Tech Brew Ride Home - Wed. 02/24 - Facebook Defends Its Stance In Australia

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 right home for Wednesday, February 24th, 2021. I'm Brian McCullough today. Facebook defends its stance in Australia. MicroStrategy doubles down on its stance vis-a-vis Bitcoin. Is sign-in with Apple the new stick the antitrust folks might use to beat Apple with?

Starting point is 00:00:51 But conversely, have you noticed that the social networking space has gotten hella competitive lately? What does that mean for antitrust arguments vis-a-vis Facebook? Oh, and a skateboard for AR glasses. Here's what you miss today in the world of tech. Facebook is defending its stance in Australia, saying that it has invested $600 million just since 2018 to support the news industry globally, and it plans to spend at least a billion or more over the next three years going forward, quoting Facebook's Nick Clegg. The assertions repeated widely in recent days that Facebook steals or takes original journalism for its own benefit always were and remain false.

Starting point is 00:01:34 We neither take nor ask. for the content for which we were being asked to pay a potentially exorbitant price. In fact, news links are a small part of the experience most users have on Facebook. Fewer than one post in every 25 in your news feed will contain a link to a news story, and many users say they would like to see even less news and political content. As Tim Berners-Lee, the inventor of the World Wide Web, warned, the Australian law could make the Internet as we know it unworkable, arguing that it, quote, risks breaching a fundamental principle of the web by requiring payment for linking between certain content online, end quote. Facebook is more than willing to partner with news publishers. We absolutely

Starting point is 00:02:11 recognize quality journalism is at the heart of how open societies function, informing and empowering citizens and holding the powerful to account. There are legitimate concerns to be addressed about the size and power of tech companies, just as there are serious issues about the disruption the internet has caused to the news industry. These need to be solved in a way that holds tech companies accountable and keeps journalism sustainable. But a new settlement needs to be based on the facts of how value is derived from news online, not an upside-down portrayal of how news and information flows on the internet, end quote. Meanwhile, Joshua Benton over at Neiman Lab says that Facebook's Australia newsband shows tech giants don't mind giving up money to appease regulators and businesses,

Starting point is 00:02:54 but they draw the line at giving up functional control of their platforms, quote, the tech giants have money and they have power. They don't mind giving up money if it gives them something in return, a friendlier regulatory environment or silence from cranky publishers. What they don't want to give up is the power. The power to pick winners, whether via algorithm or cash transfer, the power to decide what it's willing to pay, and most importantly, the power to maintain their main advantage as platforms, which is to aggregate huge amounts of free information and profit from all the ways they can organize, distribute, and monetize it all. If there were suddenly a law that says Google has to pay for some kinds of information in its search index, or that

Starting point is 00:03:36 Facebook has to pay to have some kinds of information in the news feed, that core element of their model would be at risk. Suddenly, instead of being a toll road that commuters pay to use, you have to pay drivers for the privilege of using you. That's unthinkable for them. As Google's Melanie Silva told Australian officials, quote, the concept of paying a very small group of website or content creators for appearing purely in our organic search results sets a dangerous precedent for us that presents unmanageable risk from a product and business model point of view, end quote. Joshua ends his piece by saying there is probably no side to root for here, as we've said before, quote, they're both bad guys with bad intentions. So instead of some sort of moral

Starting point is 00:04:19 valence, all you're left to compare is the raw power on display by both sides. Facebook is a corporate nightmare that has done very real and meaningful damage to democracy. Australian regulators carry water for Rupert Murdoch and have been proposing a policy that would, as Tim Bernersley says, make the web unworkable. But a bad company facing bad regulations distills down to pure power, and by shooting the hostages, Facebook made it very clear where that still lies. Or to put it another way, how do you shoot the devil in the back? What if you miss, end quote?

Starting point is 00:04:51 click through to Joshua's piece for a Kaiser Sozee analogy, but also, spoiler warning, if you've never actually watched the movie Usual Suspects. I promised I wasn't going to mention the price of Bitcoin on the show again until it either surpassed $100,000 or dropped back down below $10,000. So today I'll just say that it's not been all up lately for Bitcoin. There's been a bit of a correction, although who knows by the time you hear these words, maybe Bitcoin's back to an all-time high or something. But a mere few months ago, when the news first broke that business intelligence firm Micro Strategy had bought $425 million worth of Bitcoin just to hold it in reserve,

