Tech Brew Ride Home - Tue. 12/07 – Tim Cook’s Secret China Deal?

Episode Date: December 7, 2021

The Information has a story about a secret deal Apple struck that really solidifies Tim Cook as the China whisperer. Intel proves itself to be an astute investor as it weighs a public spinoff of Mobileye. European tech startups raise all-time record amounts. Quantifying this year’s emerging NFT market. And the first ever marketable quantum computing product? Sponsors: Detectify.com/techmeme ARM Viewpoints Podcast Links: Facing Hostile Chinese Authorities, Apple CEO Signed $275 Billion Deal With Them (The Information) Samsung's mobile and consumer electronic divisions merge into one in exec reshuffle (ZDNet) Intel to List Shares in Mobileye Unit (WSJ) The Popular Family Safety App Life360 Is Selling Precise Location Data on Its Tens of Millions of Users (The Markup) Microsoft Office prices going up 20% for some business clients unless they move from monthly to annual subscriptions (CNBC) European start-up funding triples to a new record above $100 billion this year (CNBC) [Report Preview] The 2021 NFT Market Explained (Chainalysis) Honeywell Unit Offers First-Ever Quantum-Created Encryption Key (Bloomberg) 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, December 7th, 2021. I'm Brian McCullough today. The information has a story about a secret deal. Apple struck that really solidifies Tim Cook as the China whisperer. Intel proves itself to be an astute investor as it weighs a public spinoff of Mobile Eye. European tech startups raise all-time record amounts, quantifying this year's emerging NFT market and the first ever marketable quantum computing product. Here's what you miss today in the world of tech. This is interesting. The information is reporting on a secret deal between Tim Cook and the government of China brokered back in 2016, which allegedly paved the way for Apple's success in that

country by promising to help China develop its economy, quoting extensively from the piece. Apple's iPhone recently became the top-selling smartphone in China, its second biggest market after the U.S. for the first time in six years. But the company owes much of that success to CEO Tim Cook, who laid the foundation years ago by secretly signing an agreement estimated to be worth more than $275 billion, with Chinese officials promising Apple would do its part to develop China's economy and technological prowess through investments, business deals, and worker training. Cook forged the five-year agreement, which hasn't been previously reported, during the first of a series of in-person visits he made to the country in 2016,

to quash a sudden burst of regulatory actions against Apple's business. according to internal Apple documents viewed by the information. Before the meetings, Apple executives were scrambling to salvage the company's relationship with Chinese officials who believed the company wasn't contributing enough to the local economy, the documents show. Amid the government crackdown and the bad publicity that went along with it, iPhone sales plummeted. Throughout that pivotal year, Cook, who was the architect of Apple's supply chain in China, personally lobbied officials over threats that would have hobbled the company's devices and services, including Apple Pay, ICloud, and the App Store the documents show.

He often succeeded and his previously unreported interventions, along with the multi-billion dollar agreement he signed with a powerful Chinese government agency paved the way for Apple's unparalleled success in the country. The revelations also suggest Apple's dependence on Cook for government affairs could present risks down the road if he were to step down as Apple's CEO. The cornerstone of Cook's strategy was a memorandum of understanding between Apple and the National Development and Reform Commission, China's powerful economic planning agency. The 1,250-word agreement was originally conceived by Apple's government affairs team in China as a way to improve relations with Beijing and win an audience with senior leaders,

according to a person familiar with the agreement. Face-to-face meetings with top Chinese officials became a priority for Apple brass after regulators shut down iTunes books and movies in April 2016, the person said. To Molify Authorities, Cook in May, announced an unprecedented incidented $1 billion investment in DD Global, then China's most valuable startup, giving Dedi an edge in its grueling ride-hailing war against U.S.-based Uber. Five days later in Beijing, Cook, along with Chief Operating Officer Jeff Williams and Government Affairs Head Lisa Jackson, met publicly with senior government officials at the

country's secretive leadership compound. Neither side disclosed details of the visit, but they were there in part to sign the economic deal, which committed Apple to aiding roughly a dozen causes favored by China. They included a pledge to help Chinese manufacturers develop, quote, the most advanced manufacturing technologies and, quote, support the training of high-quality Chinese talents. In addition, Apple promised to use more components from Chinese suppliers in its devices, sign deals with Chinese software firms, collaborate on technology with Chinese universities, and directly invest in Chinese tech companies akin to the DD investment. Apple promised to invest, quote, many billions of dollars more than what the company was already spending annually in China,

Some of that money would go toward building new retail stores, research and development centers, and renewable energy projects, the agreement said. According to separate internal documents, Apple's China Pledge would amount to more than $275 billion in spending over five years. The agreement said the deal would automatically extend for an additional year through May of 2022 if neither side had objections in the future. The Chinese embassy in Washington didn't respond to a request for comment, end quote. I don't think we talked about it, but Samsung had some bafo records. earnings last quarter, and I guess on the heels of that, Samsung is planning to merge its mobile and consumer electronics divisions into one business unit led by J.H. Han, while also naming

