Tech Brew Ride Home - Fri. 10/23 – What If PayPal Goes Big In Crypto?

Starting point is 00:00:00 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, October 23rd, 2020. I'm Brian McCullough. Today is PayPal making moves to become a major player in crypto, a look at the two big ballot initiatives in California that Silicon Valley cares about and which the rest of the country might be affected by. Why YouTube is this election's go-to place for campaigns to run ads and, of course, the weekend long-read suggestions. Here's what you miss today in the world of tech. Is PayPal about to make moves to become an 800-Pes? gorilla in the crypto space. We saw earlier this week that they're embracing crypto, and now sources say PayPal is exploring acquisitions of various cryptocurrency companies, including holding talks with

Starting point is 00:01:18 Bitcoin custodian BitGo, which makes multi-signature cryptocurrency wallets, quoting Bloomberg. It couldn't be learned how much PayPal would pay for BitGo if it goes ahead with the deal. Bitgo raised $58.5 million in 2018 at a $170 million valuation, according to Pitchbook. representatives for BitGo and PayPal declined to comment. Palo Alto California-based BitGo was founded in 2013 by Chief Executive Officer Mike Belchie. It offers digital wallets that require multiple signatures for transactions as well as offline vaults for storing Bitcoin and rival currencies. It was one of the first companies in the space to focus on institutional investors,

Starting point is 00:01:56 according to its website. The company applied in August to New York regulators to become an independent, regulated, qualified custodian under New York State banking law, a press release showed. Custodians like Bitgo are responsible for safekeeping digital assets using secure storage. PayPal announced on Wednesday that its customers can buy, sell, and hold cryptocurrencies including Bitcoin, Ether, Bitcoin Cash, and Lightcoin from digital wallets, as well as use the virtual money to shop at the 26 million merchants on its network. The announcement led Bitcoin to surge past $13,000 per coin for the first time since July 2019. PayPal said it would partner

Starting point is 00:02:34 with BitGo competitor Paxos Trust Company, a regulated provider of cryptocurrency products and services for its new service, end quote. Hey, have you heard it's election season here in the U.S.? Not sure if you're aware of that. Anyway, Californians, you have two pretty interesting propositions to consider on November 3rd that are related to technology, and your decisions might affect the rest of the country in a major way. For instance, there is, of course Proposition 22, which if you've used an Uber in California at all in recent months, I'm sure you've heard about because they pop it up in the app. Uber really wants

Starting point is 00:03:13 you to vote for Proposition 22. I'm going to quote here from Wikipedia. Proposition 22 titled Exempts App-Based Transportation and Delivery Companies from Providing Employee Benefits to Certain Drivers. The proposition seeks to grant app-based transportation and delivery companies a special exemption to Assembly Bill 5 by classifying their drivers as independent contractors, exempting employers from providing benefits to certain drivers. The proposition also includes additional protections for app-based workers over those for other independent contractors, but most of these protections only apply during the time the worker is, quote, engaged in fulfilling a specific request, and not while the worker is logged

Starting point is 00:03:51 into the app and available to fulfill a request. Lyft, Uber, DoorDash, Instacart, and Postmates have contributed over $180 million into campaigns supporting Proposition 22, making it the most expensive ballot measure in California's history, end quote. Well, while Californians are mulling their vote on that, an appeals court in California has upheld a lower court ruling ordering Uber and Lyft to stop classifying drivers as independent contractors, which is why they're pushing Prop 22 in the first place. Quote, the ruling is unlikely to have any immediate effect on either company's services, given the ruling will be put on hold for at least 60 days. Uber and Lyft can still ask that

Starting point is 00:04:32 the decision be reviewed by the California Supreme Court, which can't decide whether or not to hear the case. Lyft spokesperson Julie Wood said the company was considering all of our legal options. Quote, this ruling makes it more urgent than ever for voters to stand with drivers and vote yes on Prop 22, she said in a statement referring to a November 3rd ballot measure that Lyft and Uber have been pushing for months, end quote. Now, I had heard of that one, the prop that gig companies love, but perhaps more consequential in the long term is Prop 24, which I was unaware of, and let us consider it, the proposition that Google and Facebook hate. Quoting Recode. Proposition 24, also known as the California Privacy Rights and Enforcement Act of 2020, CPR, is supposed to expand a landmark California

Starting point is 00:05:17 privacy law that passed two years ago. There's a good chance Californians will approve this one, too. It's framed as legislation that will better protect their privacy, in particular sensitive data such as social security numbers, race, religion, and health information. And while the proposed law technically governs the use and sale of data. data for Californians, California has an enormous impact on the tech industry, which means CPR will become the de facto law for all of the U.S., which should sound like a good thing for most people. Among other impacts of the proposed law, it makes a point of protecting young people by mandating triple fines for infringements against consumers under the age of 16. They will

Starting point is 00:05:54 allow consumers to restrict the use of geolocation data by third parties, effectively ending practices like sending targeted ads to people who've visited a rehab center or a cancer clinic, and it will fund the creation of an agency to protect consumer privacy. Lastly, and maybe most importantly, the CPR closes loopholes that could be exploited by big tech platforms. One aspect of this is what we're calling the switch language, which clearly aligns the obligations of third parties to serve the interests of consumers. It notes that when a consumer exercises their opt-out rights and a publisher passes their choice along to all the companies with which it works, third parties, those companies must stop reusing that consumers' data for any other purpose.

