Tech Brew Ride Home - Wed. 01/13 – The Visa/Plaid Merger Is Called Off

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 meme ride home for Wednesday, January 13th, 2021. I'm Brian McCalla today. The Plaid visa merger is called off. And I'll tell you why I think this is a sign of the current situation for tech. More tectonic shifts in the chip industry, including Qualcomm acquiring a chip startup and Intel losing its CEO. More smoke around the fire story of an Apple car. And Facebook has noticed that you've started downloading alternatives to WhatsApp. Here's what you missed today in the world of tech. This has been a weird newsday where several threads that we've been discussing of late have

Starting point is 00:01:14 all converged and are sort of spilling all over each other. First, when we vaguely talk about the new wins of antitrust and anti-competition regulation blowing and how that might have real-world impact on the tech sector and tech markets, this is what we mean. Visa has announced it is abandoning its $5.3 billion planned acquisition of fintech firm Plaid after the DOJ sued over antitrust concerns back in November. Now maybe Visa Plaid is a unique case, and I'm open to people's opinions about this, but I feel like this is the sort of acquisition that would have sailed through without anyone blinking an eye five or six years ago, quoting the journal.

Starting point is 00:02:02 Plad, the government argued, was a nascent but important, competitive threat to Visa, and eliminating that threat would lead to higher prices, less innovation, and higher entry barriers for online debit services. Visa initially vowed to fight the government, and a trial was scheduled for June in a California federal court. Visa and Plaid mutually agreed to end the deal. Plad chief executive Zach Parrott said in an interview that Plaid is in good shape to prosper as an independent company because consumers flocked to the digital finance apps Plaid powers during the coronavirus pandemic. The number of paying. Plad customers has increased more than 60% since the Visa deal was announced, Mr. Parrott added,

Starting point is 00:02:41 end quote. So what I've been hearing overnight is maybe Plad isn't all that broken up about this deal breaking up, as it were, because in a world where Square is worth $100 billion, PayPal is at $250 billion, $5 billion for a key part of all of FinTech was frankly looking like an absurdly low price, like the steel of the century. Given the current markets, if somehow Plaid could IPO tomorrow, how much you want to bet they'd hit at least a $50 billion valuation or something crazy? Though I would question what made them want to take the deal in the first place. What do we or do we not know about their underlying business? As Alex Rample at A16Z tweeted, quote,

Starting point is 00:03:31 Plad underpins virtually all of fintech. It is the strategic, pillar that is allowing this industry to be built at unprecedented scale and speed. While I believe the DOJ decision to be misguided, I'm more excited for Plaid and Zach Parrott's decision to remain independent. Plad has been and will continue to be the most important piece of financial infrastructure powering the FinTech services we use today and those we will use tomorrow. The opportunity for fintech has only accelerated and Plaid's roadmap is even bigger, better, and more ambitious. ludicrous speed go, end quote. And as Ham Sorinjogi tweeted,

Starting point is 00:04:09 your move, Patrick Collison. Over to the chip space, where what have we been talking about? We've been talking about consolidation. Also, new generations of Kings of the Hill rising up. Also, possibly room for new players in the space. Some combination of all three angles is in this segment, as Qualcomm announced it is acquiring chip startup Nuvia for $1.4 billion, and plans to put Nuvia's

Starting point is 00:04:42 tech into its smartphone, laptop, and automotive processors, Toot Suite, quoting Reuters. Founded by three of Apple's former top semiconductor executives in charge of iPhone chips, Nuvia has been working on a custom CPU core design that it had said would be used in server chips. The deal marks a big push by Qualcomm to reestablish a leading position in chip performance after several years of high-profile patent licensing litigation with rival Apple and regulatory authorities. The deal is also significant because it could help lessen Qualcomm's reliance on Arm, which is being purchased by Qualcomm rival Nvidia for $40 billion. Most of Qualcomm's current chips use computing cores licensed directly from Arm, while Nuvia's cores use Arm's underlying architecture, but are custom designs. For Qualcomm, using more custom core designs, a move that Apple has also made,

Starting point is 00:05:41 could lower some licensing costs to Arm in the short term and make it easier to move to a rival architecture in the longer term, end quote. Again, if this were a blog, right now, I'd be inserting that if you're, It's always sunny in Philadelphia, Pepe Sylvia meme with all of the red string on the corkboard behind me. Now, what's in the background of all of this? We've not actually explicitly talked about it in depth. We've only sort of been whistling softly about it, but in the background, there's Intel, right? Intel seemingly is in trouble?

Starting point is 00:06:23 I think I said that yesterday. Funny thing about that. Intel CEO Bob Swan announced abruptly this morning that he will step down in February. This news alone was enough to send Intel's stock up in pre-market trading around 10%. Swan has only been CEO of Intel for about two years, quote. Dan Loeb's third point hedge fund in December urged Intel's board to explore strategic alternatives. That came after Intel lost market share to competitors, AMD, Samsung, and TSM. Third point urged Intel to divest from failed acquisitions and criticize Intel for its, quote, loss of manufacturing leadership, and quote, the firm recently took a roughly $1 billion stake in Intel, according to Reuters.

