Tech Brew Ride Home - Wednesday, May 2, 2018 - AI Announcements at F8

Episode Date: May 2, 2018

Facebook’s AI announcements from F8, LG announces G7 ThinQ, Apple earnings analysis, Snap earnings analysis, the Pentagon blocks the sale of Chinese phones, and can AI predict the next Avengers: Infinity War? Stories from: @ashleyrcarman, @DanielEran  Tweets from: @BenedictEvans, @lexnfx Links:Cambridge Analytica Closing Operations Following Facebook Data Controversy (WSJ)Telegram Messaging App Scraps Plans for Public Coin Offering (WSJ)LG’s G7 ThinQ preserves the headphone jack and introduces a notch (The Verge)Pandora Learns the Cost of Ads, and of Subscriptions (Wired)Over 30? You're Too Old For Tech Jobs In China (Bloomberg)Could Artificial Intelligence Predict the Next Avengers: Infinity War? (Wired) Credits: Produced by @brianmcc and the @techmeme editors Music by @jpschwinghamer 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 TechMeme ride home for Wednesday, May 2nd, 2018. Today, more news from F8. LG announces the G7 ThinQ, Apple earnings analysis, snap earnings analysis,

the Pentagon blocks the sale of Chinese phones, and can AI predict the next Avengers Infinity War? Here's what you missed today in the world of tech. So yesterday was about policy changes, maya culpas and consumer-facing product announcements. But day two of F8 was focused on Facebook's technology and the cool things developers can do with it. There were announcements around PiTorch 1.0,

Facebook's open-source framework for AI development, which will be available in beta in the next few months. And the company spoke again about how it is using AI and machine learning to proactively flag bad content on its platforms. Facebook says, that it increasingly doesn't have to wait for bad content to be reported because its algorithms can now take down postings before anyone even sees them. Facebook also talked about how it is using billions of publicly posted Instagram photos

to help train its AI-based image recognition models. So if you've posted a public picture on Instagram and annotated it with a hashtag, you've been helping them train some of the algorithms that are now being deployed to assist in content moderation and perhaps improve search functionality down the road. Last night, Facebook CEO Mark Zuckerberg met with a group of media executives after delivering his keynote speech at F8. Zuckerberg told the assembled scribes that this year Facebook intends to invest, quote, billions of dollars in artificial intelligence,

as well as hiring a team of tens of thousands of human moderators to police fake news and propaganda around elections held worldwide this season. year. We're essentially going to be losing money on doing political ads, Zuckerberg said last night. Now, I'm sure Facebook isn't happy that I'm going to seg from that story into this, but I'm sure they wish this news didn't come out during F8 either, but political ads, elections, the Wall Street Journal is reporting just this afternoon that Cambridge Analytica, the company at the heart of the Facebook data misuse scandal, is shutting down operations. According to the journal piece, quote,

The company decided to close its doors because it was losing clients and facing mounting legal fees in the Facebook investigation, a person familiar with the matter said. The firm is shutting down effective Wednesday, and employees have been told to turn in their computers, end quote. The journal said that while Cambridge Analytica had landed $15 million in U.S. political contracts in the 2016 election, since then it hasn't signed a single U.S. political client, and had lost several commercial ones following the publicity and controversy around its dealings with Facebook.

Also from the journal, also just this afternoon, some surprising news from out of the world of crypto. Sources are telling the Wall Street Journal that Telegram, the messaging app that is popular in crypto circles, is calling off its initial coin offering, which was expected to be one of the biggest of all time. Why is it pulling the plug on the ICO? Well, it sort of is,

but it sort of isn't, because it has raised so much money selling its newly created cryptocurrency to private investors, an estimated $1.7 billion, that it apparently doesn't feel the need to sell the currency to the wider investing public anymore. The journal speculates that the changing regulatory environment around ICOs and increased scrutiny might have caused Telegram to change course as well. Telegram has said that the money it's raised, again, $1.7 billion, will be used to build out Telegram's main messenger service. The ICO funds were originally slated to create a new digital payments and technology platform based on blockchain ledger technology. The status of that project is unknown. Telegram reportedly refused multiple requests from the journal for comment.

Cool new phone alert. LG today announced its long-anticipated G7 Thin-Q smartphone at an event here in New York this morning. Let's play smartphone bingo. Does it have a notch? Yes. Does it have a headphone jack? Yes. Fingerprint sensor? Yes. Wireless charging.

