Tech Brew Ride Home - Mon. 07/17 – Sony And Microsoft Stop Fragging Each Other Over Call Of Duty

Episode Date: July 17, 2023

Sony and Microsoft have made nice. Bitcoin ETFs continue to look like a possibility. How the Vision Pro is shaking up Apple’s org structure in a meaningful way for the first time since the Steve Jobs Era. And why Netflix’s recent turnaround have rekindled those perpetual rumors that Apple is gonna end up buying Disney some day. Sponsors: CalderaLab.com code RIDE for 20% off Hillsdale.edu/ride Links: Sony agrees to 10-year Call of Duty deal with Microsoft (The Verge) SEC accepts BlackRock’s Bitcoin ETF application, signaling regulatory review (CoinTelegraph) The shady world of Brave selling copyrighted data for AI training (StackDiary) Hacker News Thread On The Brave Thing Typo leaks millions of US military emails to Mali web operator (Financial Times) Apple’s New Vision Group Reflects Shift Away From Steve Jobs Approach (Bloomberg) Bob Iger Shifts From Building an Empire to a Disney Yard Sale (Bloomberg) 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 from Monday, July 17th, 2023. I'm Brian McCullough today. Sony and Microsoft have made nice. Bitcoin ETFs continue to look like a possibility how the Vision Pro is shaking up Apple's org structure in a meaningful way for the first time since the Steve Jobs era. And why Netflix's recent turnaround might have rekindled those perpetual rumors that Apple is going to end up buying Disney someday. Here's what you miss today in the world of tech. Sony and Microsoft have signed a 10-year call-of-duty on PlayStation deal. In 2022, Microsoft originally offered to, quote, keep existing Activision console titles on Sony through 2027, so this deal

would be longer, though it apparently only applies to call of duty, quoting the verge. Microsoft gaming CEO Phil Spencer says Sony and Microsoft have agreed to a binding agreement to keep Call of Duty on PlayStation. While Microsoft's initial announcement doesn't mention 10 years for Call of Duty on PlayStation, Carrie Perez, head of Global Communications at Xbox, confirmed the 10-year commitment to the verge. Perez later confirmed to the verge that the deal is only for Call of Duty, though. That makes the deal similar to a 10-year agreement between Microsoft and Nintendo, but not the various deals Microsoft has struck with Nvidia and other cloud gaming platforms to bring Call of Duty and other Xbox Activision games to rival service.

services. Microsoft's original deal offer to Sony in 2022 included keeping all existing Activision console titles on Sony, including future versions in the Call of Duty franchise or any other current Activision franchise on Sony through December 31st, 2027, end quote. The deal terms have clearly changed since that opening offer, with an extension to 10 years, that's limited to just Call of Duty. The deal comes after months of discussions and counteroffers over the past 18 months between Microsoft and Sony over the future of Activision content on PlayStation. Tensions over the fate of Microsoft's Activision Blizzard deal really came to ahead when Jim Ryan spoke to Activision CEO Bobby Kotik on February 21st, the same day Microsoft, Activision, Sony, and others were meeting

with EU regulators. Ryan said to Kotik, I don't want a new call of duty deal. I just want to block your merger. Jim Ryan confirmed the meeting during testimony in the FTCV Microsoft hearing. I told him that I thought the transaction was anti-competitive. competitive. I hope that the regulators would do their job and block it, end quote. Katak had apparently wanted to cover himself with an extended Call of Duty deal with Sony just in case the Microsoft transaction didn't go through. At the same time, Microsoft was waving around a contract in front of the world's media, trying to tempt Sony into signing a deal. Microsoft has always maintained it would keep Call of Duty on PlayStation arguing it doesn't make financial sense to pull the game from

Sony's consoles. Xbox Chief Spencer tried to settle the argument in November before appearing in court last month, and reiterating, under oath, that call of duty would remain on PlayStation 5. All eyes are now on the regulatory situation in the UK after Microsoft's proposed deal was blocked there earlier this year. Microsoft is participating in a case management conference at the UK's Competition Appeal Tribunal tomorrow alongside Competition and Markets Authority, or CMA. The conference has been called, quote, to consider the application made jointly by all parties to adjourn these proceedings pending further discussions between the CMA and Microsoft.

end quote. This continues to be interesting to me. The U.S. Securities and Exchange Commission has formally acknowledged Black Rocks and BitWise's spot Bitcoin ETF applications, indicating that the commencement of the official review process for such products is maybe nigh, quoting Coin Telegraph. While it is an initial step in a lengthy regulatory journey, it signals the SEC's readiness to explore the idea of a spot Bitcoin ETF and assess its potential market effects. ETFs are investment funds that typically follow specific indexes and are commonly traded on exchanges. In the realm of cryptocurrencies, a fund that mirrors the value of one or multiple digital tokens and comprises a variety of cryptocurrencies is known as a cryptocurrency

