Tech Brew Ride Home - Fri. 03/25 – Will Europe’s DMA Force AIM And MSN Messenger To Talk To Each Other?

Episode Date: March 25, 2022

Will the new EU Digital Markets Act mean that all messaging could soon become as interoperable as email? Some serious smoke around the whole grand unifying Apple subscription fire. Why Instacart is voluntarily lowing its valuation. And, of course, the weekend longreads suggestions. Sponsors: Codecademy.com promocode ride Links: EU negotiators agree new rules to rein in tech giants (Politico) Apple Is Working on a Hardware Subscription Service for iPhones (Bloomberg) Lapsus$: Oxford teen accused of being multi-millionaire cyber-criminal (BBC News) Instacart Slashes Its Valuation by Almost 40% to $24 Billion (Bloomberg) Weekend Longreads Suggestions: LAPSUS$: How a Sloppy Extortion Gang Became One of the Most Prolific Hacking Groups (Motherboard/Vice) The Man Behind Ethereum Is Worried About Crypto's Future (Time) There's something off about ApeCoin (Platformer) Of Course We’re Living in a Simulation (Wired) Nicolas Cage Can Explain It All (GQ) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Friday, March 25th, 2022. I'm Brian McCullough today. Will the new EU Digital Markets Act mean that all messaging could soon become as interoperable as email, some serious smoke around the whole grand unifying Apple subscription fire, why Instacart is voluntarily lowering its valuation,

and of course the weekend long-reed suggestions. Here's what you miss today in the world of tech. European Union lawmakers have provisionally agreed on that big digital markets act, which is designed to curb big tech in Europe by doing things like limiting the bundling of services, prohibiting self-preferencing, and a lot of things. Quoting Politico, in an agreement brokered Thursday evening, negotiators from the European Parliament and the Council reached a political agreement on the Digital Markets Act, which establishes a series of prohibitions and obligations for companies including Google. meta, Apple, and Amazon, and a number of smaller platforms. It is also likely to include accommodation platform booking and Chinese e-commerce giant Alibaba. That's because included in the rules scope will be platforms with a market capitalization of 75 billion euro or turnover in the European economic area equal to or above 7.5 billion euro a year. The new rules for so-called gatekeeper platforms derived from years of antitrust enforcement in the digital economy include restrictions on combining personal data from different sources, mandates to allow users to install apps from

third-party platforms, prohibitions on bundling services, and a prohibition on self-preferencing practices. Parliament also succeeded in convincing the Council of Interoperability Requirements for messaging services, meaning outfits such as WhatsApp, Facebook Messenger, or IMessage, will have to open up and interoperate with smaller messaging platforms. For group chats, this requirement will be rolled out over a period of four years. Penalties for breaching the rules can be up to 10% of annual worldwide turnover in the case of first infringements and even up to 20% in the case of repeated infringements. Parliament was also successful in its call to get web browsers and virtual assistance into the scope of the core platform services. The Commission, as lead enforcer of the rules,

is now tasked with staffing the relevant services that will be involved in the designation procedures as well as preparing to enforce the obligations and the prohibitions which become applicable later this year, end quote. So there's a whole bunch of crazy possibilities here. For example, I think this means that you would be able to pick your own voice assistant, for example. You could buy a home pod but put Alexa on it. And even more wild, would this mean not only the end of green bubbles, but imagine if Apple had to allow you to directly message and interoperate with Facebook. Facebook Messenger, WhatsApp, Telegram, what have you? What if this means that messaging becomes like email. No more silos, no more AIM or MSN Messenger can't talk to each other. What if the social graph of messaging is blown wide open? Now, there are about a billion technical issues that would need to be solved to make that happen, quoting Benedict Evans. It's relatively straightforward to imagine how I message and WhatsApp could be interoperable, but more of a puzzle to work out what it

would mean to send a snap story to WhatsApp. What does the EU think should happen then? And who gets fined if it doesn't work? If any messaging app is obliged to accept any inbound messages from any other app, then how do you deal with spam or harassment? How do you block harassers? You will almost certainly have to disable end-to-end encryption. At the moment a message leaves one network and goes to another, how do you signal that to users? Will the EU find you for telling people that the EU has broken your privacy, end quote. And as Alex Stamos tweeted, quote, also, as many people have pointed out, federating an end-to-end encrypted namespace across many providers is a very open engineering challenge. A cynic might say this is a way to effectively outlaw end-to-end encryption while framing it as an

