A blog about business and economics.

July 18 2016 5:13 PM

The GOP Platform Calls for Breaking Up Big Banks. Seriously!

Has the Republican Party turned on Wall Street?

In a rather surprising development Monday morning, Donald Trump's campaign manager, Paul Manafort, told a group of reporters that the official GOP platform would include a plank calling for the breakup of large U.S. financial institutions. "There has been some added components to [the platform] that reflect the issues that Mr. Trump has raised during the course of the campaign," he said, according to the American Banker. "We also call for reintroduction of the platform of Glass-Steagall so that would create barriers between what the big banks can do and avoid some of the crisis that led to 2008.”

This is a rather obvious play to lure disaffected Bernie Sanders voters over to Trump's side. Glass-Steagall was the Depression-era law separating commercial and investment banking that was repealed under President Bill Clinton in 1999. While one can debate how much its demise contributed to the 2008 financial crisis, many on the left have fixated on bringing it back as the ne plus ultra of financial reform. Sanders, of course, promised to resurrect the statute. Hillary Clinton did not during the primary campaign, arguing instead that Congress and regulators should do more to address dangers lurking in the so-called shadow banking system. This has earned her no shortage of grief from progressives who suspect she may be pandering to Wall Street donors.

Vowing to break up the banks would be a relatively easy way for Trump to capitalize on that skepticism. Doing it with the backing of the party woudl give it a bit more credibility. And what about the fact that the candidate has also said he would deregulate Wall Street by junking the Dodd-Frank financial reforms passed in 2010? Well, nobody ever accused Donald Trump of philosophical consistency. But beyond that, like many in the GOP, Manafort suggests that Dodd-Frank has been a burden on small banks. Bringing back Glass-Steagall, on the other hand, would affect big banks. Back in the real world, it's a pretty dishonest position. But rhetorically, you can see how they'd square it.

Policy logic aside, the move looks like a rather dim sign for Wall Street. Party platforms aren't binding, of course. But the authors of the GOP's document generally represent the conservative movement's hard-right flank, and with a few notable exceptions, haven't necessarily taken that many cues from their presumptive nominee. If they're open to the notion of vivisecting Goldman Sachs and JPMorgan, it could signal that the idea has currency in the party beyond Trump himself. And given that the Democrats' draft platform also includes a call for a “21st Century Glass-Steagall,” it's a notion both major American political parties have embraced.

Update, 6:30 P.M.: The RNC has blasted out a final draft of the party's platform, complete with the section on Glass-Steagall. It comes a bit out of left-field, conspicuously tacked onto the end of long section about President Obama's alleged abuse of regulatory power.

The current President and his allies on Capitol Hill have used those agencies as a superlegislature, disregarding the separation of powers, to declare as law what they could not push through the Congress.
The Environmental Protection Agency has rewritten laws to advance the Democrats’ climate change agenda. The Department of Health and Human Services has ignored the enacted text of the Affordable Care Act to do whatever it wants in healthcare. Both the Department of Labor and National Labor Relations Board have scrapped decades of labor law to implement the agenda of big labor. The Dodd-Frank law, the Democrats’ legislative Godzilla, is crushing small and community banks and other lenders. The Federal Communications Commission is imperiling the freedom of the internet. We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment. [Bolds mine]

This is sort of amusing: Officially, the Republican party now favors rebuilding the wall between commercial and investment banking, which would lead to the dismantling of the United States' largest financial conglomerates, even though it's still decrying just about every other regulatory decision by the Obama administration as gross overreach. We'll see if Sanders' fans buy it.

The first five pagraphs of this story have been updated to reflect the final draft of the platform (I cut out a few "ifs"). For the sake of transparency, I've left the original text from the end of my article below.


Original: But, here's the thing. I haven't been able to find any sign that Manafort is telling the truth at this point. On Monday morning, Republican convention organizers handed out draft text of the platform, and the section on banking includes nothing on bringing back Glass-Steagall. Instead, it spends a lot of time calling on Congress to curtail the Consumer Financial Protection Bureau's powers, then says:

Republicans believe that no financial institution is too big to fail. We support legislation to ensure that the problems of any financial institution can be resolved through the bankruptcy code. [Note: Dodd-Frank has this. It’s called the living will provision.] We endorse prudent regulation father banking system to ensure that FDIC-regulated banks are properly capitalized [Note: Dodd-Frank also has this] and taxpayers are protected on bailouts. We will end the government’s use of disparite impact theory in enforcing anti-discrimination laws with regard to lending.