ETF. On Friday, July 14th, the regulator announced that it is also in the process of reviewing applications for various funds, including Wise Origin Bitcoin Trust, Wisdom Tree, Van Eck, and Invesco Galaxy. The competition among companies vying to be the first to launch a Bitcoin ETF in the United States is seen by many as a positive development for the crypto industry. With multiple filings, the chances of success increase, with diverse proposals enabling the SEC to assess different strategies and concerns. The SEC has yet to approve a spot Bitcoin ETF in the United States. However, in Canada, the financial product is already available. Three significant funds. Purpose Bitcoin, three IQ coin shares, and CI Galaxy Bitcoin have been

approved by regulators in the country, end quote. Longtime listeners to the show will remember when publicly on this show I made the shift to the Brave browser from Chrome after kicking the tires of various options. And I've got to say, I've been happy with Brave to a large degree these past few years and felt good about my choice for privacy reasons. Well, according to Stack Diary, Brave appears to be selling copyrighted data for AI training and giving third parties the rights to that data. While not disclosing its own robot crawler activities. Quote, as you may have noticed, I use the word copyrighted for the title of this story, and it's not without reason. I think this story could have been fairly decent,

even without the copyright part, so before we get into the nitty-gritty stuff, I can 100% confirm that Brave lets you ingest copyrighted material through their Brave Search API. One might argue that even 260 words, which the search API ingest, are not useful enough for any real impact, but I'm not sure that is the case, besides the whole copyright thing, because not only can you manipulate these results and fine-tune the output based on domains, type, date, and other metrics. Brave also offers additional API features for paid customers, such as schema-enriched web results, Info Box, FAQ discussions, locations, and more, all of which can be used to extract very specific information and then be used to fine-tune LLMs because Brave acts as a middleman, end quote.

This is all a bit beyond my ken, so I'm also linking to a hacker news thread about this where people dig into the weeds on it. Link in the show notes. Millions of potentially sensitive military and security-based emails might have been miss sent to molly's. comal domain due to people mistyping the U.S. militaries. Dot M.I.L. domain. Quoting the Financial Times, millions of U.S. military emails have been misdirected to Mali through a typo leak that has exposed highly sensitive information including diplomatic documents, tax returns,

passwords, and the travel details of top officers. Despite repeated warnings over a decade, a steady flow of email traffic continues to the dotML domain, the country identifier for Mali, as a result of people mistyping.mil, the suffix to all U.S. military email addresses. The problem was first identified almost a decade ago by Johannes Zeriber, a Dutch internet entrepreneur who has a contract to manage Mali's country domain. domain. Zerber has been collecting misdirected emails since January in an effort to persuade the U.S. to take the issue seriously. He holds close to 117,000 misdirected messages. Almost a thousand arrived on Wednesday alone. In a letter he sent to the U.S. in early July, Zerber wrote,

quote, the risk is real and could be exploited by adversaries of the U.S., end quote. control of the dot ML domain will revert on Monday from Zerber to Mali's government, which is closely allied with Russia. When Zerber's 10-year management contract expires, Malian authorities will be able to gather the misdirected emails. The Malian government did not respond to requests for comment. Zerber, managing director of Amsterdam-based Molly Dili, has approached U.S. officials repeatedly, including through a defense attaché and Mali, a senior advisor to the U.S. Cybersecurity Service and even White House officials say. Much of the email flow is spam, and none is marked as classified, but some messages contain highly sensitive data on serving U.S. military personnel, contractors, and their families.

Their contents include x-rays and medical data, identity document information, crew lists for ships, staff lists at bases, maps of installations, photos of bases, naval inspection reports, contracts, criminal complaints against personnel, internal investigations into bullying, official travel itineries, bookings, and tax and financial records. Mike Rogers, a retired American admiral who used to run the National Security Agency, and the U.S. Army's Cyber Command said, quote, if you have this kind of sustained access, you can generate intelligence even just from unclassified information, and quote.

Apple continues to downplay at least this initial launch of the Vision Pro. They know the price tag is such that this isn't going to be a hit right out of the gate at the level of the iPad launch or even the Apple Watch launch, where those products immediately became major product lines, generating meaningful revenue for Apple. but according to Mark German, that doesn't mean they're not taking the long-term view here. In fact, the launch of the Vision Pro is launching a huge shakeup in Apple's org structure. When Steve Jobs returned to Apple in the late 1990s, he threw away the company's product development playbook and shifted to a functional management structure. That's why the company has no iPhone or iPad division, no AirPods group, and no dedicated Mac organization.

