardly imagine an industry where you pay 30% margins nevermind an industry where you pay your competitor 30% of your revenue, and still be able to effectively compete. So that’s one example of how the game is rigged.

Another example of this is just the way that tech giants can self-preference their own services when it comes to defaults. So you know today when you get an Android or an iPhone, the defaults are set by the companies. They’re almost impossible to change. And the defaults they set are their own services. And we know that from studies, 95% of people don’t change those defaults. So if you have an environment where tech companies can self-preference their own services and make it impossible to cancel defaults, it’s essentially impossible for anybody else to ever break in.

So the maximum you can capture is maybe 5% of the market if you’re lucky. And this is really bad for I think consumers in the long run because first, it hurts innovation because competition is the foundation of innovation. And when there’s less consumer choice from less competition, there’s also higher prices.

Some people say well, the 30% fee on the app store this is paid by developers, but of course developers will pass on those costs to customers so it’s essentially a tax on the whole internet. That’s all of us. So you and I were all paying that tax. And these are the things that these bills will make illegal and this will I think dramatically change the Internet economy.

We’ve talked about the policy side, what about the product side?

If you look at the internet today, a notion of individual products and services is something that is rapidly disappearing.

What the industry is dominated by today is ecosystems. And these ecosystems today are either Google’s ecosystems or Apple’s
AAPL
ecosystems. Facebook has an ecosystem. Microsoft
MSFT
also has an ecosystem.

These tech giants have built ecosystems, and the way they lock customers into those ecosystems is actually by having multiple products all together that work together in a seamless way. And the issue that I have with existing ecosystems is they’re really designed to maximize profit at the expense of people.

[…]

This is often not in the best interests of users, and not in the best interests of society. So what Proton is doing is linking Protonmail to Proton which is also an ecosystem. But what we want to do is the world’s first privacy ecosystem.

So unlike say Google’s ecosystem, Proton’s ecosystem is designed to be private by default, right? Google’s services […] are designed to maximize the monetization potential of every user. And this is a very different focus. And I think the world needs to have an alternative ecosystem that puts users and privacy first, gives good control over user data and is your alternative because otherwise you’re only left with a couple of options, none of which are really good for you and really provide what you want.

I also believe that for privacy to succeed long term it needs an ecosystem approach. Because yes, there are some people that only use email. But the majority are actually using Google Calendar, Google file storage and other services and applications. So for us, it really takes privacy to a larger audience to make it accessible to you know, not just you and I, but the regular folks out on the streets. It really needs to be an ecosystem. That is maybe the big bet that Proton is taking.

Talking of a product that is in Proton’s ecosystem, do you see spikes in VPN usage in authoritarian countries/settings?

We’ve seen it when Myanmar had the protests we saw up there. We saw it in Hong Kong as well. We saw that in Belarus a couple years back. So it’s literally every single place where we have democracy under attack. We see it. It’s very troubling that we’re seeing it more and more frequently in the world as well. We see it a lot in Africa. We see a lot of situations also in South America. And I wish I could tell you the frequency of this incidence is going down, but it’s actually increasing quite dramatically in the last couple of years.

You’ve been on the record as supporters of bitcoin — what do you think of what’s been happening with bitcoin — and any plans to accept Lightning payments?

Okay, so you know, it’s kind of an interesting topic given the meltdown in the financial markets. Proton has always kept some of our reserves in Bitcoin
BTC
. And this is actually something that’s already known out in the world. There’s an internal debate: I don’t have the answer to that yet — I’m not sure if we continue to hold Bitcoin or not hold Bitcoin.

Again, I’m not, let’s say a bitcoin industry insider, but I’m happy to share some of my perspectives.

I think there’s just too much fraud and abuse and other objectionable things, incredulous things. Especially when you look at things like NFTs and some of the other things that happened at the tail end of let’s say, the recent bubble, right? There’s just too much fraud and too much icky stuff in the space.

And a lot of that stuff is you know bound to crash. And when you have a space that is, you know, maybe too dominated by the abusive or fraudulent and the frankly nonsensical, then these corrections happen, and it ends up taking down the good projects as well, because it sort of lays waste to the whole space every three, four years. And that’s really bad for the industry.

[…] you know, we were also holding Bitcoin back in 2017. Right? And in 2017, what you saw was this crazy ICO craze, right seems like there was 10s of billions flooding into ICOs…



Read More: Andy Yen, CEO Of Proton, On The Tech Giants That Dominate The Internet, The Web’s Future

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