antitrust move against tech, end quote. And also, several people have pointed this out, but quoting Tsar Harabakti on Twitter, quote, amazingly, and, unsurprisingly, this is bullish for meta, and we will see the inevitable stories about how interoperability is bad because of data sharing. Remember when Facebook tried to enable devs to get friends' friends data? End quote. That last part is what led to Cambridge Analytica, someone responded. And finally, quoting Dar Abysanjo, I'm confident that Apple will either ignore or delay implementation eating fines along the way, but once they do, will restrict interoperability to EU users. They have elevated proprietary lock-in to a fine art, end quote.

Speaking of, Mark German is reporting that Apple plans to launch a monthly subscription service by 2023 for the iPhone and other hardware that could tie into Apple One bundles and Apple Care, quote, the idea is to make the process of buying an iPhone or iPad on par with paying for ICloud storage or an Apple Music subscription each month. Apple is planning to let customers subscribe to hardware with the same Apple iPhone. ID and App Store account they use to buy apps and subscribe to services today. The program would differ from an installment program in that the monthly charge wouldn't be the price of the device split across 12 or 24 months. Rather, it would be a yet-to-be-determined monthly fee that depends on which device the user chooses. The company has discussed allowing users of the program to swap out their devices for new models when fresh hardware comes out. It historically releases

new versions of its major devices, including the iPhone, iPad, and Apple Watch once a year, end quote. Guess what? We spoke to Mark about exactly this on the Twitter space last night, going into detail about how the math would work out on this for Apple in a very specific way. So I encourage you to listen to the very beginning of the bonus episode this Sunday. Real quick, UK police have apparently arrested seven people aged 16 to 21 as a part of an investigation, quote, into a hacking group, end quote, but did not say if the suspected teenager behind Lapsis, is among them. And well, if you want some tangible indications that the recent performance of tech companies on the stock market has had an impact on private valuations, well, Instacart has slashed its valuation by almost 40% to around $24 billion, down from $39 billion, which was the valuation in March of 2021 when it raised $265 million, quoting Bloomberg. Instacart hopes the move will boost recruiting and retention efforts by aligning new equity awards with the updated valuation that could have more potential for gains over the long term if the

company regains favor in the markets. Recently, investors have been souring on private and public technology companies. Voluntarily lowering its valuation is an unusual move for a startup and a rare admission that a company got ahead of itself. There have been some instances where companies raise more capital at a lower valuation known as the dreaded down round. Two years ago, rent the runway raised new funding that valued the fashion startup at less than its $1 billion dollar valuation at the time during the early days of the pandemic. But in Instacart's case, the re-evaluation was done voluntarily without investors forcing its hand. According to Instacart, the company has more than $1 billion in cash and marketable securities and doesn't need to

raise more capital, end quote. Yes, there's been a lot of talk recently about also public companies having a hard time recruiting and retaining talent because stock options are so underwater for so many companies. But also, per leaks that I've seen of Instacart revenue, think about this. In 2019, both Instacart and DoorDash had around $800 million in revenue. But in 2021, DoorDash soared to nearly $5 billion in revenue, while Instacart somehow only hit $1.8 billion in revenue. So if those numbers are real, then Instacart is only doing about a third of DoorDash's revenue. And DoorDash, a public company, has a market cap of around $40 billion down from its all-time high valuation at around $90 billion. So by marking their valuation down to two-thirds of door dashes, maybe this is more about

just, you know, Instacart right-sizing everybody's expectations. Time for the weekend long-read suggestions. And first up, look, I'm not even going to quote from it. If you want a deep dive on the rise of the Lapsis Hacking Group motherboard has got you covered, It's the first link in the long reads. I highly recommend it. Then, Vitalik Buteran has been on a mainstream publicity tour recently, by which I mean he's not just talking at crypto conferences. He's been doing what seems to be a concerted mainstream media reachout. For example, this is from time where he's on the cover of

the magazine this week. And well, he's saying some interesting stuff. Quote, Buteran worries about the dangers of over-eager investors, the soaring transaction fees, and the shameless displays of wealth that have come to dominate. public perception of crypto. Quote, the peril is you have these $3 million monkeys and it becomes a different kind of gambling, he says, referring to the board ape yacht club, an Uber popular NFT collection of garrish primate cartoons that has become a digital age status symbol for millionaires, including Jimmy Fallon and Paris Hilton, and which have traded for more than $1 million a pop.

