Tech Brew Ride Home - Tue. 11/14 – Google Pays Apple HOW Much?

Starting point is 00:00:00 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 Memerite Home for Tuesday, November 14th, 2020. I'm Brian McCullough. Today, two different trials reveal some details of Google's various deals with various platforms that they probably wish hadn't become public. Why aren't the feds arresting those casino hackers? Two interesting new initiatives from Uber and OpenAI has an independent board that gets to decide when AGI has been achieved and maybe X's Microsoft out. Here's what you miss today in the world of tech. Interesting nuggets continue to drop from the various tech trials happening right now. First up, in the U.S. versus Google, Google's main economics expert revealed that Google pays Apple

Starting point is 00:01:17 36% of the revenue earned from search ads via Safari, a figure that was apparently meant to remain a secret. This is a big deal because this is a number that's been guessed at for years, but never revealed until now. And it's key to the government's case that Google essentially buys its way into a monopoly position. And also, as Jason Kent said on Twitter, quote, if we take the 2021 default deals revenue share of $26.3 billion reported by Bloomberg, and we assume Apple has the best terms at 36% of gross, then we can estimate that Google counts at least $90 billion of its current annual revenue in search default deals. That's insane. End quote. Quoting Bloomberg. Kevin Murphy, a university, of Chicago professor disclosed the number during his testimony in Google's defense at the Justice

Starting point is 00:02:08 Department's antitrust trial in Washington. John Schmight Line, Google's main litigator, visibly cringed when Murphy said the number, which was supposed to remain confidential. Both Google and Apple had objected to revealing details publicly about their agreement. In a court filing last week, Google argued that revealing additional information about the deal, quote, would unreasonably undermine Google's competitive standing in relation to both competitors and other counterparties. The companies have had a partnership since 2002 that makes Google the default search engine in Apple's Safari. Today, that deal is the most important of Google's default deals since it sets the search engine for the iPhone, the most used smartphone in the U.S.

Starting point is 00:02:48 The Justice Department is targeting that agreement. As evidence, Google is illegally maintaining its dominance over the search engine and search advertising markets, end quote. But again, as that Jason Kent tweet suggests, it's not like Google only, does these sorts of deals with Apple. They probably do them with everyone they can. Switching to the Epic versus Google trial now, Google there reportedly agreed to pay Samsung $8 billion over four years in 2020 to make Google Search, the Play Store, and Google Assistant defaults on Samsung mobile devices. Bloomberg again. James Colotoros, vice president for partnerships at Google testified Monday under questioning by an Epic lawyer in the San Francisco trial that

Starting point is 00:03:38 Google device plans to share app store revenue with Android mobile device makers to ensure their products were pre-installed with Google Play on home screens. Epic, the maker of the popular Fortnite game, alleges the technology giant's app marketplace violates antitrust laws. A lawyer for Epic presented the agreement with Samsung as an example of the deals Google made, starting four years ago with mobile phone manufacturers that used the Android operating system. Colotoros's testimony revealed that Samsung devices account for half or more of Google Play revenue. Epic is seeking to show that executives at the Alphabet unit were eager to discourage the proliferation of third-party app stores that would cut into Google Play's

Starting point is 00:04:19 operating profit, which was estimated by Epic earlier in the trial at more than $12 billion in 2021 from sales that include the standard 30% revenue cut the company took from app developers. Monday's testimony followed evidence Epic presented last week to show that Google was so concerned about game developers releasing their products independently that it was willing to spend millions to persuade them to stick with Google Play. On Tuesday, Epic's lawyers will question Alphabet Chief Executive Officer Sundar Pichai. Google has long struck similar deals to maintain its search engine as the pre-selected choice on mobile devices, agreements that are at the center of a separate antitrust showdown with the Justice Department at a trial going on in Washington. In 2019,

Starting point is 00:05:00 Google offered to pay Samsung $200 million over four years so that Samsung's Galaxy Store App Marketplace would be available within the Google Play Store rather than pre-installed, and the South Korean Device Maker would not offer its own payment or billing system. But that proposal was abandoned, and Google went on to sign three deals with Samsung the next year worth $8 billion over four years. One internal document showed Google saved almost $1 billion over four years by pulling back on its request for Google Play to be exclusively available on a do. device's first screen known as the home screen. That meant Google Play would appear on the home screen, but with room for Samsung to also add the Galaxy Store, according to the document, end quote.

