The Grand Unification- Software Eating and Saving the World, Economically

The Grand Unification- Software Eating and Saving the World, Economically

Apple plans to offer Buy Now, Pay Later service. With that consumers can pay for any Apple Pay service in installments over time, rivaling the “buy now, pay later” products popularized by fintech powerhouses like Affirm and Paypal. In other words, Apple is now a lending company, and can technically make small marginal gains on the loans! That is good news for Goldman Sachs, its partner, as the bank continues to recalibrate for the new age where volume, even at low margins, is critical. Yes, Goldman Sachs can help process that $99 “loan” through Apple Pay Later. Just a few years ago, no one could have expected that from GS.

The upcoming service, known internally as Apple Pay Later, will use Goldman Sachs Group Inc. as the lender for the loans needed for the installment offerings, according to people with knowledge of the matter. Goldman Sachs has been Apple’s partner for the Apple Card credit card since 2019, but the new offering isn’t tied to the Apple Card and doesn’t require the use of one, said the people, who asked not to be named discussing unannounced products.

As Apple works on lending, Netflix is preparing to offer video games. The company has hired a former Electronic Arts business leader to drive game development, with a view to offering games within the next year. That is a very important playbook if the plan is to do all necessary to get people to renew their subscriptions.

Netflix’s growing fascination with video games will soon explode in the form of a full-fledged game-publishing arm.

While Netflix has yet to post its own announcement about the initiative, the streaming-video provider has confirmed to Ars Technica that it has hired a former EA and Oculus exec to lead a Netflix game-publishing team.

The newly hired exec is Mike Verdu, who most recently worked in developer relations with Facebook’s Oculus VR team (his public profile still says that’s his current job). He has worked in game development and publishing since the early ’90s, and his first studio, Legend Entertainment, was eventually acquired by GT Interactive.

Then, I report that Google has bought a fintech company: “Alphabet, Google’s parent company, has agreed to buy Japanese payments firm, Pring. The startup’s three top shareholders – Metaps, software company Miroku Jyoho Service Co Ltd, and Nippon Gas Co – announced on Tuesday they would sell their combined 87% holding in Pring to Google.”

You may ask: what is going on here? What is happening here is the power to do anything because once you have the foundational technology stack, you can easily combine and recombine things on the top stacks. Apple can add lending. Even GS can offer cheap loans. Netflix can go into gaming because it has all the core pieces already. And Google is adding payment because there is no reason not to. For Google specifically, it comes down to what I have called fintechnolization: the stable state of most digital platforms is to add a financial service product.

This thing called software will eat the world – and will also save the world, economically. It will bring a unification in many business sectors as everything business becomes a technology company, offering nothing but services in many verticals. The bank of the future will be tech firms which offer banking as a service, just as insurers of the future will be technology firms which offer insurance services.

In the next few years, technology products will evolve: Facebook can do many things right there. So, the critical playbook for innovators is to think from day one on how to deepen their moats and protect their castles, and one way of doing that is to add physical domains in anything you are doing.  When you have physical components, digital firms cannot easily automate you out. A physical component could be providing dedicated payment systems to farmers and supporting those farmers with logistics provided they use your payment technology. As you provide that support, disintermediating you will become harder.

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