Tech Brew Ride Home - Tue. 06/18 – Adobe’s Time In The Woodshed

Episode Date: June 18, 2024

The regulators have come for adobe and their alleged subscription shenanigans. Apple might settle with the EU. But it’s also shutting down its BNPL service. The Threads API is here. Tether is making bank. Uber might be having a breakthrough moment. And back to using Reddit for search. Sponsors: A Better Paradise Podcast Links: US sues Adobe for ‘deceiving’ subscriptions that are too hard to cancel (The Verge) Apple to settle ‘tap-and-go’ payments probe with EU (FT) Apple discontinuing Apple Pay Later, ahead of new features launching this fall (9to5Mac) Threads finally launches its API for developers (TechCrunch) Tether Announces a New Synthetic Dollar That Is Backed by Gold (Bloomberg) A Robotaxi Business Is A Dream For Elon Musk–But Already A Reality For Waymo (Forbes) Can You Replace Google Search With Reddit? I Tried It for a Week (WSJ) 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 Tech meme right home for Tuesday, June 18th, 2024. I'm Brian McCullough today. The regulators have come for Adobe and alleged subscription shenanigans. Apple might settle with the EU, but it's also shutting down.

It's by now pay later service. The Threads API is here. Tether is making bank. And is this the breakthrough moment, the tipping point for Waymo? Here's what you missed today in the world of tech. The U.S. Department of Justice has sued Adobe for allegedly harming consumers by, quote, enrolling them in its default most lucrative subscription plan without clearly disclosing plan terms. Quoting the verge. The lawsuit alleges Adobe, quote, hides the terms of its annual paid monthly plan in the, quote, fine print and behind optional text boxes and hyperlinks. In doing so, the company fails to properly disclose the early termination fee incurred upon cancellation. Quote, that can amount to hundreds of dollars, the complaint says. When customers do attempt to

cancel, the DOJ alleges that Adobe requires them to go through and, quote, onerous and complicated cancellation process that involves navigating through multiple web pages and pop-ups. It then allegedly ambushes customers with an early termination fee, which may discourage them from canceling. Customers encounter similar obstacles when attempting to cancel their subscriptions over the phone or via live chats, the DOJ alleges. The complaint claims, quote, subscribers have had their calls or chats either dropped or disconnected, and have had to re-explain their reason for calling when they reconnect. The lawsuit alleges that these practices break federal laws designed to protect consumers.

The lawsuit also targets Adobe executives Menendor Sauni, the senior vice president of digital go-to-market and sales, as well as David Watwani, the president of the company's digital media business. The complaint says both executives, quote, directed, controlled, had the authority to control or participated in the acts and practices of Adobe. Adobe didn't immediately reply to a request for comment. In 2012, Adobe went from selling its creative software for lifetime use to charging users for a monthly or yearly subscription to its suite of products, including Photoshop, Illustrator, InDesign, and others. The company's subscription model has long frustrated creatives who are often forced to stay subscribed to Adobe in order to keep doing their jobs. Earlier this

month, Adobe's new terms of service were met with backlash after some interpreted the move as an opportunity to train AI on users' art. The lawsuit speaks to continued regulatory scrutiny of Adobe in 2022, Adobe attempted to acquire the product design platform Figma for $20 billion, but it abandoned the deal last year after facing antitrust scrutiny from European regulators, end quote. Meanwhile, the FT is reporting that Apple is going to attempt to settle a long-running EU antitrust investigation over payments after the EU apparently accepted measures that Apple committed to back in January. Quoting, the European Commission, the executive arm of the EU charged the iPhone maker in 2022 with breaking competition laws. Brussels regulators had argued the tech company was preventing competitors from accessing tap and go chips or near-field communication NFC to benefit its own Apple pay system.

But three people familiar with the matter said that regulators had accepted a number of measures that Apple had committed to in January this year. These include providing developers with free access to its NFC technology on iOS devices and without having to use Apple Pay or Apple Wallet. Brussels officials have been testing these measures, which Apple has offered to keep in place for a decade. Apple was still ironing out final technical details, but a settlement was likely in the next few weeks, said the three people with knowledge of the matter. The commission could still have issues with Apple's commitments, and the timing of the settlement could shift. The people said, the European Commission declined to comment. A deal would help ensure Apple avoid sanctions such as a fine of up to 10% of the company's total worldwide annual turnover.

