Tech Brew Ride Home - Wed. 07/24 - Is Media Piracy Coming Back?

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, July 24th, 2019. I'm Brian McCullough. Today, the FTC finally comes down on Facebook, but is the new DOJ probe really what Silicon Valley should worry about? Cruise won't be self-driving taxis in San Francisco this year. Snap really seems to be

Starting point is 00:00:50 on the rebound and is media piracy poised for a major comeback. Here's what you missed today in the world of tech. We have to begin today with news that is not really news to you because if you listen to the show regularly, you knew that this was coming. But the FTC finally officially announced its $5 billion fine against Facebook for repeated privacy violations as a part of a settlement that requires federal oversight of Facebook's business practices going forward. This is, of course, the largest fine ever imposed by the FTC, but it's pocket change to Facebook, blah, blah, we've already litigated that. So let's focus real quick. on that oversight part. Quote, the new settlement requires Facebook to establish a special

Starting point is 00:01:41 independent committee within its board of directors to oversee privacy. Compliance officers approved by the board must keep watch over the tech giant's approach to data. And those officials, along with Mark Zuckerberg himself, must attest quarterly to the FTC that they are complying with the settlement or face civil or criminal penalties, agency officials said. Meanwhile, a third-party organization will be tasked with reviewing Facebook's data collection practices and those of its other services, Instagram and WhatsApp, over the next 20 years. And Facebook itself must do more to keep watch over third-party apps while reporting even small security incidents to the FTC, end quote.

Starting point is 00:02:20 But, and I'm quoting from the Washington Post here, but even within the FTC, serious concerns emerged Wednesday that the punishments the government secured do not actually alter the way Facebook collects and monetizes its users' data in the first place. The fears prompted the agency's two Democratic members, Rohit Chopra, and Rebecca Kelly Slaughter, to vote against approving the settlement earlier this month. In their first public comment on the settlement, the two Democrats said in their dissenting statements that the fine should have been higher, and the remedies much tougher if the FTC hoped to truly change Facebook. They also expressed alarm that the agency may have given Zuckerberg, his fellow executives and Facebook,

Starting point is 00:03:02 a complete pass on any other privacy mishaps that may have occurred in the past. A rare move, they said, would hamstring the feds in holding Facebook accountable again, end quote. In other reporting I've read, the rumors are that some in the FTC were pushing for a fine in the range of $30 billion, and an actual public lawsuit that would have named Zuckerberg as a co-defendant. So, okay, that happened, and as I say, it's easy to. to get all of these regulatory and antitrust threads confused. So again, this fine was part of the existing DOJFTC investigations, where between them, they divvied up investigations into the big tech companies. And then there were the congressional hearings of recent weeks, which were just that,

Starting point is 00:03:52 hearings. I don't think in the end anything substantive came from them at the end of the day. but this, this next story broke over the weekend, and this is something completely new and completely different. The Department of Justice announced it is opening a new antitrust review of all the tech giants, Facebook, Google, Amazon, at all, and looking into whether they are stifling competition. The inquiry is described as being broad and will specifically examine search, social media, and retail services in, again, a competitive lens. So the Facebook fine was about consumer data and for past bad behavior like the Cambridge Analytica stuff.

Starting point is 00:04:38 But with this, quote, the Justice Department will examine issues including how the most dominant tech firms have grown in size and might and expanded their reach into additional businesses. The Justice Department also is interested in how big tech has leveraged the powers that come with having very large networks of users, the department said. There is no defined end goal yet for the big tech review other than to understand whether there are antitrust problems that need addressing. But a range of options are on the table, the officials said. The inquiry could eventually lead to more focused investigations of specific company conduct, they said. The review also presents risks for the companies beyond whether antitrust issues are identified. The department won't ignore other

Starting point is 00:05:23 company practices that may raise concerns about compliance with other laws, officials said, end quote. And so that last bit gets to how this new probe is different. To sum it up, this is specifically an investigation, the sole purpose of which is to look at if the tech companies are too big. So this isn't about narrow issues or behavioral issues or even political issues, like the charges of bias and things like that. This is the holistic question of, of the power that tech companies wield. And I'm not saying that anything will come of this necessarily, but I am pointing out that if followed through on this line of inquiry,

Starting point is 00:06:02 we're talking about something that is closer to an issue that is existential for these companies. It questions the status quo on a much more fundamental level. Oh, and it's also open-ended. The analogy would be to when a special prosecutor is impaneled to investigate, I don't know, someone like the president of the United States, this investigation is allowed to look at everything, to turn over every stone and charge anything related to anything that crawls out from under those stones

Starting point is 00:06:33 that the investigators don't like. And also there is the possibility that this whole investigation could be politically motivated, right? Something tells me, if this news is for real and serious, then this is the news that has Silicon Valley the most nervous. Google today launched Gallery Go, a lightweight 10-Mabyte photo gallery app

Starting point is 00:07:03 for organizing and editing photos. The Go and the Gallery Go name suggests the actual use case. This is an alternative to Google Photos that is designed to work offline. Quoting the Verge, like Google's regular photos app, it uses machine learning to organize your photos.