Ke Yun Kyeong as its CEO for the semiconductor unit, quoting ZDNet. Previously, Samsung had individual CEOs for each of its mobile and consumer business units. In the new CEO position, Han will be responsible for overseeing Samsung's smartphone, TV, and home appliance operations, Samsung said. Samsung said Han has played a major role in the conglomerates leadership in the TV sector and that he would be, quote, expected to strengthen the synergies among the different businesses in the set division and help drive new businesses and technologies, end quote. Samsung is expected to announce further reshuffles for executives below the CEO and president levels in a couple of days, end quote. Intel plans to take its mobile eye unit public.

Sources say at greater than a $50 billion valuation, Intel only acquired. the Mobilized self-driving car company in 2017 for about $15 billion. So this is a heck of a flip if it pans out, quoting the Wall Street Journal. MobileI, an Israeli company, specializes in ship-based camera systems that power automated driving features in cars. It originally went public in 2014. Mobilized revenues have roughly tripled since Intel bought it. It had $326 million of revenue in the third quarter, a 39% year-over-year increase. Intel itself had over $19 billion, in revenue in the period. By relisting shares of Mobile Eye Intel could tap into surging investor demand for companies betting on the future of transportation, the initial public offering market has also

been on a tear with investors clamoring for new technology issues. MobileEye was created when most cars still relied principally on seatbelts, anti-lock brakes, and airbags to keep occupants safe. They set out to create vision-based systems that help cars see the road and communicate with critical systems, including steering and braking, to respond to situations. that could lead to a crash, end quote. Remember recently when we learned about that company Life 360, which acquired Tile? Well, sources are telling the markup that Life360, which, remember, is a family safety app with 33 million users, has been selling users' precise location data since 2016 and is maybe one of

the location data broker industry's top sources of data. So you could see why Tile would be useful. to them, but also, ew? Quote, the markup has learned that the app is selling data on kids and families' whereabouts to approximately a dozen data brokers who have sold data to virtually anyone who wants to buy it. Through interviews with two former employees of the company, along with two individuals who formerly worked at location data brokers, cubic and X mode, the markup discovered that the app acts as a firehose of data for a controversial industry that is operated in the shadows with

few safeguards to prevent the misuse of this sensitive information. A former X-Mode engineers said the raw location data the company received from Life 360 was among X-Mode's most valuable offerings due to the sheer volume and precision of the data. A former Kubic employee joked that the company wouldn't be able to run its marketing campaigns without Life-360's constant flow of location data. X-Mode, SafeGraph, and Cubic are known location data companies that supply data and insights gleaned from that data to other industry players as well as customers like hedge funds or firms that deal in targeted advertising. We have no means to confirm or deny the accuracy of whether Life 360 is among the largest sources of data for the industry. Life 360 founder and CEO Chris Hulls

said in an email response to questions from the markup, quote, we see data as an important part of our business model that allows us to keep the core Life 360 services free for the majority of our users, including features that have improved driver safety and saved numerous lives, end quote. Microsoft is apparently telling its partners that enterprise customers will be charged 20% more for their office subscriptions if they don't switch to an annual plan in 2022. So if you work in an enterprise where that would mean something to your budget, I guess pay up or end up paying up more, quoting CNBC. In 2022, Microsoft is rolling out what it calls the new commerce experience for office, revamping the way customers buy its software through business

partners. While the company hasn't publicly announced a specific price change, it has informed partners that organizations paying by the month will face a 20% hike unless they move to annual subscriptions. For Microsoft, the opportunity to lock customers into longer arrangements means potentially better visibility into revenue and less concern about churn, a critical element of subscription businesses. Software vendors commonly offer discounts for annual subscriptions compared to monthly sign-ups, and many larger enterprises prefer that option. However, some smaller companies that are trying to preserve cash as they deal with pandemic-related challenges are frustrated by the changing model, which comes just after a price increase was announced in August for Microsoft 365,

a bundle formerly known as Office 365. A majority of Microsoft's revenue comes from its business customers rather than consumers, and 95% of its commercial revenue is derived through partners. clients that specifically buy through Microsoft's cloud solution provider program are the ones affected by the subscription plan change, and Microsoft doesn't disclose what percentage of its customers buy products that way, end quote. A couple of interesting data points now. First, according to Atomico, European tech startups will raise a record $121 billion this year, 2021 up from a mere $41 billion in 2020, with less than 1% of that going to early,

