Tech Brew Ride Home - Mon. 09/21 – ByteDance Says It Won. Trump Says Not So Fast. TikTok Continues… For Now.

Episode Date: September 21, 2020

It looked like we had a TikTok deal the president liked. Then ByteDance went and pointed out they still had control. Now, I dunno where we’re at. Microsoft buys Bethesda. The founder of Nikola steps down in murky circumstances. And Amazon wants to use your Echo and Tile devices for a true Internet of Things network. Sponsors: Amazon.com/techmeme PayPal App Links: Trump Blesses Oracle’s TikTok Deal, Delays App Store Ban (Bloomberg) TikTok deal hit by confusion over who will own and control the app (FT) Judge halts Trump administration order banning WeChat from Apple and Google app stores (CNBC) Microsoft purchases Bethesda Softworks in industry-changing acquisition [Updated] (ArsTechnica) With $100M in funding, Playco is already a mobile gaming unicorn (TechCrunch) Nikola Founder Trevor Milton Resigns as Executive Chairman Amid Fraud Allegations (WSJ) Nikola’s chairman steps down, stock crashes following allegations of fraud (TechCrunch) Amazon details its low-bandwidth Sidewalk neighborhood network, coming to Echo and Tile devices soon (TechCrunch) 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 Memeride Home for Monday, September 21st, 2020. I'm Brian McCullough today. It looked like we had a TikTok deal that the president liked over the weekend.

Then Bite Dance had to go and point out that they still had control. Now, I don't know where we're at. Microsoft buys Bethesda, the founder of Nicholas stepped down in murky circumstances, and Amazon wants to use your echo and tile devices for a true Internet of Things network. Here's what you missed today in the world of tech. Okay, here's what I can tell you. can still use TikTok as of this moment. President Trump, since we last spoke, said he approved Oracle's bid for the U.S. operations of TikTok, quote, in concept. And so essentially the U.S.

delayed the planned TikTok ban by about a week. As Oracle and Walmart looked to take a 20% stake in TikTok Global's planned pre-IPO round, as well as, of course, the deals to host TikTok's U.S. user data and computer systems, quoting Bloomberg. I approve the deal in concept, Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina, if they get it done, that's great. If they don't, that's okay too, end quote. The new company, which will be called TikTok Global, has agreed to funnel $5 billion in new tax dollars to the U.S. and set up a new education fund, which Trump said would satisfy his demand that the government receive a payment from the deal. Quote, they're going to be setting up a very large fund,

he said, that's their contribution that I've been asking for, end quote. Oracle plans to take a 12.5% stake in the new TikTok Global, while Walmart said it has tentatively agreed to buy 7.5% of the entity. Walmart's chief executive officer Doug McMillan will serve on TikTok Global's board of directors, the retailer said in a statement. Four of the five board seats will be filled by Americans, according to the statement. TikTok's Chinese owner, ByteDance, is seeking a valuation of $60 billion for the app, according to a person familiar with the matter. Oracle and Walmart would pay a combined $12 billion for their stakes if they agreed to that

asking price. The final valuation has not been set as the parties worked out the equity structure and measures for data security, the person said. Terms are still in flux and the proposed valuation could still change, end quote. Yeah, more about that flux in a second, but more about that $5 billion payment to the government, the president mentioned. I guess that's the key money by another name that he was asking for all along, Except that seems to have come as news to at least most of the parties involved.

