Tech Brew Ride Home - Wed. 07/27 – Inflation Hits The Metaverse

Episode Date: July 27, 2022

I’ll wrap up the earnings from Microsoft, Alphabet, Spotify and Shopify. Proof that the cost of a data breach for companies is skyrocketing. What ever happened to the legislative crackdown on Big Tech? Inflation comes to the Metaverse as Meta is jacking up the prices on Quest headsets. And a big update to Google Maps. Sponsors: Storyblok.com/ridehome Links: Techmeme headlines from this morning running down earnings (Techmeme, 8:25am eastern today) IBM Security report finds data breaches are costlier than ever before (SiliconAngle) Discovery of new UEFI rootkit exposes an ugly truth: The attacks are invisible to us (ArsTechnica) Senate’s Antitrust Crackdown Sputters as Schumer Signals Doubts (Bloomberg) Quest 2 Price Jumps To $399 As Meta Costs Rise (UploadVR) Google Maps rolls out location sharing notifications, immersive views and better bike navigation (TechCrunch) 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 27th, 2022. I'm Brian McCullough today. I'll wrap up the earnings from Microsoft, Alphabet, Spotify, Spotify, proof that the cost of a data breach for companies is skyrocketing, whatever happened to the legislative crackdown on big tech. Inflation comes to the Metaverse as meta is jacking up the prices on Quest headsets and a big update to Google Maps. Here's what you miss today in the world of tech. This is the episode we do about four times.

a year where everybody has reported earnings at about the same time running through it for you, but then I'm just going to use stock market performance this morning as a quick cheat sheet. Microsoft basically missed Q4 estimates with $51.87 billion in revenue versus $52.44 billion estimated. Microsoft cited changing exchange rates plus challenges in the advertising and PC markets for their miss. But revenue was still up 12% of. year-over-year, and Azure revenue is still growing 40% year-over-year, and heck, even LinkedIn continues to be a cash cow up 26% year-over-year. Big negative spot, gaming revenue was down 7%. So cheat-sheet slash scorecard, Wall Street seems sanguine about all this. Microsoft opened about 3% up in trading this morning.

Then we have Alphabet, which reported Q2 revenue up 13% year-over-year, net income of $16 billion down from net income of $18.53 billion year over year. But Google Cloud revenue of $6.28 billion up from $4.63 billion. Alphabet's $69.69 billion. Revenue marks its slowest sales growth since Q2 2020, missing estimates by almost $190 million as macroeconomic pressures mount on the ad market. And as I've said before, if anyone has a sense of the global ad market, it's Google. Though also worth noting that Google reported search ad revenue was up nearly 14% year-over-year, suggesting that Google may be able to withstand a global recession better than smaller rivals at the same time. YouTube revenue grew only 4.8% well below expectations of 7% growth. Scorecard, alphabet opened around 4% this morning on the street.

Spotify reported Q2 revenue rose 23% year-over-year to 2.9 billion euro. while its net loss widened to 125 million euro, monthly active users were up 19% to 433 million, and premium users, basically people paying up, reached $188 million, up 14% year over year. Though remember that whole car thing thing, that sort of dashboard hardware that Spotify had been manufacturing well, yeah, they're not going to continue manufacturing the car thing, taking a 31 million euro impairment charge to shut it down. Scorecard. Spotify opened up more than 12.5% on the street this morning.

Finally, Shopify. They were down more than 14% yesterday after announcing those layoffs we discussed. Small consolation that they are now up. More than 3% this morning after reporting earnings that were largely amiss. Q2 revenue grew 16% year over year to $1.3 billion and gross merchandise volume. reached $46.9 billion, which was up 11% year over year. So I don't know, a mixed bag here overall among these four companies with only Shopify, I guess, being the real big loser, but it's generally been a big loser over the last 18 to 12 months.

An IBM study of 550 global organizations has found that the average cost of a data breach is now at an all-time record high of $4.35 million, $1, up 13% over the last two years, and 83% of those in the survey said they had more than one breach, quoting Silicon Angle. Figures relating to large companies and the cost involved in dealing with data breaches may seem academic to many, but interestingly, the report suggests that the increasing cost of these incidents, up 13% over the last two years, is contributing to rising costs of goods and services. 60% of studied organizations raise their product or service prices after experiencing a data breach. Those increases come at a time when the cost of goods is already

increasing from inflation and supply chain issues. Data breaches were also found not to be one-offs, with 83% of studied organizations having experienced more than one data breach in their lifetime. Another factor rising over time is the after effects of breaches on those organizations, which linger long after they occur, as nearly 50% of breach costs are incurred more than a year after the breach. Whether companies are exclusively to blame for lax cybersecurity is arguable, but many were found lacking in adopting cutting edge and more modern security practices. 80% of critical infrastructure organizations studied were found to have not adopted zero-trust strategies, seeing average breach costs rise to $5.4 million, a $1.17 million increase compared with those that do.

