Tech Brew Ride Home - Wed. 01/26 – Diem Dead?

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 TechMeme right home for Wednesday, January 26, 2022. I'm Brian McCullough. Today is Mark Zuckerberg abandoning his crypto dreams and looking to sell off Diem.

Starting point is 00:00:44 The IMF is subtly suggesting El Salvador abandoned Bitcoin. Microsoft is going to play nice with Activision exclusives for now. Mark your calendars for the next Samsung event and has YouTube figured out how to beat TikTok at its own game. Here's what you miss today in the world of tech. As I said on Twitter last night, I can't. remember if this is a wager that has paid off or not. I can't remember what wagers we still have running. I can't remember what we talked about day to day, even yesterday, even an hour after I published this show. But let's say I definitely at one point had in mind the idea that the

Starting point is 00:01:23 original Facebook crypto project might never see the light of day. And sources are telling Bloomberg that the meta-backed DM Association is talking to investment bankers about selling its IP to return capital to investors and give its engineers a new home. DM was once called Libra and, you know, Meta was once called Facebook. Anyway, quote, DM is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once ambitious DM coin venture,

Starting point is 00:01:58 said the people asking not to be identified because the discussions aren't public. In 2019, when Meta's Facebook first unveiled the idea, of its stable digital currencies, stable coins aimed at revolutionizing global financial services. They did so in collaboration with dozens of other companies. But the consortium wasn't enough to protect the project from worldwide regulatory scrutiny. After CEO Mark Zuckerberg was called to testify, some partners abandoned the project and it changed its name to Diem. DM's ambitions scaled back and its founder David Marcus left meta last year. The association struck an arrangement with Silvergate capital to issue Diem, but resistance.

Starting point is 00:02:35 from the U.S. Federal Reserve dealt the effort a final blow, the people said. DM said in May that an affiliate of the firm, Silvergate Bank, was to be the issuer of the DM-USD stablecoin, a type of cryptocurrency peg to the U.S. dollar that's typically used to buy and sell other crypto. After a lengthy back and forth between the DM advocates and regulators, Fed officials finally told Silvergate last summer that the agency was uneasy with the plan and couldn't assure the bank that it would allow that activity, the people said. Without a greenlight from the bank's regulator, Silvergate, was left unable to issue the new asset, with confidence the Fed wouldn't crack down, and so the DM effort had no coin. It's unclear how a

Starting point is 00:03:16 potential buyer would value DM's intellectual property or the engineers that helped develop it. Discussions are early, the people cautioned, and there's no guarantee DM will find a buyer. Meta owns about a third of the venture, and the rest of it is owned by members of the association, according to one of the people. Association members, which include venture capital firms and technology companies, agreed to invest and pay to join when the group was formed. The person added. It's unclear which firms, besides META, ended up investing in the initiative.

Starting point is 00:03:44 DM's website shows that its partners include venture capital firms such as Andresen Horowitz, Union Square Ventures, Ribbit Capital and Thrive Capital, as well as Singapore state-owned investor Temasek Holdings. Its website also lists crypto-focused companies like Coinbase Global and others, such as ride-hailing company Uber Technologies and Commerce Platform Shopify. In November, the federal watchdogs finally made it clearer what they were after. Stablecoin issuers should be regulated banks if the tokens are to be used as means of buying and selling things, the president's working group on financial markets said in a report.

Starting point is 00:04:19 The group of regulators said they feared what might happen if a vast network of tech companies users suddenly began transacting in a new currency and that combining a stablecoin issue, with a big corporation, quote, could lead to an excessive concentration of economic power, end quote. So, of course, some snark analysis you could do would be to make the point that I've made before, that in the global regulation of money, meta ran into a situation where moving fast and breaking things simply wasn't going to be allowed. Plus, governments are uniquely sensitive to threats to their sovereign power. And there is irony here, as Parker Thompson pointed out on Twitter, quote, stable coins are perhaps the crypto idea most likely to quickly and directly benefit

Starting point is 00:05:05 consumers globally, so its ironic governments have stymied big regulation-friendly companies from making them while crypto scams of all flavors run wild, end quote. But honest question here, is the fact that Mark Zuckerberg has gotten bored of crypto and seems to be moving on a bullish or a bearish sign for crypto generally? The International Monetary Fund is urging El Salvador to strip Bitcoin of its status as that country's legal currency due to its large risks and are citing the use of Bitcoin as El Salvador's sovereign currency as a major obstacle to that country's $1.3 billion IMF loan request, quoting Bloomberg. El Salvador last year sought a $1.3 billion IMF loan, but talks have been stymied by the last time. lenders Bitcoin concerns and any program would need to be approved by the board.