There definitely are lots of people that are just buying yachts and lambos, Buteran says. And then quoting again about the fees. The fees have undermined some of Buteran's favorite projects on the blockchain. Take proof of humanity, which awards a universal basic income, currently about $40 per month, to anyone who signs up. Depending on the week, the network's congestion fees can make pulling money out of your wallet to pay for basic needs prohibitively expensive. With fees being the way they are today, Buteran says it really gets to the point where the financial derivatives and the gambly stuff start pricing out some of the cool stuff, end quote. Then we talked about the whole Yuga Labs ape coin thing this week, not just because it's been a big tech story of late, but because, well, this in my opinion is maybe becoming the first meaningful stab at making a real company in this space, right? But what does that mean exactly? How do you make a company out of NFTs? Isn't it just an IP play? I encourage you to listen to the Twitter space episode on Sunday again, because Chris and I do get into this after we talk.

to Mark German. And also, one of the big pieces that has fallen into place for me about all of the hype around Web 3, from at least the venture capital perspective, is sort of illustrated here. Chris and I also talk about this in much greater detail, actually using a potential investment from the Right Home Fund to explain it in a tangible way. But this piece from Casey Newton about ape coin, the ape coin launch, the first half of it at least can explain part of what I'm going to talk about on the bonus episode. Quote, the arrival. of blockchains over the past decade created a new option for impatient VCs. Companies in the Web 2.0 era produced only goods and services whose value was always denominated in dollars or other national

currencies. But companies in the Web 3 era offer a third product, tokens, and the value of those tokens is far less tethered to reality. More often the value is correlated to the collective belief that the project's backers have in it, and both those beliefs and the token's value can be manipulated as part of the startup's growth. One way in impasseh, patient VC could manipulate a project is by insisting that a startup offer tokens as part of their project and require that a certain amount of tokens be set aside for the VC. That way, once the tokens become available for trading on public crypto exchanges, VCs can cash out part of their investment years ahead of schedule. Or if the project fails before it can sell or go public, the VC can earn

a profit on an investment that would otherwise have been a loss. A few months ago, a VC friend told me they are hearing about startups being pressured to offer tokens for just this reason. VCs still want traditional equity in companies, of course, but increasingly they want something else, too, end quote. Then I've been making the joke recently about which version of the Matrix we're in, because I've been reading this book about simulation theory. Here, let me let WIRE to tell you about it, quote. This past January, the Australian techno philosopher David Chalmers published a book called Reality Plus, virtual worlds and the problems of philosophy, the central argument of which is, yes indeed, we live in a simulation. Or more accurately, we can't know, statistically speaking,

that we don't live in a simulation, philosophers being particularly prone to the plausible deniability of a double negative. Chalmers isn't some rando either. He's probably the closest thing to a rock star in the field of philosophy, a respected mind, a TED talker, and a coiner of phrases non-philosophers might even know, like the hard problem of consciousness, or to explain why your iPhone feels like such a part of you, the extended mind. And this new book, despite its terrible title, is far in away the most credible articulation of simulation theory to date. 500 pages of immaculately worked through philosophical positions and propositions rendered in clean, if rarely shiny prose. Chalmers seems to think his timing couldn't be better.

