Tech Brew Ride Home - Thu. 06/10 – Another Payoff To Ransomware Hackers

Episode Date: June 10, 2021

Another payoff to Ransomware hackers. Facebook to launch a smartwatch? Microsoft to launch a dedicated game streaming device? Samsung unveils a tiny, tiny camera sensor. Stripe wants to handle your sales tax headache. And can the creator economy take off in a world of App Stores with 30% rakes? Sponsors: Skiff.org/ride Cybereason.com Links: JBS Paid $11 Million to Resolve Ransomware Attack (Wall Street Journal) Facebook plans first smartwatch for next summer with two cameras, heart rate monitor (The Verge) Microsoft is building its own streaming devices as part of a major Xbox Game Pass expansion (Protocol) Samsung pushes pixel size even further with new camera sensor (The Verge) Payments giant Stripe launches Stripe Tax to integrate sales tax calculations for 30+ countries (Tech Crunch) The creator economy is running into the Apple Tax — this startup is fighting back (The Verge) 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 TechMeme right home for Thursday, June 10th, 2021. I'm Brian McCullough today. Another payoff to ransomware hackers. Facebook to launch a smartwatch, Microsoft to launch a dedicated game streaming device. Samsung unveils a tiny, tiny camera sensor, Stripe wants to handle your sales tax headaches, and can the creator economy take off in a world of app stores with 30% rakes? Here's what you miss today in the world of tech. JBS, the largest meat company by sales and a top supplier of chicken and pork in North America, revealed it paid an $11 million ransom in Bitcoin to resolve a cyberware attack last week.

Quoting the Wall Street Journal. The ransom payment in Bitcoin was made to shield JBS meat plants from further disruption and to limit the potential impact on restaurants, grocery stores, and farmers that rely on JBS, said Andre Nogera, chief executive of Brazilian meat company JBSS8, U.S. division. Quote, it was very painful to pay the criminals, but we did the right thing for our customers. Mr. Noguera said Wednesday in an interview with the Wall Street Journal. He added that the payment was made after the majority of JBS plants were up and running again.

Mr. Nogierrez said JBS learned of the attack early on Sunday, May 30th, when technology staff members noticed irregularities with the functioning of some servers. Soon they found a message demanding a ransom to reclaim access to the company's system. Mr. Noguera, who was traveling, said he was awakened to. around 5 a.m. by a phone call from his chief financial officer, notifying him of the incursion. JBS immediately alerted the Federal Bureau of Investigation, Mr. Noguera said, and the company's technology team began shutting down the meat supplier systems to slow the attacks advance. JBS called in technology vendors that had previously worked with the company as well as

cybersecurity experts and consultants who began negotiating with the attackers. The FBI last week attributed the JBS attack to Reval, a criminal ransomware gang. Mr. Noguera said that JBS and outside firms are conducting forensic analyses of its information technology systems, and that it isn't yet clear how the attackers accessed JBS's systems. JBS maintains secondary backups of all its data, which are encrypted, Mr. Nogiaras said. The company brought back operations at its plants using those backup systems, he said. And while the company was making good progress, he added JBS's technology experts cautioned the company that there was no guarantee that the hackers wouldn't find another way to strike,

and JBS's consultants continue negotiating with the attackers. Mr. Nogierrez said the company is confident that no customer, supplier, or employee data was compromised in the attack based on its forensic analysis, end quote. According to The Verge, Facebook is planning to launch its first smartwatch, featuring a detachable display with two cameras and a heart rate monitor, and it's going to come out as soon as next summer. A camera on the front of the watch display exists primarily for video calling, while a 1080p auto-focus camera on the back, can be used for capturing footage when detached from the stainless steel frame on the wrist. Facebook is tapping other companies to create accessories for attaching the camera hub to things like backpacks, according to two people familiar with the project, both of whom requested anonymity to speak without Facebook's permission.

The idea is to encourage owners of the watch to use it in ways that smartphones are used now. It's part of Facebook CEO Mark Zuckerberg's plan to build more consumer devices that circumvent Apple and Google, the two dominant mobile phone platform creators that largely control Facebook's ability to reach people. Facebook is working with top wireless carriers in the U.S. to support LTE connectivity in the watch, meaning it won't need to be paired with a phone to work and sell it in their stores, the people familiar with the matter said. The watch will come in white, black, and gold, and Facebook hopes to initially sell volume in the low six figures. That's a tiny sliver of the overall smartwatch market. Apple sold 34 million watches last year by comparison, according to

counterpoint research. In future versions of the watch, Facebook is planning for it to search. In future versions of the watch, Facebook is planning for it to serve as a key input device for its planned augmented reality glasses, which Zuckerberg thinks will one day be as ubiquitous as mobile phones. The company plans to use technology it acquired from Control Labs, a startup that has demonstrated armbands capable of controlling a computer through wrist movements. Facebook aims to release the first version of the watch in the summer of 2022 and is already working on second and third generations for subsequent years. Employees have recently discussed pricing the device at roughly $400, but the price point could change. While it's unlikely, Facebook could also scrap the watch altogether,

