Tech Brew Ride Home - Tue. 09/03 – The X Ban In Brazil

Episode Date: September 3, 2024

We missed a pretty big story this weekend. X getting banned in Brazil. I’ll try to catch you up on all the contours of this. Canva’s raising prices and it’s pissing people off because, I mean, they are REALLY raising prices. And the two pretty big success stories in crypto this year that we haven’t spoken about yet. Sponsors: DataTribe.com/challenge Hims.com/ride Links: Brazil’s Most Powerful Judge Is in the Spotlight—Again (Americas Quarterly) How Brazil’s Experiment Fighting Fake News Led to a Ban on X (NYTimes) Canva says its AI features are worth the 300 percent price increase (The Verge) HP to Pursue $4 Billion Damages After Mike Lynch Yacht Death (Bloomberg) Pump.fun surpasses $100 million in revenue as Polymarket outshines NFTs in August (The Block) 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, September 3rd, 2024. I'm Brian McCullough today. We missed a pretty big story this weekend. X getting banned in Brazil. I'll try to catch you up on all the contours of that. Canva's raising prices and it's pissing people off because, I mean, they're really raising prices. And the two pretty big success stories in crypto this year that we haven't spoken about yet. Here's what you missed today in the world of tech. Hey, so the big story we missed over the weekend was that the country of Brazil blocked X. formerly known as Twitter following an order from Brazilian Supreme Court Justice Alexandra de Morayas after Elon Musk refused to name a legal representative in that country. Originally, the order from the

judge required Apple and Google to prevent downloads of VPN apps in Brazil in order to make sure no one could access X in Brazil. The part of that order has been amended so that now VPNs are still allowed. But what has not changed is that anyone using a VPN to AccessX faces the equivalent of $9,000 a day in fines. Blue Sky has reported a record spike in usage, as many ex-users in Brazil moved to Blue Sky and threads as an alternative. Brazil, by the way, is X's fifth largest international market with more than 20 million users. Starlink, which has 250,000 customers in Brazil, told Brazil's telecom agency that it would not comply with orders to block X on that service, which I'm noting because, quoting the Times,

best move illustrates the sheer power of Mr. Musk and his business empire, having built or bought leading companies with increasing control over how people connect and communicate, Mr. Musk is trying to leverage that influence to confront authorities and challenge laws he does not like, end quote. The judge had frozen Starlink assets in Brazil in an attempt to collect on $3 million and fines that he had imposed on X since Elon owns Starlink. He was trying to get the money that way, I guess, via Starlink. Thing is, satellite internet, it's kind of difficult to shut off or block, because, well, you know, calculate the angles there. So, that's the summary. But since we're late to all of this, I'm going to cut straight to the framing

of both sides of this controversy. On the one hand, you have, well, companies usually try to comply with the legal jurisdictions of the countries they do business in. If the law of the land says you have to do things to certain accounts like block them, you have to, or you risk running a foul of the law. If you don't name a legal representative in a country, you risk them banning you. But, you know, free speech, except I think there are other countries where X has complied with court order. to ban accounts when the governments in those countries ask them to. The difference here potentially is that those other countries, which X did accede to banning requests, had what people considered to be right-leaning governments, while Brazil currently has what people consider to be a left-leaning

government. At the same time, though, the other side is you have this one judge in Brazil, Alexander de Morayas, making these rulings almost unilaterally. And even some supporters of this judge's past rulings wonder if he's maybe gotten too powerful, gone too far by banning X. This is quoting a venue called America's Quarterly, quote, Alexander de Mareas might be the second most powerful person in Brazil. He does not quite have the reach of the president, but as a judge on the Supreme Court until recently, the president of the electoral court, and especially as head of two sprawling investigations against groups spreading disinformation, Morayas has wielded a rare combination of judicial powers. He has unilaterally handed out fines

ordered arrests, social media bans, and other sanctions, and even acted as an investigator and judge at once. Marias 55 has used those powers prolifically, including against several members of the right-wing opposition to Luis Enacio Lula de Silva's government. Brazilian conservatives have long contended he is abusing his power, but Zandayo, Big Alex, as he, is semi-jokingly called by supporters and detractors alike, earn the gratitude of many members of Brazil's political establishment who believed his actions were fundamental to defending democracy during and after former President Bolsonaro's tumultuous 2018 through 2022 presidency. Now that goodwill is being put to the test. It's clear he's pushing the limits, said Conrado Hubner, a professor of constitutional law at the

