Tech Brew Ride Home - Thu. 07/02 – ALL of Silicon Valley (kinda) Has A Date With Washington

Starting point is 00:00:00 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 Right Home for Thursday, July 2nd, 2020. I'm Brian McCullough today. Mark Zuckerberg has told Facebook staff he's not overly worried about the boycotts.

Starting point is 00:00:43 Zuckerberg will be among the Fab Four CEOs of the biggest tech companies minus Microsoft slated to testify before Congress later this month. Police hacked an encrypted phone network popular with mafia types and the results won't surprise you. And also the weekend long-reach suggestions. Here's what you missed today in the world of tech. Sources are telling the information that Mark Zuckerberg has told staff that Facebook won't change any policies because of a, quote, threat to a small percent of our revenue due to the ad boycotts, and also that he expects those disgruntled advertisers participating in the boycotts to return, quote, soon enough.

Starting point is 00:01:24 Quoting from the information piece, Zuckerberg gave his thoughts on the boycott, which now includes large brands like Starbucks and Coca-Cola during a video town hall meeting last Friday, according to employees who attended. In the previously unreported remarks, Zuckerberg said the boycott is more of a, quote, reputational and partner issue than an economic one, according to a transcript obtained by the information. He noted that large advertisers participating in the boycott make up a small portion of Facebook's overall revenue, and he said, quote, we're not going to change our policies or approach on anything because of a threat to a small percent of our revenue or to any percent of our revenue, end quote. And then quoting again, you know, we don't technically set our policies because of any

Starting point is 00:02:04 pressure that people apply to us, Zuckerberg told employees when asked about the boycott. And in fact, usually I tend to think that if someone goes out there and threatens you to do something, that actually kind of puts you in a box where in some ways it's even harder to do what they want because now it looks like you're capitulating and that sets up bad long-term incentives for others to do that to you as well, end quote. While he acknowledged that the boycott quote hurts us reputationaly, Zuckerberg said that small businesses make up the vast majority of Facebook's ad revenue. A dynamic, he suggested, insulates the company from threats by larger advertisers. He said the company needed to embark on a, quote, big education campaign to make clear that,

Starting point is 00:02:42 quote, our practices and our proactivity overall across the whole community actually make us the best at addressing the problem of hate speech, end quote. Indeed, but the point that I made yesterday still stands. If Facebook properties continue to gain a reputation for being down market because of controversy or what have you, well, just look at the YouTube example. YouTube has spent the better part of 15 years trying everything they can think of to convince advertisers. They are a safe space for brands to advertise.

Starting point is 00:03:13 And yet they still don't command nearly the rates that broadcast video and increasingly streaming video commands because the brands aren't entirely convinced. and because the brands feel safer in spaces where the content is curated. That's half the reason why everyone is racing to streaming, the market opportunity of higher CPM rates. So the longer-term worry here is not that this advertiser will leave or that one will cut their spend, it's that the rates overall that Facebook and others in social can command could fall over time if the reputation of these platforms is what suffers.

Starting point is 00:03:50 It's a reputational risk to an entire market, not just a PR risk from a simple boycott. Mark your calendars. We're apparently going to have the biggest day ever of tech congressional testimony. Representative David Cicillini, the chair of the House Judiciary Committee's antitrust panel, says that Apple CEO Tim Cook has agreed to testify before the panel in late July alongside the CEOs of Facebook, Amazon, and Google. Apple Insider gives you. the tick by tick of how this all went down, quote,

Starting point is 00:04:27 Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai committed to testify before lawmakers in June, though they conditioned their participation on the appearance of other executives involved in the inquiry. Amazon CEO Jeff Bezos is also expected to testify after being threatened with a subpoena, end quote. And I couldn't do better giving you the color commentary on what we might expect from this in a few weeks than this Twitter exchange from Kara Swisher, so let me just quote, quoting Kara first. While tech leaders have appeared before Congress before the gathering of the four-horsmen of the techpocalypse should be an epic show, but that is only if the lawmakers do their job and ask pointed questions about the true impact

Starting point is 00:05:08 of their power on competition, end quote. To which the information's Jessica Lesson replied, I think this is exactly what the CEOs wanted. No one is the star of the show and so little time for each. and then Jason Hirshhorn of Redef tweeted, quote, Will it matter? That's now four instead of one. Tough to focus. And no one at these hearings has proven to the public they truly understand the issues. To which, Jason Kint replied, I hear your concerns, but that's unfair having watched closely. A few members have become very educated on the issues along with committee staff. Most important we'll be keeping to a limited subcommittee so members can do follow-up and have plenty of time.

