Tech Brew Ride Home - Wed. 04/26 - The UK Is Blocking Microsoft’s Activision Acquisition

Episode Date: April 26, 2023

The UK is blocking Microsoft’s Activision Acquisition. A quick rundown of Microsoft and Alphabet earnings. The new Mavic drone is a beast. Cruise has actually expanded its self-driving taxi service. And a look at the mounting pressure on Binance and CZ. Sponsors: Mindbloom.com/techmeme and promocode: techmeme Miro.com/podcast Links: UK Blocks Microsoft’s $69 Billion Activision Deal (Bloomberg) Microsoft Q3 2023: Windows, devices, and Xbox down again (The Verge) Google’s cloud business turns profitable for the first time on record (CNBC) Apple Plans AI-Powered Health Coaching Service, Mood Tracker and iPad Health App (Bloomberg) DJI’s latest Mavic drone is a beast (TechCrunch) Cruise continues to burn GM’s cash as robotaxis expand to daylight hours (The Verge) OpenAI Offers New Privacy Options for ChatGPT (Bloomberg) Binance Faces Mounting Pressure as U.S. Crypto Crackdown Intensifies (NYTimes) 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 TechMeme right home for Wednesday, April 26, 2023. I'm Brian McCullough today. The UK is blocking Microsoft's Activision Acquisition, a quick rundown of Microsoft and Alphabet earnings. The new Mavik drone is a beast, apparently. Cruise has actually expanded its

self-driving taxi service and a look at the mounting pressure on Binance and CZ. Here's what you miss today in the world of tech. The United Kingdom's Competition and Markets Authority made a surprise announcement this morning blocking Microsoft's $68.7 billion acquisition, citing concerns about competition and innovation in the UK gaming market. Microsoft does plan to appeal, of course, but as I say, this was surprising. I think the conventional wisdom had been that Microsoft had probably won over the UK, though maybe would have more trouble with the EU. So this seriously calls into question whether or not this whole thing goes forward or not.

Quoting Bloomberg, the competition and markets authority said its concerns couldn't be solved by remedies such as the sale of Blockbuster Title Call of Duty or other solutions involving promises to permit rivals to offer the game on their platforms, according to a statement Wednesday. Microsoft said it will appeal the decision. Pressure had been mounting on Microsoft as it lobbies at home and in Europe to convince watchdogs to clear the deal, one of the 30 biggest acquisitions of all time. Crucially, the CMA's conclusions come before decisions from the European Union and the U.S. Federal Trade Commission, which is waiting on a hearing in the summer after formerly suing to veto the transaction.

Activision shares tumbled more than 10% in pre-market trading at 7.20 a.m. in New York, Microsoft, which separately reported better than expected financial results on Tuesday, rose 7.4%. If the deal is eventually blocked, Microsoft could be on the hook for a breakup fee of as much as $3 billion. The CMA took a view that the merger could result in higher prices, fewer choices, and less innovation for UK gamers. However, earlier this month, it narrowed its original scope to focus on cloud gaming rather than consoles after weighing new evidence. The CMA said the deal would solidify Microsoft's advantage in the market by giving it control over Call of Duty,

Overwatch, and World of Warcraft titles. The watchdog found that without the merger, Activision would be able to start providing games on cloud platforms in the future, end quote. As just mentioned there, Microsoft did report earnings yesterday with, revenue up 7% year over year, net income up 9% year over year, all things generally in line and firing. The all-important cloud stuff is still firing intelligent cloud revenue was up 16% year over year to $22.08 billion with Azure and other cloud services, revenue up 27% year over year, which is a good thing. Because the core business, the old meat and potatoes business, well, Windows OEM revenue was down 28% year-over-year.

Devices revenue was down 30% year-over-year, overall gaming revenue was down 4% year-over-year, and Xbox hardware revenue down 30%, quoting the verge. The PC market had a particularly bad quarter, with both IDC and Canales, reporting that shipments of PCs and laptops were down around 30% year-over-year. The PC market woes have also hit Microsoft's Devices revenue, which includes HoloLens and PC accessories instead of just Surface revenue. Devices revenue has dropped by 30% in Q3. Despite the revenue dips, quote, PC demand was a bit better than we expected, says Microsoft's CFO, Amy Hood in an earnings call today.

Demand was higher than expected in commercial, added Hood. Microsoft is now expecting a similar quarter in Q4 fiscal 2023, where Windows OEM and devices should both decline in the low to mid-20s, says Hood. This also works out to be the lowest quarter of Xbox hardware revenue since Microsoft launched the Xbox Series X-S consoles in 2020. The drop-in Xbox hardware revenue isn't particularly surprising given the lack of first-party games throughout 2022 to drive sales, end quote. Alphabet also reported earnings yesterday. Revenue was up 3%, but net income was down 8%. And the revenue from other bets was down 35% year-over-year with the overall losses from the

other bets category coming in up 47%. But here's the headline. All-important ad revenue was down again, marking the second straight decline in a row, and only the third time ad revenue has shrunk at Google in a quarter since it went public. This all marked the third consecutive quarterly decline in YouTube ad revenue as well, but there was a bright spot. Google Cloud turned profitable for the first time on record with $191 million in operating income on $7.45 billion in revenue in Q1 versus a $706 million loss on $5.82 billion in Q1 of 2022 revenue.