Under those conditions, Apple's revenues of $383 billion in 202023 would mean a fine of about $40 billion, end quote. Meanwhile, though, Margath Vestager says Apple has a number of very serious issues under the EU's DMA, and the EU will reveal conclusions of its investigation soon, quoting CNBC. We have a number of Apple issues. I find them very serious. I was very surprised that we would have such suspicions of Apple being noncompliant. Vestager told CNBC's Sylvia Amaro, Apple are very important because a lot of good business happens through the App Store, happens through payment mechanisms. So of course, even though you know I can say this is not what was expected of such a company,

of course we will enforce exactly with the same top priority as with any other business, end quote. The comments came after the Financial Times last week reported that Brussels is set to charge Apple under the DMA in relation to the probe, citing three people with close knowledge of the investigation. The charges would be preliminary, and Apple could take actions to allay the concerns of the regulators, according to the FT. If it is found in breach of DMA rules, Apple could face fines of up to 10% of the company's total worldwide annual turnover, end quote. After only launching the service in the U.S. in 2023, Apple says it will no longer offer Apple Pay Later. It's by now pay later service and will focus instead on installment loan features

coming later this year. Quoting 9 to 5 Mac. Apple tells me that users who have an active loan through Apple Pay Later will still be able to manage and pay their loans using the Apple Wallet app, just as they do today. After being announced at WWDC 2022, a preview of Apple Pay Later launched in the United States in March 2023, followed by general availability in the U.S. in October. The service offered Buy Now Pay Later loans directly via the Apple Pay Checkout Experience. The platform allowed users to apply for a loan ranging from $50 to $1,000 and split that purchase into four equal payments across six weeks with no fees or interest. Apple emphasizes in its statement that its focus is now on the new installment loan features coming to Apple Pay Later this year. These features will be available in multiple countries around the world. Apple Pay Later, meanwhile, was only ever available in the United States.

Loans offered through Apple Pay Later were backed by Apple itself, while Goldman Sachs was the issuer of the Master's, card payment credential used to complete Apple Pay Later purchases, end quote. Meta has launched its much-awaited Threads API, letting developers publish posts, fetch content, manage replies, and view analytics after an API beta back in March of this year, quoting TechCrunch. The company added that along with these features, it will also allow developers to tap into analytics with measurements such as the number of views, likes, replies, reposts, and quotes at media and account level. In October 2023, Instagram head Adam Osseri mentioned the company's work on

the Threads API for the first time. The company launched the API in a closed beta with partners such as Sprinkler, Sprout Social, Social News Desk, Kootz, Tech News, Board, TechMeme, and a few other developers. At that time, Chen said that meta plans to make the API widely available to developers in June, the company has delivered on that promise. With the new API launch, the company has also released a reference open source app on GitHub for developers to play around with. Third-party developers building social networking tools faced a tough 2023, with social networks like Twitter, now X and Reddit, restricting or shutting down API access at different levels. Decentralized social networks such as Macedon and Blue Sky have taken a more developer-friendly

approach, but Metis Threads is the biggest new social network with more than 150 million users, with threads integrating with the Fediverse and releasing an API. This gives a chance for third-party developers to build some great social media experiences, end quote. We don't do as many crypto stories as we did just a few years ago, but I couldn't resist this one because listen to this. This is the simplest way that I can summarize this story. Stablecoin provider Tether has announced a synthetic dollar backed by gold that will trade as a USDT via smart contracts on

the Ethereum Mainnet blockchain. What? But also wait for learning how much money Tether is actually making right now, quoting Bloomberg. The token was created on the company's new alloy by Tether platform and will trade as a USDT via smart contracts on the Ethereum Mainnet blockchain, where users can mint it through over-collateralization by depositing another Tether token that tracks the value of gold. The new offering highlights Tethers' ambitions to expand beyond its USDT stablecoin, a token with a market capitalization of $112.5 billion that tracks the value of the U.S. dollar and is backed by reserves of U.S. Treasury bills and other securities and investments. Tether gold has a market capitalization of about $573 million and is backed by

physical gold stored in Switzerland, according to the company. A new USDT currency is aimed at users who are looking to make transactions, payments, and remittances with a currency similar to the U.S. dollar without having to sell their gold-backed digital assets, Tether's press release said. Tether has been raking in cash with its USDT stablecoin amid the current high-interest rate environment. In the first quarter, Tether said it booked a profit of $4.5 billion, according to its published attestation. The quality of assets backing stablecoins like USDT has come under intense scrutiny in recent years, as regulators grew concerned about the liquidity of the reserves backing them, and if they could withstand mass redemption,

while under market pressure. In 2021, Tether, which is incorporated in the British Virgin Islands, reached a settlement with the New York Attorney General without admitting any wrongdoing over allegations that it lied about its reserves and hid losses. It reached a similar settlement with the Commodity Futures Trading Commission that same year, without admitting or denying the CFTC's allegations. Still, the value of Tether's USDT has been able to track the dollar one for one without any major depegs in recent years, end quote. Uber says that tens of thousands of riders in Phoenix have matched with a Waymo AI driver and have given those AI drivers, quote, a nearly 4.9 average star rating since the launch of a Robotaxie tie up with Waymo. Waymo might actually be having a real breakthrough moment right now. Listen to this. Quoting Forbes.

