Tech Brew Ride Home - Thursday, Apr. 5, 2018 - Zuckerberg's PR Offensive

Episode Date: April 5, 2018

Zuckerberg’s Q&A with reporters, possible social media regulations, Trump may hate Amazon but Uncle Sam seems to love ‘em, a dreaded 51% attack in crypto, and a new home for Moviefone. Stories:How the Government Could Fix Facebook (The Atlantic) 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 TechMean. ride home for Thursday, April 5th, 2018. Today, Zuckerberg's Q&A with reporters, possible social media regulations, Trump may hate Amazon, but Uncle Sam sure seems to love them, a dreaded 51% attack

in crypto, and a new home for movie phone. Here's what you miss today in the world of tech. As I mentioned briefly yesterday, Facebook made a lot of changes yesterday afternoon, primarily to their developer and app platform. These changes were so drastic that in his overnight newsletter, Owen Williams said it essentially marked the death of the Facebook platform as we know it. Going forward, the Events API is in near full lockdown. Facebook will manually approve all apps. The Groups API also requires manual Facebook approval, as well as data review by a group

administrator. Apps won't be allowed to see members of groups. anymore and Facebook login will no longer share data related to religious views, political affiliation, relationship status, custom friends lists, education, and work history among a slew of other things. App developers will also be blocked from requesting data from people who have ceased using a given app on a regular basis, and as hinted over the last several days, the Instagram API is locking down several datasets and features as well. Now, the idea that this is the end of the Facebook platform might be a slight exaggeration.

Developers can still get a ton of information about Facebook's users, and Facebook is still collecting data about you for itself, of course. But it does seem that Facebook wants to move more toward the model that Apple has used for years with its App Store, manual approvals of apps, more restriction on data collected, and crucially more robust monitoring of the whole process. But the fact that this new regime is a somewhat drastic change from the past was demonstrated last night by the fact that dating app Tinder was down for several hours last night because the changes to Facebook login prevented users from signing into the app.

The situation has apparently been resolved, but if you're still having trouble using Tinder, the company recommends that you make sure you're using the latest version of the app. One key detail from yesterday's blog post from Facebook's CTO Mike Schrofer that I didn't mention yesterday was that Facebook is ending the longstanding feature that let you search for a Facebook profile using a phone number or email address. This was a pretty key feature to help you find people you knew on the platform, but Facebook said that too many, quote, bad actors had abused the tool. wrote Schrofer, quote, Given the scale and sophistication of the activity we've seen, we believe most people on Facebook could have had their public profile scraped in this way. So we have now disabled this feature, end quote.

But by far the biggest news headlines came from the hour-long, wide-ranging question and answer session that Facebook's CEO Mark Zuckerberg held with tech reporters. Zuckerberg gave what is seemingly his most contrite and apolitical. statement yet regarding the fallout from the Cambridge Analytica scandal. Reading from the transcript of the conference call, quote, we're an idealistic and optimistic company, but it's clear now that we didn't do enough.

We didn't focus enough on preventing abuse and thinking through how people could use these tools to do harm as well. We didn't take a broad enough view of what our responsibility is, and that was a huge mistake. That was my mistake. It's not enough to just connect. people. We have to make sure those connections are positive and that they're bringing people together. It's not enough to just give people a voice. We have to make sure that people are not

using that voice to hurt people or spread misinformation. And it's not enough to give people tools to sign into apps. We have to make sure that all those developers protect people's information too. It's not enough to have rules requiring that they protect the information. It's not enough to believe them when they're telling us they're protecting information. We actually have to ensure that everyone in our ecosystem protects people's information, end quote. Zuckerberg also walked back his statement from last year when shortly after the election, he labeled the idea that Facebook could have had some influence on the outcome of the election as, quote, crazy, said Zuckerberg yesterday, I clearly made a mistake by just dismissing fake news as crazy as having an impact. It was

too flippant. I should never have referred to it as crazy. As to why Facebook recently increased its estimate of the number of people improperly impacted by Cambridge Analytica to 87 million potential users, quote, it very well could be less, but we wanted to put out the maximum that we felt it could be as soon as we had that analysis. Asked whether the hashtag delete Facebook movement had shown up in Facebook's own internal numbers, quote, I don't think there's been any meaningful impact that we've observed, but it's not good. Asked if he still thinks he's the best person to run Facebook, Zuckerberg said, quote, yes, life is about learning from the mistakes and figuring out what you need to do to move forward.

