Tech Brew Ride Home - Thursday, Apr. 19, 2018 - Bezos' Shareholder Letter

Episode Date: April 19, 2018

Amazon Prime tops 100 million subscribers, clarifying Facebook’s GDPR compliance, Netflix has mobile previews, what metrics show that is Reddit bigger than Facebook, and will you soon be able to letter in eSports? Stories from: @David_Ingram, @aatilley Links:Amazon CEO Shareholder Letter (SEC)Exclusive: Facebook to put 1.5 billion users out of reach of new EU privacy law (Reuters)Facebook Is Forming a Team to Design Its Own Chips (Bloomberg)Intel Plans to Shut Down Smart Glasses Group (The Information)PlayVS wants every high school to have an esports team (TechCrunch) 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 TechMeme Ride Home for Thursday, April 19th, 2018. Today, Amazon Prime tops 100 million subscribers, clarifying Facebook's GDPR compliance. Netflix has mobile page views.

By what measures is Reddit bigger than Facebook? And will you soon be able to letter in e-sports? Here's what you missed today in the world. world of tech. Last evening, Amazon CEO Jeff Bezos released his annual Amazon shareholder letter, something that he's done every year since 1997. And for the first time, Bezos revealed something that he has never revealed before, the number of people who subscribed to Amazon's Prime membership program. In the letter, Bezos announced that for the first time, Prime now exceeds 100 million members worldwide, and in 2017 alone, Amazon added more Prime members than an

any prior year of the program's existence. He also noted that Prime members shipped over five billion items via the Prime program last year. Analysts have long speculated on the number of Prime members. Business Insider Intelligence, for example, had recently estimated that there were 80 million members in the U.S. alone. The $99 a year Prime program is widely regarded as one of Amazon's key drivers of customer loyalty and revenue growth. Prime members spend more on Amazon than non-members do, reportedly $1,300 a year compared to $1,000 a year. And renewal rates for prime membership has been estimated at more than 90%. With the confirmed 100 million member number, that means that Amazon is making around $10 billion a year just in subscriber fees.

It should be noted, of course, that the price of prime varies from country to country. In a related story, MarketWatch was reporting that beginning May 2nd, Amazon's newly owned Whole Foods subsidiary will be shutting down its rewards program and folding the customer accounts into Amazon Prime, thus theoretically increasing Prime membership numbers even more. The theme of the Bezos letter this year was high standards. Quoting from the letter, How do you stay ahead of ever-rising customer expectations?

There's no single way to do it. It's a combination of many things. But high standards, widely deployed and at all levels of detail, are certainly a big part of it. We've had some success over the years in our quest to meet the high expectations of customers. We've also had billions of dollars worth of failures along the way. Bezos went on to relay an anecdote to illustrate his point. Quote, A close friend recently decided to learn to do a perfect freestanding

handstand. No leaning against a wall, not for a few seconds, Instagram good. She decided to start her journey by taking a handstand workshop at her yoga studio. She then practiced for a while, but wasn't getting the results she wanted. So she hired a handstand coach. Yes, I know what you're thinking, but evidently, this is an actual thing that exists. In the very first lesson, the coach gave her some wonderful advice. Most people, he said, think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you're just going to end up quitting. Bezos continued, unrealistic beliefs on scope, often hidden and undiscussed, kill high standards.

To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be. Something this coach understood well. So I've been telling you that Facebook has been changing its terms of service to bring them what we think to be more in line with GDPR, the privacy and data law that is slated to go into effect in Europe next month. But Reuters was reporting last night that there's a slight wrinkle here. It's complicated and confusing, but the simplest summation of it that I can give you goes like this. For years, if you've been a user of Facebook outside, side of the U.S. than by the Facebook terms of service, you've been engaging with Facebook via

their offices in Ireland, and thus we're using Facebook pursuant to Irish law. But Ireland is, of course, in the EU. And as Reuters is reporting, because of that, next month, Facebook will change their terms of service so that Facebook users in places like Africa, Asia, Australia, and Latin America will now be engaging with Facebook via their U.S. offices. and thus will be subject to U.S. law. What does this mean? It means that the approximately 1.5 billion users, affected by this change,

will not be able to file complaints with Ireland's Data Protection Commissioner or in Irish courts once GDPR goes into effect. In short, Facebook is moving these users outside of the scope of the coming GDPR regulations. So while Facebook has been making public statements and changes that comply with DPR, GDPR regulations for all users worldwide, in the narrow, technical, legal sense, the only users

that Facebook will have to worry about for GDPR liability purposes will be EU citizens. Confusing? Trust me, I did my best to try to explain that in the clearest possible way. And that's sort of the point with all this stuff. There's the PR angle to this, and there's the actual legal angle, which is seemingly designed to be. confusing. To be fair, in an interview with Reuters earlier this month, Facebook CEO Mark Zuckerberg said that Facebook was going to apply the EU law globally, quote, in spirit. And Facebook is not alone in this move ahead of GDPR taking effect. Reuters notes that LinkedIn also had terms of service that meant that users outside the U.S. were subject contractually to LinkedIn Ireland. New LinkedIn

terms of service coming May 8th mean that non-European users will now technically be doing business with the U.S.-based LinkedIn Corporation. On Twitter, pinboard snarked, quote, It's curious, given their profound idealism, that tax evasion is what left Facebook so painfully exposed to a change in European privacy laws, end quote. What's being referred to here is the fact that Facebook established its Irish subsidiary, as far back as 2008 in order to take advantage of that country's low corporate tax rates. Plenty of U.S. corporations, especially but not exclusively technology companies, have done the same thing over the past two decades for similar reasons.