Starting point is 00:07:07 Following the news of Swan's departure, Loeb called him a class act and said he, quote, did the right thing for all stakeholders stepping aside for Gelsinger, end quote. Right, I forgot to mention that. Sources are saying that Swan will be replaced as Intel CEO by VMware CEO Pat Gelsinger. Gelsinger was at Intel for 30 years before taking his post at VMware, so this definitely looks like a rescue mission. And by the way, class act, in case you were curious, is the term that they tend to use when you gracefully agree to fall on your sword, the sword that they handed to you and not so subtly suggested you fall on. Given all of that, yesterday was also Chip Day at CES.

Starting point is 00:08:00 AMD unveiled its Risen 5,000 series. These are eight core X-86 chips for gaming laptops, as well as thin and light notebooks. They're coming in February alongside third-gen epic server chips. Samsung unveiled the Exenos 2100 flagship system on a chip, produced on a 5-nanometer process node touting 19% better single core and 33% better multi-core performance than the previous gen. And, Invidia unveiled the RTX 3060, 3070, and 3080 GPUs suited for mobile gaming and says laptops with the RTX 3070 and 3080 will start rolling out this month. And if this sort of thing is your bag, AMD also says it will now directly sell ThreadRipper Pro CPUs to consumers,

Starting point is 00:08:56 which support up to 128 PCIE 4.0 lanes and 8-channel memory starting in March. Time for today's edition of the Tech Politics Ride Home. First, YouTube says it has taken down newly posted video content from President Trump for violating its policies against inciting violence. YouTube has banned new uploads to the Trump account for a week, aka the remainder of Trump's presidential term. Airbnb has announced it is canceling and blocking all reservations in the D.C. area for the next week or so, aka around the inauguration, which is, I believe, one week from almost literally right now.

Starting point is 00:09:47 Guess who had reserved a place in D.C. will be refunded. in full and hosts will be reimbursed the money that they would have earned. And forgive me for not getting around to this earlier, but there were all sorts of stories recently about how the infrastructure of parlor was apparently a joke. Such a joke that I saw stories like people creating thousands of admin accounts to basically dedos them and a sole researcher claiming that she had archived 99.9% of posts on parlor, many with, you know, user location data. Quoting Gizmodo, in a tweet early Sunday, at Dunk NB, said she was crawling some 1.1 million parlor video URLs. Quote, these are the original unprocessed raw files as

Starting point is 00:10:34 uploaded to parlor with all associated metadata, she said. Included in this data trunch, now more than 56 terabytes in size, at Dunk underscore NB, confirmed that the raw video files included GPS metadata pointing to exact locations of where the videos were taken, end quote. That is notable because the FBI is reportedly very interested in that sort of metadata, because it would show exactly where people got in the Capitol on January 6. Quoting Gizmodo again, GPS coordinates taken from 618 parlor videos analyzed by Gizmodo have already been sought after by the FBI as part of a sweeping nationwide search for potential suspects, at least 20 of whom are already in custody.

Starting point is 00:11:19 The precise location of parlor users inside the building can be difficult to place. The coordinates do not reveal which floors they are on, for instance. Moreover, the data only includes parlor users who posted videos taken on January 6th, and the coordinates themselves are only accurate up to an approximate distance of 12 yards or 11 meters, end quote. But again, Parlor seems to have been a social network with laughable security procedures, moderation policies that made everyone in the tech industry want to stop doing business with them. And today I learned that the site also required you to share your ID to even register. Now, again, I am not taking a political position here, merely a can you believe this position?

Starting point is 00:12:08 Because the phrase hoisted by your own petard really comes to mind here. Oh, but also, let's not forget the... Apple car thread that we've pulled on a few times recently. The Verge says that Apple held talks with EV startup canoe last year. Apple was apparently mostly interested in canoe's unique scalable electric vehicle platform. Remember that skateboard style platform that we talked about once before, the idea being when you're doing an electric vehicle, you don't have a whole drive train or basically that much moving parts because it's all mostly battery. And then because of that, you can basically just build this platform and put any type of vehicle on top of it. I think we talked about

Starting point is 00:12:56 how that would be a boon for crazy car designs. Well, quoting the verge, canoe's scalable electric vehicle platform or skateboard is largely what drew Apple's interest, the people said. The platform is different from ones developed by other startups and larger automakers because it integrates more of the car's electronics, allowing for greater flexibility in cabin design. It also features steer-by-wire technology, which also increases design flexibility and is not yet widely adopted in the industry. Canoe was more interested in taking on an investment from Apple, two of the people said. Ultimately, the talks fell apart. Canoe has since become a publicly traded company after merging with a blank check fund that was listed on the NASDAQ in late 2020. Apple has made at least