University of Sao Paulo, and columnist at Fulha. There's no precedent, nothing remotely similar to having a minister leading investigations that almost become permanent institutions, he said, end quote. Now, a majority of Brazilian judges on the Supreme Court, or at least a Supreme Court panel in Brazil, have subsequently voted to confirm the order to ban X in Brazil and find those who don't comply with it by using a VPN. So that maybe gives some cover to the idea that this isn't just one rogue judge. This is maybe sort of the force of law, because all five judges on the panel voted for this, it was unanimous. However, the New York Times took a deeper look at the judge and how this experiment in fighting fake news led to where we are now. Quote, as Brazil grappled with a flood

of online disinformation around its 2022 presidential election, the nation's Supreme Court made an unusual unfaithful decision. It gave one justice sweeping powers to order social networks to take down content he believed threatened democracy. That justice, Alexander de Morais, has since carried out an aggressive campaign to clean up his country's internet, forcing social networks to pull down thousands of posts, often giving them a deadline of just hours to comply. It has been one of the most comprehensive and in some ways most effective efforts to combat the scourge of internet falsehoods. When his online crackdown helped stifle far-right efforts to overturn Brazil's election, academics and commentators wondered whether the nation had found a possible solution

to one of the most vexing problems of modern democracy. Then on Friday, Justice Morayas blocked the social network X across Brazil because its owner Elon Musk had ignored his court orders to remove accounts and then closed X's office in Brazil. It was the judge's boldest measure yet, and it left even many of his defenders worried that Brazil's experiment had gone too far. I was someone who was very on his side, said David Nimer, a Brazilian-born media professor who has studied his nation's approach to disinformation at the Berkman Klein Center for Internet and Society at Harvard University. Jumeel Jaffir, an executive director of the Knight First Amendment Institute at Columbia University, called the move, quote, absurd and dangerous. The thing that is really disturbing is that increasingly undemocratic governments can point to democratic ones to justify their actions, he said. Where there are narrower ways of addressing privacy concerns or misinformation concerns, governments should use those narrower means, end quote. Carlos Alfonso Sousa, a Brazilian internet law professor, called the order, quote, the most extreme judicial decision out of a Brazilian court in 30 years.

of Internet law, end quote. Yet he added that Brazil had to take some action after Mr. Musk so publicly and explicitly flouted multiple court orders. It's not up to a company to decide if a judicial decision is adequate or not, Mr. Sousa said. The company must file a complaint in a lawsuit, not just decide not to comply, end quote. Justice Moray's support in Brazil has faded as the nation has moved past the acute tension of the 2022 election. At the time, then-president Bolsonaro was using social media to sow doubts about the integrity of Brazil's voting systems, despite a lack of evidence, and Justice Morayas was ordering social networks to remove some of his posts. After Mr. Bolsonaro lost the election, thousands of his supporters blocked highways, camped outside army bases,

and eventually stormed Brazil's Congress and Supreme Court in a bid to provoke a military takeover. Justice Morayas responded by ordering social networks to block dozens of prominent accounts that questioned the vote or sympathized with the attempted insurrection, including some belonging to federal lawmakers. But since then, as the political temperature has cooled, Justice Marius has kept issuing court orders to social networks to remove accounts. The orders are both secret and lack explanations on how a certain account had broken the law, according to leaked copies of orders. Justice Marias has continued to use the threat to democracy as a justification for his actions. In his order on Friday, he said Mr. Must's refusal to comply with orders to suspend accounts,

quote, represents an extremely serious risk to the municipal elections in October in Brazil. Justice Marais has, quote, set up a state of exception, Mr. Neamer said, but it's a permanent state of exception, and that's not good for any sort of democracy, end quote. The internets are up in arms this morning mad at Canva, which just emailed users about a price increase of as much as 300% for some users. You heard that right, 300%. Now Canva is justifying this by basically saying, you know, all those new generative AI features we gave you recently. That makes this price increase justified. But in the background, you know, they do plan on an IPO soon, so maybe the time was right to try to juice some revenue numbers. Quoting the verge.

In the U.S., some Canva team's users are reporting subscription increases from $120 per year for up to five users to an eye-watering $500 per year. A 40% discount will be applied to bring that down to $300 for the first 12 months. Some of those accounts had been locked into lower prices that Canva no longer offers. In April, the company silently changed its offering for new team subscribers to $10 per month for each user and set a minimum requirement for three users. Now Canva's communications lead, Louisa Green, says existing users are also being moved over to the structure in September quote to reflect the current price of the plan and the value of our expanded product experience, end quote. Canva has released a deluge of generative AI features over the last few years,

such as its magic media text-to-image generator and magic expand background extension tool. The additions have transformed the platform from something for design and marketing professionals into a broader workspace offering. While Canva has publicly announced similar pricing changes in the past, these latest increases were seemingly communicated exclusively via customer emails. Other subscription tiers for pro and enterprise users don't appear to be impacted. The premium pricing is a stark pivot for Canva, which was once considered to be a simple and affordable alternative to more expensive graphic design software provided by Adobe. Canva users online have condemned the increases with some announcing they'll be canceling their subscriptions and moving to Adobe

