Tech Brew Ride Home - Wed. 07/21 – Is The Narrative Turning On Netflix?

Episode Date: July 21, 2021

Netflix’s growth has hit a wall, and so here come the games. What to do about a problem like those NSO hacks? Samsung’s next Unpacked event is announced. One of the biggest crypto raises of all time. And will Apple ever join the Android ecosystem and kill off SMS once and for all? Sponsors: Calm.com/techmeme TinyCapital.com Links: Netflix’s gaming expansion starts with mobile (The Verge) On the list: Ten prime ministers, three presidents and a king (Washington Post) A case against security nihilism (Matthew Green) Samsung will announce new foldables on August 11 (TechCrunch) Biden Names Tech Foe Jonathan Kanter as DOJ Antitrust Chief (Bloomberg) Zoom announces general availability of Zoom Apps and its new virtual events platform (ZDNet) Crypto Exchange FTX Valued at $18 Billion in Funding Round (WSJ) YouTube’s newest monetization tool lets viewers tip creators for their uploads (TechCrunch) Verizon is also switching to Android Messages as default for RCS (The Verge) Set a reminder for tonight's twitter space by clicking here. 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 Tech meme right home for Wednesday, July 21st, 2021. I'm Brian McCullough today. Netflix's growth has hit a wall, so here come the games. What to do about a problem like those NSO hacks. Samsung's next unpacked event is announced, one of the biggest crypto raises of all time,

and will Apple ever join the Android ecosystem and kill off SMS once and for all? Here's what you miss today in the world of tech. Earning season is back for tech companies, and for the first time in a while, we have a new narrative. Netflix reported revenue that beat expectations slightly. They also reported global net additions of paid subscribers, which beat slightly with 1.54 million new subscribers, but the U.S. and Canada region actually lost 433,000 subscribers, and that was on a quarter-over-quarter basis, first time that Netflix has lost customers in those regions since 2019. Now, engagement, which is the time spent per member household per day was actually up 17% versus pre-pandemic levels from Q2 of 2019. And it's worth noting that's with 57.5 million more global subscribers over that time

period. And Netflix made slightly more per user on a per user basis. But as our friend Lucas Shaw tweeted, quote, Netflix just recorded its worst first half of the year since 2013. The same year it released House of Cards. And back then, it was available in less than 50 countries. It's now in more than 190, end quote. So the new narrative around Netflix is, growth is screeching to a halt. What to do about that? Well, remember, there were rumors that Netflix had ambitions to get into gaming. We actually learned a bit more about that yesterday. Netflix said its expansion into gaming will start with mobile games, which will be included with a subscription at no additional cost. Quoting The Verge.

Here is exactly what Netflix said about gaming from its letter to investors, quote. We're also in the early stages of further expanding into games, building on our earlier efforts around interactivity, e.g. Black Mirror Bandersnatch, and our Stranger Things games. We view gaming as another new content category for us, similar to our expansion into original films, animation, and unscripted TV. Games will be included in members' Netflix subscription at no additional cost similar to films and series. Initially, we will be primarily focused on games for mobile devices. We're, We're excited as ever about our movies and TV series offerings, and we expect a long runway of increased investment and growth across all of our existing content categories. But since we are

nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games, end quote. There are still no details on what types of games will actually be available, though Netflix recently extended its TV deal with Shonda Rhymes to include feature films and gaming content. There's also no word on how games will be delivered to Netflix subscribers, end quote. Quoting our friend Peter Kafka on Twitter, TLDR, Netflix doesn't know anything about games, but it wants to do an Apple arcade,

casual games with no ads, no in-game purchases, and add it into your app for free. It's experimenting, but says games will be, quote, a core part of our subscription offering, end quote. To which, I would point out, it's gaming that has been the sticking point in terms of Apple kicking things out of the App Store, right? Apple says it doesn't want any duplicate gaming stores. So eyes emoji. It's not like

Apple Arcade is blowing the doors off the place or anything, but might this mean an inevitable clash between Netflix and Apple in the very near future? Fallout from that whole NSO hacking thing continues. Phone numbers belonging to 10 prime ministers, three presidents and a king, were among the list of 50,000 potential NSAO targets leaked to Amnesty International, quoting the Washington Post. Here's who's on the list. Three sitting presidents, France's Emmanuel Macron, Iraq's Barham Sali, and South Africa's Cyril Rabaposa. Three current prime ministers, Pakistan's Imran Khan, Egypt's Mustafa Madhuli, and Morocco's Sadd-Din al-Athami.

Seven former prime ministers, who, according to timestamps on the list, were placed there, while they were still in office, and one king, Morocco's Muhammad the 6th, end quote. And Matthew Green has a long blog post up that's been getting a lot of chatter, because it makes the argument that Apple and Google can do more to screw up the economics of NSO-style mass exploitation, and maybe they should be pressured to do so, quote, critics are correct that fixing these issues won't stop exploits. The problem that companies like Apple need to solve is not preventing exploits forever, but a much simpler one. They need to screw up the economics of NSO-style mass exploitation.