Oracle later confirmed it to a degree, but quoting Dan Prumack on Twitter. More about TikTok quote payments. Number one, the education fund is not to fund Trump's patriotic history project. Number two, the $5 billion figure is not codified anywhere and no one expects it to be anywhere near that big. Number three, the $5 billion to the Treasury is anticipated payroll taxes over an unspecified period of time. There will be an education-focused effort using TikTok's short video format as a distribution tool, but there is no dollar amount tied to it with Trump seeming to conflate the

payroll tax figure with the education fund. Remember, TikTok Global doesn't have $5 billion, at least not until its IPO, which it wants to complete within 12 months, end quote. So again, has this all been Kabuki Theater? Make the president think he's getting his key money, give a politically connected firm a sweetheart deal, and even if the $5 billion is really not going to be $5 billion, again, we have the precedent of the government forcing the divestment of private property, giving it to a favored entity, and essentially asking for a kickback. Exactly what happens in Banana Republics. Super. Oh, and about that whole thing being in flux. Bight Dance this morning was asserting that it is maintaining majority ownership,

and control over TikTok Global and will not transfer any source code or technology to Oracle or Walmart. So essentially waving a flag saying they won. Quoting the Financial Times, Bightdance said on money that it would maintain majority ownership and control of TikTok global, contradicting statements by Donald Trump, Oracle and Walmart after it agreed a deal with the companies to continue operating in the U.S. Oracle, the U.S. Technology Group and Walmart, the world's biggest bricks and mortar retailer, said in a joint statement at the weekend that TikTok Global would be, quote,

majority owned by American investors, end quote. However, while their stake combined with the equity held by longstanding U.S. investors in ByteDance might mean American investors would be the biggest financial beneficiaries, direct majority ownership and control of the business is set to remain with the Chinese company. In a statement released on Jinri Tachau, BightDance's Chinese social media platform, the company said, TikTok Global would be a, quote, 100% fully owned, subsidiary. The company added that after raising funds ahead of a potential initial public offering, it would have an 80% stake in the company, end quote. So maybe that wasn't a good thing to go spouting

off about, because this either means now the deal is really off, because the Chinese side really doesn't want it, or else the deal is off because the president isn't going to be pleased about that more in just one second, or else everyone is just going to declare victory and nothing meaningfully has actually changed. My money's on that, but hard to tell at this point, because to conclude, about 30 minutes ago, President Trump said he would not approve a TikTok deal unless ByteDance ceded control. And, well, I don't know. On the other front of this particular war, a U.S. judge in California has issued a preliminary injunction halting the Commerce Department's order banning downloads of WeChat. So again, as of this moment, you are still able to use

Wii chat in the U.S. if you weren't aware, quoting CNBC. The move blocks the Commerce Department from forcing Apple and Alphabet's Google to remove Tencent Holdings WeChat for downloads by Sunday evening. U.S. magistrate judge Laurel Beeler in California said in an order that we chat users who filed a lawsuit, quote, have shown serious questions going to the merits of the First Amendment claim, the balance of hardship tips in the plaintiff's favor, end quote. Beeler's preliminary injunction also blocked the commerce order that would have barred other transactions with WeChat in the United States that could have degraded the site's usability for current U.S. users. The U.S. Commerce Department and the White House did not immediately comment, end quote.

Huge news this morning in video games. Microsoft said it will be acquiring Zeni Max Media for $7.5 billion in cash. Now, you might not know the name Zeni Max Media. I know I certainly didn't, but I did know this name, Bethesda Softworks. Zenimax Media owns Bethesda, the maker of such gaming franchises as Doom, the Elder Scrolls, and Fallout, and the upcoming space epic Starfield. As Ars Technica says, this is an industry-changing acquisition. Quote, for context, that's three times the price Microsoft paid for Minecraft Maker Mojang back in 2014.

Mojang, of course, continued to be a multi-platform developer after its Microsoft acquisitions. a decision that led to the odd site of Microsoft publishing a Mario-themed mashup pack for Minecraft on Nintendo consoles. But Minecraft was a relatively unique situation where the acquired game was built around cross-platform compatibility among a heavily established fan base. Microsoft seems less likely to extend that same multi-platform courtesy to Bethesda's gaming properties in the long term, but nothing has been officially announced on that score. In the near term, though, Bethesda is still working on two console exclusive titles for the PS5, Ghost Wire Tokyo, and Death Loop. Both those games have featured heavily in Sony's console