applications. These huge price increases also follow Canva purchasing the company behind Affinities Creative Software Suite for a reported several hundred million British pounds and ahead of a potential public listing in the U.S. in 2026, end quote. Lots of people, as I said, online saying they don't use or want the gen AI features that Canva has rolled out, quoting Gen Kramer on Twitter. Canva's value is in two areas, quick basic editing of images and their vast template library for everything else. It's the software everyone wanted from Adobe, basic plus starter templates. AI doesn't add value to what was already there, end quote. But also, I wonder if this might actually do the opposite of what Canva

intended. Note that this was targeting largely those in the team's product. Well, quoting Adam Probolsky on Twitter, who else got the Canva price increase email notice today and immediately checked to see how many extra people are on your account? Don't get me wrong. I love Canva, but emails like that are great reminders to check your account. We had five people who never use it at $100 per person. That's a lot of pumpkin spice lattes, end quote. There's a weird addendum to that whole story of Mike Lynch, the tech executive who died on his yacht in the Mediterranean recently. Quoting Bloomberg. Hulet Packard Enterprise said it intends to pursue the $4 billion damages claim in London against the estate of the recently deceased British tech tycoon Mike Lynch.

Just over a week after the bodies of Lynch and his 18-year-old daughter, Hannah, were recovered from the wreck of his sunken yacht. The U.S. company said it planned to collect any damages that are awarded by a London court. HPE, won the British civil case over the collapse of Lynch's autonomy and is waiting for a judge to decide how much it is owed. It is HPE's intention to follow the proceedings through to their conclusion, the company said in a statement Monday. The decision to move forward puts HPE on a reputational tightrope. While a UK civil claim automatically ensures that the case passes to the estate of a defendant in the event of a death, the prospect of pursuing the money from Lynch's family is likely to be

deeply unpopular after the tragedy. It was likely that they were going to face criticism going ahead with a claim against his grieving widow, said Robin Henry, a partner at law firm Collier Bristow, who isn't involved in the case. I think they are trying to mitigate the reputational damage by saying they are under an obligation to protect the interests of HPE's shareholders, end quote. A spokesperson for Lynch's family declined to comment, the Times of London reported on the case earlier. One of the longest and most expensive trials in British history, Judge Robert Hilliard ruled in 2022 that Lynch had fraudulently boosted the value of the company. One of the tragedies of the case is clear. An innovative and groundbreaking product, its architect,

and the company will probably always be associated with fraud, the judge said in the ruling. In total, HPE was seeking $4 billion from Lynch and his finance chief, but the judge had cautioned that it was likely to get substantially less than that, end quote. Finally, today, we don't talk that much about crypto these days, but I did want to hip you to two startups that have been a roaring success in crypto, as the sector has made a cautious comeback over the last year. One site has generated over $100 million in cumulative revenue by allowing users to mint more than a million meme coins created on the platform just since its launch in January of this year. The second one, well, if you're into politics, you might have heard of it. Quoting the block. The crypto industry has always generated its fair share of speculators for better or worse.

It's no wonder then why two of the hottest platforms in crypto, meme coin launchpad pump. Pump. Fun and decentralized prediction marketplace, Polymarket, are built on speculation. Though curiously, the platforms can be seen as inverses of one another. On Pump. Fun, users speculate on meme coins that, aside from their branding and community value, have no intrinsic value proposition, meaning it should be hard to predict which coins are going to break through the noise and attract fans. On Polymarket, users are encouraged to use every bit of information at their disposal when trading positions on the market, predicting everything from political elections to how many times Elon Musk will tweet this week. Both platforms have seen a

meteoric rise. Launched in January 2024, Pump. Dot Fund recently passed $100 million in total cumulative revenue generated for its developers, according to a Dune Analytics dashboard. Pump. Pump. Fund's developers take a 1% fee on all transactions on its platform. Pump.com fund even recently eliminated the cost for deploying a token, making it easier than ever for users to spin up new meme coins. However, Pump. Dot Fund's daily revenue on Friday was the second lowest single-day sum since May 24th. Whether or not the launchpad can continue to incentivize users to create and trade meme coins will be critical to its future growth, less the project comes to resemble friend.tech, a once-hot Web3 social platform that has essentially stopped making money over the past three months, according to the block's data. Not to be outdone, Polymarket also netted a notable achievement this month,

doing more volume than all NFTs across all chains combined, according to the Block's data and CryptoSlam. While NFTs only logged about $377 million in volume over the past 30 days, Polymarket has seen $463 million in value traded on its platform. Polymarkets' population of active traders has steadily increased since May as the 2024 presidential election draws closer, according to the Block's data, though U.S. users are not officially permitted to use the site. The prediction marketplace currently shows former President Donald Trump with a slight lead over Vice President Kamala Harris to win the 2024 presidential election. Nearly three quarters of $1 billion has been bet on that outcome, end quote. That last bit is what

really got my attention. I knew Polly Market, because it gets mentioned all the time in political circles. Nate Silver is on their board or is an advisor or something like that. Nearing a billion dollars in betting, though, on just the presidential election. Those are like stock market numbers. Prediction markets have been predicted to be a thing for years now. I guess we're there. Talk to you tomorrow.