Companies either in the early stages or who have not started applying security practices across their cloud environments were found to have $660,000 higher average breach costs than studied organizations with mature security across their cloud environments. Conversely, organizations that have fully deployed security, artificial intelligence, and automation incurred $3.05 million less on average in breach costs compared to studied organizations that have not deployed the technology. the biggest cost saver observed in the study. Ransomware victims in the study that opted to pay threat actors ransom demands saw only $610,000 less on average in breach costs compared with those that

chose not to pay, including the cost of the ransom. Given the high price of ransom payouts, the report notes, the financial toll may rise even higher suggesting that paying the ransom may not be an effective strategy. The most costly form of data breach among the companies studied was found to be fishing. Compromised credentials were the most common cause of a breach at 19. percent, but fishing, accounting for 16 percent of breaches, led to average breach costs of $4.91 million, end quote. Relatedly, Kaspersky researchers have found a malicious UEFI-based root kit used in the wild since 2016 that, get this, keeps PCs infected even after an OS reinstall or a hard drive replacement. Because, quoting Ars Technica, the firmware compromises the UEFI, the low-level and high

opaque chain of firmware required to boot up nearly every modern computer. As the software that bridges a PC's device firmware with its operating system, the UEFI, short for unified, extensible firmware interface, is an OS in its own right. It's located in an SPI-connected flash storage chip soldered onto the computer motherboard, making it difficult to inspect or patch the code. Because it's the first thing to run when a computer is turned on, it influences the OS, security apps, and all other software that follows. On Monday, researchers from Kaspersky profiled Cosmic Strand, the security firm's name for a sophisticated UEFI root kit that the company detected and obtained through its antivirus software. The find is among only a handful of such UEFI threats known to have been used in the wild.

Until recently, researchers assumed that the technical demands required to develop UEFI malware of this caliber, put it out of reach of most threat actors. Now, with Kaspersky attributing Cosmic Strand to an unknown Chinese-speaking hacking group with possible ties to crypto-minor malware. This type of malware may not be so rare after all. The most striking aspect of this report is that this UEFI implant seems to have been used in the wild since the end of 2016, long before UEFI attacks started being publicly described. Kaspersky researchers wrote, this discovery begs a final question. If this is what the attackers were using back then, what are they using today? End quote. Kaspersky believes that this variant was active in 2020, and that an earlier version saw use between 2016 and mid-2017, and that both

were written by Chinese-speaking developers. The command and control servers used by both variants used domain names that remain dormant for long stretches of time, during which the root kit would be inoperable. Company researchers believe that means that while cosmic strand was designed to persist permanently on computers, the actual exploitation of those machines may not have lasted for more than a few months. Then again, the researchers said it may have been possible that the domains were periodically reactivated for short durations. Kaspersky detected the root kit running on computers in China, Vietnam, Iran, and Russia. All victims were running Kasperski's free product in indication that targets may have been

private individuals. Company researchers have been unable to identify any specific organizations or even industry verticals that were infected. Researchers so far have been unable to determine the entry point that allows the route kit to get installed in the first place. Kwayho 360's report speculated that one infection may, have been the result of a backdoored motherboard ordered at a secondhand reseller, but so far Kasperski has been unable to confirm that, end quote. I've been holding off on talking about this for a while

because there's been a bunch of stories that have basically just been rumors or behind the scenes whispers, but I did want to put this on your radar. Has anyone else noticed that we're almost two years into the Biden administration, and the expected crackdown on big tech has thus far at least not happened basically at all? Sources are telling Bloomberg that Senate Majority Leader Chuck Schumer told donors at a fundraiser that the AICO Act that is designed to pare back the power of big tech companies doesn't have the votes for passage. Quote, Schumer was asked about the measure the American Choice and Innovation Online Act during a question and answer session at a fundraiser on Tuesday evening at Bistro Bees, a restaurant near Capitol Hill. He called the bill a high

priority but said the Senate doesn't have the 60 votes needed to approve it. Schumer had previously affirmed that he was working with the legislation's lead Democratic sponsor in the Senate Amy Koblachar of Minnesota, but he has not said publicly that he doesn't think the bill can pass until now. He had earlier pledged to bring the legislation to a vote early this summer. The bill would prevent Apple, Alphabet's Google, meta platforms, and Amazon from using their gatekeeper power to discriminate against rivals. Schumer told the donors that people have urged him to put the bill on the floor, a strategy that would put pressure on undecided lawmakers to vote in favor. He added, however, that he does not believe that would be effective. The bill's co-sponsors have

