Tech Brew Ride Home - Wed. 10/25 – Boo! Tech Earnings Snuck Up On Us!

Episode Date: October 25, 2023

Meta got sued by most the States. California has forced Cruise to stop its autonomous vehicle testing. Will earbuds be key in any AI future? Tech earnings season snuck up on me at least. And is Sam Bankman Fried going to have to take the stand in order to keep himself out of prison? Sponsors: Nuts.com/ride Miro.com/podcast Links: Meta sued by 42 attorneys general alleging Facebook, Instagram features are addictive and target kids (CNBC) California DMV immediately suspends Cruise’s robotaxi permit (TechCrunch) Qualcomm turns to Wi-Fi to take wireless earbuds and headphones to the next level (The Verge) Controversial Chip in Huawei Phone Produced on ASML Machine (Bloomberg) Can Sam Bankman-Fried argue his way out of trouble? (FT) 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, October 25th, 2020. I'm Brian McCullough today. Meta got sued by most of the states. California has forced crews to stop its autonomous vehicle testing. Will earbuds be key in any AI future? Tech earnings season snuck up on me at least. And is Sam Bankman-Fried going to have to take the stand in order to keep himself out of prison? Here's what you miss today in the world of tech. I know people have been talking about how at least legally and maybe from regulators, social media might be in for a bit of a, this is bad for you, sort of like cigarettes are bad for you moment, but I have to say, I didn't see this coming. A bipartisan

group of 42 attorneys general are suing META in the United States, alleging that Facebook and Instagram features are addictive and aimed at kids and teens. Quoting CNBC, META is now facing multiple lawsuits on this issue in several districts. Attorneys general from 33 states filed a federal suit against Meta in the Northern District of California, while nine additional attorneys general are filing in their own states, according to a press release from New York Attorney General Letitia James' office. Besides New York, the states that filed the federal suit include California, Colorado, Louisiana, Nebraska, South Carolina, Washington, and Wisconsin. The suits are another demonstration of the bipartisan priority state law enforcers have placed on

protecting kids and teens from online harm. This is a tough time in America, Tennessee Attorney General Jonathan Scrametti said at a press conference after the lawsuit was filed, we have polarization, the likes of which we have not seen since the Civil War. And so for all of the attorneys general from both parties, people who frequently disagree very vocally and very publicly, to all come together and to move in the same direction, I think that says something, end quote. This is not an action we take lightly, Colorado A.G. Phil Weiser said in the press conference, this is not a case that we know is going to be decided very quickly, but it's of the utmost importance. That's why we dedicated level resources of the state

agencies brought together here addressing issues that are top of our national agenda, end quote. The federal suit also accuses META of violating the Children's Online Privacy Protection Act, or Kappa, by collecting personal data on users under 13 without parental consent. The states are seeking an end to what they see as META's harmful practices, as well as penalties and restitution. META was well aware of the negative effects, its designs could have on its young users, the attorney's general allege. While META has publicly denied and downplayed these harmful effects, it cannot credibly plead ignorance, James's office wrote in a press release, meta's own internal research documents show its awareness that its products harm young users.

Indeed, internal studies that META itself commissioned and kept private until they were leaked by a whistleblower and publicly reported reveal that META has known for years about these serious harms associated with young users' time spent on its platforms, end quote. I also did not see this coming. California's Department of Motor Vehicles has suspended Cruises deployment and driverless testing permits, ending the GM self-driving car subsidiary's robotaxi operations in San Francisco, quoting TechCrunch. The DMV's order of suspension, which TechCrunch has viewed, states that Cruz withheld video footage from an ongoing investigation prompting the agency to suspend its permit. The DMV said it met with Cruz

representatives on October 3rd, one day after an incident that left a pedestrian who had initially been hit by a human-driven car, stuck under a cruise robotaxy. It should be noted that the NHTSA opened its own investigation into Cruz's autonomous vehicle system, following several incidents involving pedestrians in San Francisco, including the October 2nd event. The portion of the video that the DMV says it did not initially view showed the cruise robotaxie after coming to a complete stop attempting a pullover maneuver while the pedestrian was underneath the vehicle. The AV traveled about 20 feet and reached a speed of 7 miles per hour before coming to a complete and final stop. The order reads. The DMV later stated in the order that Cruz's omission

hinders the ability of the department to effectively and in a timely manner evaluate the safe operation of the company's vehicles and puts the safety of the public at risk. Cruise told TechCrunch that it shared the entire video with the DMV. The DMV told TechRunch, it stands by its assessment. The DMV, which regulates autonomous vehicle testing and deployments in the state, said Cruise must meet a number of steps to reinstate its suspended permits, which the agency will not approve until the company has fulfilled the requirements to the department's satisfaction. This decision does not impact the company's permit for testing with a safety driver, the DMV added. The suspension comes less than three months after Cruise and competitor Waymo