Starting point is 00:06:36 This essentially forces those companies to revert to the role of a service provider. The switch language also prevents any wiggle room by not allowing contracts to override this requirement. As publishers experienced in Europe, platforms like Google and Facebook often use their unbalanced negotiating leverage to force publishers to sign over these data rights, so this section is hugely important for individual publishers that do not have the leverage to force Google or Facebook to stop mining data off their properties. Finally, CPR clarifies that publishers are not responsible for third parties that violate the previous section, as long as they do not have actual knowledge of the violation.

Starting point is 00:07:13 Taken together, these provisions reflect a thoughtful understanding of how data flows in the digital economy. They also put the onus squarely on big tech companies to tailor their data collection practices in accordance with consumer preferences, end quote. In the piece I just quoted from Jason Kent says, CPR isn't perfect, but it is well-intentioned. But while you may hear tech giants warning that it will hurt small publishers, he says you should probably consider the source of those warnings and the motivations behind them. Speaking of elections, if you're a politics nerd, there seems to be signs that

Starting point is 00:07:50 advertising on YouTube is this year's go-to place for campaigns to advertise. If 2016 and maybe, you know, frankly, 2008 were the elections of Facebook and Twitter, this year it seems to be YouTube. So much so that political strategists say they are struggling to find enough inventory with particular shortages in swing states, quoting Bloomberg. Viewership has shot up on YouTube during the pandemic. While commercial advertising remains anemic, there's been a glut of political ads. Many political ad buyers are interested in YouTube's limited amount of commercials that viewers can't skip through. They're also vying for ads that YouTube sells based on reservations, which can be purchased in advance like television slots and run against YouTube's most popular videos.

Starting point is 00:08:35 The reserves tend to be gobbled up by well-funded campaigns, said Reed Vinius, vice president of Digital at Majority Strategies, a Republican political ad firm. He has seen prices for some of these ads double in recent weeks. That has forced some campaigns, particularly small ones, to look at alternative digital video outlets such as Hulu and Roku. The site has a particular shortage of ad slots in critical swing states, causing prices to double in some instances. This makes political ads more lucrative for Google, which owns YouTube. The company saw advertising revenue dip earlier this year and is set to announce its quarterly earnings next week.

Starting point is 00:09:10 The situation has sent smaller campaigns scrambling to find advertising opportunities elsewhere. There is a crunch, said Kat Stern, media director for Lockwood Strategy Lab, a digital campaign agency focused on Democratic candidates and progressive advocacy organizations. All political advertisers are buying in the same states to similar audiences. She equated the commercial spree to the online spending binge during Black Friday and Cyber Monday, end quote. Time for the weekend long read suggestions. First up, Vice has a weird story about Phantom Secure, the secretive phone company that helped apparently, allegedly, the crime world evade surveillance. It's especially the story of the founder of Phantom Secure, Vince Ramos,

Starting point is 00:09:57 quoting Vice. He'd traveled to meet an associate as part of his multi-million dollar business, selling encrypted phones under the brand name Phantom Secure. Fantoms customized BlackBerry phones used dedicated software designed to make an ordinary wiretap impossible. The associate and Ramos planned to attend a fight in Vegas. But instead, the FBI were waiting and cornered Ramos, dangling charges above his head usually reserved for taking down mob bosses. Biker gangs in Australia, drug traffickers in California, and even members of the Sinaloa cartel all used Phantom's phones, rather than treat Phantom as an innocent third party to crime like Apple or Google when criminals use phones made by those companies, authorities said Ramos himself was part of criminal conspiracies. The agents had Ramos on tape,

Starting point is 00:10:42 suggesting he had made the phones to help drug smugglers. On the other side of that hotel room door, when the agents finally stopped asking their questions, there was likely a long prison sentence, end quote. Polygon has a long look at the history of cloud gaming, which I didn't realize is one of those things, that has been promised for years and years, always with false starts and false dawns. Quote, many cloud gaming services over the last 15 years like On Live and Gamefly have come and gone, dangling visions of high-quality, low-latency gaming experiences crunched on remote servers and pipe to PCs, consoles, tablets, and smartphones miles away. But often technical issues and a lack of game exclusives prevented those services from offering cloud-based experiences that rivaled games