Starting point is 00:05:37 it was big news. It seemed to be sort of a break in the dike, as it were. Maybe this news actually started the current bull run in the price of Bitcoin to the degree that you can pin any catalyst to Bitcoin's price fluctuations because then Square said it was buying Bitcoin to hold as well, and then Tesla did. And now word comes today that Microstrategy has re-upped, doubled down, quoting decrypt. Business intelligence firm Microstrategie has purchased 19,452 Bitcoin worth $1.026 billion at an average price of $52,765. The company now holds approximately 90,500 Bitcoin, and it's a lot of $1,400, and it's its overall Bitcoin investment is now worth $4.5 billion at current prices. On average, MicroSrategie has paid $23,985 per Bitcoin. The company first invested in Bitcoin last year, spending $425 million

Starting point is 00:06:35 on Bitcoin in August in September 2020. By November, this collective Bitcoin investment was worth over half a billion dollars. In December 2020, the company raised $650 million in debt securities in order to purchase an additional $29,000 Bitcoin. The company then followed this up with two more relatively smaller purchases of $10 million a pop using its own treasury funds. This brought the firm's total amount of Bitcoin to $71,79 at the time, end quote. So not to be left behind, Square reporting earnings last night, where, among other things, they announced $1.76 billion in revenue

Starting point is 00:07:13 from Bitcoin training on their platform, also announced that it had spent a further $170 million to acquire 3,000 Bitcoins itself at an average price of $51,000 following its own earlier $50 million bet on the cryptocurrency. So again, they're buying with the intention to hold. Square now holds 5% of its total cash on hand in Bitcoin. We know that gaming is huge. We've been talking about how cloud gaming is the hot coming thing. But what this next segment presupposes is, what if gaming accessories is where you want to be as well? You know, in a gold rush, sell the shovels and the pickaxes, right? Maybe that's the logic behind HP announcing that it is acquiring gaming peripheral company HyperX for $425 million, quoting the verge.

Starting point is 00:08:09 This transaction will result in HP buying the HyperX brand from Kingston, the current owner, but HP notes in the announcement that Kingston will retain the DRAM, Flash, and SSN. D products for gamers and enthusiasts. HP has been making strides to enter the gaming peripheral space for the last several years under the Omen brand, but it has not gained much traction compared to competitors such as Corsair, Logitech, and Razor. HP told the verge that the ingenuity companion app used for some HyperX accessories will continue to exist and will not be rolled into the Omen Control Center software used at this time.

Starting point is 00:08:44 HyperX is one of the most notable brands in this market with gaming accessories including its line of cloud headsets, which are among the best-selling gaming headsets right now. And gaming headsets aside, HyperX's portfolio has a variety of gaming accessories from gaming keyboards to microphones. Most recently, HyperX announced its first 60% mechanical gaming keyboard, end quote. Sources are telling the information that the Department of Justice is investigating Apple's use of its sign-in with Apple button to make it more difficult for users to switch to a rival device maker. So this would suggest a new front being opened up beyond just the, you know, Apple you're not being fair with the App Store

Starting point is 00:09:29 rules. Quote, Apple says it's sign-in with Apple button, which gives users the ability to hide their personal details from the app, is pro-privacy. But investigators are examining how Apple uses the sign-in button and other app store rules to make it more difficult for users to switch to a rival device maker, according to people who have met regularly with the Justice Department over the past 18 months. The government's interest in the Apple sign-in button, which the company introduced in 2019, hasn't been previously reported. The investigation shows how Apple's recent efforts to enhance privacy, which have won it plotits from some members of Congress,

Starting point is 00:10:03 have collided with the government's antitrust investigation into whether Apple has abused its monopoly control over software on its devices. Developers began lodging complaints to U.S. investigators about the sign-in button starting last summer, these people said. Despite the multiple threads, the government is pursuing bringing an antitrust. case against Apple won't be straightforward and may require a more aggressive interpretation of antitrust laws than some of the agency's prior cases. For one thing, while iPhones are widely used, their share of the U.S. smartphone market just barely reaches monopoly territory under antitrust law. U.S. antitrust enforcers typically consider a monopoly to be control of 60% or more of a market. But Apple's share of the U.S. mobile device software market ranges between 50 and 62%, depending on the

Starting point is 00:10:49 research firm calculating the data, while Google's Android controls most of the rest of the market. In contrast, the Justice Department's recently filed antitrust case against Google's search engine centered on its control of a whopping 90% of the search market in the U.S. And the agency's antitrust case against Microsoft in the 1990s occurred at a time when that company's Windows market share in PC software topped 90%. On Twitter, Kyle Seth Gray said, quote, It literally works like any other SSO service. If you're not on an Apple device, it takes you to Apple ID.