Mark German says Apple is working on emotion tracking tools coming to its health apps sometime later this year, as well as an AI-powered health coaching subscription service. Quote, the new coaching service codename Quartz, is designed to keep users motivated to exercise, improve eating habits, and help them sleep better, according to people with knowledge of the project. The idea is to use AI and data from an Apple Watch to make suggestions and create coaching programs tailored to specific users, said the people who ask not to be identified because the initiatives haven't been to. announced yet. The move is part of a broader health push at the company, which has made such features central to its devices, especially the Apple Watch. Its latest efforts also include an expansion of the health app to the iPad and features that could help users with poor vision. The tools for tracking emotion and managing vision conditions such as near-sightedness will be added to the health app this year. The initial version of the emotion tracker will let users

log their mood, answer questions about their day, and compare the results over time. But in the future, is hoping the iPhone could use algorithms to determine a user's mood via their speech, what words they've typed and other data on their devices. The company's upcoming mixed reality headset, also set to debut in June, will play into the health and wellness strategy as well. A feature will let users meditate while wearing the device, and an optimized version of Apple's Fitness Plus workout service is in the works. The mood and emotion tracking features are separate from a new journaling app that Apple is planning for this year. That app isn't meant to be a health feature, the people said, and Apple is unlikely to position it as such, end quote.

TechCrunch says DJI's latest Mavic drone is a beast. It's the Mavik 3 Pro, and TechCrunch says, quote, at its heart is a Hasselblad camera, naturally, given that the drone giant purchased a majority stake of the much-loved Swedish camera maker back in 2017. It's the same 4x3 CMOS model found on the standard Mavic 3 series, which is capable of shooting 12-bit raw images. The three-camera system appears to offer a lot more optical flexibility than you'll find on other off-the-shelf consumer-focused drones, with a trio of focal lengths at 24 millimeters, 70 millimeters, and 166 millimeters. The system can shoot up to 5.1K at 50 frames per second, and 4K at 120 frames per second. All of that is enhanced by the video software DJI has been building over several generations,

allowing for pre-programmed cinematic shots. Effectively, you can get something that looks professional with just a couple of clicks, or you can take manual control yourself. It can also fly based on waypoints or fly through a pre-configured route, while using built-in obstacle avoidance to stop from falling out of the sky. The beefy 43-minute batteries should help with that, too. Flight time has traditionally been a major sticking point on these systems, but 43 minutes is generous.

You can also swap batteries to keep going. you'll get to additional if you go in for the Fly More package. Predictably, this thing isn't cheap. The Mavik 3 Pro starts at $2,200. The Fly More combo, which also includes a battery charging hub, is an additional $800. Another $889 will get you the DJIRC Pro controller with a built-in 1080p screen. The drone is up for pre-order today and is expected to start arriving May 9th, end quote. Quick check in on the self-driving situation.

GM's cruise has expanded its small fleet of driverless robotaxies in San Francisco to daylight hours, now operating 24-7. The cruise unit lost $561 million in Q1, which represents a 73% growth in losses year over year, quoting the verge. The company earned just $30 million in revenue for GM, though most of that money comes from interest and other non-operating sources. Cruise, which operates robotaxies in San Francisco, Phoenix, and Austin says it remains on track to hit $1 billion in revenue by 2025 and $50 billion by 2030. Cruise CEO Kyle Vogt said the company expanded its driverless fleet size by 86 percent, from 130 to 242 concurrently operating AVs. The vehicles have since passed the one and a half million miles mark and regularly conduct a thousand driverless trips

with passengers each day, Vogue added. The company was previously only operating its fully driverless vehicles in San Francisco at night, but has since obtained permission for daylight operations. A small portion of our fleet is now serving driverless rides 24 hours a day across all of San Francisco, Cruz CEO Kyle Votes said during a GM earnings call Tuesday, for us, this is a milestone years in the making and represents that our driverless fleet has real commercial value. Cruise declined to share the number of vehicles that would be accepting passengers during the day. The full driverless cars will only be available to cruise's power users who are members of the public who get free rides in exchange for testing out beta features and sharing feedback with the company. Customers who ride in cruises vehicles between 10 p.m. and 5.30 a.m. do pay for their trips. Those vehicles are only available in the northwest section of San Francisco.