Starting point is 00:05:47 I hear you and understand, but the perceptuals, even of the Zuckerberg hearing was unfair. The issue was format, rush job, timing, and Facebook lobby capture. That's all changed. In two years, a lot has been learned on staff level. Same in other parliaments. Work to do, end quote. And then I also saw someone else on Twitter last night, though I couldn't find the tweet, say, Bezos will be the big target of the hearings. Zuckerberg will attract the cameras and the headlines. And meanwhile, Cook and Pachai will probably just hope to hang back in the cut a bit and try not to be noticed. Facebook is shutting down Lassow. It's Earthswhile TikTok clone that it launched only a year

Starting point is 00:06:33 and a half ago. If you want a Lassau for the first time, you better do so before July 10th when Lassow is getting shut off. The reasons for the shutoff should be obvious, quoting TechCrunch. Lasso had fewer than 80,000 daily active users on Android, the highest it has ever had in Mexico its biggest market on June 1st, according to Mobile Insights firm App Annie, data of which an industry executive shared with TechCrunch. The app had so few users on iOS, and it struggled so much in other markets that the figures were too low for App Annie to track in other markets. Earlier this week, Facebook announced it was also shutting down Hobby, an app that allowed

Starting point is 00:07:15 users to document their personal projects. Hobby 2 was an experimental project by Facebook, end quote. This will give us a nice little transition into the Longreeds segment because this is pretty interesting if you want to dive into it. Police apparently infiltrated an encrypted phone network called EncroChat, which was apparently very popular with organized crime types in Europe. And the police then gleefully read millions of messages in real time by those same organized crime types. This surveillance led to tons of international arrests, quoting motherboard. French authorities had penetrated the Encrochet network, leveraged that access to install a technical tool in what appears to be a mass hacking operation, and had been

Starting point is 00:08:05 quietly reading the user's communications for months. Investigators then shared those messages with agencies around Europe. Only now is the astonishing scale of the operation coming into focus. It represents one of the largest law enforcement infiltrations of a communications network predominantly used by criminals ever, with encrochat users spreading beyond Europe to the Middle East and elsewhere. French, Dutch, and other European agencies monitored and investigated more than 100 million encrypted messages sent between encrochat users in real time, leading to arrests in the U.K., Norway, Sweden, France, and the Netherlands, a team of international law enforcement agencies announced Thursday. As dealers planned trades, money launderers washed their proceeds, and even criminals discuss their next murder,

Starting point is 00:08:50 Officers read their messages and started taking suspects off the street, end quote. Didn't I do a story not too long ago how it turned out apparently that some sort of encrypted channel used by various governments going back to the 1960s was in fact all along technology developed by the CIA who then used that technology to listen into, for example, the Iranian government during the 1979 hostage crisis? Yeah, shouldn't that sort of thing or hacking? like this sort be going on all the time. Don't you assume that it is? Like if you don't think that it's going on way more than we know, then you're probably really naive. Because it's so obvious. Why would you not do it? Why do you think governments are so wary of TikTok? Sometimes you fear the most

Starting point is 00:09:37 the thing you suspect in others that you know you're guilty of yourself. Time for the week on long read suggestions. And sometimes the long reads pop up. Just in time to go deeper into things that we literally have just been talking about. Bunch of those this week. First, Marker has a piece up entitled, Mirror wanted to be the next iPhone. Instead, it's selling to Lulu Lemon. So yes, a deeper dive behind the company at the center of the big acquisition story of the week, quote, fitness, in other words, was only the gateway drug for the mirror to become