received the final permit required to offer commercial robotaxy services across San Francisco 24 hours a day, seven days a week. That permit was issued by the California Public Utilities Commission, which regulates commercial driverless ride-hailing permits. However, without the DMVs permits, which allow for driverless vehicles to be on public roads, the CPUC permit is essentially worthless, end quote. I first saw this story last night when it rose to the top of Hacker News, and the comments under it were interesting. Lots of San Franciscans who apparently have extensive experience using both of these driverless services said, in their opinion, Waymo felt to them much safer to ride in than Cruise, so much so

that several of the people claimed to only use Waymo and never use Cruise. Now, that's entirely anecdotal, but I thought that was interesting. Qualcomm has unveiled S7 and S7 Pro Chips with increased memory, AI capabilities, and more, all designed for earbuds, headphones, and speakers set to be released in 2024. In other words, this new tech might take earbuds and headphones to the next level, which is interesting, as a lot of people are coming around to thinking that down the road a bit with this AI stuff, let's say you have a personal bot that you interact with all the time, let's say that it's on your phone, and let's say that your primary way to interact with AI in that future would be via your headsets or your earbuds. So greater capabilities for both would be necessary.

Quote, any flagship pair of headphones or earbuds you buy nowadays is going to be very, very good. Noise cancellation has grown more impressive than ever, and Bluetooth codex like LDAQ and AptX adaptive have led to meaningful uptics in audio quality. But there's always room for our tech to get better, and particularly in the realm of wireless audio, we're really pushing up against the limits of what Bluetooth can deliver. That's been true for some time, and Qualcomm believes it has come up with a solution. Beginning with its next Snapdragon sound platform, the company plans to rely on Wi-Fi in addition to Bluetooth to unshackle the next wave of headphones and earbuds from Bluetooth's typical limitations. If the company's promises bear out,

you won't have to worry about staying within 20 feet of your phone or laptop anymore, and people with a good ear will be able to enjoy truly lossless music, playback more frequently. Today, Qualcomm's announcing the S7 and S7 Pro, the platforms that third-party manufacturers will include in earbuds, headphones, and speakers starting next year. Current Snapdragon sound partners include Audio Technica, Bose, Edifier, Fio, Jabra, LG, Master and Dynamic, Sure, and other brands, so you can imagine that many of them will be integrating the S-7 series Silicon into their future audio gadgets. Like the company's latest Snapchat and hardware for phones, Qualcomm is highlighting significant increases in compute power,

memory, AI capabilities, and more. The ANC from the S7 and S7 Pro is said to be more powerful and more intelligent, adapting to let important outside sounds through whenever they're detected. As Qualcomm's Dino Beckas, Vice President and General Manager of Wearables and Mixed Signal Solutions, explaining to me, you could be riding a bike and listening to an audiobook. As a truck passes, your earbuds will engage transparency mode at just the right volume level to keep you aware of your surroundings without drowning out your entertainment. This sounds a lot like Apple's adaptive audio mode on the AirPods Pro. Bekis told me the new chips also deliver better voice recognition to help products single out your voice from those around you. But to me, those feel like advancements you'd expect.

Things get more fun when it comes to the new micropower Wi-Fi support that's built right into the higher-end S7 Pro. Quote, it will help your device use the best of Bluetooth and the best of Wi-Fi to deliver groundbreaking new user experiences even for earbuds, Beckas said. Those experiences are include 192 kHz lossless audio delivered over Wi-Fi in a way that supposedly won't decimate battery life for earbuds and the tiny batteries inside them. To do this, the S7 Pro leverages what Qualcomm calls its expanded personal area network or expand technology, end quote. And also, as mentioned just there, Qualcomm also unveiled a Snapdragon 8 Gen 3 mobile 4 nanometer chip with 25% more performant GPU, an AI engine that can make stable diffusion images.

in less than one second and more. Like a chainsaw wielding hockey mask wearing maniac in a haunted house, tech earning season snuck up on us. Shares of Alphabet are leading tech shares down this morning after the company reported Q3 revenue was up 11% year-over-year. Net income was up 42% and Google ad revenue was up 9% year-over-year. But cloud sales disappointed the street. Google Cloud Q3 revenue was up 22.5% year-over-year-over-year.