Instead, Apple is organized by departments like software engineering, hardware development, machine learning, design, and services. Contributions from all those groups are then funneled into new features and products. But Apple's most recent new product categories, including the Vision Pro headset, show that strategy is evolving. The Vision Pro has its own dedicated division inside of the company. The unit, run by Mike Rockwell, was dubbed the Technology Development Group, or TDG, from its inception around 2015, until the name changed in recent weeks. It is now internally known as the Vision Products Group, or VPG. The group doesn't depend on Apple's main software and hardware engineering and other departments. It has its own versions of those teams reporting to Rockwell, in addition to ones for strategy,

computer vision, content, app development, and project management. That doesn't mean the Vision Pro Group isn't collaborating with other parts of Apple. It works with the design and operations teams overseen by Jeff Williams, Apple's chief operating officer, and the Johnny Shrugi-led chip unit that makes M2 and R1. processors. It also relies on frameworks and other building blocks created for iOS and MacOS by Federigi's group, which is responsible for some of the headset's developer tools as well. And it gets a helping hand from the main hardware organization. When the Vision Pro was finally announced, people working on it believe the development team would eventually be broken up and distributed across the

company, matching the approach used by Apple's other core devices. But the recent name change seems to imply that the current structure is here to stay. It's also worth noting that the unit's new name and use of a plural and products, seems to confirm the Vision Pro is the first of many headsets to come from Apple. As I've reported previously, the group is already working on a lower-cost version of the device, along with a second-generation pro model, end quote. Mark also says that he expects an October launch for new Macs with M3 chips, including refreshed IMAX, 13-inch MacBook Ares, and 13-inch MacBook Pros. Might even get their own event for such an unveiling, Mark says. Finally today, one thing we haven't had a chance to discuss was the big news from Disney last week.

Basically, in a series of interviews, recently returned CEO Bob Eiger signaled that he was open to selling Disney's television networks and cable channels. Also, he could foresee a future where everything on ESPN was available for a subscription to an app. But as Thomas Buckley and Lucas Shaw point out in their newsletter this weekend, while the Disney situation could get interesting, listen on for continued speculation about Apple. buying Disney someday? The real story here is the turnaround at Netflix. Quote, while we will get to the major Disney news in a minute, let's look ahead to a big week for Netflix and the entire entertainment business. The worldwide leader in streaming TV will report second quarter financial results on July 19th, and expectations are high. Shares of Netflix

are up more than 90% since the market bottomed out in October, and the company is the 11th best stock in the S&P index since then. New data from Antenna, why? June was Netflix's best quarter of domestic growth in years. About three and a half million people signed up for Netflix in the U.S. last month, an increase of more than 100% over its recent averages. Netflix accounted for one quarter of all new domestic streaming signups last month, at least among the services measured by antenna. This doesn't mean Netflix added three and a half million customers in the U.S. That would be shocking. Those are gross additions. Lots of people also canceled their Netflix accounts, but people are signing up a lot faster

than they are canceling. That is good news for a company that hasn't added customers at home in two years. Netflix has cautioned that the password crackdown, which might account for some of this, won't boost its customer base until the second half of this year, but the data suggests that it has already prompted millions more people to start paying. And then there is the new cheaper ad-supported stream that might already be generating more income per user than the subscription stream. But back to Disney. Bob Eiger built Disney into the world's most powerful entertainment company by acquiring Pixar, Marvel, and Lucasfilm. Now he's looking to downsize. Iger put roughly a third of the company up for sale this week, declaring Disney's linear TV assets as non-core. That includes TV networks ABC,

FX and Freeform. He also said Disney is looking for a strategic partner for ESPN, though he's not willing to sell the whole thing yet, and the company is already looking to sell or restructure its TV and streaming business in India. It's a stunning, if inevitable turn of events for an executive who spent so much of his career working in TV and for a company that relied on cable networks for the majority of its profit. Before the pandemic, Disney's media networks generated 35% or $24.8 billion of company revenue and more than 50% or $7.5 billion of its offering income. Management chased streaming subscribers at unsustainably low prices to goose the launch of Disney Plus in 2019 and is now seeking to raise prices without alienating customers. Disney Plus lost 4 million subscribers just last quarter.

It's not yet clear how serious Iger is about selling entire TV networks. ABC, for example, is key to retaining NBA rights. FX has been a key supplier of programming to Hulu, which Iger plans to keep and fold into Disney Plus. Yet Iger's CNBC interview was unmistakably a distress signal. Disney is contractually obligated to buy Comcast's one-third stake in Hulu in a deal that would value the business at least at $27.5 billion. It's also wrestling with a colossal debt pile, stemming from its $71.3 billion acquisition of 21st Century Fox in 2019.

A sale of the TV business could fetch around $8 billion, according to Wells Fargo analyst Steve Kahl, which would largely offset the cost of acquiring the piece of Hulu it doesn't yet own. Most of the potential suitors for linear TV networks are financial entities like private equity firms that would milk them for cash as they decline into obscurity. The list of interested parties in ESPN is longer and could include tech giants like Apple, as well as sports companies like fanatics. The streaming side of the sports giant ESPN Plus remains more of a niche business.

But Disney continues to signal it will offer all of ESPN outside of the cable bundle in the near future. Rumors have long swirled that Iger will end up selling all of Disney to Apple. It's still hard to imagine Iger selling Disney to anyone, though. He was always a builder, not a seller. But Bob the builder is doing a lot more cutting this time around. Iger's comments should spook his peers. If a diversified company like Disney is bailing on its cable networks, what does that mean for companies like Paramount Global and Warner Brothers Discovery? They still make almost all of their profit from networks that are shrinking, end quote. Nothing for you today. Talk to you tomorrow.