Starting point is 00:07:20 You can also use it to auto-enhance your pictures and apply filters. Gallery Go is just the latest, lightweight version of an app designed for developing markets like Nigeria, where Google announced the new app. Facebook has produced light versions of the main Facebook app, as well as Messenger and Instagram, and Twitter has done the same with the Twitter Lite app. Google has even done something similar on the OS level with Android Go, a lightweight operating system based on Android that's designed to run on inexpensive smartphones lacking powerful processing, end quote. You can give Gallery Go a go today

Starting point is 00:07:55 by downloading it from the Play Store, but you will need to be running Android Oreo 8.1 or higher to make the magic happen. I didn't talk on this, I don't think, but earlier this year there was a bit of a kerfuffle when various outlets reported that some delivery services like DoorDash and Instacart actually lower the payout that they give to delivery workers if you tip those workers in the app. In other words, you thought you were giving money to whomever brought you your barrenes. Rito, but in fact, the companies saw that, and they kept some of that for themselves, without telling customers that that is what they were doing. Pretty shady. Well, after a renewed backlash

Starting point is 00:08:41 about all this, Dordash's CEO said that his company will change its tipping policy in the coming days to add all customer tips to a driver's earnings directly. CEO, Tony Zhu tweeted last night, quote, it's clear from recent feedback that we didn't strike the right balance. We thought we were doing the right thing by making Dasher's whole when a customer left no tip. What we missed was that some customers who did tip would feel like their tip did not matter. Going forward, we're changing our model. The new model will ensure that Dashers' earnings will increase by the exact amount a customer tips on every order.

Starting point is 00:09:15 We'll have specific details in the coming days, end quote. What's interesting is that the controversy at Door Dash itself specifically arose when actual DoorDash workers started complaining about the tipping policy, noticing that their tips weren't coming through as they expected. After surveying its workforce about this practice, just last month, DoorDash said it would stick to its original tipping policy. But after the rash of customer complaints recently, I guess they've changed their minds.

Starting point is 00:09:47 Quoting Alex Bowles on Twitter, it takes rare talent to make both your customers and your staff feel like you're lying to and stealing from them, end quote. Quick entry into the will we or won't we see self-driving cars on real roads by 2020, my ongoing wager. GM's cruise automated vehicle startup has been forced to admit that it will not meet its 2019 target to deploy a commercial robotaxy service in San Francisco. Why?

Starting point is 00:10:21 Well, exactly what you would expect. Turns out this stuff is hard. quoting from the cruise blog post CEO Dan Amman wrote, quote, In order to reach the level of performance and safety validation required to deploy a fully driverless service in San Francisco, we will be significantly increasing our testing and validation miles over the balance of this year, which has the effect of carrying the timing of fully driverless deployment beyond the end of the year. While Cruise is already logging the most miles in a complex environment, having our cars running many more miles on the road will further exceed.

Starting point is 00:10:55 accelerate our rate of learning and safety validation. It will also give us crucial operational learning from running a larger scale fleet and a larger scale ride service, which we currently operate for our employees, end quote. In other words, the tech just isn't there yet, but also, and this is always one of my biggest reasons for being skeptical, remember, I said long ago, you're not going to just snap your fingers and get governments and regulators to allow you to deploy these things on real streets overnight. Quoting Venture Beat. The announcement comes after reports that Cruz faced pushback from U.S. regulators over requests to waive safety standards in order to deploy driverless vehicles without controls or steering wheels. The company had hoped to have

Starting point is 00:11:42 2,500 such cars up and running as part of a controlled on-demand fleet in the coming months. Cruise isn't planning to increase the size of its roughly 180 vehicle San Francisco fleet, which it confirmed will comprise the first commercial deployment in its forthcoming ride-sharing service. Instead, the company will ramp up the pace of testing to expose its third-generation Chevrolet Bolt, all-electric cars, which are equipped with LiDAR sensors, radars, video cameras, computers running proprietary control algorithms and in-vehicle displays to more complex scenarios on public roads, in part through its employee-only, cruise anywhere driverless pilot program, end quote.

Starting point is 00:12:20 So in our recent segments about Snap, I think we did a lot of speculating and laying the groundwork around the growing chatter that Snap and Snapchat might be turning things around. And if Wall Street is any yardstick, it sure looks like that might be coming to pass. Late yesterday, Snap reported $38 million of revenue up 48% year over year, more than the $359 million estimate. And net losses shrank from $353 million to $255 million. Not only that, gross margins came in at 46% versus 30% a year ago, which is a friggin' huge jump. But, and this is key, key, daily active users actually grew. In fact, Snapchat saw an increase of 13 million new users. Wall Street was only expecting 2 million new users.

