Tech Brew Ride Home - Mon. 11/01 – How Much Money Is Apple’s ATT Costing Snap, Facebook, Et Al?

Starting point is 00:00:03 Welcome to the Tech meme right home for Monday, November 1st, 2021. I'm Brian McCullough today. How much money is Apple's ATT costing Snap, Facebook, Twitter, and the like? $10 billion or more. The chip shortage is hitting Apple at the worst possible time, but new iOS devices might soon have crash detection built in. Why was Roblox down for so long? And why Hollywood thinks there's money in their old banana stands after all? Here's what you miss today in the world of tech.

Starting point is 00:00:32 How much money is Apple's iOS app tracking transparency change costing companies? And who is affected the most? According to a new estimate, the policy has cost Snap, Facebook, Twitter, and YouTube almost $10 billion in combined ad revenue just in the second half of this year, quoting the Financial Times. LaDamee, an advertising technology company whose clients include the Weather Company and McClatchy, estimated that the four tech platforms lost 12% of revenue in the third and fourth quarters, or $9.85 billion. Snap fared the worst as a percentage of its business because of its focus on

Starting point is 00:01:14 smartphones, while Facebook lost the most in absolute terms because of its size. Mike Woolsey, Lottamese chief operating officer, said advertisers are now getting less bang for their buck on iPhones. He gave, as an example, a men's underwear brand that would have gained one customer for a $5 ad targeted at a thousand men. Quote, well, now to get a thousand men, you have to show it to 2,000 people because all of a sudden you don't know

Starting point is 00:01:40 who is a man and who is a woman, Woolsey said, and you still only have $5 for those 2,000 impressions, so your acquisition cost doubled and the lost yield is 50%, end quote. Facebook has the most to lose in this scenario because the cost of running advertisements on its platform has been increasing for years, said Aidan Cobert,

Starting point is 00:01:59 chief executive of Wayflyer, which offers financing to online shopping startups. If your ability to advertise on Facebook is no longer economic, you're going to move away immediately, he said. So TikTok is becoming extremely popular because it's a lot cheaper from a cost per 1,000 impressions basis, end quote. Charles Manning, chief executive of Kochava, which measures the effectiveness of mobile marketing, said it was wrong to think that advertising spending was actually going down. end quote. Spend isn't decreasing. It's just moving, he said. Where marketers spend money is where they see results, end quote. Lotomi's estimates are likely to be conservative. Eric Seifert, an ad tech consultant, said he estimated that Facebook alone would have suffered an $8.3 billion shortfall in the

Starting point is 00:02:45 last two quarters, and he believes loss revenues will extend into the next quarters as the advertising groups rebuild using a privacy-centric paradigm. Some of the platforms that were most impacted, but especially Facebook have to rebuild their machinery from scratch as a result of ATT, he said. My belief is that it takes at least one year to build new infrastructure. New tools and frameworks need to be developed from scratch and tested extensively before being deployed to a high number of users, end quote. I'm leading with this today to highlight it, because when we say things like big tech is now a circular firing squad,

Starting point is 00:03:22 that it's a zero-sum game, that everyone is so big now, you can only continue to grow by kneecapping your rivals and stealing their lunch. This is what we're talking about. The thing about the circular firing squad metaphor is for about the last decade, the total addressable market for most of the big tech companies was so big that growth was comparatively easy. It was very much a matter of just planning your flag or standing in front of the tidal wave of history, letting it wash over you and printing money, really pick your metaphors there. there are suddenly so many different headwinds facing big tech that it's hard to keep track of. Regulation is, of course, a big deal, but also people are talking seriously about how the

Starting point is 00:04:12 global supply chain has had an emperor's new close moment. Like, I know the global pandemic of COVID has been hugely disruptive, but the thing is, it could have been so much worse. Imagine the disruption something like China invading Taiwan could cause, or the decades of climate change chaos seemingly built into our collective cakes, people are starting to ask questions of the whole global supply chain regime that all of these big tech companies have built their success on over the last two decades and are starting to wonder what good its vaunted efficiency is if even small disruptions leave the supply chain completely prostrate. Maybe more robustness needs to be built into the system. Of course, the king of the global supply chain is Apple, but as we've been discussing,

Starting point is 00:05:01 the global chip shortage has seemingly finally hit Apple at the worst possible time, ahead of the holiday shopping season. Mark German touches on this in his newsletter over the weekend, quote, Tim Cook was a bit defensive. On Apple's quarterly earnings call Thursday, the chief executive officer was quick to tell investors and analysts that the company's product shortages aren't the result of a, quote, fundamental error that we've made, end quote, and that it's supply chain strategy didn't create the current troubles. Instead, he laid the blame on suppliers. If only one chip or part is in tight supply, Apple can't build and ship that device. There lies the problem. Not Apple's scrutinized manufacturers in China, Cook seemed to imply. It's not surprising