Thanks to the pandemic, he writes in the intro, our lives are already pretty virtual. So it's not hard to imagine them only getting more virtual as time goes on and Facebook slash meta metastasizes until within a century. Chalmers predicts, VR worlds will be indistinguishable from the real one, except he wouldn't quite phrase it that way. For Chalmers, VR worlds will be, are just as real as any world, including this one, which might itself be virtually simulated. So what's the difference? One way he attempts to convince you of this is by appealing to your understanding of reality. Picture a tree, he says, it seems solid, it's very there, very present. But as any physicist will tell you, at the subatomic level, it's mostly empty space. It's barely there.

at all. Few people think that the mere fact that trees are grounded in quantum processes makes them less real, Chalmers writes, I think that being digital is just like being quantum mechanical here, end quote. The whole article is actually interesting because it goes into the pushback that simulation theory has recently gotten from scientists. And well, look, how about a GQ profile of Nicholas Cage, where the man who was once considered one of our finest actors tries to come to terms with his memeification. If social media has elevated Keanu Reeves into one of the biggest movie icons of our era, Cage's reputation has sort of gone in the other direction, you'd have to say, quote, Cage is a little more circumspect with me. It's more that he doesn't want to be that guy anymore. He

hasn't wanted to since he had his first child at 26. Cage has two sons, Weston, 31, and Calell, 16. I had some moments that I went off and did some wild stuff, but a lot of that was by design, he says. I think many people in the public got swept up with an idea of me being some kind of wild madman, which was fun in the beginning. But after Cage became one of the most bankable leading men in the mid-90s to the mid-thousands, he started to lose control of his persona. First, there was YouTube, then one social media platform after another. When his career and finances started to suffer around 2010, the internet went into overdrive. His performances, which, while colorful, were at least mostly tuned to the movies they were in, were plucked out of context and spliced

together into Nicholas Cage freakout montage or 40 clips of Nicholas Cage screaming in one minute or Nicholas Cage Ultimate Freakouts uncensored version. Millions of views later, a life on screen was distilled into farce. Cage took umbrage when he first saw the photoshopping and the supercuts all those years ago, but then more or less came to accept it. You can't go against that which is, he says, shrugging. In all fairness, the internet lore has, in its own way, made him even more beloved than ever. Seldom has an actor inspired such a rabid, reverent following. His fans worship at the altar of the R-slash One True God subreddit and get his face tattooed on their bodies and attend day-long Nick Cage movie marathons, after which they go home to rest their weary heads on multiple versions of Nick Cage novelty

sequin pillows. I ask him if he sees unbearable weight, his new movie, by the way, where he plays a character called Nicholas Cage, as a chance to seize control of the memeified version of himself and get the last word. How could anything possible? top Nick Cage playing Nick Cage as the most Nick Cage thing to ever happen. There was an element of that in it. I think it was a way of embracing what had happened to me, he says. He even pushed his envelope further at times. In one scene, Cage, young and old, make out with each other. That was Nick's idea. The director told me he was supposed to kiss him on the cheek and he was like, oh, I'd like to French kiss, end quote. A movie where Nick Cage makes out with himself,

Yep, that's pretty much the most Nick Cage thing I can imagine. All right, two bonus episodes this weekend. The first one, well, it's an interesting story. Two weeks ago, a listener from Ukraine reached out to see if I wanted to talk to the founder of their tech startup about, well, about being a tech startup while bombs are falling all around you. I was honored that we had listeners in Ukraine and that they wanted to come on the show to tell us their story. We finally put together the recording session yesterday. And so Saturday morning, I'm going to release that conversation commercial free out of respect for the gravity of the topic, of course.

And by the way, you all know I try hard to keep politics out of this show. But look, this has been a huge story everywhere, not just in the world of tech. and I will cop to having sympathy for the Ukrainian people in this particular conflict. So if any of that offends you, you can skip this episode, but I don't apologize for my sympathies in this case. The episode itself is largely apolitical, though. It's basically a first-person account of one company's attempt to survive and continue to operate in a time of war. There are no political messages, no harangues about Putin or Russia. it's just a very moving, very personal on the ground story of the reality on the ground right now.

As an example and an aside, the person who reached out to me, the listener who put me in touch with the founder in question, couldn't join our Zoom call when we finally did it because there was an air raid, and they were down in an air raid bunker with no internet service. Anyway, that's the Saturday episode. Sunday, we will post the Twitter space we did with Mark. German about all the recent Apple news and rumors about Chris's unifying Apple theory and about the whole explanation of why tokens might be the thing that has gotten VCs so singularly excited about Web 3. I'd say these are two of the most substantive episodes we've ever done,

and they're coming to you all in one weekend. So enjoy. Talk to you on Monday.