marketing this year, ahead of expected launches in 2021. It is likely too late to change deal structures and platform release plans for those titles, which are also coming to the PC, which means Microsoft could well be behind two of the PS5's biggest console exclusives next year. The key point is we're still Bethesda, VP of PR and marketing Pete Hines wrote in a blog post announcing the news. We're still working on the same games we were yesterday, made by the same studios we've worked with for years, and those games will be published by us, end quote. Being part of Microsoft Game Studios makes Bethesda's gaming lineup a de facto part of Xbox GamePass. Microsoft promised years ago that every upcoming first-party game would be available on the subscription service, quote, on the same day they launch, end quote. While we're on gaming, let me cram an interesting raise in here.

Playco is a mobile gaming startup which has been in stealth until today when it finally announced its very existence. Zinga co-founder Justin Waldron is one of the founders of Playco. So that's notable. Playco also announced it raised a $100 million series A round at a greater than $1 billion valuation. So that's a Monster Series A round, which is notable. They're already a unicorn on their first day of, at least our knowing they exist without having even launched a product yet, so that's notable as well. The round was led by Josh Buckley and Sequoia Capital, so that's notable. Will Smith is involved, that's notable. All of these things are notable. So what is so notable about what Playco is doing? Quoting TechCrunch. Michael Carter, Playco's CEO and previously the co-founder of Game Closure,

said the startup will be revealing its first games later this year. For now, he wants to talk about Playco's vision. It's trying to address the fact that, quote, it's very difficult to get two people into a single game in the app store, end quote. After all, downloading an app is a pretty big hurdle, especially compared to the early days of web and social gaming when all you needed was a link. We're going to bring that back, Carter said. With Playco's titles, sharing and playing a mobile game with your friend should be as simple as texting or calling them. All it really takes is a hyperlink, end quote. He pointed to a number of technologies that can enable this instant play experience on mobile. including cloud gaming, HTML5, and platform-specific tools like Apple's new app clips.

He claimed, the team is, quote, very good at this cutting-edge technology, and the company has created its own game engine, but he said technology is not the sole focus. That's just table stakes, end quote. Waldron, Playco's president and the Zinga co-founder, argued that this represents the next big platform shift in gaming, and it will require, quote, reinventing a lot of the most popular genres today, while also creating entirely new genres in the same way that social gaming enabled new types of games. Quote, if you think about Farmville, there were no farm games being advertised being in local console game stores. Waldron said, they don't market well.

If you put up a poster for a farm game, no one wants to play. But if your friends invite you by sending you some digital crops, then you absolutely want to play. Carter also acknowledged that it's unusual for a startup to raise so much money in its Series A. Quote, it's not your typical company and it's not your typical series A, end quote. But he said that being more ambitious with fundraising allowed play code to quickly grow the team to 75 people, end quote. Nicola is one of those electric vehicle startups we discussed recently on a weekend bonus episode. It's an electric vehicle startup not named Tesla, remember, and Nicola is one of those startups that's also focusing more on trucks. Yeah, well, the founder of Nicola, Trevor Milton, has abruptly resigned as

executive chairman of Nicola amid what the Wall Street Journal is calling fraud allegations. Quote, Nicola, which went public in June through a reverse merger, has come under scrutiny since short-seller Hindenburg Research released a report earlier this month, accusing the company and Mr. Milton of making exaggerated claims about the readiness of Nicholas' technology and how much of it is proprietary. Doubts about the company's readiness to produce vehicles and questions about its claim to own proprietary technology have prompted U.S. securities regulators and the Justice Department to investigate whether Nicola misled investors, the Wall Street Journal reported earlier this month, citing people familiar with the matter. Nicola has called the Hindenburg