Starting point is 00:05:43 to see Cook defend Apple's supply chain strategy. After all, he was the one who helped forge the partnership with Foxcon and build its supply chain empire two decades ago. If it were not for the current problems, Apple would have reported a record $90 billion for its fiscal fourth quarter. And instead of missing analyst's expectations for total sales, as well as falling short in revenue from the iPhone, Mac, and accessories, it probably would have had a clean sweep of beating Wall Street forecasts. The timing of the supply problems is especially poor because Apple has one of its strongest product lineups in years, and now its sales engine is sputtering for reasons that it says are out of its control, end quote. But is it out of their control, or is the system that Tim Cook helped build too fragile

Starting point is 00:06:27 in its very makeup designed for a world that was more stable, all things considered, than the one that we increasingly find ourselves in? A related story this weekend from the journal said that sourcing chips has almost turned into a lottery amid the global chip shortage, as wait times have ballooned to 22 weeks or more. Quote, the global semiconductor short. The global semiconductor shortage is worsening. With wait times lengthening, buyers hoarding products and the potential end, looking less likely to materialize by next year. Demand didn't moderate as expected. Supply routes got clogged. Unpredictable production hiccups slammed factories already running at full capacity. What's left is widespread confusion for manufacturers and buyers alike. Some buyers trying to

Starting point is 00:07:12 place new orders are getting delivery dates in 2024, said Ian Walker, operations director at Electronic Components Distributor, Pryncepts Electronics, which helps companies find chips. It really feels as if we are running out, Mr. Walker said. Wait times for chip deliveries have continued to climb above a healthy threshold of 9 to 12 weeks. Over the summer, the weight stretched to 19 weeks on average, according to Susquehanna Financial Group, but as of October, it has ballooned to 22 weeks. It is longer for the scarcest parts, 25 weeks for power management, components and 38 weeks for the microcontrollers that the auto industry needs, the firm said.

Starting point is 00:07:51 Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said he would have thought six months ago that chip shortages would start easing by this time. But now he says they will likely last until 2023. Wells Fargo Investment Institute recently revised down its U.S. GDP forecast to 6.3% from 7% as the chip shortage limited the supply of consumer goods, end quote. But if Apple can get its act together, if they can get their hands on some more parts, they of course plan to keep iterating. Sources are telling the Wall Street Journal that Apple plans a crash detection feature next year for iPhones and Apple watches, which would measure a spike and I guess ambient G forces in order to detect things like car accidents and then auto dial

Starting point is 00:08:43 help dialing 911 without you having to lift a finger, quote, Crash detection uses data from sensors built into Apple devices, including the accelerometer, to detect car accidents as they occur. For instance, by measuring a sudden spike in gravity or G forces on impact. Apple has been testing the crash detection feature in the past year by collecting data shared anonymously from iPhone and Apple Watch users, the documents show. Apple products have already detected more than 10 million suspected vehicle impacts, of which more than 50,000 included a call to 911.

Starting point is 00:09:16 Apple has been using the 911 call data to improve the accuracy of its crash detection algorithm, since an emergency call associated with a suspected impact gives Apple more confidence that it is indeed a car crash, according to the documents. The documents don't specify how Apple users are sharing information with the company so it can test its new crash detection algorithm, end quote. I'd really like to know more about this, because something smells unusual here. Roblox said halfway through yesterday that it's back online. If you have kids, then maybe you were aware that Roblox was down for most of the weekend for three entire days, in fact. Like, that is a long time for a company this big to be completely down. I think even their website was down. As Benedict Evans noted, this is a $50 billion platform with 50 million daily active users, quoting Kataku. According to Roblox's status page, players are returning to the game incrementally, though the devs did warn that not all players will have access right away.

Starting point is 00:10:24 However, it appears that whatever issue or problems were behind the prolonged outage have been fixed, and soon players will be able to get back online. The original outage appears to have started at 7 p.m. Eastern Time on October 28th, the following morning on October 29 at 9.19 a.m. Eastern Time, the official Roblox Twitter account posted that it was aware of the server outage and was working on a fix. Around 5 p.m. Eastern, Roblox's devs were still working on fixing the server issues, posting a new tweet that apologized for the outage and assured players it was making progress on fixing the situation. This tweet also included a message to players that the outage

