Tech Brew Ride Home - Mon. 10/17 – Kanye To Elon: Hold My Beer

Episode Date: October 17, 2022

Looks like Ye, née Kanye West, is going to try to buy the social network Parler. A look at the Chinese export controls that could potentially force American executives to choose between their jobs and their American citizenship. Wait until you hear about the Mango Markets exploit. And what do you think is the global population of robots, right now? Today? Sponsors: RocketMoney.com/ride Links: Kanye West is buying ‘free speech platform’ Parler (The Verge) Kanye West to buy social media app Parler (The Verge) Decentralized Solana-based trading platform Mango reportedly hit by $100 million exploit (Fortune) Biden declares economic war on the Chinese semiconductor industry (Noahpinion) With New Crackdown, Biden Wages Global Campaign on Chinese Technology (NYTimes) American Executives in Limbo at Chinese Chip Companies After U.S. Ban (WSJ) Meet the Army of Robots Coming to Fill In for Scarce Workers (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Tech meme right home from Monday, October 17, 2022. I'm Brian McCullough. Today, looks like Yi, nay Kanye West, is going to try to buy the social network parlor. A look at the Chinese export controls that could potentially force American executives to choose between their jobs and their American citizenship. Wait until you hear about the mango markets exploit. And what do you think the global population of robots is right now today? Here's what you miss today in the world of tech. As at a ramdam said on Twitter, quote, If I had a nickel for every time a free speech-obsessed billionaire wanted to buy a social media platform, I would have two nickels, which isn't a lot, but it's funny that it's happened twice, end quote.

Parlor says it has agreed to be acquired by Ye, formerly known as Kanye West, to create, end quote, uncanceable ecosystem with the deal expected to close in Q4 of 2022. Quoting the Verge. Parlor's emphasis on free speech has made it a lightning rod for right-wing conspiracy theorists. The platform was accused of helping rioters plan and coordinate the storming of the Capitol building that took place on January 6, 2021. Following the riots, both Google and Apple removed Parlor from their respective app stores. Apple cited the, quote, threats of violence and illegal activity on Parlor, and said that the social media network had, quote, not taken adequate measures to address the proliferation of these threats to people's safety, end quote. That same month, Amazon also kicked Parlor off its web hosting service. Parlor was later reinstated

on both app stores after agreeing to more closely moderate posts. Its website appeared back online in February 2021. Parliament Technologies press release notes that it will continue to provide, quote, ongoing technical support and offer cloud services via its quote, private cloud and data center infrastructure after the acquisition. The company has previously suggested these cloud services are uncancellable, end quote. A bit more detail here from Reuters, quote. Recently, Kanye West was locked out of his Instagram by Facebook parent meta platforms for posts that online users considered anti-Semitic.

He then moved to Twitter, posting for the first time in two years. In a world where conservative opinions are considered to be controversial, we have to make sure we have the right to freely express ourselves, Ye said in a statement. Ye seemed to have joined Parlor on Monday and had about 91 followers at the time of the announcement, end quote. No notes for me on this one. This version of the timeline clearly has no sense of shyness. Anything that can happen, why not just let it happen?

Here's another fun one to catch you up on. Mango Markets is a Solana Defi platform, and it reported last week that a hacker allegedly stole around $100 million of its tokens by manipulating its tokens price. The hacker then made a Dow proposal. to waive any investigations into his activities, quoting fortune. Blockchain audit firm Ottersek noted that it appeared the attacker, quote, manipulated the price of MNGO up across a number of exchanges,

borrowing against their unrealized MNGO gains to drain the protocol, end quote. After the incident, the attacker then made a Mango governance proposal to ask for Mango token holders to waive any criminal investigation, provide a bounty, and waive any bad debt on the protocol. As of Wednesday morning, the vote is. is 99% yes, with 33,254,078 in favor, end quote. More on that. This is a tweet from Alex the latest on Twitter, quote. So to recap the mango market situation, Hacker exploits Mango for 100 million plus. Hacker turns around and offers to return most funds if the Dow promises not to

pursue criminal investigations. Hacker uses 32 million votes from the exploit to vote yes. LMFAO, cannot make this S up, end quote. So my understanding of the current state of play is, we've been using the term hacker, but who knows, let's just say that the person behind the exploit is reportedly keeping $47 million worth of the proceeds and returning $67 million of the funds to the DFI project after a Mango community vote. This person involved in the exploit claims all of his actions were legal, or at least within the bounds of the protocol. Quoting the block. Avram Eisenberg, the man behind the $114 million exploit on Mango Markets, has confirmed that he orchestrated the attack on the defy platform in a statement issued today.

I was involved with a team that operated a highly profitable trading strategy last week, Eisenberg confirmed, adding, I believe all of our actions were legal open market actions using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are, end quote. Eisenberg declined to comment on the size of his team when asked by the block. This legal trading strategy required $10 million on Eisenberg's part to drain $114 million from mango markets. The quote, trade worked by manipulating the price Oracle to inflate the mango token price threefold from 30 cents to 91 cents. This boosted the value of Eisenberg's collateral, allowing him and his team to borrow more funds from the protocol.