Meanwhile, cruise employees known as cruisers, can ride in the company's driverless vehicles in a much larger portion of the city, 24 hours a day, seven days a week. The news comes as the outlook for a future dominated by driverless cars remains dower. Investment in robotaxie and delivery operations has fizzled dropping 60% in 2022 compared to the previous year. Major AV operators are slashing costs, laying off staff, and some have even closed altogether. But despite the setbacks in the industry, GM remains confident in Cruise's future. The company's next generation vehicle, the cruise origin, is currently in production at the GM Detroit Hamtramic plant, rebranded as Factory Zero. The steering wheel and pedalless shuttle will replace cruises fleet of Chevy bolts, which will end production later this year. Also later this year, the cruise origin is expected to start testing

on public roads in Austin. This vehicle has been validated almost entirely in simulation, reducing our historical reliance on expensive and time-consuming supervised technology at the collection, Vogue said. The launch of the origin is a critical step on our path to profitability, as well as towards hitting a billion dollars in revenue in 2025. We remain on track and slightly ahead as it is today, end quote. This is the day's AI news. OpenAI now lets chat GPT users turn off their chat histories, excluding them from the company's models. And Open AI also plans to launch chat GPT business in the coming months, though details on that

are scarce, quoting Bloomberg. The move could be a privacy safeguard for people who sometimes share sensitive information with the popular AI chatbot. The startup said Tuesday that chatchipt users can now turn off their. their chat histories by clicking a toggle switch in their account settings. When people do this, their conversations will no longer be saved in ChatGPT's history sidebar, located on the left side of the webpage, and OpenAI's models won't use that data to improve over time. OpenAI is aiming to make people feel more comfortable using the chatbot for all kinds of applications.

For example, during a demo of the feature on Monday, the company used the example of planning a surprise birthday party. We want to move more in this direction where people who are using our products can decide how their data is being used, if it's being used for training or not. not. OpenAI chief technology officer Mira Murati said. The San Francisco-based startup, which announced the changes in a blog post Tuesday, will continue to train its models on user data by default. It will store data, including that from conversations where users have turned off the chat history for 30 days before deleting it, which it does to spot abusive behavior, the company said. This month, OpenAI also said it's allowing users to email themselves a downloadable copy of the

data they've produced while using chat GPT, which includes conversations with the chatbot. The company is planning to roll out a business subscription plan in the coming months that it said will not train on those users' data by default, end quote. And finally today, a check-in on crypto, specifically a look at the mounting U.S. pressure on Binance and its founder, CZ, quoting the New York Times. Changpeng Xiao, Binance's founder and chief executive, has hired white-collar defense lawyers at the firm Leitham and Watkins to represent him personally as he and his company face a tightening legal net. Justice Department prosecutors are investigating the exchange for money laundering violations as the Securities and Exchange Commission is looking into the company's business practices.

Last month, another agency, the Commodity Futures Trading Commission, sued Mr. Zhao, also known as CZ, accusing him of compliance failures that allowed criminals to launder money on Binance. The legal threats have converged to create the most precarious moment in Binance's history. Criminal charges against CZ or his company could set off mass panic. in the crypto markets, which are reeling from the FTCS exchanges collapsed last year and the rest of the firm's founder Sam Bankman-Fried. Binance is several times larger than FTCS was, processing tens of billions of dollars in trades every day. It's the biggest exchange for crypto, and if it gets clamped down on, that's going to be a big deal, said Hillary Allen, a crypto expert at

American University. It's hard to see the rest of the crypto industry remaining unscathed, end quote. CZ46 has responded by hiring compliance officials with government credentials and pledging to help law enforcement agencies stop crypto crimes. Binance executives are meeting with reporters to trumpet the company's compliance efforts, and the exchanges U.S. Arm has formed a political action committee to push its agenda in Washington. CZ called the CFTC lawsuit unexpected and disappointing, describing it as an incomplete recitation of facts. A company spokesman declined to comment on the other investigations. Representatives for the Justice Department, the CFTC, and the SEC also declined to comment. The increasing pressure on Binance has already sent tremors through the crypto market.

The exchanges U.S. operation recently lost a major banking partner, Signature Bank, when the embattled lender went out of business last month. Binance also lost its outside auditing firm Mazars last year after the company said it was pausing work for crypto clients. Some of Binance's customers appear spooked. Over seven days in late March, more than $2 billion in cryptocurrencies built on the popular Ethereum network was withdrawn from the exchange, according to the crypto data trackard, Nansen. So far this month, nearly $1 billion has left the platform. Binance still sits on an estimated $66.5 billion in customer holdings, Nansen says, end quote. This is another one of those days where this podcast is a time machine for me. By the time you hear this, the Arsenal versus

Manchester City game is either over or is currently playing. So you know, before I do, if Arsenal's season is over by now, or if we have pulled out. some sort of miracle. Right now, as I type these words, all I'm doing is living in hope, and even then, I only give us a 5% chance today. Our defense has been decimated by injury. We're playing at their ground. I think our confidence has been shaken by the last three draws we've had. And look, if we don't beat them, basically, yeah, the season is over. They have the title. We'll come in second, because I don't see anyone else beating Man City this year. So again, the way I see it, 95% chance the expected result will happen.

5% chance of just absolute unmitigated glory. Hate it when sports grabs me like this. It only happens to me every few years, but this year it's got me bad. Come on, you, Gunners. Talk to you tomorrow.