Starting point is 00:05:41 The hits just keep on coming for the gaming industry, not in the good sense of hits keep coming like hit games. No, I'm talking about more layoffs. Amazon is restructuring its games division to focus on free streaming games offered with Prime and is cutting 180 or so jobs that unit's second round of layoffs just this year, quoting Aftermath. Two sources with knowledge of the layoffs told Aftermath that Amazon is eliminating 180 positions in its games division. This includes the entirety of Crown Channel and Amazon-backed Twitch Channel and the game growth team with a larger goal of refocusing efforts around Prime Gaming, a portion of the company's Amazon Prime subscription that offers free games and in-game content.

Starting point is 00:06:30 Crown Channel is notable as an instance of attempted synergy between Amazon and Twitch, the live streaming platform the company has owned since 2014. While it managed to put together elaborate events featuring countless streaming stars and the occasional mainstream celebrity, it never quite found its footing. Earlier this year, a Bloomberg report claimed that the channel's viewership had been artificially inflated, end quote. Not sure what to make of this, but Reuters is claiming that for over six months, the FBI has known the identities of those hackers tied to the MGM and Caesar's breaches. So people are starting to wonder, why no action on this yet? Quote, industry executives have told Reuters they were baffled by an apparent lack of arrests,

Starting point is 00:07:19 despite many of the hackers being based in America. I would love for somebody to explain it to me, said Michael Centonis, president of Crowdstrike, one of the firms leading the response effort to the hacks. For such a small group, they are absolutely causing havoc, Santonis told Reuters in an interview last month, Santonis said the hackers were known, but didn't provide specifics. He did say, quote, I think there is a failure here. Asked who is responsible for the failure, Santonis said law enforcement. The FBI has said it is investigating the gaming company hacks, but a spokesperson for the agency declined to comment on the larger group responsible or where the investigation stands. A spokesman for the Department of Justice also declined to comment.

Starting point is 00:08:00 Dubbed by some security professionals as scattered spider, the hacking group has been active since 2021, but it grabbed headlines following a series of intrusions at several high-profile American companies. The MGM breach disrupted operations at its casinos and hotels for days and cost the company roughly $100 million in damages, it said in a regulatory filing last month. Caesars paid around $15 million in ransom to regain access to its systems from the hackers, according to reporting by the Wall Street Journal. In total, roughly 230 organizations have been hit since the beginning of last year, according to a tally by the Baltimore-Maryland-based cybersecurity firm Zero Fox, which has helped Caesars contain the fallout. Zero Fox's chief executive James Foster

Starting point is 00:08:44 attributed law enforcement's sluggish response to a lack of manpower. Over the last several years, numerous press reports have suggested the Bureau is losing many of its best cyber agents to the private sector who offer them higher salaries. Law enforcement, certainly at the federal level, has all the tools and resources they need to be successful in going after. criminal's, Foster said, they just don't have enough people. Another challenge has been the hesitancy of many victims to cooperate with the FBI. One of the sources, an executive involved in defending against the hackers who declined to be named citing client confidentiality, said several victim companies never informed the Bureau they were compromised, meaning

Starting point is 00:09:22 prosecutors lost the chance to acquire potentially important evidence. This instinct to hide an intrusion isn't unusual. An ex-FBI official who requested anonymity and previously worked on ransomware investigations told Reuters. What I encountered working on the ransomware stuff is basically nine out of ten times the company did not want to cooperate, the ex-official said, end quote. Two new initiatives from Uber. Uber plans to test Uber tasks, a task rabbit-like service that lets users hire people to complete household tasks in the coming weeks. Quoting Bloomberg. During the initial test of the program, drivers and couriers on Uber's app can opt in to help customers with small home projects, including furniture assembly, in-home laundry, and lawn mowing,

Starting point is 00:10:11 the company said Monday. The feature dubbed Uber Tasks will launch in the coming weeks in Fort Myers, Florida, and in Edmonton, Alberta, the company said. Other possible chores include snow removal, packing, or unpacking, holiday decorating, yard cleanup, and garden maintenance. Drivers and careers will see estimated earnings before reserving a task, according to the company. The move confirms a September report by Bloomberg News about evidence of such a feature in the software code of the Uber app. The program, should it be expanded, would put Uber in competition with TaskRabbit and Angie, which also support household tasks, end quote. And then similar to that story recently about DoorDash, be careful how you rate your Uber and Uber Eats drivers because Uber has rolled out

