Tech Brew Ride Home - Thu. 07/08 – The States Go After Google First

Episode Date: July 8, 2021

State Attorneys General file an antitrust suit against Google. But why them, first? Visa wants you to spend crypto via their platform. Fintech leads a record first half of the year for VC raises. And if payment for order flow were nixed by the SEC, what would that do to Robinhood? Sponsors: Tovala.com/ride Cybereason.com  Links: 36 states, D.C. sue Google for alleged antitrust violations in its Android app store (Politico) Visa is partnering with over 50 crypto companies to allow clients to spend and convert digital currencies (Markets Insider) OnePlus confirms the OnePlus 9 and 9 Pro throttle many popular apps to improve battery life (XDA Developers) Global Venture Funding Hits All-Time High In First Half Of 2021, With $288B Invested (Crunchbase News) London fintech funding soars in first half of the year (Reuters) Twitter Pledges to ‘Fully Comply’ With India Internet Rules (Bloomberg) Robinhood’s Debut Is Clouded by SEC Scrutiny of Payment for Order Flow (Wall Street Journal) Weekend Longreads Suggestions: Mark Zuckerberg and Sheryl Sandberg’s Partnership Did Not Survive Trump (New York Times) The U.S. says humans will always be in control of AI weapons. But the age of autonomous war is already here. (Washington Post) GitHub Copilot is not infringing your copyright (Julia Reda) Ireland’s Days as a Tax Haven May Be Ending, but Not Without a Fight (New York Times) 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, July 8th, 2021. I'm Brian McCullough today. State Attorneys General file an antitrust suit against Google, but why them first? Visa wants you to spend crypto via their platform. FinTech leads a record first half of the year for VC raises. And if payment for

order flow were nixed by the SEC, what would that do to Robin Hood? Here's what you miss today in the world of tech. Attorneys general from 36 states and the District of Columbia have filed an antitrust lawsuit against Google, targeting the Play Store practice of forcing devs to use Google's billing system and charging devs a commission for doing so, quoting Politico. In addition to Wednesday's suit, Google also faces a suit that the Justice Department and 14 states filed in October focused on Google's efforts to dominate the mobile search market, one from 38 states and territories filed in December also focused on search and a third suit by 15 states and territories related to Google's power over the advertising technology. In a blog post, Google dismissed the suit

as meritless, saying the changes the plaintiff's demand for its Google Play Store risk, quote, raising costs for small developers, impeding their ability to innovate and compete, and making apps across the Android ecosystem less secure for consumers, end quote. This lawsuit isn't about helping the little guy or protecting consumers, the company said. It's about boosting a handful of major app developers who want the benefits of Google Play without paying for it, end quote. The case mirrors one filed against Google by Fortnite Maker Epic Games last August, and a barrage of antitrust class actions filed on behalf of app developers and consumers who allege Google's policies have led to higher prices. The bipartisan group of state attorneys general filed Wednesday's

case in the same court as those other app store suits. It will be heard by the same judge, James Donato, an Obama appointee, who has scheduled a trial in epic suit against Google for April 2022. While Google has long had a policy that app developers must use its payment system for purchases made through the Play Store, the company has only loosely enforced the rule. Last year, the company said it would start enforcing its payment rules this coming September, end quote. Does anyone else find it interesting that the AGs are going against Google first? not sure what to make of that. But quoting Dieter Bone, who went into the weeds on the suit itself, quote, I assure you this multi-state lawsuit against the Google Play Store is a big deal,

reading through it now, and there are enough redactions and hints of receipts to make me believe these AGs did not come to, well, play, end quote. Visa is partnering with more than 50 crypto firms, including Coinbase, to allow Visa users to convert and spend crypto and says more than $1 billion was sent via crypto-linked Visa cards in the first half of this year, quoting Insider. The merchants don't have to change anything, Kai Shuffield, Visa's head of cryptocurrency told Insider, it will be the same as any other visa transaction to them, but on the back end-end, the crypto assets are instantly converted into Fiat, end quote. You have this growing number of consumers with assets on crypto platforms, trading crypto,