And here's the full section.


Note, there's nothing in there about chopping banks down to size. It just says no financial institution, no matter how big, is too big to fail. And far as I've been able to glean, nothing changed between when this document was handed out and when the platform committee formally adopted it. (I tried calling the RNC to confirm, but the staff in D.C. sent me to an office line in Cleveland that got me nowhere.)

Anyway, it's possible that Manafort knows something I don't. Maybe Republicans really want to bring back “Wall Street's Worst Nightmare,” as Business Insider exaggeratedly put it. Or maybe everybody he's operating in a fog of confusion because it's 2016 and nothing politicians or their handlers say means anything anymore. I'll be sure to add updates as they come in.

July 17 2016 9:58 PM

Why There Was Nothing Buffoonish About Mike Pence’s Visit to Chili’s

When Indiana Gov. Mike Pence, Donald Trump’s newly named running mate, tweeted that he and his family had stopped for dinner at a suburban New Jersey Chili’s this weekend before returning home to Indiana, the online ridicule from New York foodies was immediate.

But the joke was on the folks getting a quick laugh at Pence’s expense. Whatever Pence’s actual reasons for picking Chili’s following appearances with Trump in Manhattan—earnest craving, savvy trolling of media elites—it was the perfect restaurant for him to be photographed in (dining on a Quesadilla Explosion Salad, no less). After all, Chili’s may be one of the most the most politically neutral restaurants in the United States.

As the Wall Street Journal noted in 2014, according Experian Marketing Services Chili’s patrons are almost as likely to be liberal-leaning as conservative. Using a base score score of 100, Experian’s survey of thousands of restaurant patrons found that Chili’s had a score of 99 in the conservative category, falling only to 94 on the liberal side.

Compare that to Chipotle, where Hillary Clinton famously stopped after announcing her candidacy last spring and ordered a chicken burrito bowl with guacamole. Was Clinton trying to send a message? Almost certainly. According to Experian, Chipotle’s liberal score is 145—which, as the Wall Street Journal wrote at the time, means liberals “are 45% more likely than the average American to visit a Chipotle.” (Chipotle’s conservative score, on the other hand, is a mere 88.) At the time, Chipotle was one of the most popular brands in the restaurant trade.

Chili’s may not have the cachet that Chipotle did when Clinton visited, which was before an E. coli outbreak battered the chain’s reputation. Sales at Chili’s are falling, as would-be customers increasingly prefer fast-casual options over casual sit-down establishments. And Chili’s turnaround efforts—like adding a new honey chipotle flavoring to its popular baby back ribs and putting tablets at every table so customers can order without the help of wait staff—has failed to reverse the slide in customer traffic. (You might even say Chili’s could use some help becoming great again!)

So there’s likely one group who may be grateful for Pence’s surprise Chili’s visit: the management at Brinker International, the parent company of Chili’s. And they may already be favorably disposed toward him.

See, when the person manning Chili’s Twitter feed wrote, “In case you were wondering, we exclusively support the Margarita Party,” a few hours after Pence’s visit, he or she was lying.

Brinker International Inc. does not share its customers’ seemingly bipartisan leanings. A recent investigation by Eater found that between 2011 and 2014, 89 percent of Brinker International’s political action committee and executive donations went to Republicans.  Things have only changed slightly since then. According to Open Secrets, while contributions from individuals affiliated with Brinker are leaning Democrat in this election cycle, the same is not true for the firm’s political action committee. Over 90 percent of the donations made by the Brinker International Inc. Political Action Committee to other political action committees, House and Senate members, or people running for those offices in the 2016 cycle also went to Republicans, including a $10,000 donation to Team Ryan, House Speaker Paul Ryan’s fundraising operation.

At the same time, Chili’s is kind of like us—it’s trying to make a comeback from hard times. Yet it remains a version of us stuck in the past, even if there are now tablets at the tables. It’s from the era before the craze for purportedly artisanal food, before the broader aversion to fatty, unhealthy meals, and before young professionals’ overwhelming tilt toward urban living. It’s definitely not p.c. Heck, Pence wouldn’t even have found a Chili’s in Manhattan if he’d tried. (There is one in Trump’s home borough of Queens, at John F. Kennedy International Airport.) It’s a place to feel comfortable. And unlike, say, Chipotle, Chili will never lecture its customers on wholesome, healthy food.