Starting point is 00:10:17 the content delivery system for anything else, virtual. We're building the third screen in your life, she said. The possibilities were endless. fashion, therapy. Putnam had raised $74.8 million from VCs, along with celebrity customers, including Alicia Keys, Reese Witherspoon, Gwyneth Paltrow, and Kate Hudson, earning the four-year-old startup, a $300 million valuation and a lot of buzz, end quote. Yeah, so if that was the opportunity, and seemingly this is the moment in this COVID moment where exercising remotely is a huge thing, and the likes of Peloton and others are seeing record sales, why sell now?

Starting point is 00:10:55 The piece suggests, in essence, maybe the angle to look at here is in an era where yoga studios and gyms are closed for the foreseeable future, consider what the strategic angle for Lulu Lemon is. Next, YouTube TV, as I told you just yesterday, has raised prices to levels approaching the traditional cable TV bill, and we speculated about the dollars and cents behind that. According to The Verge, we were right. it's exactly what we speculated. The problem lies in the fact that all of these companies, internet, TV and cable alike,

Starting point is 00:11:31 aren't really fighting with each other to keep prices down. They're fighting with content providers like ViacomCBS, CBS, Disney, Warner Media, NBC Universal, Fox Corporation and Discovery, which license out the rights to air their channels to cable providers like Verizon and YouTube TV. And they do not like to license their content cheaply. YouTube TV, Fubu, Hulu, and the rest may want to offer. their original low prices, but they're at the mercy of carriage fees. The competition that matters here isn't what YouTube and Hulu charge, or even what Optimum and Verizon Fios charge, but what ViacomCBS

Starting point is 00:12:05 CBS and Disney's licensed content costs, end quote. So in essence, you have a revolution happening in video, for sure, but only on the distribution end. The underlying raw materials of this video hasn't been revolutionized at all, and it's just as expensive as it ever was. I really want to make some sort of analogy to the illegal drug trade and the underlying cost of, say, cocaine, but that seems a bit much, so I'll hold off. And next, the great Steven Sinovsky has an annotated tweet storm on his blog that looks at the announcement of Apple Silicon over the recent weeks and says that this is really a miracle of strategy and execution. Here's a nice summation of what you'll learn if you read Stephen's piece, quote, three factors continue to blow me away, for lack of a better expression, especially after

Starting point is 00:12:57 today. Fearless multi-year strategy, clear unified planning and prioritization, widely unprecedented execution. Many tend to focus on strategy alone, such as vertical integration or manufacturing execution, e.g. Tim Cook's legendary supply chain work when he joined the company, or even marketing, get a Mac. All of those on their own were amazing and critical. I am choosing to look at the overall arc of product development, as that underpins everything that I believe is singularly unique, end quote. From the Wall Street Journal, more on a company that I've been fascinated to learn more about in recent weeks, Just Eat Takeaway, which, you know, just ate and took out Grubhub,

Starting point is 00:13:39 and Jitzy Grown, the founder of Takeaway.com, who has slowly cobbled together a colossus through acquisitions. In fact, I learned that Just Eat Takeaway has... has done $20 billion in acquisitions in just the last four years. Quote, The rapid dealmaking has been underpinned by Just Eat Takeaway's belief that the future of its business lies in having restaurants handled the delivery part themselves, avoiding the costs of building fleets of drivers and cyclists to transport meals to customers.