year to $8.41 billion, but that was against an $8.62 billion estimate. Microsoft, meanwhile, reported Q1 revenue up 13% year over year, net income up 27% year over year, office commercial revenue up 15% and LinkedIn revenue up 8%. Their Q1 Intelligent Cloud revenue was up 19% year over year to 24.26 billion versus a $23.49 billion estimate. So they beat on that. With Azure and other cloud services revenue was up 29% year over year versus 26% year over year, beat again. Microsoft's shares are bucking the trend this morning by being up nearly 4%. This is interesting. Recently, Huawei and other Chinese tech companies were able to release new devices with

new chips that were more advanced than some people thought China was capable of in the face of the U.S. government tech bans and similar impediments. Here's a clue of how that might have happened. Sources say SMIC used ASML's DUV machines to create a 7-nometer chip used by Huawei in its recently released phone. Now, ASML has never shipped its EUV tools to China, but older DUV models can apparently be retooled, so China may not be as hampered as some might think, quoting Bloomberg. In a suggestion that export restrictions on Europe's most valuable tech company may have come too late to stem China's advances in chipmaking. ASML's so-called immersion deep ultraviolet machines

were used in combination with tools from other companies to make the Huawei Technologies chip, the people said, asking not to be identified discussing information that's not public. ASML declined to comment. There is no suggestion that their sales violated export restrictions. The U.S. has been working with Japan and the Netherlands to prevent China from accessing advanced semiconductor technology of the kind demonstrated in the 7-nometer chip that powers Huawei's mate 60 Pro, in order to curb the country's technological advancement and prevent it from gaining a military edge. Despite those broad restrictions, Huawei surprised the world in August when it quietly introduced its new smartphone with 5G capabilities and a cutting edge processor. A teardown of the

device conducted by Tech Insights for Bloomberg News revealed the chip was produced by SMIC, demonstrating manufacturing capabilities well beyond where the U.S. had sought to stop China's advance. That prompted questions both about how SMIC was able to manufacture the chip and the effectiveness of the Washington-led controls. SMIC didn't respond to a request for comment. ASML occupies a pivotal role in the global chip supply chain. It has a monopoly on advanced extreme ultraviolet lithography systems or EUVs that are indispensable to the production of the most cutting-edge chips, and it also supplies the deep ultraviolet lithography machines needed to make more mature semiconductors. ASML has never been able to sell its EUV machines to China because of export restrictions,

but less advanced DUV models can be retooled with deposition and etching gear to produce 7 nanometer and possibly even more advanced chips according to industry analysts. The process is much more expensive than using EUV, making it very difficult to scale production in a competitive market environment. In China, however, the government is willing to shoulder a significant portion of chip-making costs. Chinese companies have been legally stockpiling DUV gear for years, especially after the U.S. introduced its initial export controls last year before getting Japan and the Netherlands on board. Pressure from President Joe Biden's administration pushed the Dutch government last summer to announce

plans to prohibit ASML from shipping three out of four of its most advanced model immersion DUV lithography machines, its second most capable category of machinery to China without a license. ASML is still able to export those products to China at the moment, but the ship, will be prohibited from January. According to an investor presentation published by the company last week, ASML experienced a jump in business from China this year as chipmakers there boosted orders ahead of the export controls taking full effect in 2024. China accounted for 46% of ASML's sales in the third quarter compared with 24% in previous quarters and 8% in the three months ending in March, end quote. Finally today, a check-in on the Sam Bankman-Fried trial, according to the Financial Times. After 12

of damaging witness testimony from SBF's friends and colleagues, legal experts say he may now have to take the stand himself in order to have even a chance at avoiding life in prison. Quote, the 12-person jury and its six backup jurors includes two conductors on New York's Metro North Commuter Railway and a former Solomon Brothers investment banker. They have sat through presentations of internal spreadsheets, chat messages, and tweets, along with hours of testimony as the prosecution set out the bulk of its case. All 12 jurors will have to agree to convict or acquit. If one or more dissents, the ultimate result is a mistrial, forcing the government to decide whether to bring the whole case again. The key issue is whether Bankman-Freed

had criminal intent. Prosecutors have focused on conversations and documents that they hope will convince the jury that the FDX founder was aware of, orchestrated, and lied about the diversion of funds to Alameda for years. If he does take the stand, prosecutors will try to demonstrate that the gaps in Bankman-Fried's memory are both selective and deceptive. The trial may yet hinge on, was said inside of a conference room, and the fact that the three other people present in that room will contradict him makes his testimony a difficult task. With the government case largely intact at the end of the trial's first act, it appears that Bankman Freed is the only witness who can offer a counter-narrative to the prosecution's portrayal of greed, secrets, and lies. One trial observer

added that if he does take the stand, it could be a counsel of desperation for SBF, given how overwhelming the prosecution's case appears to be. It may be his last hope. This observer said, maybe he is able to persuade at least one juror that he did not have criminal intent, end quote. Reminder that just as how I've been able to share carry on investment deals that listeners bring to the Ride Home Fund,

and by the way, several of you have taken advantage of that, just wanted to make clear that the Ride Home AI Fund can share carry on deals as well. You don't have to be an investor in the United States. the fund or do anything other than just make a meaningful introduction to a company or deal that you're aware of that we might be missing otherwise. We can share a couple points of carry if we go into that deal. So if you know of someone doing something interesting in the AI space right now and can make a personal intro, please email me at brian at ridehomefund.com. This is a standing offer as long as

the ride home AI fund is cutting checks, which we aim to do for at least The next 12 months or so, talk to you tomorrow.