Tech Brew Ride Home - Wed. 06/12 - The DOJ is Telegraphing its Possible Punches to Silicon Valley

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, June 12th, 2019. I'm Brian McCullough. Today, the state of the internet, according to Mary Meeker. House party joins the Fortnite party. Uber Elevate is planning some important firsts. The DOJ is teleghing its possible punches to Silicon Valley. And someone find, have I been pawned a good home, please? Here's what you miss today in the world of tech.

Starting point is 00:00:57 It's a highlight of the tech calendar every year. Mary Meeker delivered her annual internet trend report. at the Code Conference yesterday. It's a 333-page slideshow that you can click through in the show notes to flip through it yourself. But some of the headline data points that stuck out to me and that other people have noted, helpfully collected by Recodes Rani Mola. Summary bullet points like some 51% of the world, 3.8 billion people were internet users last year up from 49% or 3.6 billion in 2017. e-commerce is now 15% of all retail sales. Americans are spending more time with digital media than ever, 6.3 hours a day in 2018, up 7% from the year before.

Starting point is 00:01:47 The number of interactive gamers worldwide grew 6% to 2.4 billion people last year, as interactive games like Fortnite became the new social media for certain people. 87% of global web traffic was encrypted in Q1 of this year up from 53% three years ago. And I found this super interesting. Images are increasingly the means by which people communicate, as technology developments like faster Wi-Fi and better phone cameras have encouraged a surge in image-taking. More than 50% of Twitter impressions now involve posts with images, video, or other media, end quote. Epic Games. The maker of Fortnite and the Unreal Engine says it has acquired video chat social network house party for an undisclosed sum. You might remember that Epic recently raised $1.25 billion, so I guess that money was burning a hole in their wallet.

Starting point is 00:02:45 Quoting Brian Heater at TechCrunch, the deal seems like a natural fit for Epic. Social has been an integral piece of Fortnite's success as a multiplayer battle royale title. Founded in 2015, House Party is a social network that delivers video chat across a number of different platforms, including iOS, Android, and MacOS. Like Fortnite, the offering tends to skew younger. specifically the app caters towards teen users providing a more private and safer space than other broader platforms. House party brings people together, creating positive social interactions in real time. Epic CEO Tim Sweeney said in a media post announcing the news, by teaming up, we can build even more fun, shared experiences than what could be achieved alone, end quote.

Starting point is 00:03:31 In the wake of its recently blown up partnership, sources are telling the information that Apple is in talks to buy a key part of Intel's smartphone modem business, i.e. its German operations, quote, the talks come as Intel considers selling its struggling modem business in pieces. Apple is focusing on one of the strongest pieces in the modem business. While Intel's modem group is spread across the world, its foundation is in Germany, where the chipmaker, Infinion, whose modem operations Intel bought in 2011 for $1.4 billion is based. Any deal with Intel for the business would likely send hundreds of modem engineers to Apple. Many former senior executives at Intel who came to the company through the Infinian deal now work at Apple, including Burned Adler, who joined Apple in 2015, and Stefan Wolf, who joined the iPhone maker a few months ago. Mr. Wolf previously managed the Germany-based modem operations for Intel. Intel in April publicly announced its plans to exit the 5G modem business, saying it saw little opportunity to turn a profit in the business.

Starting point is 00:04:33 The announcement came hours after Apple, the biggest customer for Intel's modem chips, said it had settled a legal dispute with Intel's biggest competitor in the cellular modem business, Qualcomm. As part of that settlement, Apple said, it struck a multi-year agreement to buy modem chips from Qualcomm, end quote. This deal might never go through, of course, but if these talks are indeed happening, they're happening for only one reason. Apple knows it needs to control its own destiny for perhaps the key component going to. forward for iPhones. Building off of yesterday's news about Foxcon saying it can handle iPhone production, even if it can't produce anything in China, sources are telling Bloomberg that Google is moving

Starting point is 00:05:20 some production of U.S.-bound Nest thermostats and server hardware out of China to Taiwan and Malaysia to avoid punitive U.S. tariffs. And that might just be the beginning of a shift, to say the least. quote, among the Google hardware saddled with higher tariffs, server motherboards are among the most critical to the tech giants operations. The company builds its own data centers in the U.S. and elsewhere. Those computing hubs help it offer search and productivity tools on a cloud services platform and power the world's largest mobile platform as well as services from mapping to search. Motherboards are categorized as printed circuit board assembly, which face

