Tech Brew Ride Home - Tue. 11/22 – The Alexa Deathwatch Is Real

Episode Date: November 22, 2022

The contagion in crypto continues to teeter on a knife’s edge. Why were Sam Bankman Fried’s parents allegedly buying property in the Bahamas? Elon says Twitter is hiring again. Turns out the Alexa deathwatch is very real. And is Apple really the privacy company, or just like everybody else when it comes to ads? Sponsors: InternetSociety.org/techmeme RocketMoney.com/ride Links: Crypto Brokerage Genesis Is Said to Warn of Bankruptcy Without Funding (Bloomberg) Hedge funds left with billions stranded on FTX (FT) Exclusive: Bankman-Fried's FTX, parents bought Bahamas property worth $121 million (Reuters) Elon Musk says Twitter is done with layoffs and ready to hire again (The Verge) Amazon is gutting its voice assistant, Alexa. Employees describe a division in crisis and huge losses on 'a wasted opportunity.' (Insider) Apple Says Your iPhone's Usage Data is Anonymous, but New Tests Say That's Not True (Gizmodo) 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, November 22nd, 2022. I'm Brian McCullough today. The contagion in crypto continues to teeter on a knife's edge. Why were Sam Bankman-Fried's parents allegedly buying property in the Bahamas? Elon says Twitter is hiring again. Turns out the Alexa Deathwatch is

very real and is Apple really the privacy company or just like everybody else when it comes to ads? Here's what you miss today in the world of tech. Bloomberg says that Genesis is struggling to raise more than $1 billion in funding for its lending unit and has warned potential investors that it may need to file for bankruptcy if its efforts to raise that money fails, which that's quite a pitch. Quote, Genesis has spent the past several days seeking at least $1 billion in fresh capital, said the people who asked not to be identified because discussions are private. That included talks over a potential investment from crypto exchange Binance, they said, but funding so far has failed to materialize. The rush for funding was precipitated by

a liquidity crunch at the lender after the sudden collapse of FTX, one of the world's largest crypto exchanges. Genesis halted redemption shortly after revealing on November 10th that it had $175 million locked up in an FTX trading account. We have no plans to file bankruptcy imminently, a representative for Genesis said in an emailed statement, quote, our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors, end quote. Genesis has reached out to Apollo global management in a bid to secure an investment, but Apollo is unlikely to commit to a deal, according to a person with direct knowledge of the matter.

One option proposed by Genesis was for Apollo to buy parts of its loans book, this person said. Genesis is a counterparty to many in the digital asset space and is closely watched as a gauge of the industry's strength. It's among the crypto lenders that are feeling acute strain after a prolonged route in virtual coin prices amid multiple high-profile blowups. The difficulties at Genesis have also buffeted the billionaire Winklevoss twins, Tyler and Cameron, owners of the Gemini Crypto Exchange. In response to Genesis suspending withdrawals, Gemini halted redemptions from its earned product that left in limbo a program that, according to a person familiar with the matter, has $700 million of customer money tied up in it, end quote. Speaking of, according to new research,

between 100 and 150 crypto hedge funds, or around 25 to 40% of all specialized funds out there, have exposure to FTX or that FTT token. So that totals around $2 billion in funds in trouble, shall we say, quoting the Financial Times. In a situation reminiscent of Lehman Brothers in 2008, which left billions of dollars of hedge funds assets trapped for years, investors who traded on the Muhammad's based exchange have found themselves among the thousands of creditors and a highly complex bankruptcy. The sudden failure this month of FTX valued at $32 billion this year has shocked investors who backed it and traders who used it. Legal filings on Sunday revealed that FTCS owes its 50 largest creditors, likely to include a wide variety of hedge funds,

more traditional asset managers, and other traders more than $3 billion. Cryptofocus hedge funds have direct exposure to FTC group or to FTT, FTC's own digital token, in which it promoted to incentivize more trading on its main exchange of around $2 billion, according to Data Group Crypto Fund Research. Earlier this month, the Financial Times revealed that Galois Capital, whose founder Kevin Zhao is credited with spotting the collapse of cryptocurrency Luna, had around half of its capital stuck on FTX. Jow admitted he was, quote, deeply sorry and that he had underappreciated, quote, the solvency risk withholding our funds at FTX. He said it could take a few years to recover,

quote, some percentage of our assets, end quote. Crypto fund research estimates that between 100 and 150 crypto hedge funds are around 25 to 40% of the total number of such specialist funds, have some direct exposure to FTX group or to FTT. The average exposure is around 7 to 12% of funds total assets under management, with some funds holding a majority of their assets on the exchange, according to the data group. Trading firms such as Genesis Trading, which has halted withdrawals at its lending unit and BlockFi, which has taken similar steps. exposure could be as high as $4 to $5 billion, crypto fund research said, end quote. And speaking of, according to Reuters, FTX, its executives, and even Sam Bankman Fried's parents,