Starting point is 00:11:27 com to complete the authentication. What's the issue here? End quote. But your podcast, Ombudsman Chris Messina, said, quote, that Apple is neutering the IDFA only points to an increasing drive toward the importance of sign-in with Apple and owning the digital credentials of the user. If you want to target users in the future, you'll have to go through Apple. Apple. Sign in with Apple is the sign of the beast, a monopolist hiding in plain clothes, end quote.

Starting point is 00:12:00 Speaking of antitrust issues, I did want to highlight this great point that Casey Newton made recently in his platformer newsletter. What are we talking about lately? We're talking about TikTok, about Clubhouse, about Substack, right? Isn't it interesting that after a multi-year lull between, say the rise of Snapchat and the rise of TikTok, suddenly social networking has gotten red hot and crucially it's gotten competitive again. Quoting Casey, if I had to put a date on when competition ended among social networks in the United States, I'd choose August 2, 2016. That's when Instagram introduced its copy of Snapchat stories, blunting the momentum of an upstart challenger and sending a chill through the startup ecosystem. I don't think copying features is

Starting point is 00:12:48 necessarily anti-competitive. In fact, as I'll argue below, it's a sign that the ecosystem is working as intended. But the effect of Facebook's copying here was dramatic. Snap fell into a long funk, and would-be entrepreneurs and investors got the message. Facebook will seek to acquire or copy any upstart social product dramatically limiting its odds of breakout success. Investment shrunk accordingly. You can think that the FTC's case against Facebook is weak, and also believe that the period from 2016 to 2021 saw remarkably little innovation among American social networks, at least in terms of the basic user behaviors they inspire. The market for social products became incredibly concentrated. Facebook and Google built a duopoly in digital advertising, and their vast size and

Starting point is 00:13:34 unpredictable effects helped to trigger a global backlash against American tech giants. I think there's a good case to be made that antitrust pressure from the U.S. government in particular is what has allowed competition to return to social networks in the first place. Had Clubhouse or Substack emerged in 2013 or 2014, it's not hard to imagine Facebook racing to acquire them and knock them off the chessboard. But in 2021, when Facebook faces a formal antitrust review in the United Kingdom over its acquisition of a failing GIF search engine, the company can only sit back and try to copy what others are doing better.

Starting point is 00:14:08 If that's the case, it suggests that the half-assed response to Facebook's growing dominance Over the past half decade, nonetheless got us, however belatedly, to a better place. Antitrust pressure made it extremely difficult for the company to make acquisitions, opening a window just big enough for new entrance to climb through. It remains to be seen how big any new challengers to Facebook, YouTube, or Twitter can grow, but for the first time in a long time, I'm optimistic about their chances, end quote. Unlike that restaurant company that we mentioned recently, Toast, One of the very obvious COVID-Times success stories in startup land has been Hopin, that virtual events company.

Starting point is 00:14:54 Sources are now saying that Hopin is looking to raise around $400 million in a Series C at a greater than $5 billion pre-money valuation. Just last year, Hopin raised $125 million at a $2.125 billion valuation, quoting TechCrunch. The company, which was founded in mid-2019, is running around the fundraising circuit and perhaps nearing the end of a fund rise in which it is looking to acquire roughly $400 million at a pre-money valuation of $5 billion for its Series C. Two sources implied that the valuation could reach as high as $6 billion, but with greater dilution based on some offered terms, the company has received. The deal is in flux, and both the round size and the valuation are subject to change. One source told TechCrunch that the company's ARR has grown to $60 million,

Starting point is 00:15:40 implying a valuation multiple of 80 to 100x, if the valuation were here. pans out. That sort of multiple wouldn't be out of line with other major fund rises for star companies with SaaS-based business models, end quote. Finally today, something something, aren't we glad we started poking into AR and VR recently? Because here's another one. Qualcomm has unveiled its XR1 Smart Viewer reference design for AR smart glasses. Lenovo's Think Reality A3 glasses set for release sometime this spring or summer, are apparently based on this platform design. You know, the ultimate dream of AR, right, the platonic ideal that everyone was working towards, of having unobtrusive glasses instead of big honking headsets on your head. This is a move in that direction, quoting the verge.