Starting point is 00:05:59 25% tariffs if they are imported directly into the U.S., while server racks as a whole have not yet been affected. Many U.S.-bound servers are assembled in Mexico, while there are also companies that assemble those locally in America, end quote. Uber says it plans to start testing fast food deliveries by drone to designated safe landing zones in a trial in San Diego later this summer. Uber elevate the arm of Uber doing these sorts of things is still waiting for the FAA approval that Alphabet's Wing recently got to do these sorts of drone activities. But when it does get the go-ahead, it expects to begin testing Uber Eats delivery in the same price range that it already charges for such a service. Quoting Bloomberg, San Diego has been a hotbed of drone research, in part because of the military presence there,

Starting point is 00:06:53 and because the weather is reliably sunny and calm. In 2018, the FAA selected San Diego as one of 10 locations to test commercial drones. and the city partnered with Uber. The city is already testing drones for blood delivery and emergency response situations as well as laser-equipped drones that can monitor soil composition for major California industries such as wine cultivation and almond growing, end quote. And in related news, Uber has chosen Melbourne in Australia for its first international site for its autonomous flying taxi service launching in 2023 alongside Dallas and L.A., quoting Reuters, The test flights will transport passengers from one of seven Westfield shopping centers in Melbourne to the city's main international airport.

Starting point is 00:07:37 The 19 kilometer journey from the central business district to the airport is expected to take 10 minutes by air compared to the 25 minutes it usually takes by car. The electric on-demand air taxis can be ordered by customers through smartphone apps in the same way Uber's road-based taxi alternatives are hailed. Uber's planned air fleet includes electric jet-powered vehicles, part helicopter, part drone, and part-fixed-wing air. aircraft running multiple small rotors capable of both vertical takeoff and landing and rapid horizontal flight, end quote. And note, also autonomous flight, because as we've noted before, autonomy is much easier to achieve in the air. But back to the drone delivery of Big Macs, so I can squeeze in this little joke real quick. Quips Justin Paterno on Twitter, we were promised flying cars. Instead, we got flying carbs.

Starting point is 00:08:29 A month or two ago, we talked about Snapchat seeming to change its strategy. And when we did, I made the point that if there's one thing Snap as a company is super good at, it's straight up product innovation. In short, I think I said words to the effect of, Don't bet against Snap's ability to innovate its fat out of the fire. Well, you might have seen the buzz these last few weeks around Snapchat's gender swapping and baby filters. Quoting 1.0 on May 8th, Snapchat released a photo filter. a lens in Snapchat parlance that by rounding a user's face and smoothing away their wrinkles

Starting point is 00:09:09 transforms them into a toddler. Over the next two days, Snapchat also debuted a pair of gender swap lenses, which either gave users a square jaw and stubble to look more stereotypically masculine or a dolled-up soft glow to look more feminine, end quote. Well, and let me stress, I'm not saying this is for sure a win or anything, but the new lenses seem to have had an effect. quoting again. The filters seem to drive a sharp increase in the daily downloads of the Snapchat app across iOS and Android. Snapchat was downloaded across the platforms an estimated 41 and a half

Starting point is 00:09:44 million times worldwide in May, more than twice the number of downloads from the previous month, 16.8 million. And in May of last year, 17.6 million, according to third-party data. Prior to the baby and gender swap filters, Snapchat was being downloaded approximately 600,000 times per day worldwide, according to estimated data provided by Censor Tower, a mobile app market research firm. Daily downloads doubled after the introduction of the new filters to more than one million per day. On three different days in May, the app was downloaded around two million times. It is unclear how many of those downloads are new users versus people coming back to the platform after abandoning and deleting the app, end quote.

Starting point is 00:10:22 Again, early days, but worth reminding you that Snap did beat its projected revenue estimates in the first quarter recently and actually increased its daily active user number by four million users after several quarters of plateaus and even declines. Meccan del Rahim, the Department of Justice's antitrust chief, gave a speech in Tel Aviv on Tuesday that is raising eyebrows because it might signal some of the possible antitrust arguments that the government could be preparing to make against big tech. If you'll recall, with all of that divvying up news from last week, the DOJ is reportedly taking the lead in investigations of Alphabet and Apple. There's a transcription of the whole speech in the show notes.