I think what people should evaluate us on is learning from our mistakes, and if we're building things people like and that make their lives better, there are billions of people who love the products we're building, end quote. asked if Facebook's board might have had discussions about replacing him as chairman, Zuckerberg said, quote, not that I'm aware of. So Facebook is clearly trying to be proactive, and we learned yesterday Zuckerberg himself will be testifying before Congress next week. What could Facebook be trying to get out in front of? Well, in the Atlantic, Julia Angwin speculated about the types of things governments around the world might be considering doing with regards to tech giants, like Facebook, up to and including new regulations.

One thing might be to impose fines for data breaches. Angwin notes that, quote, in the United States, companies are only required to notify people if their data has been breached in certain states and under certain circumstances. And regulators rarely have the authority to penalize companies that lose personal data. The Facebook Cambridge Analytica situation is not technically a data breach,

of course, but Facebook might still face fines because it is under the terms of a consent decree with the Federal Trade Commission. David Vladek, the former FTC Director of Consumer Protection, told Anguwen, quote, I predict that if the FTC concludes that Facebook violated the consent decree, there will be a heavy civil penalty that could well be in the amount of $1 billion or more. Anguan also speculated that new laws could be passed around election advertising. especially given the charges special prosecutor Robert Mueller, recently brought against 13 Russians alleged to have interfered with the 2016 election. Engwin also notes that academic research is often subject to institutional review boards

to vet the ethical nature of research studies. She suggests that going forward tech companies could set up independent ethics review boards when researchers use tech platforms, as Cambridge Analytica claimed to Facebook it was doing. But most crucially, for many tech companies, Angwin notes that there seems to be a growing appetite for making tech platforms more liable for content on their platforms. Most social networks and the like claim immunity from liability thanks to the 1996 Federal Communications Decency Act. In November, Harvard Law Professor Jonathan Zittrain wrote an article reassessing the Communications Decency Act, saying it had become a, quote, subsidy for tech companies since they bear no cost for false or damaging content. Quote, any honest account must acknowledge the collateral damage it has permitted to be visited upon real people

whose reputations, privacy, and dignity have been hurt in ways that defy redress, Zittrain wrote. Also, in December, two University of Maryland law professors argued that the Communication Decency Act should be re-examined legislatively. quote, the time is now to go back and revise the words of the statute to make clear that it only provides shelter if you take reasonable steps to address illegal activity that you know about, said one of the professors Danielle Citron. And that is very probably what Facebook and every other major tech company is trying to get out in front of. A couple of follow-ups to President Trump's seeming beef with Amazon. A piece in the Wall Street Journal outlines the large degree to which the federal government itself has increasingly become a big Amazon customer. From the piece, quote, in the past several years, the Seattle-based company has won much of the business to help the government shift computing services from legacy mainframes onto the cloud, a business where Amazon is the world leader. Amazon has provided cloud computing services for government agencies ranging from the Department of Homeland Security to,

the Smithsonian Institution. Amazon reportedly has done work for 2,300 government entities in the U.S. in 2017, up from only 100 in 2011. Amazon does not report how much business it does with Uncle Sam, but research firm GBH Insights estimates that Amazon's government contracts will grow to $2.8 billion in 2018 and $4.6 billion in 2019, up from less than $300 million. in 2015. And of course, still pending is a 10-year contract with the Department of Defense that has been pegged at a potential $10 million. In a story directly related to that defense

contract, Bloomberg is reporting that Oracle Chief Executive Safra Katz dined privately with President Trump on Tuesday evening, and according to people familiar with the matter, she criticized the bidding process for the contract as being seemingly, quote, designed for Amazon to win. Oracle is one of the companies competing with Amazon for the contract, but according to Bloomberg's sources, that was, quote, a point she didn't emphasize to Trump, end quote. During her press briefing on Wednesday, White House press secretary Sarah Huckabee Sanders said, quote, the president is not involved in the process, adding that the defense department, quote, runs a competitive bidding process.

Another follow-up story this time concerning Spotify's debut on the stock market. As you'll recall, Spotify pursued a somewhat unusual direct listing instead of an IPO, and many were watching to see if the move would prove successful or not. The answer seems to be guarded success. At the time of this recording, Spotify shares are hovering around the $150 mark, down from the high of around $169 it reached, on its debut day, but only about 10% down from its debut price. Since Wall Street bankers were not in charge of making the market in this case,

analysts were looking to see how the stock would perform in its first few days. The consensus seems to be that since fewer existing shareholders sold stock on Tuesday than many were expecting, there was probably an initial shortage of shares available, which drove the price up. Indeed, trading volume was reportedly well below the IPOs of other technology companies that went public at market valuations similar to Spotify's. Among the insiders selling out were some of the record companies. Early on in Spotify's life as a condition of licensing their catalogs of music to Spotify to stream, many of the record labels demanded chunks of Spotify equity in addition to license fees.

