Tech Brew Ride Home - Wed. 09/26 - Facebook Dirty Laundry

Episode Date: September 26, 2018

More fallout from the Instagram departures and some pretty dirty laundry aired from inside Facebook, Google reverses course on Chrome, Coinbase opens its doors to alts, and maybe I was right about Amazon Homes! Links: Exclusive: WhatsApp Cofounder Brian Acton Gives The Inside Story On #DeleteFacebook And Why He Left $850 Million Behind (Forbes) Facebook’s Messing With Instagram Prompted Co-Founders’ Departure (WSJ) Product updates based on your feedback (The Google Chrome Blog) The Temptation of Apple News (Slate) Coinbase will add cryptocurrencies more rapidly, with ratings and reviews (Yahoo Finance) One third of ICOs launched in the past two years aren’t listed anywhere (TNW) Amazon Comes Up With Another Way to Get Alexa Into Your Home (Bloomberg) 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, September 26th, 2018. I'm Brian McCullough. Today, more fallout from the Instagram departures and some pretty dirty laundry airing from inside Facebook.

Google reverses course on Chrome. Coinbase opens its doors to Alts. And maybe I was right about Amazon homes all along. Here's what you miss today in the world of tech. Today, Parmi Olson at Forbes dropped a bombshell store. story, which was an interview with Brian Acton, co-founder of WhatsApp. In the piece, Acton airs a surprisingly large pile of dirty laundry about the internal workings at Facebook, about Mark Zuckerberg, Cheryl Sandberg, and other execs. So this would be a major story under normal circumstances because

we don't often get insiders giving us behind the scenes peaks like this, but given yesterday's news about the Instagram founders leaving and given that Acton obviously new, This would drop right on the heels of that news. This is interesting, to say the least. You might remember that a year ago, Acton walked away from $850 million in Facebook stock on his way out the door of that company. And now we know why.

He really, really didn't agree with Facebook about how to monetize WhatsApp. Acton in this interview paints a picture of WhatsApp as a company run by actual idealists, along with co-founder Jan Kohn. Acton ran WhatsApp with strict stances against advertising, against monetizing users' data, and perhaps most famously against knowing what was in its users' communications.

WhatsApp's end-to-end encryption was implemented based on a principled belief that the company would never want to snoop on its users in order to sell ads to or about them. Acton liked to say, quote, no ads, no games, no gimmicks. And then he sold WhatsApp to Facebook, a company which Forbes notes, quote, derived 98, percent of its revenue from advertising.

Suddenly, WhatsApp's founders' principles were at odds with the core business of its new owners. One of WhatsApp's motto was, take time to get it right. So compare that to Facebook's famous motto, move fast and break things. Something had to give here, right? At the heart of this story is a disagreement about strategies to monetize WhatsApp. Acton says he wanted to charge heavy users after offering an allotment of free messages each month, similar to how SMS messages were traditionally billed in the U.S. You'd get a bunch for free, then pay a tiny bit for each message beyond that.

Forbes has Acton describing WhatsApp in truly simple terms, quote, you build it once, it runs everywhere in every country, you don't need a sophisticated sales force, it's a very simple business, end quote. At least that's the business he was envisioning. Apparently Facebook's executives didn't have the same vision. According to Acton's telling, Facebook CEO Cheryl Sandberg disagreed with the metered usage model and said, quote, it won't scale. And here I'm going to quote extensively from the article.

I called her out one time, says Acton, who, since there might be greed at play, I was like, no, you don't mean that it won't scale. You mean it won't make as much money as. And she kind of hemmed and hawed a little. And we moved on. I think I made my point. They're business people. They are good business people. They just represent a set of business practices, principles, and ethics, and policies that I don't necessarily agree with, end quote.

And the disagreements just kept coming. Acton says he was coached by Facebook to tell EU antitrust regulators that WhatsApp and Facebook data would be super hard to blend. Then, of course, Facebook figured out how to blend them. Then Acton says WhatsApp's growth wasn't looking good enough for Zuckerberg. Internally, Facebook had targeted a $10 billion revenue run rate within five years of monetization, but such numbers sounded too high to Acton and reliant on advertising, end quote. He apparently couldn't take it, so he left Earth.