startups while at the same time, 98 unicorns were minted in 2021. Europe's tech startup ship has finally come in, it looks like. Quoting CNBC, it's the first time European startups have raised more than $100 billion in a single year and highlights surging interest from investors in the continent's rapidly growing tech industry. It's been a defining year for European tech, Tom Weymire, Atomico's head of insights told CNBC, I think what we've seen in the numbers is that European tech is creating value faster than ever, end quote. Based on findings from data firm deal room, Atomico's latest annual state of European tech report shows that total equity value of European tech companies in the

public and private markets surpassed $3 trillion for the first time in 2021. It took us decades to get to the first trillion in equity value in technology in Europe. Wymeyer says, we got to that milestone only three years ago in December 2018. And then we went from $1 trillion to $2 trillion in 24 months. And then this year. The most recent trillion has been added in eight months, end quote. Europe is now home to $321 billion unicorn companies, 98 of which were minted this year. There are also 26 so-called decacorns worth $10 billion or more, including Klarna, Revolut and checkout.com, according to Atomico, end quote. Meanwhile, an analysis from Chainalysis gives us a sense of this year's NFT craziness.

Jay analysis says users have spent more than $26.9 billion on NFTs in 2021, though most transactions are under $10,000, and Cryptopunks is the most popular collection with $3 billion in sales since March. Notably, we see significant increases in both total value sent and average transaction size, suggesting that NFTs as an asset category are gaining value as they attract new users. There's also a noticeable spike beginning in the last week of August, which appears to have been largely driven by the release of a new collection from the popular NFT creator group behind Bored Ape Yacht Club. Most users buy NFTs on dedicated marketplaces similar to how they might buy conventional cryptocurrencies on an exchange. Many NFT marketplaces such as OpenC don't custody users' NFTs for them, instead allowing users to transfer NFTs directly between their own wallets. In this way, those marketplaces are similar to decentralized exchanges or periodical. peer exchanges. Others, however, like Dapper Labs, handle custody on behalf of users. OpenC is the most popular marketplace by a wide margin, with over $16 billion worth of cryptocurrency received so far in

2021. But Cryptopunks, which was established in 2017, well before the current NFT craze has been the most popular NFT collection during the time period studied with more than $3 billion in transaction volume since March 2021. Interestingly, we see some collections that experience brief but large spikes in transaction activity without ever gaining consistent popularity. For instance, hash masks saw more than $380 million in transaction value during the week of July 4th, 2021. In no other week during the same time period study, did the collection see more than $95.7 million, and its average weekly transaction volume for the entire time period was just under $21 million. We see a similar pattern with Mutant Ape Yacht Club. We see a strong mix of

web visits from several regions with Central and South Asia, North America, Western Europe and Latin America leading the pack. The number suggests that like conventional cryptocurrency, NFTs have achieved global popularity with no region making up more than 40% of monthly web visits since March, end quote. Finally today, Quantinium, a startup recently spun off from Honeywell, claims it has created the first quantum generated encryption key, which when you hear the details of it is pretty interesting, quoting Bloomberg. The quantum computing generated offering is for encryption keys that Quantinium says are uniquely random and can't be predicted. A milestone in using cutting-edge computing for a practical business problem, Tony Utley,

the company's president said in an interview. Traditional computers already generate encrypted keys, but Quantinium says it takes security a step further with vastly improved, randomly generated keys that are essentially impervious to hacking by conventional computers. He said the offering is, quote, as far as we're aware, the first product actually derived from the use of a quantum computer that does something that is meaningfully relevant to businesses around the world, end quote. Utley is the scientists who led Honeywell's decade-long effort to build a quantum computer. Quantinium's standalone security key product is designed to compete with encryption

key management companies including Microsoft's Azure Key Vault and Amazon's AWS key management service. Quantinium said the generation of random keys is a solution that's relatively easy for these new devices because it taps into the essence of quantum physics in which a particle can be in multiple states at one time. Once the particle is measured, though, it collapses into one random value and loses its quantum properties. The other aspect of quantum computing that makes it a good fit for deriving random keys is entanglement. That term describes a characteristic of quantum physics in which particles connect with each other at a distance and take on the same properties. This phenomenon can't be replicated by a classical computer, which are limited by electric currents being switched

to either on or off. Quantinum only needs three high-fidelity quantum bits or qubits to create a pool of random numbers and symbols from which the keys are made. The quantum-derived keys can be used in standard cryptography systems, said Utley, whose company is announcing the product on the opening day of an annual industry ride, Q2B conference, end quote. Nothing for you today, for I have known them all already, known them all, have known the evenings, mornings, mornings, have measured out my life with coffee spoons? T.S. Eliot, too pretentious for you? Whatever. No song lyrics jumped to mine today, and it's just sort of that kind of day, sort of blah, so that's how I was feeling. My wife thinks it's too pretentious. She suggested Crash Test Dummies lyrics instead,

so maybe we'll do that tomorrow. Talk to you that.