Every week, hundreds of Phoenix, San Francisco, and Los Angeles residents find a cheerful message in their email inboxes. Buckle up, you're ready to ride. Welcome to Waymo One. get ready for your first fully autonomous ride. With that confirmation, they're off the waiting list for the largest U.S. Robotaxi service, more than 500 electric Jaguar SUVs that can drive themselves. Waymo's sensor-laden AI-controlled fleet won't be ubiquitous in the U.S. anytime soon. But 2024 is an inflection point for a technology that many advocates hoped would arrive years ago. After 15 years of R&D, more than $8 billion of investment and multiple pilot programs, Waymo's Robotaxies have become a business booking more than 50,000 rides a week in the three cities.

Assuming an average fare of $20 per ride annual revenue should top $50 million this year. It was less than $1 million in 2022, according to a pitch book estimate, representing growth of about 1,000%. Even with modest growth in the four cities in which it plans to operate by the end of 2024, Waymo could be looking at annual revenue of hundreds of millions of dollars within another year or two. Waymo is really the winner in the Robo Taxi Games, said Ross Gerber, CEO of Los Angeles-based wealth manager Gerber Kawasaki, an investor in alphabet and potential self-driving rival Tesla. I never loved the Waymo model because the equipment was so obtrusive and expensive that it didn't seem scalable. But over time, I think the technology

is getting so good that the equipment will be scalable at a much lower price in the next couple of years. Waymo has made impressive progress in scaling up operations, said Philip Kupman, an autonomous vehicle safety researcher and associate professor at Carnegie Mellon University. Some had previously criticized their ramp-up for being slower than other companies, but they are looking a lot smarter these days for having done that, end quote. Still the company has more work to do. We've seen some recent incidents, for example, a utility pole crash and an investigation from NHTSA. I hope those aren't signs they've started scaling up faster than they should due to

funding pressure, Kupman said. Safety still remains the biggest question. Waymo's slow but steady progress hasn't been exciting. It's likely years away from being highly profitable and recouping the billions of dollars needed to get it to this point. But revenue growth, a function of the size of its fleet, customer base, and operating areas within the cities it's entered, could come rapidly even if Waymo is slow to enter new urban markets. For example, even after six years of operating in and around Phoenix, Waymo service is still available in only just half the city. And while it now has 200,000 riders in San Francisco, the Robotaxi service is offered in just a tiny sliver of the massive Los Angeles region where commercial operations launched several weeks ago. Adding hundreds more vehicles in each of those locations and Austin, and increasing the service area in the cities it's in, would boost revenue dramatically.

Alphabet doesn't break out Waymo's revenue in earnings reports, wrapping it into other bets businesses, which includes Internet and healthcare-related services. But it is, by and large, the most promising of the company's other bets. Revenue jumped 72% to $495 million in the first quarter, coinciding with the expansion of Waymo's service in San Francisco and Phoenix. Los Angeles service began in the second quarter. In addition to ride revenue, Waymo is generating funds from an unlikely partnership with Uber, which was once a rival it took to court over technological theft. Now its robotaxies are accessible via the Uber app and also make food deliveries in Phoenix. Aside from U.S. safety reviews, Waymo's ability to expand its fleet as fast. as it wants is also running into some challenges. It announced plans in 2022 to introduce electric ride van tailored to its service from Zeker, a brand created by China's Gile Automotive,

though trade tensions between the U.S. and China, including dramatically higher tariffs on imported vehicles and batteries could complicate that deal. Waymo isn't changing its plans, said spokesperson Catherine Barna. Currently, the company is doing human-driven tests of Zika vehicles with Waymo sensors, quote, to familiarize ourselves with driving dynamics and capabilities of this new platform before we begin integrating and validating the Waymo Driver for Autonomous Driving, she said, end quote. So tomorrow is a holiday here in the U.S. So my plan is to not do a show tomorrow, though I reserve the possibility to throw something out if the news is newsy enough. So probably talk to you on Thursday.