maintained that they have the votes to pass the bill with votes from both Democrats and Republicans, and support for the legislation has been growing. On Tuesday, the National Federation of Independent Businesses, which represents small businesses across the country, announced that it's backing the bill, end quote. This is not ideal, I would think. Meta plans to increase the prices of its Quest 2 headsets by about $100, starting on August 1st, though it will bundle Beat Sabre for free with any new headset through December 31st, which is good because BeatSaber seems to be the only real breakthrough hit on VR right now, but also, isn't the Quest 2 supposed to be meta's main channel for mainstreaming VR? And lower prices would help with that

right, quoting Upload VR. Oculus Quest 2 debuted at 200. $1929 in 2020, $100 cheaper than Oculus Quest from 2019. In 2021, Facebook bumped the base Quest 2 headsets storage from 64 gigabytes to 128 gigabytes while holding the suggested entry price firm at $299. Earlier this year, Meta-change the headset's branding on the physical device to its new corporate identity officially becoming MetaQuest 2. The price change will kick in officially on August 1st, with the 128-gabyte model increasing to $399 and the $250,000,000. 56-gigabyte model, increasing to $499.99. To offset the price difference, meta says it's now bundling Beat Saber free.

With the purchase of MetaQuest 2 between August 1st and December 31st of 2022, Beat Saber is one of VR's most popular and comfortable titles. And since Facebook acquired developer Beat Games in late 2019, it has seen major new features launch as well as a slew of content packs from big-name musicians. Quest 2 doesn't support expandable storage, so what you buy is what you get. for the headset like Resident Evil 4, Medal of Honor, and Mist have started to take up dozens of gigabytes each. upcoming games like Grand Theft Auto San Andreas promised to continue to eat up more of the internal storage on Quest 2 headsets. Meta has invested billions of dollars to help foster and grow

a thriving VR ecosystem. We're adjusting the price of our MetaQuest 2 headsets to enable us to continue investing in ways that will keep driving this incredibly competitive industry forward for consumers and developers alike. A meta spokesperson wrote in a prepared statement, even as meta prepares a high-end professional-grade standalone headset to complement Quest 2, currently known as Project Cambria, competitors like PICO may be preparing new competition. Stand-alone VR headsets PICO 4 and Pico 4 Pro, for example, were just spotted in FCC filings. Nonetheless, META remains confident its pricing will be hard to match. Even with these pricing changes, MetaQuest 2 continues to be the most affordable VR headset

with a comparable feature set on the market. Meta claimed in its blog post announcing the new price. structure, end quote. And finally today, big Maps update from Google Maps, including photorealistic aerial views of nearly 100 landmarks around the world, also more detailed cycling routes, and improved location sharing. Quoting TechCrunch. Google Maps has long been adding in more features beyond just giving you the ability to plan how to get from A to B, and even some of the features today are essentially interim steps in

longer upgrade strategies. The company first introduced the idea of immersive views at its developer conference Google I.O. back in May, with an aim to creating 3D models of landmarks by using a fusion of street view, satellite, and aerial images. With that in mind, the company is now rolling out immersive views of more than 100 places situated in cities like Barcelona, London, New York, San Francisco, and Tokyo. But while the feature is currently restricted to landmarks, the company mentioned at Google I.O., its plans to apply this to restaurants and neighborhoods as well so users can check out how they look before visiting. All of this ties into the firm's effort to make

people use Google Maps as a preferred app for place discovery. Google Maps' second feature announcement is about detailed cycling routes. The company has had turn-by-turn cycling navigation on the app for more than a decade and has added features like elevation profile and bike sharing locations along the way. Today's update gives even more data to bike riders. It will tell cyclists if they should expect heavy car traffic and, helpfully, what kind of road they will travel on, a major road, a minor road, a bike lane, or a shared path. Plus, it will also tell users, if there will, will be any obstacles in the way like steep hills or stairs. This puts Google Maps on a closer par to how various cyclist first navigation apps work and help make using Google Maps more reliable,

especially in less familiar areas or more unpredictable routes. Finally, Google is also updating location sharing, which lets you share your live location for a specified time through a URL, by introducing notifications for arrival and departure for a particular location. Here's how it works. If you're meeting a group of friends at a restaurant, you can set the location notification for that restaurant so that when your friends who are sharing location with you arrive at the destination, you can know immediately. Similarly, users can set a notification for departure from a place so they can know when their friends or family have left the place, end quote. Nothing for you today because I've not even started editing this yet, but I can already tell that I'm running late

for my meeting in the city later today. So, talk to you tomorrow.