The attack left the mango markets insolvent with user positions in danger being liquidated, as the protocol could not repay the bad debt. Eisenberg noted this in his statement and said he helped negotiate a deal with the defy platform. The Mango community voted today to allow Eisenberg to keep $47 million while returning the remaining $67 million to the project. The return funds will be used to recapitalize the exchange. The bad debt brought on by the exploit can then be covered. Shortly after the vote started, Eisenberg repaid around $8 million worth of tokens, according to on-chain data, according to the details of the deal captured in the vote. This first repayment is a show of good faith on Eisenberg's part. The remaining funds have now also been repaid to mango markets,

both on Solana and on Ethereum. This comprises $48 million of Seoul, $10 million of USDC, and $90,000 of GMT. The $47 million to be kept by Eisenberg has been a subject of scrutiny in the crypto space. The amount is larger than the usual bounties claimed by hackers in exchange for the affected platform not pursuing any criminal charges. Other exploiters have struck deals to keep as much as 10% of the loot. In Eisenberg's case, he and his team will keep over 40% of the funds. Accounting for the $10 million used to launch the attack, the team's effective payout from the bounty will be about $37 million. According to Eisenberg, the deal is not out of the ordinary.

This is similar to how auto-de-leveraging works on exchanges such as Binance and Bitmex, clawing back some profits from profitable traders in order to ensure all user funds are protected, he said. Auto-de-leveraging is one of the ways exchanges manage risk during periods of high volatility. It is used as a last-ditch method by exchanges when their insurance funds cannot cover a bankrupt user's position. Today's statement also confirms Eisenberg's acceptance of the $47 million bounty. The bounty forms part of an agreement between the Mango community and Eisenberg that the former will not pursue any legal action. It remains to be seen whether law enforcement officials will view this arrangement as legally binding.

Earlier today, Eisenberg discussed placing a bet on Twitter that he won't be charged with a crime by the end of 2023, end quote. Time to catch you up on a story that fell through the cracks recently. Back on October 7th, the Biden administration issued sweeping rules that significantly expanded the limits on exports to China of chips and tools used to make advanced chips and other tools. Now, that might all sound like just more trade war stuff, but let me assure you, this is beyond that. These are the most stringent controls by the U.S. government on technology exports in decades, according to the New Times. Our friend Noah Smith wrote of this quote, The actions are being described as an economic war and the phrase is not hyperbole.

The primary purpose of these export controls is not to protect U.S. industry or to stop the leakage of intellectual property to economic competitors. Their purpose is to kneecap China's semiconductor industry to slow down the country's push for technological self-sufficiency, end quote. In other words, while some are saying that this new crackdown on China, tech exports was driven by fears of China using supercomputers and AI to develop weapons and crack U.S. encrypted messaging, quoting the Times, the measures do not directly restrict foreign makers of semiconductor equipment from selling products to China, but experts said the absence of the American equipment would most likely impede China's

nascent industry for making advanced chips, eventually, though, that leverage could fade as China develops its own key production technologies, end quote. In other words, this can be read as an attempt to absolutely destroy China's nascent chip industry, delay it for years, and again, China knows that making chips is the Achilles heel of its overall tech strategy. So this is designed to hobble a major competitor to existing silicon incumbents, while also lengthening the time it will take for China to become Silicon independent, if you will, in the same way that countries talk of becoming energy independent. But this has a spillover today right now to the incumbents as well. The entire chip-related sector of stocks has slumped globally since this was announced applied materials

as an example, said that U.S. expert controls on chips and chip-making tech to China would result in a $250 to $550 million net sales loss for its fiscal Q4 20202 and Q1-20203. Sources this morning were saying that Apple has frozen plans to use memory chips from China's YMTC chip production company in its products, including iPhones, following the latest U.S. export restrictions. And just broadly, U.S. chip equipment suppliers are pausing business activities in China and pulling out their staff, to the degree that, according to the journal, these export controls may affect more than 43 senior executives at 16 public chip companies in China, forcing them to choose between their U.S. citizenship and their jobs.