but more than 19 properties in the Bahamas worth around $121 million over the past two years as, quote, residents for key personnel, quoting Reuters. Most of FTX's purchases were luxury beachfront homes, including seven condominiums in an expensive resort community called Albany, costing almost $72 million. The deeds show these properties bought by a unit of FTX were to be used as residence for key personnel of the company. Raiders could not determine who lived in the apartments. The documents for another home with beach access in Old Fort Bay, a gated community that was once

home to a British colonial fort built in the 1700s to protect against pirates, show Bankman Freed's parents, Stanford University Law Professors Joseph Bankman and Barbara Freed as signatories. The property, one of the documents dated June 15th, said, is for use as a, quote, vacation home. When asked by Reuters why the couple decided to buy a vacation home in the Bahamas and how it was paid for, whether in cash with a mortgage or by a third party such as FTX, a spokesman for the professors said only that Bankman and Freed had been trying to return the property to FTX. Their son, Sam Bankman-Fried, has told Reuters he lived in a house with nine other colleagues. For his employees, he said FTCS provided free meals and an, quote, in-house Uber-like service around the island, end quote.

Which, you know, just speculating here, would that allegedly translate into luxury cars and on-call drivers at all hours? that would be Uber-like in a way. Today in Twitter, sources say that at an all-hands meeting, Elon Musk said Twitter is done with layoffs and is in fact actively recruiting for roles in engineering and sales. Twitter has around 2,700 employees at this point. It is believed, quoting the verge. Musk's comments were made the same day that an unspecified wave of cuts hit Twitter's sales

department, which has lost almost all of its senior leadership since Musk took over. over. Musk didn't specify the kinds of engineering or sales roles Twitter was hiring for, and the company doesn't currently have any open roles listed on its website. In terms of critical hires, I would say people who are great at writing software are the highest priority, Musk said during the meeting. The verge reported last week that Twitter recruiters were already reaching out to engineers asking them to join Twitter 2.0, an Elon company, end quote. Monday's all-hands meeting was the first time that Twitter's employees heard from Musk since he required all of them to opt into staying for his extremely hard.

core cultural reset, which led to roughly 1,000 resignations last week. While fielding employee questions for about a half an hour from Twitter's San Francisco headquarters, Musk said there are, quote, no plans to move Twitter's headquarters to Texas like he did with Tesla, but that it could make sense to be dual headquartered in California and Texas. In response to a question about employee compensation, Musk reiterated that employees will be given stock options in Twitter and be able to cash them out regularly, like at SpaceX, his other company that is also privately held. Quote, the way things work at SpaceX to get liquidity is that every six months there's a liquidity event where the company buys back shares, and we also invite new investors to buy shares,

he said, and we'll be able to operate Twitter in the same way, end quote. Elon also apparently said that they are holding Twitter Blues verified relaunch until, quote, there is high confidence of stopping impersonations, end quote, and also floated the idea of using different colors for different organizations and individuals. Once again, to paraphrase Whoopi Goldberg, Alexa, you in danger, girl. According to a new report, Amazon's hardware group, which Alexa is a part of, is on track to lose $10 billion in 2022, as many echo devices are sold at cost, and plans to monetize Alexa have not panned out, quoting Business Insider.

Alexa is on Life Support. When the voice assistant first launched in November 2014, in the Publications called it the Computer of the Future. CNET described it as something out of the sci-fi series Star Trek. Computer World heralded the product as the future of every home. Nearly 10 years since, the voice assistant hasn't lived up to Amazon's expectations. During the first quarter of this year, Amazon's worldwide digital unit, which includes everything from the Echo Smart Speakers and Alexa Voice Technology to the Prime

Video Streaming Service, had an operating loss of over $3 billion, according to internal data obtained by Insider. The vast majority of worldwide digital's losses were tied to Amazon's Alexa and other devices, a person familiar with the division told Insider. The loss was by far the largest among all of Amazon's business units and slightly double the losses from its still nascent physical stores and grocery business. While Amazon's business model has traditionally tolerated this kind of poor financial performance from its hardware businesses, that's no longer true. Amazon's Alexa and the devices team at large is now the prime time. target of the biggest layoffs in the company's history, according to press reports and an internal

email seen by Insider. Insider spoke with over a dozen current and former employees on the company's hardware team to get a better picture of its current condition. They described a division in crisis. While Alexa was once one of the company's most rapidly growing projects, the mounting losses and massive job cuts underscore the swift downfall of the voice assistant and Amazon's larger hardware division. Alexa is a colossal failure of imagination, one former employee said, it was a wasted opportunity, end quote. After the first cracks in the product's business model began to show internally, the team was worried about the quality of user engagements. By then, Alexa was getting a billion interactions a week, but most of these conversations were trivial, commands to play