report false. Mr. Milton said in a company statement that he had asked the board to step down so the focus was on the business, not him. He added in a separate statement posted on his Twitter account early Monday that he intended to defend himself against, quote, false allegations leveled against me by outside detractors, end quote. Mr. Milton, 39 years old, founded Nicola in 2015 and owns nearly one quarter of the Phoenix-based company's shares, according to fact set. He served as chief executive until the company went public, at which point he became executive chairman and Mark Russell was appointed as CEO. Investors have seen Mr. Russell as a calming influence over the bulliont behavior of Mr. Milton, who has frequently vented

frustrations and shared ideas via Twitter, end quote. More details I learned about Nicola today while researching this segment. GM recently said, that it would take an 11% stake in Nicola in exchange for helping to engineer and build an electric pickup truck called the Badger, and Nicola's stock was down 21% in this morning's trading, that nonetheless still gives it a $13 billion market cap. And this just popped up on TechCrunch, quote, news is breaking that Trevor Milton, Nicola Corp founder and former executive chairman, was arrested by the DOJ and FBI at Sky Harbor Airport in Phoenix, Arizona this morning. This is so far unconfirmed, end quote.

Finally today, Amazon says its echo and tile devices will later this year become Bluetooth bridges for sidewalk, Amazon's low bandwidth, long-range wireless protocol. What fascinates me about this is that Amazon's sidewalk is part of a new networking system that will extend the hyper-local low-range systems with Amazon's Project Kuiper, the 3,200 satellites, that it is hoping to use to connect high-speed internet wirelessly to basically the entire planet. So, if this whole project works, this would have the potential to someday make any wireless internet from the telecom companies and their cell towers, perhaps redundant, at the very least for Internet of Things devices. Think of this as the Internet for the Internet of Things,

quoting TechCrunch. Sidewalk, which is somewhat akin to a mesh network that with the right amount of access points could easily cover a whole neighborhood is now getting closer to launch. As Amazon announced today, compatible echo devices will become Bluetooth bridges for the sidewalk network later this year, and select ring floodlight and spotlight cams will also be part of the network. Since these are low bandwidth connections, Amazon expects that users won't mind sharing a small fraction of their bandwidth with their neighbors. In addition, the company also announced that Tile will be the first third-party sidewalk device to use the network when it launched. launches its compatible tracker in the near future. In today's white paper, the team notes that

Amazon will make sure that shared bandwidth is capped and provide a simple on-off control for compatible devices to give users the choice to participate. The maximum bandwidth a device can use is capped at 500 megabytes, and the bandwidth between a bridge and the sidewalk server in the cloud won't exceed 80KBPS. Quote, echoes are going to serve as bridges. That's going to be a big thing for us, Arana said. You can imagine the number of customers that will benefit from that feature. And for us, to be able to have that kind of service, that's super important. And tile is going to be the first edge device, the first sidewalk-enabled device, and they'll be able to track your valuables, your wallet, whatever it is you love, end quote. And in many ways, that's the promise of sidewalk.

You share a bit of bandwidth with your neighbors, and in return, you get the ability to connect to a smart light in your garden that would otherwise be outside of your own network, for example, or get motion sensor alerts when your home Wi-Fi is out, or to track your lost dog who is wearing a smart pet finder, something Amazon showed off when it first announced sidewalk, end quote. By the way, yes, Amazon and A-L-E-X-A are going to be sponsoring the show this week. The fact that I ended the episode with a story about the same is entirely coincidental. Editorial has nothing to do with advertising on the show, as you know.

By the way, I'm liking iOS 14 very much so far. I am liking having widgets, but I'm really liking it because of one thing I didn't expect. Somehow, when I updated to iOS 14, Apple Maps updated as well, and now Apple Maps has speed camera warnings inside it. So when I cross Brooklyn every morning to pick up our nanny, I get a warning to slow down every time I go past a speed camera and even a red light camera too, which I didn't even know those. existed. I guess I hadn't triggered any of those yet. Remember what I told Martin Lee about my rash of speeding tickets at the end of our weekend bonus episode about electric car startups, not named Tesla? Hopefully I'll get no more tickets. Also, now I'll have to go back and listen to what Martin said about Nicola. Talk to you tomorrow.