In other words, the kinds of voters the Trump campaign hopes to sign on, whether they lean right or (optimistically for Trump) left, may see something of themselves in Chili’s. Aligning oneself with this slightly faded casual-dining giant is about much more than trolling political elites. It’s about declaring common cause. And in this case, that likely comes better from Pence than Trump, part of whose appeal is that he isn’t us.

So Pence gave a business that both needs the publicity and is favorably disposed toward his party a likely boost. At the same time, he communicated something about himself to the kind of Americans the Trump campaign really, really needs.

What a political pro.

July 15 2016 5:17 PM

The Government Is Finally Punishing Herbalife

The Federal Trade Commission has finally closed its investigation into Herbalife—the nutritional-supplement company (and multilevel-marketing business) whose critics have accused it of being a pyramid scheme. That unsavory term is precisely what the FTC is not accusing Herbalife being—but its agreement with the company will force Herbalife to pay a hefty fine and commit to restructuring its business, one in which its products are sold by its “members.”

July 15 2016 4:43 PM

Finally, You Can Review Airlines Like Hotels. Will That Make Them Any Better?

Few industries in the United States are as notorious for poor customer service as domestic airlines. And few seem so immune to customer pressure to get better at their jobs.

There are a lot of reasons for that, including regulations that insulate the domestic carriers from foreign competition. But one seems to be that technology has encouraged customers to base their airline decisions largely on price, via sites such as Kayak and Expedia that by default sort flights from cheapest to most expensive. This is in stark contrast to, say, the restaurant industry, where Yelp and others have placed customer reviews and ratings at the forefront of their recommendation services. Somewhere in the middle are hotel sites, which tend to incorporate both prices and star ratings.

Now, at last, a major travel site has begun incorporating customer reviews into its airline recommendations. TripAdvisor, which has proven influential in the hotel and restaurant industries, this week began allowing users to post star ratings and reviews of airines, both foreign and domestic. Those reviews will go into both an overall star rating for each airline and a new metric called “FlyScore” that rates individual flight routes on a 1-10 scale. The FlyScore combines the user airline reviews with several other factors, including the duration of the flight plan and the amenities available onboard, to generate a rating for any given itinerary. Users can now view that rating along with the price of each flight when deciding which one to book.

This is both long overdue and welcome. TripAdvisor hotel reviews have always had their flaws and biases, but in aggregate, they do seem to correlate at least somewhat with the quality and service you can expect of a given establishment. And while a bad TripAdvisor score isn’t going to turn American Airlines into Emirates overnight, it should at least give customers some useful new data to draw on when booking a flight. Ideally, it will also give airlines a little more incentive to actually make sure their passengers have a decent experience.

So, which airlines are getting the best and worst reviews so far? Since the reviews have only been widely available for a few days, data is scant for some of the smaller international carriers. The next person to rate Air Iceland or Mandarin Airlines will be the first. But already reviews have poured in for the largest carriers, including the major domestics. And if you have experience with the airlines in question, you probably won’t be terribly surprised by how they’re doing so far. Here’s a sampling of the aggregate rating for a handful of notable airlines, as of July 15. Each of those listed here has more than 500 reviews.

  • Singapore Airlines: 4.5 stars
  • Emirates: 4.5 stars
  • Southwest Airlines: 4.5 stars
  • JetBlue Airways: 4.5 stars
  • Delta Airlines: 4 stars
  • Lufthansa: 4 stars
  • Air France: 3.5 stars
  • British Airways: 3.5 stars
  • China Southern Airlines: 3.5 stars
  • Ryanair: 3.5 stars
  • American Airlines: 3 stars
  • United Airlines: 3 stars

If there are any huge surprises in these early returns, I’m not seeing them. If anything, the ratings for American and United might be a little higher than I expected, given the level of vitriol they incur on social media. That said, 3 stars on TripAdvisor is nothing to gloat about. The median score so far is 3.7, the company told the Washington Post—just a little lower than the median for hotel reviews. And the featured “recent reviews” when I visited the site Friday were not exactly flattering.

American Airlines reviews
If nothing else, disgruntled flyers have a new place to vent.

Screenshot / TripAdvisor

I’ve written in the past about some of the subtle biases that shape restaurant ratings on Yelp. Some may turn out to apply to TripAdvisor airline reviews as well, while others won’t. Regardless, customer reviews seem unlikely to have as profound an impact on airlines as they have on restaurants, given the relatively limited competition they face, especially on domestic routes. It’s not as if United is unaware that it isn’t exactly beloved—it already ranks last in at least one existing customer satisfaction survey. It’s just that, well, running a big airline is hard, and delivering consistently great customer service would require a pretty dramatic turnaround in the corporate culture. No doubt there are a lot of other priorities on its list—like cutting down on those FAA safety violations—besides bumping its 3 stars on TripAdvisor up to 3.5.