Starting point is 00:14:10 Both Just Eat Takeaway and Grubhub have some driver networks of their own, but their business revolves around taking a cut from restaurants and chains that use their websites to advertise and take orders. U.S. rivals like Uber Eats, Doordash, and Postmates use their own drivers for almost all deliveries. We don't put people on bikes, said Jissy Grown, who founded Takeaway.com in 2000 and took it public in 2016. Last year, it recorded its first annual profit since its initial public offering, crediting its, quote, marketplace model, end quote. This doesn't maybe satisfy my true self-driving by 2020 wager, but Vox says that true networks of self-driving trucks are becoming a reality in the U.S. right now as we speak. Quote, on Wednesday, the San Diego

Starting point is 00:14:57 based self-driving startup, Too Simple, announced what it's calling the world's first autonomous freight network. That means that the company is laying the groundwork for delivering a lot more of our stuff with self-driving trucks. Too Simple is hardly the only company working to make fully automated shipping a reality. Several companies, including Aurora, Daimler, and Embark trucks are competing for a slice of the future of self-driving freight trucks. Alphabet-owned Waymo confirmed on Tuesday that it will be expanding its own self-driving trucking routes throughout the American Southwest and Texas following previous tests in Arizona, California, Michigan, and Georgia. Two Simples expansion plans seem more concrete than some of its competitors, though. The company

Starting point is 00:15:37 is expanding existing shipments with UPS, which also has invested in Too Simple, and the food service delivery giant McLean. The major shipping company U.S. Express, one of the nation's largest freight companies, will also start shipping goods through Too Simple, which now has 22 contracted customers. And those companies will ultimately have influence over which routes are digitally mapped out next for self-driving trucks, end quote, which you would think would be a huge advantage if you're one of those early adopters. And next, I haven't actually read this one, but the cover story in Bloomberg Business Week asked the provocative question, did a Chinese hack kill kill Canada's greatest ever tech company. They're talking about Nortel, which was once a leader in

Starting point is 00:16:19 wireless technology, but then came a high-profile hack in 2004 that led to leaked documents being sent to a shell company in China and then disseminating widely and the resulting financial scandal arguably led to Nortel's 2009 bankruptcy. But notice that I said Nortel was once a world leader in wireless. Who's the world leader now? Huawei. timing there. Don't know if this is true or not, but I think you can get the implication of where the story probably goes. Finally, a piece that you'll need to watch on video to really appreciate again, Disney has developed movie-quality face-swapping technology that could fundamentally change filmmaking. Check the video in the link to this last one to see how good

Starting point is 00:17:06 this has actually gotten. We're talking no uncanny valleys here anymore. Quote, face swaps. are not uncommon in the film and TV industry. Oftentimes, a stunt double will momentarily look at the camera, requiring extensive post-production to ensure even for a brief moment that the person on the screen looks exactly like who they're supposed to. Fixing these problems can often require reshoots or a combination of clever computer graphics and compositing, which is never cheap. But with this new research, existing footage from the same shoot could be used to train the algorithm, which would then fix these problems all on its own. But while overworked visual effects artists and budget-conscious Hollywood producers might celebrate the new tool, it will also make it much harder to spot deep fake videos in the wild.

Starting point is 00:17:52 It won't take long for the new approaches in this research to find their way into existing machine learning tools, at which point we can expect a new wave of deep fakes to flood the internet, and there's now a good chance we won't actually know they're fake, end quote. So quick programming note, here in the U.S., July 4th is two days away, but since it falls on a Saturday this year, July 4th is being observed, as they say, on the 3rd, which is tomorrow. So tomorrow is an official work holiday here in the States. So I'm going to take tomorrow off for the 4th, even though tomorrow is the 3rd. I was actually kind of on the fence about doing this because there have been so many Friday news dumps lately. But what I'll do, I think, is if something something really major breaks that I think it would bother me to miss or else it would feel stale to talk about next week. I'll just quickly write something up and post it, even if it's only like two or three minutes or whatever.

Starting point is 00:18:51 So like an emergency mini episode, if necessary. But barring that, enjoy a long weekend, Americans, I'd not suggest you do a barbecue or whatever unless it's socially distant. I don't know how it's gotten to the point where it's political for me to say that. I hope you're careful so you don't get sick, but also I hope you don't get sick because I don't get you to get me sick, but whatever. Somehow that's suddenly a political thing to say, I guess. Anyway, be well, as I used to say, be safe, enjoy the fourth, talk to you on Monday.

Tech Brew Ride Home - Thu. 07/02 – ALL of Silicon Valley (kinda) Has A Date With Washington

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