as the device has yet to enter mass production or even be given an official name, end quote. Microsoft says it will soon launch a dedicated device for game streaming and is working with TV manufacturers to expand Xbox GamePass subscriptions to Smart TVs, quoting protocol. Microsoft says it's in the process of, quote, working with global TV manufacturers to embed the Xbox experience directly into internet-connected televisions, end quote, adding that no extra hardware will be required save a controller. But the company is also, quote, building its own streaming devices for cloud gaming to reach gamers on any TV or monitor without the need for a console at all, end quote. These plans mark a substantial step forward for Microsoft's subscription ambitions and could

enable the company to reach additional tens of millions of customers, some of whom may not be interested in a game console, but are still enticed by the appeal of a true Netflix for gaming platform. The approach, if successful, could also reduce Microsoft's need to compete directly against Sony's PlayStation. Microsoft hopes that its position in the cloud computing, gaming, and desktop operating system sectors means it's uniquely capable of delivering a streaming subscription platform and product experience of this scale where others like Google Stadia have struggled. Until now, Xbox GamePass has not worked entirely like Netflix or other video streaming platforms. Instead, requiring you to download games.

locally to hardware capable of running it like a console or PC. That's largely due to video game file sizes and network requirements. But as those technical limitations have begun to disappear, Microsoft is now interested in expanding GamePass to include smart TVs and streaming devices as well as mobile phones and web browsers. That means Xbox games could conceivably be accessible from almost any screen anywhere at any time. This represents Microsoft's rather bold vision for the future of gaming and it stands in stark contrast. to the model competitors, Nintendo and Sony have stuck with for years now, which has focused on selling hardware,

complemented by games only playable on said hardware, end quote. Samsung has unveiled a 50-mixel sensor with pixels just 0.64 micrometers in size, the smallest in the industry, which Samsung says can be used in ultra-wide or telephoto modules, quoting the verge. The ISOcell, JN1, is a 50 megapixel sensor, with a relatively tiny 1 by 2.76 inch format, meaning its pixels are just 0.64 micrometers in size. For comparison, Samsung already broke records in 2019 with the slightly larger ISOcell Slim GH1,

another 50 megapixel sensor with 0.7 micrometer pixels. Conventional camera wisdom says that smaller pixels usually result in worse image quality with higher noise. So why is Samsung doing this? According to the company, it's about form factor versatility. The sensor's smaller size means it can be used in ultra-wide or telephoto camera modules, which are challenging to design when size is at a premium, or as a way to reduce the height of the primary camera bump. As with other high-resolution camera sensors, the JN1 will make use of pixel-binning technology

that combines multiple pixels into one for higher light sensitivity. In this case, Samsung says the sensor will capture 12.5 megapixel photos with the Iq equivalent of 1.28 micrometer pixels, and the company is also claiming a 16% boost to light sensitivity with its ISOcell 2.0 tech, end quote. The JN1 is apparently already in mass production, so expect to see this showing up in smartphones in three, two, one. I feel like since basically every app, every startup, every creator basically uses Stripe at this point to get paid and also to pay, we should probably start following Stripe's product releases in sort of the same way we cover new features and say Android. It's that fundamental to developers and entrepreneurs at this point.

So to that end, let me let you know that Stripe has launched Stripe Tax, which will provide automatic, updated sales tax calculations and related accounting services to customers in the U.S. and around 30 countries, quoting TechCrunch. Stripe Tax is a separate service from tax jar, but the two are not unconnected. As Stripe Tax was being built out of Stripe's offices in Dublin over the last several months, Stripe's business lead for EMEA, Matt Henderson, told me that the team had identified Tax Jar as a strong company in the field. That ultimately led to an MNA deal between them. Sales tax, and specifically a more seamless way to deal with charging and tracking sales tax, is a painful issue for people doing business online. Digital and physical goods are taxed in

over 130 countries, Stripe said, and within that, there can be a huge amount of variation and compliance complexity since codes get updated all the time, too. Mishandled sales tax, meanwhile, can result in pretty hefty fines, sometimes up to 30% interest on past due amounts. Unsurprisingly, a sales tax tool has been the most frequently requested feature from Stripe's customers, Henderson said, a call that presumably only got louder in the last year as e-commerce and digital transactions went through the roof with COVID-19. Previously, Stripe customers would have resorted to using third-party services like Tax Jar to work out sales tax, or more typically those Stripe customers would have opted to limit the number of places

they sold goods and services in order to minimize the pain of dealing with multiple complex and usually quite localized tax codes. Tax Jar came to Stripe's attention with an established operation, 15,000 customers at the time of the acquisition, and and Stripe wisely bolted that on as a standalone business, which means that new and existing customers that use Tax Jar can continue to use it as is. That is to say, at least for now, they do not need to be Stripe Payments customers in order to use Tax Jar, even if the integration between the two platforms will only improve over time. Stripe Tax, on the other hand, is being built from the ground up as a product aimed

specifically at increasing touchpoints and stickiness with Stripe customers. Stripe Tax provides real-time tax calculations based on customer location and products sold. Transparent itemizing for customers tax ID management in areas like Europe where business customers can provide their code and get a reverse charge on tax if they are under a certain turnover threshold themselves and reconciliation and reporting across all transactions to make filing and remittance easier. But there is, for now, no way to use Stripe Tax outside of Stripe payments. This could pose some problems for some customers, because these days, many of the strongest retailers will take an omni-channel approach that might cover selling through marketplaces, selling through websites, selling through social media, and more, and not all of those experiences may be powered by Stripe. It will be worth watching whether future iterations of Stripe Tax can account for that.

