Tech Brew Ride Home - Monday, Apr. 23, 2018 - Amazon's Robot For Your Home

Episode Date: April 23, 2018

Alphabet's Q1 earnings, Amazon's working on a domestic robot, Aleksandr Kogan says he worked more closely with Facebook than has been reported, spies—like us—fear digital tracking, and the state of the music industry. Stories:Amazon Has a Top-Secret Plan to Build Home Robots (Bloomberg)Cambridge Analytica Data Scientist Aleksandr Kogan Wants You To Know He’s Not A Russian Spy (BuzzFeed)Who Has More of Your Personal Data Than Facebook? Try Google (WSJ)CIA agents in 'about 30 countries' being tracked by technology, top official says (CNN)Global Recorded Music Revenues Grew By $1.4 Billion in 2017 (Music Industry Blog) Credits: Produced by @brianmcc and the @techmeme staff Music by @jpschwinghamer 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 ride home for Monday, April 23rd, 2018. Today, Alphabet's Q1 earnings, Amazon's working on a domestic robot. Alexander Kogan says he worked more closely with Facebook than has been reported.

Spies, like us, fear digital tracking, and the state of the music industry. Here's what you miss today in the world of tech. Literally minutes ago, Google's. parent company Alphabet released their quarter one earnings numbers. Quarter one revenue came in at 31.15 billion versus the 30.29 billion estimate. This represents revenue growth of 26% year over year. Earnings per share came in at $13.33 versus a $9.32 consensus. So that sounds like a huge beat, but in early analysis, that appears to be due to Alphabet's stake in Uber. Because of an accounting change, Alphabet is reporting the value of its Uber investment for the first time,

and it appears that value is around $3 billion. Earnings per share taking out the Uber stake appears to be $9.93 per share versus $9.28 per share expected by consensus estimates. Some other nuggets from the press release, overall Google's non-ad Revenue, hardware, cloud, and App Store included, increased from $3.2 billion to $4.4 billion year over year. Alphabet also says that the Google Unit spent $7.6 billion on KAPX in the quarter. Last year in the same quarter, that number was $2.4 billion, so that's quite an increase. Revenues from the other bets category was $150 million, up from $132 million last year. Immediately after the announcement, Alphabet shares jumped around 3%, but at the time of this recording, 4.30 p.m. Eastern time, investor response was more muted and Google shares were slightly below what they had closed at in normal trading. So it seems that investors were expecting the earnings beat due to the Uber stake.

This is, of course, an evolving story. The earnings call is taking place right now, so keep checking Techmeme.com all evening for more details as they develop. Welcome to another Mark German scoop Monday, but this time with Brad Stone. And the scoop is concerning Amazon, not Apple. This morning, German and Stone are reporting in Bloomberg that Amazon is working on a domestic robot, codenamed Vesta, that's designed to be able to navigate inside your house. Vesta is the Roman goddess of the domestic space of the home and family, in case you weren't aware. The Vesta project is being run inside Amazon by Greg Zzzan. Zahar, who's in charge of Amazon's Lab 126 Research and Development Division, which has given the world the echo speakers, fire TV devices, and also the fire phone. The project began a few years ago, but it's apparently far enough along that Amazon hopes to begin testing the robots inside of employees' homes by the end of the year.

The Bloomberg piece speculates that Amazon might begin offering the robot to consumers by 2019, but details remain. sketchy in terms of what the robots will actually do. Prototypes apparently have advanced cameras to help the robots navigate a house in the same way that self-driving cars navigate roads. Quoting from the piece, advances in computer vision technology, cameras, artificial intelligence, and voice activation help make it feasible for Amazon to bring its robot to the marketplace. The retail giant has shown itself willing to partially subsidize the cost of its devices for prime subscribers who buy more products and subscribe to services through its gadgets. That could also make such a product more affordable for mainstream consumers in the future, end quote. Amazon as a company

actually has a long history with robotics. One of its largest ever acquisitions was Kiva Systems, which it turned into Amazon robotics to populate its warehouses and fulfillment centers with semi-autonomous bots that help organize orders and shipments. Many of the pieces of the pieces of is looking at this news are speculating that Vesta would not be a robot butler, as robotics have not quite gotten good enough yet that she could do the dishes for you. It seems more likely that Vesta would be more like a mobile personal assistant, a sort of Alexa on wheels. Over at BuzzFeed this morning, Ryan Mack had an interview up with Alexander Cogan, the Cambridge University researcher and academic who was at the center of the Cambridge Analytica scandal.