Quote, in a rare move that caught the industry off guard, the new controls also sought to restrict the use of American know-how by barring U.S. persons from supporting China's advanced chip development or production without a license. The department defines U.S. persons, permanent residents, people who live in the U.S. and American companies. Several companies, including Beijing-based NARA technology and Dutch equipment maker ASML holding, have suspended their American employees from continuing work that could now be restricted while they seek clarity on the rules, the companies have said. Restricting Chinese companies' access to U.S. talent delivers a direct blow to the heart of China's attempt,

to move up the technology chain, said D.M.C., a Washington, D.C., based head of global risk and intelligence at business consulting firm control risks. The technology is nothing without the people there to make it work, he said, end quote. For many senior executives at Chinese companies, the rule will likely force them to decide between their jobs and their U.S. citizenship or permanent resident status. Mr. Chomero said, the rules require all U.S. persons to apply for a license to continue working in a Chinese advanced chip development, end quote. Finally today, interesting data point over the weekend from a piece by our friend Chris Mims in the Wall Street Journal. Quote, a half million industrial robots were installed globally last year, according to data released Thursday by the Trade Group International Federation of Robotics,

an all-time high, exceeding the previous record set in 2018 by 22%. The total population of industrial robots in the world has now also reached an all-time high, three and a half million, which exceeds the population of every U.S. city, save New York and Los Angeles, according to the Federation. This all amounts to a potentially titanic shift in the way things are made, transported, even consumed, ushering in what some who study the phenomenon call a roboc economy. Even more than we do now, in the future, we will depend on robots to grow our food, make our goods, care for our elderly, and continue to grow the global economy, predict researchers, economists, engineers, and business leaders. China, which established itself as

the world's factory floor on the backs of the world's biggest human workforce, has been by far the largest adopter of robots in recent years and was responsible for half of all industrial robot installations in 2021. There were 62,000 robots installed in its automotive industry last year, double the number of the year prior. In Japan, one of the world's most advanced economies, the ratio of robots used in manufacturing to the number of humans in that industry, a measure called robot density, grew almost 30% between 2017 and 2020 after being nearly flat for more than a decade, according to data from the International Federation of Robotics and an analysis by the Equity Research firm Bernstein. Jay Huang, an analyst at Bernstein, says the past four years

are just the beginning of a robot renaissance and that this trend of broader and faster adoption of robots will continue. Driving that adoption is the spread of robots from long-time uses like welding in automobile manufacturing into more challenging tasks. These include picking parts and operating other machines, tasks that require more dexterity, flexibility, and a dollop of artificial intelligence and machine vision. The service robot industry, which basically encompasses every kind of robot that isn't bolted to the floor, is also growing at a rapid pace and shows signs that it could soon eclipse traditional industrial robots in rate of growth, as well as annual sales.

These service robots include everything from autonomous cleaning robots, scouring the floors of your local grocery store. Nearly every Sam's Club in Walmart in America already has one. on staff, to delivery robots and mobile robots taking over jobs like unloading trucks, end quote. So the reason I'm flagging this story is I just wanted to make note of the numbers. According to this piece, again, there are three and a half million robots in the world right now. We're talking about the kind of robots that actually do jobs, not, you know, toys. Doesn't that number seem small to you? Wouldn't you have thought it would be more than that by now?

That's the first thing that came into my head when I read this over the weekend. But the second thing, and I think I can hold these two thoughts simultaneously, only three and a half million? Jeepus, like a young Jeff Bezos quitting Wall Street in 1994 because he saw how fast the internet was growing. Let me show you a number that will look downright minuscule in a couple of decades by probably orders of magnitude. I guess what I'm saying is three and a half million robots, wouldn't you think it would be more by now? Or three and a half million robots, can you believe how much that number is about to exploit? load. One more quote from the piece. The convergence of three forces is driving the robot renaissance. The first is that demographic trends in rich countries mean there simply aren't enough

workers, says Craig Webster, a political scientist and associate professor at Ball State University, who recently wrote a paper on the topic. The second factor is that robots have become more capable more quickly than at any other point since their earliest adoption by the automotive industry in the middle of the 20th century. This new generation of robots have mobility and vision and are capable of flexibility in their behavior that simply hasn't been possible with the kinds of industrial robots that have been in use in manufacturing since the 60s. The third factor is a sum of the prior two. Surging human labor costs and more capable robots mean the amount of time it takes a new robot to pay for itself is shrinking, according to research by Dr. Huang of Bernstein.

In China, for example, a robot that can operate a machine tool and a factory can do the work of two or even three humans and can pay for itself in London. for example, a robot that can operate a machine tool and a factory can do the work of two or even three humans and can pay for itself in less than two years, end quote. Actually, the final quote from that whole piece is kind of worth doing, so I will. At schnucks, only half the chain's stores use cleaning robots because they are incompatible with older style floors. As stores are updated to polished concrete ones, more robots will be rolled out, says Mr. Steak. Another problem is that autonomous cleaning robots require wide, clear aisles. This means stores can't set out the kind of manufacturer-produced displays called shippers that typically stand in aisles and entice shoppers to make more impulse purchases, he adds.

Similarly, the stretch robot is, for now, limited to unloading trucks and shipping containers loaded in a particular way, ones where all the boxes are of relatively uniform size, weigh less than 50 pounds, and are stacked directly on the floor, says Mr. Miller. We have really built a world meant for humans to navigate, not for robots, too, says Dr. Webster of Ball State University. In the future, we will have to make a world that is attuned to the needs of the robot, end quote.