Starting point is 00:06:05 IMF executive directors who represent the funds 190 member nations highlighted Bitcoin's risks to, quote, financial stability, financial integrity, and consumer protection, end quote, and fiscal contingent liabilities, the fund said in a statement Tuesday. They urge the authorities to, quote, narrow the scope of the Bitcoin law by removing Bitcoin's legal tender status, end quote. Some directors also express concerns over the risks associated with issuing Bitcoin-backed bonds, the fund said. The comments came in the board's discussion of the Central American Nation's annual article for economic evaluation. The nation began buying Bitcoin last year

Starting point is 00:06:41 when it was trading at around $50,000 and has bought at least 1,801 coins. It has fallen 45% from its peak of almost 68,000 in early November, meaning that the nation has likely lost about $20 million, according to calculations by Bloomberg News, end quote. Sources are telling Bloomberg that Microsoft will keep Activision Blizzard agreements in place for three new Call of Duty games on the PlayStation platform, which are due in the next two years. But the longer term plans are hazy, which is another way of saying, for sure, Activision games will someday be Microsoft exclusives, but they're probably just going to wait a few years to drop that bomb. Quote, before the news of the $69 billion acquisition broke last week, had already committed to make the next few Call of Duty games available on Sony's console, according to four people with knowledge of the deal, speaking anonymously because they were not authorized to speak to the press. That includes this year's Call of Duty, expected to be a new entry in the popular modern warfare subseries being developed by Infinity Ward, and the following

Starting point is 00:07:53 game, which is in development at Traiark, both Activision-owned studios. The deal also includes a planned new iteration of Call of Duty Warzone, the lucrative free-to-play game that was released in 2020. For at least the next two years, Microsoft is committed to releasing Call of Duty on PlayStation, the people said. Neither Sony nor Activision responded to request for comment. Microsoft declined to comment. Plans are hazier for the Call of Duty games further out, said the people familiar with the matter. Microsoft said it expects the acquisition to close sometime in the next six to 18 months, after which it will be able to decide whether to continue releasing future Call of Duty games on PlayStation. Top employees at Activision have also discussed spacing out call

Starting point is 00:08:33 of duty releases, rather than putting them out every year, Bloomberg has reported. Eventually, Microsoft could deprive its biggest gaming rival of an integral franchise. With some previous acquisitions, Microsoft has honored existing contracts, then pivoted, end quote. By the by, Microsoft did earnings yesterday after the bell. Q2 revenue came in at $51.7 billion, which was up 20% year-over-year. net income was $18.8 billion up 21%, Windows OEM revenue up 25%, LinkedIn revenue up 37%, and surface revenue up 8%. For Microsoft, of course, one of the key metrics is this. Microsoft's cloud revenue grew 32% year over year to $22.1 billion in Q2 with intelligent cloud revenue of $18.3 billion, up 26%, and Azure and other cloud service revenue up 46% but also something something zoom and slack. On the analyst call,

Starting point is 00:09:37 Sacha Nadella revealed that Microsoft Teams topped 270 million monthly active users in the December quarter up from 250 million miles in July of 2021. Now, at the time of this writing, Microsoft's stock is up about 5% in trading, but then the broader market is bouncing back generally today. So weirdly, I think a Bellwether stock, for the entire market right now, at least the momentum side of the market, reports after the bell tonight, and that would be Tesla. If Tesla somehow disappoints, that could send reverberations around other tech stock leaders. But also, if Tesla had good earnings, but the market reacts negatively anyway, that would be very bad, too. Real quick, mark your calendar. Samsung has announced its next

Starting point is 00:10:29 Galaxy Unpacked event, which it is calling the epic standard event. That will be here. held on February 9th, virtually at 7 a.m. Pacific time, where it's expected to unveil the Galaxy S-22 lineup. Quoting a gadget, Samsung is expected to unveil the next S-series flagship then, and if it doesn't drastically change the naming standard it's been using for the last few years, we should be seeing the Galaxy S-22. Based on the rumor mill, there might not be many huge upgrades in the next-gen product. The most significant improvement could be an onboard slot for the S-pen and a blockier design, which would spell the death of the note line. Other reports suggest the new Ultra variant might start out with less RAM than last year's model,

Starting point is 00:11:15 offering 8 gigabytes at the base level compared to the S-21 Ultra's 12 gigabytes. There could also be a 50-mepixel camera on the regular S-22s up from the S-21s, 12-mepixel sensors, end quote. And a quick follow-up on a previously big story. Remember that whole log-for shell flaw that people were saying was one of the biggest security holes found in recent memory? We had days and days of scary headlines, and then not much. So what happened? Well, Safos News has the follow-up that I've been looking for, and their analysis is this. The immediate threat of attackers' mass-exploiting log-for-shell was averted because the severity of the bug actually galvanized digital and security communities into action.