Starting point is 00:13:40 one other acquisition in the mobility space in recent years, buying Drive AI in 2019, end quote. But also remember how we talked about Apple and Hyundai supposedly in talks recently. Well, guess what? Quoting again, Hyundai and Kanoo previously announced a plan to co-develop electric vehicles in February 2020, though that project appears to be unrelated to the startup's talks with Apple. Kanoo refers to its partnership with Hyundai in recent filings with the Securities and Exchange Commission as an, quote, engineering services agreement that will see the companies co-develop a platform to power a, quote, small segment electric vehicle. But Kanoo has not disclosed whether it has been

Starting point is 00:14:22 paid for the Hyundai deal or whether any work has begun. Canoe was founded in late 2017 by a small group that split out from struggling EV startup Faraday Future, including multiple former BMW executives. As the Verge first reported, the effort was funded by a Chinese investor who is the son-in-law of a former Chinese Communist Party leader and the family in charge of Taiwanese tech company TPK, which supplies touchscreen technology to Apple. Canoe plans to make commercial electric vehicles like delivery vans or food trucks, as well as a consumer-focused van that will be sold on a subscription basis. All of Cano's vehicles are powered by that same scalable skateboard technology, end quote. And finally today, we've been tracking this all along, because even though I know that

Starting point is 00:15:13 most WhatsApp users aren't using WhatsApp primarily for the security features, I had an inkling, some not insignificant number of users were there for things like end-to-end encryption, and because it wasn't, at least until now, Facebook proper. And look, you know, Zuckerberg likes to watch those analytics on all of his platforms like a hawk. So as apps like Signal and Telegram have suddenly surged to the top of the app store, suggesting a WhatsApp diaspora was in effect, don't think Zuck didn't notice. WhatsApp has clarified its new data.

Starting point is 00:15:49 sharing policy with Facebook on its FAQ page, quoting the verge. WhatsApp published a new FAQ page to its website outlining its stances on user privacy in response to widespread backlash over an upcoming privacy policy update. The core issue relates to WhatsApp's data sharing procedures with Facebook, with many users concerned and updated privacy policy going into effect on February 8th will mandate sharing of sensitive profile information with WhatsApp's parent company. That isn't true. The update has nothing to do with consumer chats or profile data, and instead the change is designed to outline how businesses who use WhatsApp for customer service may store logs of its chats on

Starting point is 00:16:29 Facebook servers. That's something the company feels it is required to disclose in its privacy policy, which it's now doing after previewing the upcoming changes to business chats back in October. Quote, we want to address some rumors and be 100% clear. We continue to protect your private messages with end-to-end encryption. The official WhatsApp account tweeted and linked to the FAQ page. WhatsApp executives as well as Instagram Chief Adam Mosseri and Facebook AR VR head Andrew Boz Bosworth are now trying to set the record straight, perhaps to little avail at this point. Quote, there's a lot of misinformation about the WhatsApp Terms of Service right now. The policy update does not affect the privacy of your

Starting point is 00:17:10 messages with friends or family in any way. The changes are related to messaging a business on WhatsApp which is optional. Mosseri tweeted. WhatsApp chief Will Cathcart also took to Twitter a few days ago to post a thread, trying to cut through the confusion, and explain what's actually going on. With end-to-end encryption, we cannot see your private chats or calls, and neither can Facebook. We're committed to this technology and committed to defending it globally, Kathcart wrote. It's important for us to be clear. This update describes business communication and does not change WhatsApp's data sharing practices with Facebook. It does not impact how people communicate privately with friends or family wherever they are in the world.

Starting point is 00:17:48 A bit of irony in all of this is the data sharing that WhatsApp users are so keen to avoid all of the sudden has already likely been happening for the vast majority of those who use the messaging platform. The company let users opt out of data sharing with Facebook for only a brief amount of time back in 2016 two years after Facebook purchased the platform. After that, new signups and those who didn't manually opt out of data sharing have had some WhatsApp information, principally their phone number and profile name, shared with the larger social network for ad targeting and other purposes. If you did opt out, WhatsApp says it will honor that even after the February 8th update according to PCMag, end quote.

Starting point is 00:18:29 So Telegram says it has seen 25 million new signups in just the last 72 hours, but Telegram isn't fully end-to-end encrypted, right? So maybe that's not the best choice. Plus they're a Russian company, I think. Not saying anything about that, but you know. Signal is the one that's end-to-end encrypted and backed by Brian Acton's money, right? They apparently broke monthly download records in one week last week, quoting Nick Statt on Twitter. This WhatsApp privacy controversy, that is, again, based on incorrect information, is really getting away from Facebook, which at this point is more a sign of the company's reputation than anything else, end quote.

Starting point is 00:19:11 Yeah, what did I say earlier in the show? hoisted by your own petard. This has been a super busy news week. Every day there have been like five different stories that could have led the show in a normal newsday, and that's not even counting all the product announcements from CES. But never fear. I think we've actually decided to move CES coverage to its own special bonus episode. More on that soon.

Starting point is 00:19:42 Talk to you tomorrow.

Tech Brew Ride Home - Wed. 01/13 – The Visa/Plaid Merger Is Called Off

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