music or ask about the weather. That meant fewer opportunities to monetize. Amazon can't make money from Alexa telling you the weather and playing music through the echo gives Amazon only a small piece of the proceeds. By 2018, the division was already a money pit. That year, the New York Times reported that it lost roughly $5 billion. This year, an employee familiar with the hardware team said the company is on pace to lose about $10 billion on Alexa and other devices. According to internal documents, although Amazon's hardware team planned on building an updated set of wireless headsets and a new type of augmented reality product, it's unclear how many of these projects will survive Amazon's cost-cutting. Employees told Insider, a combination of

low morale, failed monetization attempts, and a lack of engagement across users and developers made them feel as though the team was deadlocked over the past few years, end quote. Finally today, I want to flag this as something new to watch. Remember how Apple introduced ATT and basically kneecapped Meta's business along with a few others by blocking ad tracking? Well, not a few people noticed that soon afterwards, Apple seemed to ramp up its own internal advertising products. So, you know, that's some pretty aggressive stuff. You kill your competitors' businesses. Also, you reap the PR rewards of being the, in quotes, privacy company, and then you ramp up your

own advertising to, I guess, fill the vacuum. But also, maybe you start to do things that you use to criticize other folks for doing. For example, earlier this month, there was research suggesting that Apple collects data about iPhone usage, even when the iPhone analytics setting to quote, disable the sharing of device analytics altogether is triggered. And now, researchers say, Apple's analytics data includes a unique ID for a user's ICloud account, despite Apple's saying usage data does not include personally identifiable info. Quoting Gizmodo. The privacy policy governing Apple's device analytics says none of the collected information identifies you personally. But an analysis of the data sent to Apple shows it includes a permanent, unchangeable ID number

called a directory services identifier or DSID, according to researchers from the software company MISC. Apple collects that same ID number along with information for your Apple ID, which means the DSID is directly tied to your full name, phone number, birth date, email address, and more, according to MISC's tests. According to Apple's analytics policy, quote, personal data is either not logged at all, is subject to privacy preserving techniques such as differential privacy or is removed from any reports before they're sent to Apple, end quote. But Misk's tests show that the DSID, which is directly tied to your name, is sent to Apple in the same packet as all the other analytics information.

Quote, knowing the DSID is like knowing your name. It's one-to-one to your identity, said Tommy Misk, an app developer and security researcher, who ran the test along with his partner Talal Haj Bakri. all these detailed analytics are going to be linked directly to you, and that's a problem because there's no way to switch it off, end quote. The findings worsen recent discoveries about Apple's privacy problems and promises. Earlier this month, MISC discovered that Apple collects analytics information even when you switch off an iPhone setting called Share iPhone Analytics and action that Apple pledges will, quote, disable the sharing of device analytics altogether, end quote.

Days after Gizmoto reported on MISC's tests, a class action lawsuit, was filed against Apple for allegedly deceiving its customers over the issue. Apple didn't respond to a request for comment. The company hasn't said anything publicly about the apparent contradictions in its privacy promises or the recent lawsuit. Theoretically, Apple might argue that an ID number isn't personal information, but the GDPR, the mammoth European privacy law, which set the standard for data regulation worldwide, defines personal data as any information that, quote, directly or indirectly identifies a person including ID numbers. I think people should be upset about this, Misk said.

This isn't Google. People opt for iPhone because they think these kinds of things aren't going to happen. Apple doesn't have the right to keep an eye on you, end quote. In some cases, this analytics data apparently includes details about your every move. Misk's tests show that analytics for the App Store, for example, includes every single thing you did in real time, including what you tapped on, which apps. you search for, what ads you saw, and how long you looked at a given app, and how you found it. You can see the data which is sent in real time in a video on the MISC YouTube channel. It's possible that Apple processes DSID data to shelter personally identifying details when the company

receives the information, separating your personal information from other data. But there's no way to know because so far Apple seems unwilling to explain its practices. The company may not use the data if you turn the related privacy settings off, despite still receiving it, but that's not how the company explains what the settings do in its privacy policy. The findings are especially damning given the years Apple spent rebranding itself as a privacy company. Apple's recent marketing campaigns suggest the company's privacy practices are supposed to be far better than other tech companies. It's emblazoned 40-foot billboards of the iPhone with the simple slogan, privacy, that's iPhone, and ran the ads across the world for months.

But Apple is making strides to build an advertising empire of its own built on the personal data of its billions of users. Even the company's own privacy settings can be seen as part of a long game to kneecap its advertising competitors, though the company vehemently denies that accusation. For his part, the findings come as a personal shock to Tommy Misk. In the past, quote, I would always allow the app to share analytics with Apple because I want to help them, Misk said, but I always assumed the data was going to be sent out in an anonymous way, end quote. I woke up this morning, looked at my phone, and saw the score of the Saudi Arabia-Argentina game and was like, what? I continue to be like, what?

Craziest upset I've ever seen in a World Cup. And sad for the United States yesterday, they were quite good in the first half, I thought, but they really wilted in the second, and that was a penalty all day, every day, bad tackle in the box. Anyway, I was more successful at watching the games while also working on this today. So, you know, progress. Talk to you tomorrow.