Starting point is 00:16:36 The XR1 is designed as a consumer focus must have accessory for phones and computers rather than a self-contained product. It uses two 1920 by 10, 80 OLED displays with a 90-hertz refresh rate, plus an array of cameras to add a virtual overlay onto the real world. The camera array can also support hand tracking as a control scheme, and it can detect planes in the environment so you can do things like pin a virtual window to a wall for multiple PC displays, or place a virtual object on a table and interact with it through gesture controls. Like most AR glasses, however, they have a relatively limited field of view of 45 degrees, which is roughly similar to the Microsoft HoloLens 2.

Starting point is 00:17:16 has already announced a product based on the XR1 Smart Viewer reference design, the Think Reality A3 glasses, which it unveiled at CES earlier this year. Think Reality A3 glasses are set for release in mid-2021 at a currently unlisted price following up on Lenovo's A6 business-focused headset from 2019. The XR-1 Smart Viewer is distinct from the Snapdragon XR1 or XR2 platforms, a pair of chip sets that are optimized for virtual and augmented reality glasses, including last year's XR2-based Oculus Quest 2. It's designed to perform some tasks using built-in electronics, but it offloads other tasks to an external computing device, allowing for a more lightweight design. Qualcomm has spent the last couple of years pushing for AR Glass's adoption, which

Starting point is 00:18:01 it thinks could stimulate the nascent 5G cellular market by popularizing high bandwidth mixed reality apps. It's previously partnered with Chinese company Enreal on the Enreal Light, one of the only consumer-focused AR viewers, which plugs into a Qualcomm Snapdragon 855 or 865 powered phone. The Enreal Light launched late last year in Korea and Japan, and yesterday, Enreal announced that it will arrive in the European Union and the U.S. later this year, end quote. If you'll remember, the Enreal was the most impressive demo I saw for AR when I was at CES last year. And remember, I went to CES last year specifically to see what was the state of the

Starting point is 00:18:42 art for AR and VR. So interesting to learn why Enreal was only available to demo on Android hardware. It's because Qualcomm has a sort of skateboard for AR glasses to borrow the electric car analogy. Tonight, 10 p.m. Eastern, 7 p.m. Pacific. The TechMeme Ride Home Experience is back live on Clubhouse once again. Hopefully I remember to put a link to that in the show notes today. And Hive Mind. I've two things to see if you can help me with if anyone is able. Number one, does anyone know of a running list of all of the SPACs that have happened in the last few months or so? Maybe Dan Primack has a list or something like that. I'm curious because I want to know if there are any trends in what is being spacked at the moment. There's an angle to all of this that might evolve into

Starting point is 00:19:39 something bigger we can talk about later. Like somebody told me recently that there's pressure if you're a late stage startup at this point to do a spec because people are afraid if they don't do a spec, then that would reflect poorly on them. If no one wants to spec you, then maybe people will start assuming your business isn't good. So I'd like to see all of the spec data to see which industries have been going out and which haven't. And then second, is there any service or website or list or anything like that out there that keeps a running tally of the stocks that hit 52 week highs on the stock market every day, like the stocks of Twitter and Snap have basically been on a tear lately. And it's not that we're an investing show all of a sudden, but it's, if I had

Starting point is 00:20:25 known that, I would have known ahead of time that Snap and Twitter might have been involved in some sort of turnaround. If companies like Snap and Twitter that were once considered trouble are at the early stages of a turnaround, it often gets reflected in their stock prices, right? So what I'm looking for is some website or even just a service that, you know, is like, okay, company X has hit new all-time highs a dozen times in the last month. A list like that would be a canary in the coal mine that would clue me in to start poking around to see what's going on at given tech companies. Again, I'm thinking this could be a long-term tool for us on the show being in the know before

Starting point is 00:21:04 everyone else is, news you can use, all that sort of thing. So if someone out there knows of such a service tracking 52-week highs on the stock market or listing the recent spacks, please get in touch at Brian MCC on Twitter or podcast at techmeme.com. Talk to you tonight on Clubhouse if you're around and talk to you here tomorrow for sure. Eli was an assistant professor of English literature at Brooks College. The recent publication of his second novel had earned him a sudden unexpected literary celebrity. Well, everyone knows Custer died a little big morning. What this book presupposes is, maybe he didn't.

Starting point is 00:21:45 Thank you.

Tech Brew Ride Home - Wed. 02/24 - Facebook Defends Its Stance In Australia

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