Starting point is 00:13:21 Snap's total user base is now 204 million DOWs, which is a far cry from last year when it seemed all doom and gloom because the user base had shrunk to 188 million Dows. And the good news doesn't stop there. Time spent watching Snapchat shows has tripled since 2018. And increasingly, time spent in an app on a platform is a metric that is more meaningful to Wall Street than even Dows or Mows. quote, the growth in our community, engagement, and revenue is the result of several transitions we completed over the past 18 months, Snap's CEO Evan Spiegel said in a statement, we look forward to building on our momentum and making significant ongoing progress in each of these areas, end quote. Indeed, several of the things that we have spoken about in the

Starting point is 00:14:11 past few months have come home to roost for Snap in a good way. The redesign of that disastrous Android redesign to the app has happened and users seem to be pleased. And those lenses, the AR sort of puppy face lenses, the rainbow lenses, the gender swap lenses, the baby face lenses, they have drawn the users back in a big way. At the time of this writing, Snap shares are up 15% on the day at around $17 per share, which was the price that Snap went public at. Snap's all-time low stock price was $4.99 on December 21st, so we're up around 200% since then. Finally today, the streaming wars from a different angle. Owen Williams and others have been warning about this for a while now, but if we really are

Starting point is 00:15:07 about to enter a world where video content will be chopped up and stuffed behind different pay silos, and you won't know what service to subscribe to if you want to watch friends or what service to subscribe to if you want to watch Batman Begins. Well, then maybe, just maybe, in that sort of a scenario, piracy will make a big comeback. And guess what? Let me introduce you to a thing called Plex, which allows consumers the ability to set up their own streaming servers to share media, which anytime you're sharing media, that might include pirated content, right? here's how Plex works, according to the verge.

Starting point is 00:15:49 Plex, a company that sells media server software, has found itself in the strange position of being the answer to that problem. It has two components, the piece of software that organizes your media on your computer's hard drive, and the client-side program that lets you and your friends and family stream that content from wherever you are on just about any device. It's clean, it's beautiful, it's extraordinarily simple to use. It looks a little like Netflix.

Starting point is 00:16:15 except all of the content is custom, tailored by the person running the server. In the company's words, both pieces of its software are, quote, the key to personal media bliss. What Plex doesn't say, however, is how that bliss is achieved, because what's on Plex servers is populated by people. Most of the commercial content you'll find there is probably pirated. And this is the main tension of using Plex. While the software itself is explicitly legal, the media that populated, its customer-run servers is not, at least the stuff protected by copyright law.

Starting point is 00:16:51 The company, of course, doesn't condone this particular use of its software. A spokesperson provided a statement that read in part, quote, Plex supports content creators and does not condone privacy, end quote, before directing me to its terms of service page, end quote. So this is old school internet, or at least early 2000s era internet, makes one get all nostalgic. Apparently people are trading invite-only access to their Plex servers. If you don't know somebody who knows somebody, you don't get access. Everyone pools and shares their existing media. And voila, it's a little bit Napster, a little bit fight club.

Starting point is 00:17:29 Again, full-on nostalgia. But the lesson, of course, is the same as it ever was. People just want what they want right now, especially in media. No different services to sign up to, no hunting around, who has the content you want, people just want frictionless consumption, unlimited selection, instant gratification. I wonder if we're about to learn that lesson all over again. As Owen Williams himself notes, media piracy has been in steep decline over the last few years. But will that last? It's early days yet and perhaps piracy won't come back in a big way, but it's hard to overstate

Starting point is 00:18:10 how simple it seems compared with signing up to a bunch of fragmented disconnected services. If we're having this conversation now, before Disney Plus, Apple TV Plus, and every other service has launched, it's going to be fascinating to see how it plays out, end quote. So yes, I am back, y'all. The Pacific Northwest is truly God's country, and it was beautiful and peaceful, and a great week, and my little family had our first true vacation, not involving a trip to one grandparent's house, or another, and somehow we manage not to get on each other's nerves too badly. So we're back. My thanks to Glenn Fleischman for the truly expert fill-in work. I like to joke that Glenn is my

Starting point is 00:18:55 Joan Rivers, if you're old enough to get the reference, but actually, Glenn fancies himself funnier than Joan Rivers, as you'll notice if you enjoyed his episode titles this past week. Seriously, though, Glenn, thank you. You are more a pro than I will ever be. Anyway, that is all for today, but before we go, a quick podcast classified ad. Remember, you can get your own classified if you so desire by going to ridehome.com. Forward slash classifieds. Talk to you tomorrow. Attention investors.

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Tech Brew Ride Home - Wed. 07/24 - Is Media Piracy Coming Back?

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