holding crypto and then you millions of merchants who don't really understand crypto. They don't want to have to update their point of sales and terminals and figure out what a blockchain is, he said. Among the features being offered, though it will depend on the cryptocurrency platform, is letting users spend fiat and earn cryptocurrencies as a reward similar to how users can accrue cashback, airline miles, or hotel points, end quote. Quoting Terry Angelos on Twitter, there's over 200 billion in crypto assets stored in regulated exchanges and wallets, and we are starting to see those assets fund spending, end quote. This is a weird one. I don't think I've ever seen this happen before.

One Plus is confirming that the one plus nine and nine pro smartphones actually throttle many popular apps in order to improve battery life. Investigations had been reporting uneven throttling across apps and benchmarks, and now we might know why, quoting XDA developers. After a bit of digging, an Antek discovered a One Plus performance service that tracks when the user opens applications and decides whether or not to make modifications to the CPU scheduler. Many OEMs develop a similar kind of service and OS framework to control device performance, so its existence isn't interesting in and of itself. What's odd here is that

One Plus has several popular apps on the black list. Anantec was unable to find the exact list of applications affected by One Plus's performance limiting mechanism, but they did test a handful of popular apps. Apps like Chrome, Twitter, Zoom, WhatsApp, Facebook, Instagram, Snapchat, YouTube, Discord, Microsoft's Office apps, Firefox, Samsung, Internet, etc., are all affected. Surprisingly, One Plus's own first-party apps are affected as well. Luckily, this mechanism isn't applied to popular games like Genshin Impact, and benchmark apps are also unaffected. For what it's worth, even with this performance limiting mechanism in place, the One Plus 9 Pro remains a fast and responsive phone. Most users won't notice this behavior in day-to-day

use as One Plus has employed other mechanisms, such as OS framework boosters and touch boosters to neutralize the effects of the performance limiting mechanism. Researchers note that they initially didn't notice the issue until they compared the One Plus 9 Pro side by side with the Galaxy S-21 Ultra and Me 11 Ultra, end quote. Some data on the state of the startup ecosystem globally, an analysis of global venture funding for the first half of 2021, shows a grand total of $288 billion invested in tech startups, an all-time high, and up by $110 billion over the second half of 2020.

20, quoting CrunchBase News. Record funding was invested at every stage in the first half of this year. Late stage funding peaked the most, more than doubling year-over-year per crunch-based numbers. Early-stage funding grew more than 60% over the prior two half-year timeframes, and seed funding gained 40% year-over-year. Growth equity investor Tiger Global Management and Insight Partners racked up the most portfolio companies for the first half of the year, according to CrunchBased data. Tiger Global, whose breakneck investing pace this year we've written about previously, added 110 new portfolio companies. It has led 87 rounds in new and existing portfolio companies, averaging more than 14 rounds led per month. The firm has added 58 unicorn companies to its portfolio already this year. Insight Partners added 71 new portfolio companies in the same

time frame, but led more rounds, totaling 82 for new and existing portfolio companies, and venture firms Andreson Horowitz, a sell and growth equity in General Catalyst round out the top five active investors year to date, end quote. What continues to be the hot sector? Well, as we've been talking about on the interesting raise episodes, FinTech. FinTech companies globally raised $54.1 billion between January and June, more than the total amount raised in the two previous years combined. Following up on a story we've mentioned recently, Twitter says it will now fully comply. with India's new IT rules and has appointed an interim chief compliance officer, which you'll recall

was a major part of that law, and will name a grievance officer by July 11th, quoting Bloomberg. These are some of the requirements under intermediary rules issued by Prime Minister Narenda Modi's government in February. Facebook, WhatsApp, Google, and others have already made the appointments and started generating user grievance reports as required by the new rules. Twitter, which was involved in a ferocious confrontation with electronics and information technology minister Ravi Shankar Prasad over the rules was holding out. Prasad resigned from the ministry this week and his successor, Warton Grad, Ashwini Vaishnaughna, was quoted by the Indian Wire PTI as saying that those who live and work in