Starting point is 00:10:53 new tools in the U.S. to identify writers or Uber Eats users who consistently give bad ratings in order to get refunds to cut down on what they call unfair deactivations. Quoting TechCrunch, starting Monday across the U.S., Uber will roll out a technology that identifies riders or Uber eats customers who consistently give bad ratings or feedback with the intent of getting a refund. Allegations by those customers, the company said in a blog post, won't be considered in drivers' ratings or deactivation decisions. The Ride Hale Giant is also expanding its in-app review center to provide drivers and couriers with more information about why their account was deactivated, allow them to request a review of the decision, and share any additional information, like audio or video recordings. Uber rolled out an audio recording feature for drivers and writers

Starting point is 00:11:40 nationwide last year. The company also started piloting video recording and said Monday it would expand the pilot to iOS drivers in a dozen U.S. cities, including Atlanta, Denver, Dallas, Minneapolis, and select drivers in Los Angeles. Uber will also pilot voluntary drug tests so that drivers who are accused of driving under the influence of a drug or for having a car that smells like marijuana in a state where it's legal can dispute those complaints. Drivers have longed. protested against unfair deactivations, which amount to being fired in the app-based gig economy, and many have joined class action lawsuits against the company. Drivers have complained that some writers submit false complaints out of malice or bias. They've also said that they lack the transparency

Starting point is 00:12:20 to view the nature of those complaints in order to contest them, and that Uber offers little to no recourse to dispute the claims. Two drivers who spoke to TechCrunch on the condition of anonymity said they had no warning that they were going to be deactivated. One day, they tried to open the app and found their access revoked. A February report from the Asian Law Caucus found that 30% of deactivated drivers said they were not given any explanation as to why they were deactivated. Of the drivers who were given a reason, 42% said they had been deactivated due to a customer complaint. Another 10% said they were deactivated due to low customer ratings, end quote. Finally today, I did not know this, but OpenAI apparently has a six-member nonprofit board

Starting point is 00:13:06 tasked with deciding if the company has achieved AGI, artificial general intelligence. This is important because apparently under the terms that OpenAIA operates, that would mean that they would lock down the ability to monetize AGI, even for investors like Microsoft. Quote, according to OpenAI, the six members of its nonprofit board of directors will determine when the company has attained AGI, which it defines as, quote, a highly autonomous system that outperforms humans at most economically valuable work. Thanks to a for-profit arm that is, quote, legally bound to pursue the non-profits mission, once the board decides AGI or artificial general intelligence has been reached, such a system will be, quote, excluded from IP licenses and other

Starting point is 00:13:51 commercial terms with Microsoft, which only apply to pre-AGI technology, end quote. But as the very definition of artificial general intelligence is far from agreed upon, what does it mean to have a half a dozen people deciding on whether or not AGI has been reached for OpenAI and therefore the world. And what will the timing and context of that possible future decision mean for its biggest investor, Microsoft? The information was included in a thread on X over the weekend by OpenAI developer advocate Logan Kilpatrick. Kilpatrick was responding to a comment by Microsoft President Brad Smith, who had a recent panel with meta-chief scientist Jan Lacoon, tried to frame OpenAI as more trustworthy because of its nonprofit status, even though the Wall Street Journal recently reported

Starting point is 00:14:35 that Open AI is seeking a new valuation of up to $90 billion in a sale of existing shares. Currently, the OpenAI Nonprofit Board of Directors is made up of Chairman and President Greg Brockman, chief scientist Ilya Sutskever, and CEO Sam Altman, as well as non-employees Adam DeAngelo, Tasha McCulley, and Helen Toner. DeAngelo, who is CEO of Quora, as well as tech-entrefer, McAulner, who is Director of Strategy for the Center for Security and Emerging Technology at Georgetown University, have all been tied to the Effective Altruism Movement, which came under fire earlier this year for its ties to Sam Bankman-Fried and FTX, as well as its, quote, dangerous take on AI safety. And OpenAI has long had its own ties with EA. For example, in March 2017, OpenAI received a grant of $30 million from Open Philanthropy, which is funded by effective

Starting point is 00:15:29 altruists, and Jen Likey, who leads OpenAI's super alignment team, reportedly identifies with the EA movement. The OpenAI spokesperson said that, quote, none of our board members are effective altruists, adding that, quote, non-employee board members are not effective altruists. Their interactions with the EA community are focused on topics related to AI safety, or to offer the perspective of someone not closely involved in the group, end quote. I forgot to mention last week that I got to go see Spamalot, which recently returned to Broadway, would highly recommend because it's still great. I've seen everything from the producers to Book of Mormon, and I still think Spamalot is the funniest musical ever made. Go see it if you can. Talk to you tomorrow.

Tech Brew Ride Home - Tue. 11/14 – Google Pays Apple HOW Much?

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