Starting point is 00:11:12 And if you'll further recall, we've discussed how traditional antitrust has been about pricing power that adversely affects consumers and how that doesn't exactly apply in the case of tech giants. Well, quoting Del Rahim, the antitrust division does not take a myopic view of, of competition, he said. Many recent calls for antitrust reform or more radical change are premised on the incorrect notion that antitrust policy is only concerned with keeping prices low. It is well settled, however, that competition has price and non-price dimensions, end quote. In addition to price inflation, diminish quality is also a type of harm to competition, Delrahim said. As an example, privacy can be an important dimension of quality. By protecting competition, we can have an impact on privacy and data protection.

Starting point is 00:11:59 protection. Quoting CNBC, this concept could become particularly important for companies like Facebook and Google, which don't charge customers for their services but collect vast amounts of data about them. Apple, on the other hand, has tried to preempt this approach by emphasizing consumer privacy in its products, end quote. But perhaps more directly applicable to questions around Apple, quote, generally speaking, an exclusivity agreement is an agreement in which a firm requires its customers to buy exclusively from it or its suppliers to sell exclusively to it. There are variations of this restraint, such as requirements, contracts, or volume discounts, Del Rahim said. So that sounds sort of parallel to the antitrust complaints about the rules

Starting point is 00:12:45 Apple imposes on its app store. And this is probably most applicable to Facebook, but frankly signals that any sort of big tech platform acquisitions could come in for scrutiny. Let me just quote directly from CNBC again here. One way of evaluating whether a company has violated antitrust law is through what Delrahim called the no economic sense test. A monopoly that makes a decision that makes no economic sense except for its tendency to eliminate or lessen competition would fail the test, according to Delraheem's definition. But even if a company achieves monopoly position through legitimate means, it cannot take actions that do not advance plausible business goals but rather are designed to make it harder for competitors to catch up. he said, end quote. And we'll end with one more, quote. We already have in our possession the tools we need to enforce the antitrust laws in cases involving digital technologies,

Starting point is 00:13:37 Delraheim said. U.S. antitrust law is flexible enough to be applied to markets old and new, end quote. Finally today, Troy Hunt is looking for a buyer for the invaluable have I been poned project to help with the exploding growth of that website that archives data breaches, So the project can go to the next level. It's actually amazing. But to this point, Troy has been running, have I been poned, all by himself? It's amazing that he's taken it this far as a one-man band. Have I been poned currently has almost 8 billion data breach records.

Starting point is 00:14:18 Nearly 3 million people have subscribed for notifications. 7 million notifications of credentials being poned has been sent out. and the site gets 150,000 visitors on a normal day, but 10 million visitors on an abnormal day when there is, shall we say, news. And actually, traffic has been exploding since the new year. Quote, it's time for HIBP to grow up. It's time to go from that one guy doing what he can in his available time to a better resourced and better funded structure that's able to do way more than what I ever could do on my own, end quote. Troy says he's not quite burned out on the project. yet, but he can see burnout coming down the horizon. So he's putting out feelers to see if some company or organization can help him take over the burden, quote, imagine a future where I'm able to source and process much more data, proactively reach out to impacted organizations, guide them through the process of handling the incident, ensure impacted individuals like you and me, better understand our exposure and what to do about it, and ultimately reduce the impact of data breaches on organizations

Starting point is 00:15:24 and consumers alike. And it goes much further than that, too, because there's a lot more that can be done post-breach, especially to tackle attacks such as the huge rate of credential stuffing we're seeing these days. I'm really happy with what HIBP has been able to do to date, but I've only scratched the surface of potential with it so far, end quote. So, someone listening with deep enough pockets, please help Troy and have I been poned find a good home. Thank you. That's all for today. I've been your host as always, Brian McCullough. Follow me on

Starting point is 00:16:03 Twitter at Brian MCC. The show subreddit is our slash right home and the link to sign up for the ad-free feed so you can support the show directly is the very bottom link in the show notes. Talk to you tomorrow.

Tech Brew Ride Home - Wed. 06/12 - The DOJ is Telegraphing its Possible Punches to Silicon Valley

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