Starting point is 00:11:25 running locally and a healthy dose of consumer skepticism ensured these services stayed on the fringe, while a wave of newer cloud gaming services, Google Stadia, Nvidia's G-Force now, Microsoft's X-Cloud, and Amazon's recently announced Luna, aims to change that. The battle for mainstream acceptance may be as crowded and difficult as ever, end quote. In Gadget takes a look at virtual studios, the way shows like The Mandalorian and some recent movies have been shot lately, and they delve into how this might lead to a new filming revolution, quote, Rebellion says it's the world's first all virtual production, with all of the action playing out entirely in front of a halo of large flat screen displays. These monitors are connected to PCs running Unreal Engine, where the

Starting point is 00:12:10 virtual environments are produced. Essentially, the painted curtains and matte paintings of yesterday have been replaced with LED TVs showing footage from a game engine. You might have heard of the technique before. The first high-profile instance of its use was Disney's The Mandalorian, which shot the majority, but not all of its scenes in these studios. In that instance, the action was filmed in a 270-degree horseshoe of LED displays 20 feet high. Virtual studios have the potential to make a big difference to filmmaking. Because the background environments were already visible in the shot, there was no need to add them in afterwards.

Starting point is 00:12:47 It also gives actors a better handle on what they're doing since performing in an entirely green void can understandably hamper performances. It's also a lot easier and cheaper to shoot than sending your crew across the lobe to real-world jungles and deserts that even a lavishly budgeted show like the Mandalorian could hardly afford, end quote. And of course all week, people have been looking at the DOJ's case against Google, the antitrust case, and I've actually been surprised. Lots of people that I respect, like Ben Thompson, think that the government might actually be making a decent case. Seemingly, the case is focusing on Google's deals to get its search engine on other platforms.

Starting point is 00:13:27 quoting Alex Cantowitz's big technology newsletter. In a surprising revelation, the DOJ said these distribution deals accounted for three times as many searches as Google sees on its owned and operated properties. 60% of all general search today comes to Google via its partners, the DOJ said, while 20% of search takes place on Google properties like Chrome and Google.com. Google, therefore, is far more vulnerable than we thought, as in Pachai's early days, its fate rests in intermediary's hands, as evidenced by the $8 to $12 billion it pays to Apple each year, end quote. Yeah, that's the thing that surprises me. When I first read the details of the case, I was like, cutting off these pay-to-play deals, that can't really make that

Starting point is 00:14:14 much of a difference to Google, can it? Well, I was very wrong about that, it seems. These deals are extremely important to Google, and to Apple, too, I suppose. Well, you know, I respect Tim Wu tremendously. He's shaped a lot of my thinking about big tech and big platforms, and he's actually a lawyer. So let me share his take, quote. At bottom, what favors the government is that their case is simple, and every box is ticked. It is about as straightforward as an anti-monopoly case can be, and they have a pretty simple message. If Google really was as good as they say they were, why did they need to pay Apple billions for nearly 50% of their mobile traffic? And in the end, doesn't that just lock up too much of the market? What favors Google is the strong fact that their

Starting point is 00:15:00 search engine is almost universally thought of as the best other than by the privacy inclined. They can also claim, in reasonably good faith, that everything they did was in the interest of trying to give users a good experience. Myself, I don't know who will win, and at some level, it is surprising that Google hasn't managed to settle this. While I'm not a fan of bigness, I do admire and respect what Google has built, but I can't help thinking that if Google really is so great, why not settle the case and prove it by competing without the exclusive contracts, end quote. And finally, you know how much I always devour Matthew Ball's essays when they come out, usually they're on the streaming wars, but this time he's taken aim at something near and dear to my heart,

Starting point is 00:15:41 the opportunity in the audio space and who he thinks will capture it. Come for the great historical details like this, quote, even the Beatles, though doubtlessly destined for success, were elevated by changing technology. Between 1954 and 1962, five and a half million transistor radios were sold in the United States. In 1963, this install base nearly doubled to 10 million, many of which were received as Christmas gifts. The top use case or killer app for this newly ubiquitous device, listening to The Beatles' I Want to Hold Your Hand, which was coincidentally released for radio play on December 26. Within a month, the song had become the Beatles' first Billboard number one, thereby landing the group its February appearance on the Ed Sullivan show and jump-starting Beatle

Starting point is 00:16:23 mania, end quote. Then stay for the analysis like this, quote, the dynamic detailed above isn't unique to TikTok. All of the major social platforms such as Twitch, Facebook, and Roblox are now offering creators the ability to use professional music as part of their user-generated content and at no incremental cost. This will mean brand new, highly scaled revenue streams and discovery models for artists. And from a macro perspective, it's notable that while no one has quite cracked, User-generated content in audio, the biggest video platform globally, YouTube, is based on it. As is the biggest video game, Roblox, the biggest publisher of news, Facebook is UGC. We can throw in cabs, commerce, hotels, etc., too.

Starting point is 00:17:09 Someone will eventually find the right model, and we're probably not that far off, end quote. That is all for this week, but not all for the show. We've got a weekend bonus episode coming at you tomorrow that I think you'll enjoy. dust it off the old history hat, as I said. Talk to you on Monday.

Tech Brew Ride Home - Fri. 10/23 – What If PayPal Goes Big In Crypto?

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