In the interview, Kogan admits that he broke Facebook's terms of service with his controversial app, but he claims that he wasn't alone in doing what he did. Kogan denies that he's a Russian agent, quote, I am not a Russian spy, he told Mack. He also scoffed at claims that his work and his apps had the ability to sway opinion or influence voters, especially around Brexit or the 2016 presidential election. Kogan is in London to speak before a parliamentary committee this week around the Cambridge Analytica scandal. Quote, folks are only concerned right now about the story because they think it could have swung the elections or that they can be mind-controlled, and that's not a real worry, Kogan told Mack.

The actual story right now, according to Kogan, is that the public has finally woken up to the privacy implications of big technology and the fact that data is being used without people's informed consent. consent. Quote, if there's one message I want Parliament to walk away from, it's not, Alex didn't do anything wrong, he's been scapegoated. The main message is, what you've been worried about is BS, but there is a real issue to think about, end quote. BuzzFeed apparently has gotten a series of interviews with Kogan, so this might be the first piece of many. And Kogan was also profiled last night on 60 minutes. In that interview, Kogan continued to defend himself saying he was just doing what he felt was common practice. Kogan told Leslie Stahl, quote,

The idea that we stole the data, I think, is technically incorrect. I mean, they created these great tools for developers to collect the data, and they made it very easy. I mean, this was not a hack. This was, here's the door, it's open. We're giving away the groceries. Please collect them. In this interview, Kogan did seem to suggest that he's being made into something of a

convenient scapegoat. Quote, I think there's utility in trying to tell the narrative that this is a a special case and that I was a rogue app and this was really unusual. Because if the truth is told and this is pretty usual and normal, it's a much bigger problem, end quote. In the 60 Minutes interview and in BuzzFeed's interview, Kogan maintains that he had a much closer relationship to Facebook than has generally been portrayed in the press. He claims to have made numerous visits to Facebook's headquarters to give talks to Facebook employees about behavioral psychology, and he even served as a paid consultant to Facebook in 2015.

Quoting from the BuzzFeed piece, he worked on at least 10 papers with Facebook's Pete Fleming, who is now the head of research at Instagram, the company's photo sharing platform, while Joseph Chancellor, his co-founder and equal partner at Global Science Research, GSR,

the company that harvested the ill-gotten Cambridge Analytica data, has worked at Facebook since late 2015. Kogan also said, Chancellor informed Facebook about his work at GSR while interviewing for a position at the company in 2015, end quote. In a statement to BuzzFeed, Facebook's vice president of product partnerships acknowledged the company's relationship with Kogan, but, quote, at no point during those two years was Facebook aware of Kogan's activities with Cambridge Analytica, end quote. As far as the broader

geopolitical controversies he's now caught up in, Kogan told Mack, quote, there have been conspiracy theorists that are convinced I am the missing link between Russia and Trump. Ryan Mack tweeted this morning, quote, something that didn't make the story but came up in Alexander Kogan's morning show interviews, he told me no one from the Mueller investigation has approached him with election interference questions. They know who the real spies are, he said. And people are starting to ask when attention will turn beyond Facebook to other data hoarding

practices at other tech companies. In the Wall Street Journal, Christopher Mims had a piece over the weekend that literally asked, Google gathers more personal data than Facebook does by almost every measure. So why aren't we talking about it? Quoting from Mims' piece, Google Analytics is far and away the web's most dominant analytics platform, used on the sites of about half of the biggest companies in the U.S. It has a total reach of 30 to 50 million sites.