Stripe's most significant product launch prior to Stripe Tax, Stripe Treasury last December, underscores how the company is currently very focused on diversifying outside of its basic payments business. and opening the platform to much wider, more-scaled transactions, end quote. Finally today, talking about attacks of a different kind, the brushfire of the App Store rebellion is spreading. The founders of Fan House and only fans like Platform are on the warpath, trying to get their vast audiences to join them in the fight against Apple's 30% App Store cut. Quoting The Verge. Founders of Fan House, which is basically only 5%.

fans without the nudity, say the platform will be kicked out of the app store in August. If it doesn't start forking over 30% of the fees, people pay creators when purchases are made through the iPhone app. One of Fan House's creators, the streamer Bread Witchery, says that cut would mean losing two months of rent from her earnings to date. The company doesn't have a lot of options to push back, but it's launching a campaign today to pressure Apple into easing its rules around payments to creators. Quote, people are using this platform to survive, starting with me, our very first creator, Jasmine Rice, a fanhouse creator and one of the platform's co-founders, tells the verge, I use this to pay the bills for my family, I use this to pay my mom's medical

expenses, end quote. Fanhouse, which launched in 2020, initially slipped past the app store bouncers and offered payments on the web without issue. Now that Apple has spotted the potential for profit, it's given Fanhouse the same ultimatum it gives almost everyone else. Fanhouse either needs to pay up or get booted from the store. Fanhouse only takes a 10% cut on its own, so the platform's creators could soon be earning a whole lot less. Rice says she would be okay with handing Apple a 30% cut of Fanhouse's own profits, but once that 30% has to cut into creators' profits, it starts to hurt people, not just the platform. Quote, this money really means a second job for some people, that they have a place to live, that they can afford tuition,

rice says. And we try to explain this to Apple. End quote. Fanhouse allows creators to charge a subscription for access to a private social media feed where they can post updates about their life or publish photos and videos. Creators can also earn money from tips or they can post locked updates that fans need to pay to view. Each account also has a public feed that can be viewed without a subscription, which may be why the app was able to slip through the app store unnoticed until now. Apple told The Verge, it's working with Fanhouse to bring the app into compliance with its rules. The company referred to its in-app purchase guidelines and said Fanhouse was rejected previously because of a similar violation, end quote.

So I've seen some people push back on this and say Fanhouse was basically trying to whistle past Apple's obvious rules, knowing that they could gin up a backlash if they were ever caught, like they've been caught. But this is the question that folks like Lee Jin and Nathan Batchez have been asking a lot lately in a world where creators are going direct to their audiences, or at least direct via creator catering platforms, what exactly is Apple providing for that 30% cut? I mean, I can see that security and other things might be important for apps, but this isn't apps.

This is a creator and their fan base. Is this just rent collection? And a 30% cut off the top, in addition to 10% or more for the creator platforms, and let's not forget 30% or more for taxes, the creator economy risk being strangled in the credit. crib by all of these middlemen. Guess what? We spoke about all this at length on last night's Twitter space with none other than Jasmine Rice herself, who came on to argue Fanhouse's case.

And of course, Chris and I kicked around the issues of the backlash in the creator economy extensively. Once again, our spaces are talking to newsmakers in real time. Of course, we also did a WWDC wrap-up as well. So if you've not checked out spacecasts yet, you're missing out. One thing Chris said last night about Fanhouse and the App Store 30% rate controversy was that increasingly digital platforms function much like governments. They're literally that powerful. So why shouldn't they have their own sort of tax regime? That's sort of stuck in my head overnight. And we did end up talking about how various industries settle on various take rates, like 15% for agents, 5% for real estate. And yes, if you look at the average tax rate around the developed world, it settles in on average at around 30%.

But that's the point. If you have to pay 30% on every dollar you charge, and then another 30% of that, then every dollar becomes 49 cents before you even see penny number one. That's functionally so onerous as to be non-functional, in my opinion. If commerce is moving to the digital realm, can we afford to have to render unto two different Cesar's? What Cesar's thinks belongs to them? As I argued last night, I don't think the market can really sustain that. And that's what I think we're actually seeing right now is a natural settling to a sustainable pie slicing based on what this particular market can bear.

It's how capitalism works. And I just don't think that 30% is sustainable. Talk to you tomorrow.