Starting point is 00:12:03 The good guys put out the fire, sort of. This is going to be a long-term problem, but the immediate issue of the house burning down seems to have been averted. Quote, Sometimes when a software crisis doesn't cause the kind of devastation everyone expects, it is because there may not have been a crisis in the first place. That is not the case with the Log 4 shell vulnerability found in the widely used Apache Log 4J software in early December 2021, even though the world hasn't seen the feared mass exploitation of the vulnerable,

Starting point is 00:12:33 the log-for-shell bug buried deep in many digital applications and products will likely be a target for exploitation for years to come. Sophos believes that the immediate threat of attackers' mass-exploiting log-for-shell was averted because of the severity of the bug united the digital and security communities and galvanized people into action. This was seen back in 2000 with the Y2K bug, and it seems to have made a significant difference here. Just because we've steered around the immediate iceberg, that doesn't mean we're clear of the risk, however. As others have pointed out, some of the initial attack scans may have resulted in attackers securing access to a vulnerable target, but not actually abusing that access to deliver malware, for instance. So the successful breach

Starting point is 00:13:14 remains undetected. In the past, Saffos has observed countries such as Iran and North Korea pounce on VPN vulnerabilities to gain access to targets networks and install backdoors before the targets have had a chance to deploy the patches and then waiting months before using that access in an attack. In another example, attackers targeted vulnerable exchange servers in the immediate aftermath of the first proxy login patches, leaving behind web shells as backdoors for later attacks. Patching your exchange server wasn't enough. You also had to remove any backdoors that were dropped. There's more.

Starting point is 00:13:48 Over time, internet-facing applications vulnerable to a log-for shell exploit are likely to be identified, patched, or removed. However, unknown internally vulnerable systems may never be known or discovered, and these will remain a security risk. Sophos telemetry shows that the number of vulnerable Java archive files on Sophos protected endpoints hasn't changed. Those could become a favorite tool for malicious lateral movement down the road. Sophos believes that attempted exploitation of the Log 4-shell vulnerability will likely continue for years and will become a favorite target for penetration testers and nation-state-supported threat actors, like. The urgency of identifying where it is used in applications and updating the software with the patch remains as critical as ever, end quote. Finally today, just something to put on your radar.

Starting point is 00:14:41 Has someone finally figured out a way to beat TikTok at its own game? In her semi-annual PR tour to discuss the state of YouTube, YouTube CEO Susan Wajicki, let drop the eye-popping stat that YouTube shorts has had more than five trillion. views to date. And so YouTube is going to double down on this. Quoting variety. Since first launching YouTube shorts in September 2020, the Google-owned video giant has served more than five trillion short-form videos. YouTube CEO Susan Wajicki wrote in an update to creators on Tuesday. We're working every day to improve how we help creators get started and reach an audience faster on shorts, Wajiki wrote. Last year, YouTube established a $100 million fund for shorts

Starting point is 00:15:25 to encourage people to create videos of up to 60 seconds in length. In August 2021, it began paying creators with the highest performing YouTube shorts up to $10,000 per month, and that program is now available in more than 100 countries. According to Bojiki, more than 40% of creators who received payment from the YouTube Shorts Fund last year were not in the YouTube Partner program, its longstanding ad revenue sharing program for qualifying creators. In other words, it's evidence that Shorts is pulling in a different class of creator. In 2022, YouTube will test new ways for shorts creators to make money through branded content deals

Starting point is 00:16:00 via Brand Connect, YouTube's program that matches creators with brands. In addition, the video platform is, quote, in the early phases of testing how shopping can be integrated with shorts, Wajicki wrote. On the product front, YouTube introduced a new remix feature that lets users create shorts using audio from videos on core YouTube if the original creator allows it. In the next few months, quote, will expand this capability with even more exciting ways to remix YouTube's content, according to Wajicki, end quote. That's all for today, but instead of hunting around for an appropriate song lyric, I'll share with you the most poetic graffiti I ever saw in my entire life when I lived in Ann Arbor, Michigan, on a railroad bridge down the hill from campus, was spray-painted

Starting point is 00:16:58 the following sentence. What you don't know about cowgirls could kill you, which if you think about it is profoundly true. Talk to you tomorrow.

Tech Brew Ride Home - Wed. 01/26 – Diem Dead?

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