Targeted exploits have been around forever. What makes NSO special is not that they have some exploits. Rather, NSO's genius is that they've done something that attackers were never incentivized to do in the past, democratize access to exploit technology. In other words, they've done precisely what every smart tech business is supposed to do. Take something difficult and very expensive and make it more accessible by applying the magic of scale. NSO is basically the SpaceX of surveillance, but this scalability is not inevitable. NSO can afford to maintain a 50,000 number target list because the exploits they use hit a particular sweet spot, where the risk of losing an exploit chain, combined with the cost of

developing new ones, is low enough that they can deploy them at scale. That's why they're willing to hand out exploitation to every idiot dictator, because right now they think they can keep the business going, even if Amnesty International or Citizen Lab occasionally catches them targeting some human rights lawyer. But companies like Apple and Google can raise both the cost and risk of exploitation, not just everywhere, but at least on specific channels like IMessage. This could make NSO's scaling model much harder to maintain. A world where only a handful of very rich governments can launch exploits, under very careful vetting and controlled circumstances, isn't a great world, but it's better than a world where

any tin pot authoritarian can cut a check to NSO and surveil their political opposition or some random journalist, end quote. Samsung has announced its next galaxy unpacked event will be held virtually on August 11th, where it is expected to unveil new foldables, quoting TechCrunch. Samsung just sent out invites for its next unpacked event. There are those companies that like to sneak hints into their invites, and then there's Samsung. The note leads with the big, bold words, get ready to unfold, and features a pair of flat-colored

objects that can reasonably be said to resemble the form factors of the Galaxy Z-Fold and flip, respectively. In keeping with the general state of the world over the past year and a half, the event will be held virtually on Wednesday, August 11th. Interestingly, the company is also opening up pre-orders on its next flagship, sites, and specs unseen. Perks for early pre-orders include 12 free months of SamsungCare Plus, up to an extra $200 trade-in credit, and a special pre-order offer, end quote. President Biden has nominated Jonathan Cantor to become the Department of Justice's antitrust chief, who is Jonathan Cantor. Well, if Lena Khan is Amazon's long-time bett noir, quoting Bloomberg, Cantor 47, who left one of the country's biggest law firms last year to

start his own firm, is a longtime foe of Alphabet Incorporated's Google, representing companies that have pushed antitrust enforcers to sue the search giant. client. Cantor has, quote, been a leading advocate and expert in the effort to promote strong and meaningful antitrust enforcement and competition policy, the White House said in a statement. If confirmed by the Senate, Cantor would take over the antitrust division as it forges ahead with a monopoly lawsuit filed in October against Google and an investigation of Apple over its app store practices. Cantor is the favored candidate of a faction of lawmakers and antitrust experts who say the U.S. economy is plagued by monopoly power across industries and that enforcers at the Justice

Department and the Federal Trade Commission need to more aggressively police mergers and anti-competitive conduct, end quote. Zoom said this morning that Zoom apps and its vertical events service known as Zoom events are both now generally available, with 50 apps available at launch for the Zoom Apps store, including Asana and Dropbox spaces, quoting ZDNet. Zoom apps launched under the name ZAPS at Zoom's 2020. ZoomTopia Conference are different from the more than 1,500 apps offered in Zoom's marketplace. Zoom's existing marketplace revolves around integrating Zoom with other applications,

whereas Zoom apps are meant to bring apps into the Zoom experience with a click. The company said its intent on growing its Zoom apps ecosystem as it works to expand the functionality of its platform, especially for enterprises and to evolve as a broader collaboration provider for the future of work. Ross Mayfield, product lead for Zoom apps and integrations, said work is underway to open Zoom. apps to any developer and that there's already a pipeline beyond the 50 apps that will be released over time. As for Zoom events, which was first announced in May, the platform will allow users to build an event hub to manage and share events, customized ticketing and registration, control access to billing, host events, free, paid one time or series, bring attendees

together with integrated networking and track event statistics like attendance and revenue. Events can be kept private or posted to a public directory. They can be used with an existing paid Zoom meetings or video webinar license. Why Lee, head of the Zoom events platform, said Zoom envisions a range of use cases for the platform, including large events like an investor relations meeting, or a more visual focus conference like a yoga expo, end quote. Crypto derivatives exchange FTX has raised $900 million from SoftBank, Sequoia, and others, valuing it at $18 billion, which is quite significant in the crypto. space. Never heard of FTX? Well, actually you might have. Quoting the Wall Street Journal.