India will have to obey the country's laws, end quote. Robin Hood's much anticipated IPO should go out the door any day now. But as always with these sorts of things, we got our first look at the business, a startup actually has when it files for an IPO. And there's one blaring red flag with Robin Hood. Its IPO filing shows that 81% of Q1 revenue came from that controversial payment for order flow, an off-scrutinized practice that could potentially be banned someday by the SEC. And if that were to happen, well, quoting the Wall Street Journal, payment for order flow critics, including the country's top market regulator, Securities and Exchange Commission

Chairman Gary Gensler are wary of the practice. They argue that it poses a conflict of interest for brokerages because the brokers can either collect more money for selling their customers' order flow or pass that money on to customers in the form of price savings on their trades. Last month, Mr. Gensler said the SEC was reviewing payment for order flow, fueling speculation among some market observers that payment for order flow could be banned. The entire business model of some brokers is in the crosshairs, said Tyler Gelach, executive director of Healthy Market Associates, an investor trade group. In some ways, Robin Hood is pursuing the same path as other fast-growing startups that went public despite regulatory uncertainty

over their business models, such as Uber and Coinbase. Payment for order flow has existed for decades. The SEC has reviewed the practice several times and allowed it to continue despite occasional flare-ups of controversy. To date, the regulator has accepted the argument put forward by many brokers and traders that sending retail orders to high-speed traders benefits small investors. Proponents of Payment for Order Flow say investors save money when their orders are routed to such trading firms compared to what they would get at exchanges such as the New York Stock Exchange or the NASDAQ stock market. Many of Robin Hood's rivals except Payment for Order Flow too, but the other major U.S. brokerages tend to rely more on other revenue streams such as collecting interest on

customer's cash balances. Charles Schwab, for instance, reported that 6% of its net revenue last year came from selling order flow. Some industry veterans say Robin Hood will survive the SEC's review. Even if new regulations curtail the company's payment for order flow revenue, Robin Hood could find other ways to make money from its vast customer base, said Jamie Selway, chairman of retail brokerage startup, All of Us Financial Incorporated. Quote, they have 18 million relationships, which is huge, he said, citing the company's reported number of funded accounts. There are other levers they could pull, end quote. Time for the weekend long read suggestions. Wait, what's that? Well, I'll explain at the end of the show. Also, it's going to be a slightly shortened long reads this week, as since it's been a

holiday week, there just hasn't been that much to pick from. But here's a juicy one for you. Shira Frankel and Cecilia Kang have a new book coming out called An Ugly Truth Inside Facebook's Battle for domination, and the New York Times has an early excerpt out that outlines how the supposed storied partnership between Mark Zuckerberg and Cheryl Sandberg deteriorated, according to the authors, during the Trump era, as Zuckerberg started making calls on the biggest policy decisions facing Facebook, which used to be Sandberg's balliwick, quote, The view from inside the upper echelons of the company was clear. It felt as though Facebook was no longer led by a number one and a number two, but a number one and many. The pair

continued their twice-weekly meetings, but Mr. Zuckerberg took over more of the areas once under her purview. He made the final call on issues surrounding Mr. Trump's spread of hate speech and dangerous misinformation. Decisions Ms. Sandberg often lobbied against or told allies she felt uncomfortable with. Mr. Zuckerberg oversaw efforts in Washington to fend off regulations and had forged a friendly relationship with Mr. Trump. Ms. Sandberg surrounded herself with a kitchen cabinet of outside political advisors and a team of public relations officials who were often at odds with others in the company. Both executives declined to comment for this story, perhaps letting the company's performance speak for itself. Facebook's market valuation is now over $1 trillion, end quote. From the Washington