Does this mean that Facebook is pulling up stakes on its Irish subsidiary? That's unclear. But an Irish official, who spoke to Reuters on the condition of anonymity, said he was unaware of any plans by Facebook to decrease its presence in Ireland. Maryland. As recently as March of 2017, Silicon Republic was reporting that Facebook employed 1,600 people in its Dublin offices and at the time was looking to hire at least 800 more. In unrelated Facebook hiring news, Bloomberg is reporting that the company is staffing up in order to build an internal team that will design its own AI chips. This is according to public

job listings and people familiar with the matter who spoke to Bloomberg. The move would decrease Facebook's reliance on chipmakers like Intel and Qualcomm, of course, and follows a broader trend of other tech companies such as Apple and Google, who have moved to bring their own chip production in-house. According to a job listing, Facebook is seeking to hire a manager to oversee the development of a, quote, end-to-end system on a chip slash application-specific integrated circuitry firmware and driver development organization. That would eventually help the company power hardware devices, AI software, and the servers. in its data centers.

If you'll remember, there were rumors recently that Facebook had been hoping to debut a line of smart speakers, plans that were reportedly put on hold after the Cambridge Analytica privacy scandals. Facebook also, of course, owns the virtual reality hardware maker, Oculus.

Facebook's own AI researcher, Jan Le Coon, tweeted about these very job postings on Wednesday. Flip side of the coin from that previous story, there are rumors that Intel is planning to shut down its new devices group, which was formed in 2013, to make fitness trackers and other wearable tech like smart glasses. The information first reported, and the Verge later said it

confirmed with Intel that the division, which was responsible for products like the Vaunt smart glasses, revealed just earlier this year, will be shutting down. The information speculated that this will probably result in some layoffs in the 200-person new devices group, but the group had as many as 800 employees as recently as 2016. The information says that Intel had invested several hundred million dollars in the group and that it was responsible for several high-profile acquisitions, including Fitness Tech Startup Basis, which it bought in 2014 for around $100 million, and Smart Glasses Maker Recon, which joined the group in 2015 for around $175 million.

The information notes that the new devices group was part of Intel's long, effort to evolve its business into new markets beyond its core PC processor business. It's unclear if this latest about face means a new strategic direction for the company, or if Intel will merely find a different market to attempt to expand into. Quote, it's very difficult for Intel to move out of its comfort zone, a former Intel executive told the information. Its comfort zone is in Silicon. Netflix Today launched a new feature, mobile previews,

videos of new content on the streaming service. Currently only available to iOS users, but coming soon to Android, the 30-second trailers are presented vertically and in a slideshow format, allowing users to quickly sample new shows or movies that they might be interested in adding to their viewing lists. Netflix introduced video previews last year on its TV apps, and according to Netflix, quote, years of testing has made it clear that video previews help our members browse less, and discover new content more quickly. With the launch of mobile previews,

we are bringing a video browse experience to your mobile phone in a fun and mobile optimized way, end quote. Many pieces announcing and analyzing this new feature noted how similar the format was to the stories feature popular on Snapchat and Instagram. John Russell at the verge described it this way, quote, the previews look much like stories

because the thumbnails are circular and the content plays with virtual videos, so there's no need to move your phone to the side. Added to that, they play like a slideshow, allowing users to swipe or tap to skip to the next video without returning to the main screen. Shows that appear can be stored for later viewing with a button that adds them to your list.

It doesn't get in the conversation as much as other audience conglomerating properties, but Reddit has quietly been moving into the heavyweight category when it comes to measuring online online. audience and engagement. According to the Next Web, which was referencing data from HootSuite and Reddit's own data, Reddit's monthly active users have jumped from $250 million last November to $330 million this month. That represents 30% audience growth in less than six months and puts it at number 11 in

HootSuite's social media platform ranking behind your Facebooks, Instagrams, and tumblers, but ahead of Twitter, Skype, LinkedIn, and Snapchat. In the case of Twitter, Reddit is just ever so slightly ahead. According to the latest Alexa numbers, the traffic measurement tool, not the personal assistant, Reddit is the sixth most visited web property, but Reddit users spend on average 15 minutes and 47 seconds on the site each day compared to just 11 minutes and 8 seconds on average. at Facebook. As the next web points out, quote,

visitors spend longer on Reddit than any other site in Alexa's ranking of the 50 most visited sites on the web, regardless of category, even compared to top adult sites. Finally, today, we all know that in high school you can try out for the soccer team, the volleyball team, the swim team, the football team. Well, maybe not that much longer for that last one, but maybe you could replace that with a Fortnite team. I did not know this, but apparently nearly 200 colleges and universities in North America are currently recruiting e-sports athletes, complete with scholarships and everything.

But until now, that e-sports trend has not filtered down to high schools. TechCrunch has a short profile of a Los Angeles-based startup called PlayVS, which is looking to help build out the infrastructure for intramural e-sports so that they can proliferate at the high school level. The company has signed a contract with the National Federation of State High School Associations, which is essentially the NCAA of high school sports, to create an e-sports system that would encompass competition all the way through the state championship level. It sounds like a big task.

Rules need to be established. Refering practices need to be established. formulated tournaments need to be organized, and PlayVS wants to step in and handle all of that via apps and websites, as well as potentially hosting the online competitions themselves. The project is far enough along that the first season of competition is slated to be held this fall, providing enough schools organize and enough leagues are set up. The initial competition will reportedly be PC only and exclusive to three specific genres. multiplayer online battle arena, fighting, and sports games.

And that's all for today. The TechMeme Ride Home was produced by Brian McCullough. Follow me on Twitter at Brian MCC. As ever, I had the extraordinarily diligent assistance of the TechMeme editors. Visit TechMeme.com. Anytime day or night for your latest tech news headlines. Talk to you tomorrow.