Still, it can’t hurt to add a highly visible new customer satisfaction metric to the equation for the airlines to try to improve. If nothing else, passengers subjected to a terrible experience now have a convenient place to vent about it.

July 15 2016 1:13 PM

T-Mobile’s Plan to Give You Free Data for Pokémon Go Is Bad but Also So Good

T-Mobile really, really wants you to know that it's hip to the haps. The company calls itself the "Un-carrier" and debuts new promotions on a corporate holiday called T-Mobile Tuesdays, so it should shock no one that the mobile provider has found a way to hop on the Pokémon Go bandwagon. If T-Mobile were a character in Mean Girls, it'd be Amy Poehler's Mrs. George. I'm not like a regular carrier—I'm a cool carrier!

On Thursday, T-Mobile announced that it would offer free, unlimited Pokémon Go data for one year in order to help customers "take their Pokémon Go skillz to a whole new level." This means that while customers will still pay for mobile data in general, any data they use in the Pokémon Go app won't count toward their monthly total. To claim the promotion you have to be a T-Mobile customer, of course, and then download the T-Mobile Tuesdays app to actually lock in the deal.

T-Mobile has announced lots of promotions like this, including free data for music streaming and video streaming (which are both data-intensive) if customers use certain approved content providers. This practice is called zero-rating, and cuts against net-neutrality principles by privileging certain internet traffic and subtly steering customers to use some Internet services over others. A big part of an open internet is a level playing field where people can freely choose the services they want to use.

Additionally, as Wired and the Wall Street Journal point out, Pokémon Go isn't even burning through that much data. Playing the game consistently will obviously use more data than not playing it, but analysts say that the game's average data consumption per hour falls far below music or video streaming.

Still, many people are reporting frustrations that suggest the T-Mobile promotion will have some big fans. It's a little bit harder to ask people to be principled about net neutrality when they've got Pokémon to catch.

July 14 2016 2:49 PM

Remember When Mike Pence Tried to Start a Government Propaganda Outlet in Indiana?

At first glance, Donald Trump does not appear to have much in common with his apparent vice presidential pick, Indiana Gov. Mike Pence, a slightly dull and conventional ideological conservative who pairs a dislike of abortion and gay rights with a love of tax cuts. But if they have anything to bond over, I'm guessing it’s a mutual distaste for the press. After all, Pence is a man whose administration actually tried to start a government propaganda organ for the state of Indiana.

Back in the winter of 2015, the Indianapolis Star discovered that the governor was planning to start a “state-run taxpayer-funded news outlet that will make pre-written news stories available to Indiana media, as well as sometimes break news about his administration.” The website, JustIN, was to be run by a former Star reporter and offer straight news stories, as well as the occasional light feature.

The administration, sensing the potential for public outrage, argued that it was basically just spiffing up its current public relations operation. "Reports that this was intended to be a news agency, I think just represent an understandable misunderstanding based on some internal communications that I read about in the press," Pence said. That “misunderstanding” may have had something to do with documents obtained by the Star that referred to the site as an “Indiana state news service” that would be “designed to provide the quality expected by today's online audiences.” It all inspired a bunch of jokes about "Pravda on the Plains,” and headlines like, “Welcome to the Gulag, Love, Mike Pence.”

All the commotion convinced Pence to quickly kill the idea. "However well intentioned, after thorough review of the preliminary planning and careful consideration of the concerns expressed, I am writing you to inform you that I have made a decision to terminate development of the JustIN website immediately," Pence wrote in a memo to state agencies. One can only assume that the head of the GOP ticket probably wouldn't have backed down so quickly. Again, they don't have that much in common.

July 14 2016 12:49 PM

Classic Gaming Fans, Rejoice! You’ll Soon Be Able to Plug an Old-School Nintendo Into the TV Again.

Nintendo’s corporate identity has long been tied up in its consoles and handheld devices. Nevertheless, recent developments—most notably the colossal success of mobile game Pokémon Go—suggest that the company might be willing to embrace other platforms and technological infrastructures. It’s clear, however, that it hasn't yet given up on more traditional consoles—and that it doesn’t think its longtime fans have either.