Starting point is 00:11:00 wasn't caused by any, quote, specific experiences or partnerships on the platform, end quote. This seems to be a reference to the theory among many players that the outage was caused by Chipotle giving away $1 million worth of free burritos in Roblox. That event started about an hour before the server crash started. The timing is certainly suspicious, but for now, Roblox is being careful not to blame a big partner for such a huge server collapse. As for the actual reason, the servers are down, Roblox hasn't explained what the cause could be, end quote. I always have my eye out for advances in battery technology because I feel like a breakthrough there might change the world in a super meaningful way. But this weekend, I read about how data storage might also be a technology,

Starting point is 00:11:49 ripe for evolution. Quoting New Atlas. By deploying cutting-edge lasers and a little problem-solving, scientists at the University of Southampton have achieved a data storage breakthrough that offers both incredible density and long-term archiving capabilities. The technology is said to be capable of storing 500 terabytes on a single CD-sized disk, with the creators imagining it finding use in preserving everything from information for museums and libraries to data on a person's DNA. The technology is what is known as five-dimensional or five-D optical storage, and it is one the University of Southampton team has been pursuing for a while. It was first demonstrated back in 2013 with the scientists successfully using the format to record and retrieve a 300kb text file, though they harbored much

Starting point is 00:12:36 loftier ambitions than that. The data is written using a femtosecond laser, which emits incredibly short but powerful pulses of light, forging tiny structures and glass that are measured on the nanoscale. These structures, contain information on the intensity and polarization of the laser beam in addition to their three spatial dimensions, which is why the scientists refer to it as 5D data storage. One thing the scientists have been working to address, however, is the ability to write data at fast enough speeds and at high enough densities for real-world applications. They now claim to have achieved this by using an optical phenomenon called near-field enhancement, which enables them to create the nanostructures

Starting point is 00:13:16 with a few weak light pulses rather than writing with the Fem to second laser directly. This allows data to be written at 1 million voxels per second, which equates to 230kb of data or more than 100 pages of text per second. The team demonstrated this technique by writing 5 gigabytes of text data onto a silica glass disk around the size of a CD with almost 100% readout accuracy. Though the researchers say such a disc would be capable of holding 500 terabytes, of data, making it 10,000 times denser than a Blu-ray disc. The researchers imagine the tech finding use in preserving information from someone's DNA or for long-term data storage for

Starting point is 00:13:56 national archives, museums, and the like. But first, they'll need to develop faster methods of reading the data, end quote. Finally, today, on a day that has been heavy with analysis for some reason, I haven't talked about it because it's outside of our scope. But recently, a lot of big money from hedge funds and private equity and the like have been making deals and chasing deals around music back catalogs. Why? Isn't that a dunzo business? I would have thought so. Well, this is not exactly music, but this example that I'm about to tell you about might show you why suddenly there is a new flavor of value in certain types of legacy content. Snap today announced a deal with NBC Universal to let Snapchat users

Starting point is 00:14:46 add audio clips from its popular titles, including SNL in the office, to their posts, quoting the Hollywood Reporter. Snapchat has reached a deal with NBCUniversal that will bring audio clips from hit films and TV shows like Bridesmaids, The Office, Parks and Recreation, Back to the Future, Shrek, and Saturday Night Live, to the social platform. In addition to music, Snapchatters will now be able to add audio clips from popular titles in NBCU's catalog to their snaps, Users who receive a snap from a friend using the NBCU audio will be given the option to swipe up to view more information about the movie or show, as well as a link to access the title from whichever streaming platform it's available on. NBCUniversal has an iconic catalog, and we know Snapchatters will love adding quotes from their favorite movies and series to their snaps to help perfectly express the moment. Ben Schwaren, Snap's SVP of Content and Partnerships said in a statement, NBC has been a tremendous and long-standing partner to SNAP and we're thrilled to continue to innovate together on new experiences for our community, he said, end quote.

Starting point is 00:15:48 NBCU's partnership follows SNAP's multi-year licensing deal with Universal Music Group to bring the label's entire catalog to Snapchat. Since launching the sounds feature last year, which allows Snapchatters to add audio to their snaps, there have been more than 521 million videos created using the feature according to Snap, end quote. So do you see the angle here? Folks want to add songs and video clips and all sorts of other things from copyrighted content to their social media posts. Being able to post clips from, say, The Office on Snapchat, but not on other platforms could become a competitive advantage thing. Lord knows Hollywood has tons of content available. And Lord knows they know the tech platforms have basically all the money in the world. So see the angle here.

Starting point is 00:16:34 Universal Music Group songs snapped 521 million times. already, you know, the old office space slash, I think it was the plot of Superman 3 thing about how even tiny fractions of a penny start to add up if you're talking hundreds of millions or billions of fractions of pennies. That's all for today. Talk to you tomorrow.

Tech Brew Ride Home - Mon. 11/01 – How Much Money Is Apple’s ATT Costing Snap, Facebook, Et Al?

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