and many of these companies were among the shareholders selling on Tuesday. For example, Sony Corporation announced that it will record a profit of around a billion dollars for its fiscal first quarter due in part to the value of Spotify stock it sold this week as well as shares it still owns. Sony reported that it had sold 17.2% of its Spotify position, representing a sale of between $260 and $300 million, depending on the price Sony was able to sell at. According to Spotify's prospectus, Sony had the largest share in the company of all the record companies at about 5.7%. And while the stakes owned by the other two big labels, Universal and

Warner, were not disclosed, it is believed that they are holding around 4% or less. Earlier this week, Sony released a statement saying that it was, quote, committed to sharing with their artists and distributed labels, any net gain they may realize from a sale of Sony Music stake in Spotify." But no details have been forthcoming about how and when that profit sharing will occur. A couple quick stories from the world of crypto. Privacy coin Verge has reportedly fallen victim to what is known as a 51% attack, which is when a rogue miner or group of miners gain majority control of a network's mining

power or hash rate. If such an attack is successful, it becomes a... possible for the controlling entity to modify transactions, calling the integrity of the entire blockchain into question. This appears to be what happened to Verge, also known as SVG, when a bug in the Altcoins code enabled an unknown attacker to spoof timestamps and cause each new block to be produced using the same algorithm. The attacker then taunted the Verge development team in a forum post writing, quote, hey Verge team, get some real developers and fix your code.

As a result of this hack, the project team has been forced to initiate a hard fork to eliminate the fraudulent blocks. Also, Bloomberg is reporting that CryptoCoin Company Ripple has, quote, tried to buy its way onto major exchanges for cryptocurrency. Despite controlling the world's third largest cryptocurrency, Ripple has been unable to get major exchanges like Coinbase and Jephens. to list its coin. According to Bloomberg, during discussions with Gemini last year, a Ripple executive reportedly asked if a $1 million cash payment could convince Gemini to list XRP.

And quote, during preliminary talks with Coinbase last fall, Ripple said it would be willing to lend the exchange more than $100 million worth of XRP to start letting users trade the asset, according to a person privy to that discussion. Ripple, without putting the proposal in writing, told Coinbase it could pay back the loan in XRP or dollars, the person said. If the exchange had chosen the latter, it could have profited had the tokens become more valuable upon being listed, the person said, end quote. Both Gemini and Coinbase reportedly turned down Ripple's offers. Coinbase is, of course, the largest cryptocurrency exchange in the world, and Gemini was co-founded by Cameron and Tyler Winklevoss.

XRP is a cryptocurrency intended to be used by banks and other financial institutions, and some banks are already operating on its network, while others have bought equity stakes in XRP's developer, Ripple. Finally, today, the parent company of subscription movie ticket service, MoviePass, has acquired Movie Phone from Oath for around $15 million. This natural alignment between MoviePass and Movie Phone will help us grow our subscription, based significantly and expand our marketing and advertising platform for our studio and brand partners. So said MoviePass CEO Mitch Lowe in a statement.

Movie Phone has been a go-to resource for entertainment enthusiasts for years and we're excited to bolster its presence and bring this iconic platform into the entertainment ecosystem of the future, end quote. So you probably either have a soft spot in your heart for movie phone or you've perhaps never heard of it. back in the 90s movie phone was a toll-free phone number that people called up to find out the times movies were playing in local theaters because that sort of information was hard to find out back in those days unless you bought a newspaper that day or drove by the theater's marquee

the co-founder of movie phone Russ Leatherman became famous for voicing all of the movie phone recordings and hello and welcome to movie phone was for a time as ubiquitous as you've got mail. In fact, movie phone sold to AOL for $388 million back in 1999. Yes, Grandpa, but that's why we invented the internet, right? Indeed, AOL discontinued the dial-up phone lines in 2014, but the movie phone website still gets 6 million monthly unique visitors. And that's traffic that could be useful to a company like MoviePass, which is in the business of putting butts in seats at movie theaters. Quick, shameless plug for my other podcast, the internet history podcast. On this week's episode, I interviewed New York Times technology columnist Farhad Manjou. It's sort of like my version of

the long-form podcast, the show where they talk to writers about their craft. I spoke to Farhad about how he writes, how he decides what to write about, and generally how he thinks about technology. If you've ever wanted to know what makes Farhad Manjoo tick, check out the latest episode of the internet history podcast. This podcast, the TechMeMyman. Right Home was produced by Brian McCullough and the tech meme editors. You can follow me on Twitter at Brian MCC. Thanks for listening.