On Thursday, Nintendo announced via Twitter that it will release a new miniature version of the original classic Nintendo entertainment system. Small enough to be held in a single hand, the system comes preloaded with 30 games. According to reports elaborating on the announcement, it’s designed to connect with modern high-definition televisions via HDMI cables. The full system will sell for just under $60 and will be available for sale on Nov. 11.

As PC World notes in an article on the news, this device won’t be entirely revelatory to gamers involved in the emulation scene. Describing the ease of simulating old games on newer computers, PC World’s Ian Paul writes, “Within half an hour, you can go from zero to a full NES gaming setup on a Raspberry Pi.” Likewise, the Verge writes that similar systems are already broadly available online for fans of vintage gaming. What’s more, classic games have long been available for purchase on Nintendo’s newer systems.

To understand what Nintendo’s up to here, though, you don’t have to look much further than that mid-November release date. This is an item designed to be unboxed and put to work immediately on Christmas morning, a toy for millennial parents desperate to remember when the holidays were joyful for them too. In that light all this new device has to be is a legal, plug-and-play option that checks off some nostalgic boxes.

That said, the mini-NES isn’t going to please everyone. The full list of games includes a few classics (Super Mario Bros. and Zelda II: The Adventures of Link are standouts) as well as some obligatory oddities (the bizarre Super Mario Bros. 2, for example). But many of the classic titles will likely do little more than remind casual gamers how frustrating old-school gaming could be. If you can cruise through Castlevania II or the original Ninja Gaiden, you’re far more skilled than I, at least, have ever been.

Most disappointing of all, though? The system apparently won’t ship with Duck Hunt, the one classic game that still feels like it would be worth crowding around the family television for.

July 14 2016 8:00 AM

Why Do These Congressmen Want to Help Federal Employees Use Uber—but Not Taxis?

We can say this for Washington, D.C.’s ailing Metro system: It brings people together. Not just on the platforms.

Last week, Republican Rep. Mark Meadows, of North Carolina, and Democratic Rep. Gerry Connolly, of Virginia, proposed a bipartisan modification of the IRS code governing transit benefits for federal workers. In light of the service interruptions wrought by WMATA’s ongoing “SafeTrack” repairs program, the pair wants to enable federal workers in the D.C. area to use tax-free transit benefits on transportation network companies like Uber and Lyft, as well as Capital Bikeshare.

Consistent with the current system, which requires commuters to allocate their $255 maximum in benefits to either parking or transit but not between the two, the bill would create a third all-or-nothing category for services that utilize “innovative mobility technologies.” That could lure some frustrated Metro commuters away from mass transit for months at a time, though WMATA has encouraged commuters to try to find other ways to get to work during “Safety Surges.”

July 13 2016 7:16 PM

Japan Confirms It Will Not Be Undertaking an Awesome Economic Experiment. Drat.

For a brief, glorious moment this week, it seemed possible that Japan was about to embark on the weird monetary policy adventure of econ enthusiasts' dreams. Sadly, a government spokesman poured cold water on the idea Wednesday by clarifying that, no, Japan's central bank was not about try showering the country with “helicopter money.”

What is “helicopter money"? There are a few different variations on the concept. But the gist is that, rather than tinkering with interest rates, the central bank could act like a hovering aircraft, disgorging bombs of cash directly onto the economy. The helicopter image itself comes to us from Milton Friedman's old essay “The Optimum Quantity of Money,” in which he argued that a central bank should always be able to fend off deflation, illustrating his point with this little tableau:

Let us suppose now that one day a helicopter flies over this community and drops an additional $1,000 in bills from the sky, which is, of course, hastily collected by members of the community. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated.

In practice today, Helicopter money would probably take the form of new government spending that lawmakers would pay for through monetary financing—translation: by printing money—instead of by issuing new debt. In other words, it's the stuff of nightmares for the sort of people who fear hyperinflation. And to be sure, it could be absolutely disastrous if attempted in the wrong circumstances (think Zimbabwe, or Venezuela). But as a last-ditch tool for fending off potentially crippling deflation, or fixing a prolonged economic slump, it's a fascinating option. Former Federal Reserve Chair Ben Bernanke earned the nickname "Helicopter Ben" for bringing it up during a famous 2002 speech, and he cautiously endorsed the general concept in a blog post this year. At least, he said it would be “premature” to rule the it out under the right circumstances. (Others have suggested that central banks should try something even more radical and make payments directly to households.)