Post, just going to quote the headline, the U.S. says humans will always be in control of AI weapons, but the age of autonomous war might already be here, end quoting from the piece. Drones have been a part of warfare for years, but they've generally been remotely controlled by humans. Now, by cobbling together readily available image recognition and autopilot software, autonomous drones can be mass produced on the cheap. Today, efforts to enact a total ban on lethal autonomous weapons long demanded by human rights activists are now being supported by 30 countries. But the world's leading military powers insist that isn't necessary. The U.S. military says concerns are overblown, and humans can effectively control autonomous weapons, while Russia's government

says true AI weapons can't be banned because they don't exist yet. But the facts on the ground show that technological advancements coupled with complex conflicts like the Syrian and Libyan Civil Wars have created a reality where weapons that make their own decisions are already killing people. The debate is very much still oriented towards the future, said Ingvild Bodhi, an autonomous weapons researcher at the University of Southern Denmark. We should take a much closer look at what is already going on, end quote. Julia Reda has an essay up looking at that new GitHub co-pilot thingy that uses GPD3 to complete code for you.

What, in short, might that mean for ownership, for authorship, for copyright, quote, some commentators see GitHub co-pilot as a copyright infringement because the program not only uses copyright protected software code, a lot of which is published under GPL as training material, but also generates software code as output. According to critics, this output code is a derivative work of the training data sets because the AI would not be able to generate the code without the training data. In a few cases, copilot also reproduces short snippets from the training data sets according to GitHub's FAQ. On the other hand, the argument that the outputs of GitHub co-pilot are derivative works of the training data is based on the assumption that a machine can produce works.

This assumption is wrong and counterproductive. Copyright law has only ever applied to intellectual creations. Where there is no creator, there is no work. This means that machine generated code like that of GitHub copilot is not a work under copyright law at all, so it is not a derivative work either. The output of a machine simply does not qualify for copyright protection. It is in the public domain. That is good news for the open movement and not something that needs fixing. Those who argue that copilot's output is a derivative work of the training data may do so because they hope it will place those outputs under the licensing terms of the GPL. But the unpleasant side effect of such an extension of copyright would be that all other AI generated content would henceforth also be protected by copyright. What would then stop a music label from training an AI with its music catalog to automatically generate every tune imaginable and prohibit its use by third parties? What would stop publishers from generating millions of sentences and privatizing language in the process, end quote. And finally, from the New York Times, earlier this month,

130 nations, including Russia, China, and India, signed preliminary agreements to unify corporate tax rates in an effort to prevent companies, especially tech companies, for moving operations around the globe in search of lower taxes. But what about the Celtic Tiger? Ireland, one country that has juiced its economy for decades by operating as a sort of tax haven. quoting the piece I'm sharing from the New York Times. Ireland was one of only nine countries not to sign on to the sweeping framework last week, overseen by the Organization for Economic Cooperation and Development, that could undermine those advantages.

The accord would impose a new 15% global minimum corporate tax rate and forced technology and retail giants to pay taxes where their goods or services were sold rather than where the company had its headquarters. The details of the agreement are expected to be completed in October, and then each country's government would need to adopt it. At stake is Ireland's low official corporate tax rate of 12.5% and a tax regime that helps global companies base there avoid paying taxes to other countries where they make profits, a setup that has put billions of euros into Ireland's tax coffers and created hundreds of thousands of jobs, end quote. Question is,

for how much longer? Okay, so as I said, I'm treating this week as sort of a vacation week, even though I have been putting out shows. To that end, there will be no show tomorrow. I'm taking Friday off. There will also be no weekend stuff this weekend. So the next time you'll hear from me will be on Monday. It's been more than a year since I took a day off, and it's approaching two years since I had a guest host fill in for me.

So I hope you'll understand taking this teeny tiny break. Talk to you all next week.