Google Analytics tracks you whether or not you're logged in. Meanwhile, the billion-plus people who have Google accounts are tracked in even more ways. In 2016, Google changed its terms of service, allowing it to merge its trove of tracking and advertising data with the personally identifiable information from our Google accounts, end quote. Google and Facebook are by far the most dominant players in online advertising. According to various industry metrics, the two companies between them now controls somewhere between 60 and 70% of the entire online. advertising market. Other data shows that about 80% of growth in the online advertising market is gobbled up by these two companies. And the business model of online advertising is about

monitoring user activities, so any practices that consumers might be uncomfortable with from Facebook are likely mirrored in some ways by Google. Over at Digidae, Jason Kint, the CEO of digital content next, a trade association for publishers, said in an interview, quote, despite having different free services, Google and Facebook have the same underlying business model, which has led to many of our industry's woes. Google, even more than Facebook, has propped up an ecosystem which hasn't rewarded the companies who trade in high-quality news and entertainment for trusted audiences, end quote. One important difference between Facebook and Google, according to Kent, however, quote,

Google is better at lobbying, both in D.C. and the press and publishers. It turns out that when it comes to the global digital panopticon, spies are just like us. The fact that everywhere we go and everything we do is now trackable seems to be messing with the spy game just like it's screwing up normal life. It's common practice for spies to always be surveilled

wherever they go when they're in a foreign country. For years, CIA agents have learned to expect that there will always be someone on their tail, hoping to uncover their sources by tracking their movements. But it turns out that digital surveillance, like closed-circuit cameras and wireless infrastructure, mean that increasingly physical tracking is no longer necessary. The spies, it seems, are left out in the cold all by themselves. Don Meyer-Rieckes, deputy director of the CIA's Science and Technology Division, gave a speech on Sunday where she revealed that in certain digitally developed countries, like Singapore, for example,

CIA agents no longer fear, counterspies, physically playing cat and mouse with them, because normal everyday surveillance networks are good enough to track a spies movement remotely. And digital cameras aren't the only culprits, quote, even if you turn your phone off 10 minutes before you get to your place of employment, do you think anyone's fooled about where you're going? Myarek's asked. According to Myerick's speech, the CIA is turning to AI to counter the counterintelligence. As of six months ago, the agency was apparently pursuing nearly 140 different artificial intelligence and machine learning projects that were designed to help spies figure out when they were being surveilled and how they might evade digital detection.

If all else fails, increasingly, according to Myorex, CIA agents are resorting to, quote, living their cover to evade the digital detection. to evade the digital dragnet. That could mean a spy's phone shows her at the movies with her family, while the actual spy might be somewhere else. The blog, Music Industry blog, has an interesting check-in on the state of the music industry. Last year, 2017, global recorded music revenues were $17.4 billion, up from $16 billion in 2016, representing annual growth of 8.5%. Where did that growth come from?

Streaming, of course, which saw revenues increase 39% year-on-year, reaching $7.4 billion or 43% of all industry revenue. Downloads and legacy formats like CDs declined by 10% year-over-year to only $783 million. But to me, the interesting statistic in the blog post was the data on the category called Artist Direct Sales, That means platforms like Band Camp, TuneCore, and CD Baby, where artists can sell directly to their fans

without the assistance of major record labels. This category saw 27.2% year-on-year growth and generated $472 million last year. That might seem minuscule in a $17.4 billion industry, but it was up from $371 million the year before. According to Music Industry blog, with nearly half a billion dollars of revenue in 2017 and growing far faster than the traditional companies, this sector is simply too large to ignore anymore.

Artists Direct are quite simply now an integral component of the recorded music market, and their influence will only increase. In fact, independent labels and artists direct together represent 30.3% of global recorded music revenues in 2017. Although this does not mean that the labels are about to be. be usurped. It does signify, especially when major distributed independent label revenue and label services deals are considered, an increasingly diversified market. Add the possibility of streaming services signing artists themselves and doing direct deals with independent labels, and the picture becomes even more interesting. That's all for today. The TechMeme Ride Home was produced

by Brian McCullough. Follow me on Twitter at Brian MCC. And it was also produced by the TechMeme editors. Visit Techmame.com for the evolving analysis and eventual consensus about the Google earnings. Talk to you tomorrow.