Bernanke's version of a Helicopter drop could work two ways: The government would decide to spend a bunch of money (say on a massive tax cut, or on a new public works program), then the federal reserve would deposit the funds directly in a Treasury account. Or the Treasury would issue new bonds, which the Fed would buy and hold forever, while remitting all the interest back to the government. Voila! Free money. The major economic side-effect, aside from the stimulus provided by new spending, is that inflation should rise—but when your economy is in a hole and prices are threatening to fall, that's a feature, not a bug.

How is this different than regular old quantitative easing, which the Fed has obviously tried many times since the Great Recession? With QE, the central bank buys government bonds on the open market and tries to push down yields, thereby pushing people into other, riskier assets, lowering interest rates for everyone, and hopefully spurring some economic activity. It's indirect. With a helicopter drop, it's coordinating with the rest of the government to finance immediate spending. And while it sounds a bit exotic, as Greg Ip has noted at the WSJ, there are at least a few scattered examples of it in history.

The downside of a helicopter drop is that, well, it involves coordinating with the rest of the government, which a lot of central bankers think of as a cardinal sin—an absolute no go that could undermine their cherished independence. There's also a risk that legislators would get hooked on easy money, which could bring about an inflationary calamity in the future.

But that's why it's considered an emergency measure for nations in an economic slump, and why a country like Japan, that is teetering on the edge on deflation despite trying some out-their monetary techniques like negative interest rates, would be an ideal testing ground.

So, why did everybody get their hopes up that a helicopter drop might be coming? Well, for one, Helicopter Ben paid a recent visit to Tokyo and had lunch with Bank of Japan Governor Haruhiko Kuroda. Meanwhile, a Japanese newspaper reported that aides to Prime Minister Shinzo Abe were pushing the idea. But, alas, Chief Cabinet Secretary Yoshihide Suga quashed the speculation on Wednesday. Maybe next year.

July 13 2016 5:43 PM

Will We Start Seeing Virtual Billboards in Pokemon Go?

Though Pokémon Go has been available for less than a week, its massive success has already had financial consequences. In the days immediately after the mobile game’s release, Nintendo’s stock price climbed aggressively. Meanwhile, on a smaller scale, some businesses have reportedly activated in-game lures to draw in customers via the promise of more and better Pokémon on site. (If you don’t know what any of this means, check out Slate’s thorough explainer on the topic.) For all that, though, it hasn’t been entirely clear how, exactly, the game will make money for its creators. New reporting from the Financial Times, however, suggests one intriguing possibility.

At present, in-game transactions are the most immediate and obvious source of revenue in Pokémon Go. Like many other mobile game companies, Niantic sells in-game tokens (pokécoins) for real money (the exchange rate varies, depending on how many you’re willing to buy at a time), which can then be exchanged for items such as pokeballs, incense, and eggs. (Again, confused reader, just read our explainer.) In the iOS App Store, the free-to-play game currently sits in first place on the “top grossing” chart, outdoing perennial hits such as Mobile Strike and Game of War. However, while microtransactions reportedly account for a significant portion of App Store revenue, research has long indicated that a significant percentage of gamers are unwilling to spend real money while playing. For Niantic, that may mean seeking other ways to monetize Pokémon Go’s massive user base.

Reporting out an interview with Niantic CEO John Hanke, the Financial Times’ Tim Bradshaw and Leo Lewis suggest that advertising may be coming to the game. As Bradshaw and Lewis note, there are already real-world promotions in Niantic’s cult-favorite augmented reality game Ingress, where businesses can sponsor “portals” to draw players in. Hanke apparently brought up this revenue stream while in conversation with the publication about its new hit, speaking to his company’s “cost per visit” model, which is “similar to the ‘cost per click’ used in Google’s search advertising.” Bradshaw and Lewis clarify that Hanke “would not comment on any such sponsorship deals that had been struck.” It makes sense, however, that such a model might pair well with Pokémon Go and appeal to advertisers, not least of all because it could drive real, measureable foot traffic from the game’s huge mobile audience.

If so, such sponsorships may just be the start. Given that the game now imprints Pokémon on the real world, it stands to reason we could soon see billboards popping up behind those elusive little monsters. To be clear, this is all speculation for now. But it’s clear why such a business model might be effective, not least of all because its augmented-reality mechanics would make it possible for advertisers to reach out to players in ways largely unavailable in previous mobile games. In a world where you can stumble across Pikachu out on the street, is it really so crazy to think that he might welcome you into the local Starbucks?