trying to invoke a clause in his contract that was designed to let him recoup all of his Facebook stock if the company implemented monetization initiatives in WhatsApp. In a meeting where Facebook's legal team explained why they disagreed, Acton attributed the following to Zuckerberg. Quote, he was like, this is probably the last time you'll ever talk to me, end quote. Rather than lawyer up or try to meet in the middle, Acton decided simply not to fight. quote, at the end of the day, I sold my company, he says. I am a sellout. I acknowledge that, end quote. Subsequently, Acton has poured funding into Signal, which is an app that currently matches his values,

and has donated a billion dollars of his Facebook money to philanthropy within the U.S. Forbes reports that even after foregoing that big chunk of Facebook stock, Acton is today worth $3.6 billion. So again, that story coming out now, we kind of just have to assume that it was meant as some sort of commentary, obliquely or otherwise, on the news yesterday that the Instagram founders were leaving. The Wall Street Journal has more details on why Instagram co-founders, Kevin Sistram, and Mike Krieger just jumped ship. According to the story, Shocker, Mark Zuckerberg, didn't agree with the Instagram co-founders about how to run the acquired company. and a big part of the issue had to do with, again, monetization. Quoting from the journal,

Instagram officials argued that some of Facebook's product changes undercut the apps ability to add and retain users, according to people familiar with the matter. After years of supporting Instagram's growth, Facebook appeared to be diverting users' attention to its main app from Instagram where ads still don't command the same prices as those that appear in Facebook's news feed, end quote. A major change to the Instagram slash Facebook ecosystem

included de-emphasizing the fact that some content originated on Instagram. In other words, if you post a photo to Instagram and share it to Facebook, on Facebook, that photo used to have a very clear tag that said it came from Instagram. Now it doesn't. A series of changes to Facebook seemed designed to pull Instagram users into the core Facebook app. This bugged Sistram and Krieger and an internal change in reporting structure moved Zuckerberg further up the reporting chain from them, putting Zuck basically in the Instagram driver's seat. So this is why on Monday they quit. quoting again from the journal piece,

the two men formally joined Facebook six years ago this month. Facebook shares typically vest over a four-year period, so thanks to Facebook's strong stock performance in recent years, Messer's Sistram and Krieger will likely leave with hundreds of millions of dollars and few remaining ties to the parent company, end quote. Fairly well, Sistram and Krieger, maybe you guys should go hang out with Brian Acton. Sounds like you guys could have some war stories to share.

On Monday, I told you about a change coming in Chrome, 69 that was bothering some privacy conscious users. In the upcoming browser version slated for mid-October, Chrome will now sign you into Chrome itself whenever you sign into any Google website. Previously, the sign-in schemes for Google sites and the browser itself were entirely separate. This caused a lot of head scratching and muttering earlier this week, as we talked about. This morning, though, in a blog post, Chrome product manager, Zach Cook, updated us all on a new plan, writing, quote, we want to be clear that this change in sign-in does not mean Chrome Sync gets turned on. Users who want data like their browsing history, passwords, and bookmarks available on other devices

must take additional action such as turning on sync, end quote. Cook went on to say that due to the, shall we call it, feedback, a new preference will be added that disables this Chrome sign-in linking stuff altogether. So there you have it, Chrome users. If you don't want this feature when Chrome 70 ships, just turn it. off in the settings. Over at Slate, Will Aramis is reporting that Apple News, the Apple News app, is great for just about everything, except for ad revenue for Apple News partners. Oramus praises Apple News's human curation and prioritization of actual news rather than clickbait, but he

points out that for publishers, the money just isn't there yet. In an era when Facebook is showing users fewer news stories and prioritizing updates from friends, publishers are turning to alternative platforms to connect with their readers. Apple News is one of these platforms and according to Aramis, it's growing nicely and driving plenty of traffic. Quoting from the piece, sources at several news outlets say they've seen their audience on Apple News multiply in 2018 alone. Some now say it has become one of their top traffic sources alongside Facebook and Google. At Slate, which disclosed its data for this story, page views on Apple News have roughly tripled. since September 2017, and the app recently surpassed Facebook as a driver of readership, end quote.

Cool. So readership is up. Apple News is helping fill the Facebook gap. Apple bought texture, so they've got that digital magazine subscription thing coming. What's the problem? Well, basically, what happens in Apple News stays in Apple News. Readers are sticking around inside Apple's app, and one of the app's hallmarks is an extremely light touch on advertising. Even if publishers are getting nice readership numbers for their stories, there simply aren't enough ads being sold on Apple news pages to make those new readers as valuable as regular web readers. On the Apple News platform, publishers face a choice. They can either let Apple handle selling ads, in which case Apple takes its traditional 30% cut,

just like in the App Store, or publishers can create custom ads specifically to run inside their Apple News stories and keep all the revenue. No surprise, quote, Apple News doesn't support some of the common ad formats, or systems that dominate ad sales on the web, end quote. While Apple and perhaps readers might call that a feature, publishers see that as a real problem. Matt Corollion, the Boston Globe's director of new initiatives, gave Slate a decidedly film noir, quote, The Juice ain't worth the squeeze, end quote. Although Apple recently integrated Google's ad manager into Apple News,

publishers are still seeing dramatic differences and payouts from readers who use Apple News versus readers coming directly to the publisher's website. For example, Aramis writes, quote, I did one back of the envelope calculation that startled me. Slate makes more money from a single article that gets 50,000 page views on its site than it does from the 6 million page views it receives on Apple News in an average month, end quote. That's pretty brutal. How could that be?