The transaction vaulted FTX into the ranks of the world's highest valued crypto companies. It also provided a measure of mainstream acceptance for FDX, which bars Americans from trading on its main marketplace to avoid running afoul of U.S. regulators. FDX's main office is in Hong Kong and its parent company, FDX Trading Limited, is domiciled in Antigua and Barbuda. Other prominent investors in the fundraising round included hedge fund billionaires, Israel, Englander and Alan Howard, the family of another hedge fund billionaire, Paul Tudor Jones, and tech-oriented private equity firm Toma Bravo. The founder and chief executive of FTCS is Sam Bankman-Fried, a California native who worked for quantitative trading giant Jane Street

Capital before getting into Bitcoin. FTCS has grown rapidly since starting operations in 2019, making the 29-year-old Mr. Bankman-Fried a billionaire. FDX's main business is running a market for crypto derivatives. Risky instruments that allow traders to place leverage bets on whether digital currencies will rise or fall. FTX handles more than $10 billion worth of trades on an average day, according to data provider crypto compare. Lately, FTX has sought to raise its profile through sports sponsorships. Earlier this year, the company notched a $135 million-dollar 19-year deal to buy the naming rights to the home of the Miami Heat. The stadium is now called FTX Arena. In June, National Foot Football League star Tom Brady became an ambassador for FTX as part of that deal, Mr. Brady and his wife,

supermodel Jusel Bunchin, both took equity stakes in FTX. FtX says the sports sponsorships are aimed at promoting FtX.us, a crypto exchange catering to American customers that was designed to be compliant with U.S. rules. FtX.U.S. offers traders a less exotic selection of markets than FTX's main overseas exchange, end quote. YouTube has debuted Super Thanks, which lets users tip creators for individually uploaded videos rather than live streams, and also to have their messages highlighted in the comments, quoting TechCrunch. This is YouTube's fourth paid digital good, which is what the platform calls any product that lets fans directly pay creators. So far, these tools include super chat, super stickers, and channel subscriptions,

but Super Thanks is YouTube's first of those features that allows fans to tip creators. for individually uploaded videos rather than live streams. If a viewer wants to show extra appreciation for a video, they can pay creators with one of four preset amounts, ranging between $2 and $50 in their local currency. When viewers buy Super Thanks, they can leave a message, which will appear highlighted in the comment section. YouTube's previous tools for direct payments to creators

seemed like a way to play catch-up with Twitch, but the platform is now differentiating itself with Super Thanks. Even Instagram has features that let users tip creators when they go live, like badges, but lacks a way for creators to receive a one-time payment for a post or real. Instead, Instagram has pivoted hard to e-commerce, which feels like a less organic or direct way for fans to engage with creators than a product like Super Thanks. Last year was YouTube's biggest for paid digital goods. In 2020, more than 10 million users purchased either a Super Chat, Super Sticker, or channel subscription for the first time on the platform.

The number of channels that earned a majority of their revenue from these products in 2020 was more than 3x in 2019, end quote. Finally today, here in the U.S., Verizon has joined AT&T and T-Mobile and switching Android messages to RCS by default, thereby raising the question of when, or really if, Apple, will ever swap its SMS default for iMessages over to RCS. quoting the verge. In the U.S., that leaves only one large cohort that will not use RCS as a default SMS replacement, iPhone users. Verizon has said it will fully support interoperability between carriers, so in theory the improved images, video, and read receipts, as well as group chats, should just work, assuming everybody you're texting with is also using Android messages. Verizon was the last of the big three U.S. carriers to get on board with Google's latest strategy to push RCS as the new default for texting. After years of Kodjur,

jolling, shaming, and downright pleading, the company has made deals with carriers to simply use the standard Android Messages app, which supports RCS by default. Default end-to-end encrypted chats between Android phones raise an interesting conundrum for Apple. Next year, texts between Android phones and iPhones will be less secure than text within those two ecosystems because they will be on SMS instead of RCS. Apple's Messages app offers end-to-end encryption if all users are on the I-Message system, and it has shown no appetite to either offer IMessage on Android, nor adopt RCS on the iPhone.

Although RCS has been closely associated with Google, the company often points to the fact that it is meant to be a standard that is shared by the entire mobile industry and managed by the GSM. Carriers are able to use their own RCS infrastructure instead of Google's. Still, RCS is closely tied to Google in many people's minds, and Google offers RCS services to carriers and will even allow consumers to directly use RCS via its services if their carrier doesn't offer it.

Google began pushing RCS as the new texting experience on Android after its own messages attempts, notably Hangouts and ALO, floundered. Currently, there are 473 million monthly active RCS users around the globe, according to the GSM. Adoption in the U.S. is likely to boost that number by quite a bit. Google has no plans to try to introduce a messaging app that supports RCS on the iPhone, however. Apparently, Verizon and Google intend to find a way to ensure that VM Plus and Android messages share a text message database so that messages stay in sync. That's potentially a first step towards opening up RCS to third-party applications, something that's been impossible so far,

end quote. Tonight, the usual time, 9 p.m. Eastern, 6 p.m. Pacific. Chris Messina and I are doing a space on Twitter. I believe we are trying to line up someone from Product Hunt to discuss that new fund they launched yesterday. So do join us. If you have questions, about that. Link to the space is at the bottom of the show notes so you can set a reminder. You can do that now. Set reminders. Talk to you tomorrow.