Well, Apple shows way fewer ads, like I said. We intrepid reporters at the TechMeme Ride Home podcast did some sleuthing. It was kind of you to write that that way, Chris, but actually we know it was you that did this sleuthing, so credit Chris Higgins. On the Slate website, Aramis's article featured nine large ads within the body of the story, including multiple auto-playing videos. After the story, it had 21 distinct ads at the bottom, including a healthy serving of those weird ones like, Look at them now, headlines about septuplets, and two ads about the children of celebrities, a warning about household mold, etc., etc. So that was a total of 30 ads that ran on Slate's website for that one page view. How many are there on the Apple news page for the same story?

On our iPhone, there was one. A single ad for a Slate podcast appeared at the bottom of the story, followed by three related stories from Slate, and then three related stories from other publishers that seem tailored to the reader by Apple's algorithms. None of it looks spammy, unlike a few of the Slate web ads. So that's the point, I guess. One ad on a page versus 30 is a big difference. So ultimately, what Slate's examination of Apple News tells us is a tale as old as web advertising itself.

If you control the page and all the advertising on it, you can sell a lot of ads and reap the rewards from them. But if you give your content to a platform like Apple News, you're giving up control over advertising and potentially losing a ton of money in the process. Aramis notes that some publications have pulled out. out of Apple News because of this imbalance, though many, including Slate, are sticking around, hoping to figure out how to translate engagement into dollars in a low advertising environment. From Daniel Roberts at Yahoo Finance, here's another story about cryptocurrencies growing up. Coinbase announced yesterday that it's implementing a new policy for listing assets on its site. Up until now, Coinbase has allowed users to trade Bitcoin, Litecoin, Ether, Bitcoin Cash,

and Ethereum Classic. But after this announcement, Coinbase is opening up a process for the developers, of other cryptocurrencies to apply to be listed on the exchange. Of course, Coinbase will still vet those applications, but in theory this could open up trading for a variety of so-called altcoins, including Chris's favorite Dogecoin. Along with the new policy on how assets are listed, Coinbase says it will announce new currencies joining its platform only at or near the time of public launch,

end quote. This is to prevent employees and others in the know from pre-investing in assets right before they get the stamp of legitimacy from Coinbase, quoting from Yahoo Finance. All of this is happening nearly one year after Coinbase came under heavy fire when the price of Bitcoin Cash soared in the hours before Coinbase publicly announced it was adding the asset. Critics speculated that Coinbase insiders who knew the site would be adding Bitcoin Cash told their friends who bought up the asset ahead of time, end quote. And in a related story that gets right to the heart of the recent cryptocurrency nuclear winter,

that almost every currency has been experiencing recently. In the next web, David Canellis reports that, quote, 70% of cryptocurrencies outside of the top 100 are now valued less than the amount initially raised at their ICOs, end quote. He further reports that about a third of all tokens that launched an initial coin offering in 2017 and 2018

are not listed on any exchanges. Maybe, just maybe, some of those might show up on Coinbase now. Finally, today, I want to amend what I said at the very beginning. I'm not trying to take credit for calling this at all, because remember, I originally speculated on Amazon buying a major home builder like Pulte. And this is not quite that, but yes, it does turn out that Amazon wants to perhaps make it easier for people to elixify their homes, or what I'm about to tell you, certainly indicates interest in that direction.

Amazon's Alexa fund, which is an investment fund Amazon set up in 2015 to invest. invest in startups working in the Alexa ecosystem, has invested in a $6.7 million round for plant prefab, a maker of prefabricated homes. Plant prefab is one of that raft of startups that is trying to reinvent the very notion of what a prefabbed home can be. Don't think trailer parks, think ultra-modern design, the type that gets featured in architectural magazines, but just so happens to consist of modular sections that can be fit together in any number of configurations. Your average plant prefab home costs less than $500,000, delivered and

assembled, though they also have a 400-square-foot model that runs about $160,000. Anyway, bottom line, Steve Glenn, plant prefab's CEO notes that when customers order a home from the company, they can customize it with a whole range of different options, sizes, layouts, etc. Quote, in the not too distant future, there will be home automation and smart home technology that's part of that, Glenn told Bloomberg. Amazon clearly thinks that as well. Maybe someday when you see a for-sale sign in a front yard, there will be a little logo on it that says Alexa Inside.

That is all for today. Today's episode was almost entirely written by Chris Higgins. So thank you, Chris, again, for pitching in. Follow Chris on Twitter at Chris Higgins. By the way, the Oculus event did happen this afternoon. It came in a little late in the day, so we'll be back tomorrow to talk about everything that happened there. Talk to you then.