Check. It'll be shipping with Android Oreo. And this is a slightly new category. It will have a dedicated button for Google Assistant, sort of like Samsung's Bixby Assistant button on the Galaxy phones. But this morning, LG really wanted to highlight its AI-assisted photo technology, the G7 Sports Dual 16 Megapixel Rearer. cameras and LG's software promises the ability to recognize objects on their own and automatically

optimize photos accordingly. Here's how the Verges Ashley Carmen described it, quote, the phone detected flowers when I tried taking a photo of them, but I didn't notice much of a difference in the image quality. This was a quick test, though. LG claims the photos and videos are four times brighter than the G6, and users can enable a bright mode to take low light shots, end quote. The rest of the details, a Qualcomm Snapdragon 845 processor, a 6.1-inch QHD plus LCD display, four color options, blue, black, gray, and dark pink, and no word on price or availability yet, because that will be left for the various carriers to announce. So the shakeout from Apple's most recent quarter comes down to the stories that weren't.

people were thinking that iPhone 10 sales might come in weak. Apple insists that they were not. Others were thinking that Apple was losing market share in China, but Apple actually posted 21% revenue growth in the greater China region, its best year-over-year increase in 10 quarters. Quote, the iPhone obviously had to do extremely well to get a 21% number, Tim Cook said on the conference call yesterday. Apple Insider dunked on some of the naysayers this morning.

quote, many bloggers and analysts similarly expressed a self-assured confidence that Apple had priced iPhone 10 too high, despite the fact that Apple has a very strong historical track record of pricing its products incredibly well to maximize volume sales at sustainable margins while delivering extremely high customer satisfaction. Indeed, the fact that Apple's earnings numbers were so healthy can really only be down to the success of the iPhone 10 and the added revenue generated by that higher price point. As John Gruber wrote on Daring Fireball, quote, year over year, iPhone sales were up 3% on unit sales, but 14% on revenue.

Unit sales are close to flat, but Apple grew revenue by double digits. There's no other way to explain it than that iPhone 10 is a hit. By and large, I think many people have just been assuming that the smartphone market is reaching saturation point, or at least maturity, so everyone is expecting Apple's sales will hit some sort of natural ceiling. But so far, Apple has successfully been maturing its line by expanding at both the low and high end.

And even if that hadn't been successful, Apple has also been diversifying beyond devices, something that critics have been yelling at them to do for years now. That's why analysts were so focused on the services number reported yesterday. By services, I'm talking about things like the App Store, Apple Music, ICloud Storage, and Apple pay. Even if hardware sales do level out, analysts were looking for services to come in as replacement revenue to make up for any shortfall. And Apple says services revenue was up 31% year over year to $9.2 billion. Apple's paid subscriptions were up $30 million in just the last 90 days. Apple now has 270 million paid subscribers. As Benedict Evans pointed out on Twitter,

last 12 months of Apple's service revenue, $32.2 billion. 2008 total Apple revenue, $34 billion. The last 12 months of Facebook revenue, $40.7 billion. This morning, Apple's stock was up over 4%. Contrast that news with what's been going on at Snap. Last evening, Snap reported its earnings, which came in at a Q1 net loss of $386 million. analysts had been looking for SNAP to post revenue of about 244 million, but it generated just

$230 million. Average revenue per user rose 34% year over year, but was actually down 21% quarter over quarter. Blame for Snap's poor performance was all over the map, including the controversy over Snapchat's recent redesign. The thing investors were focused on more than anything else was that Snapchat's user growth rate slowed to its lowest rate ever. Snapchat had 191 million daily active users, but that was only up 2.13%. On the conference call, Snapchat's CFO said, quote, we are planning for our Q2 growth rate to decelerate substantially from Q1 levels. For investors in social networks, user growth

is everything. Snap's shares opened down 20% on the news this morning, touching all-time lows for the stock. And overnight, at least 15 analysts lowered their price targets on SNAP. And a note to clients, Piper Jaffrey wrote, Snap is a poorly structured company that is demonstrating a clear pattern of mismanagement, end quote. Business Insiders Alexei Oroskovic tweeted, SNAP's North American daily active user growth has basically stalled to Twitter-like levels. And TechCrunch's Josh Konstine painted a dire scenario tweeting, there's a savage tone of skepticism coming from the analyst on Snap earnings call.

No one sounds like they think it can extinguish this quarter's garbage fire. With user growth at a crawl, Snapchat will have to cram in a lot more ads to significantly grow revenue, which will further reduce user growth. Death spiral. Good news reported from Hulu, however. As had been rumored, Hulu announced that it had passed the 20 million subscriber mark in the U.S. for the first time. That's up from 17 million subscribers. just this past January.

But more exciting for you, if you're a Hulu subscriber, Hulu is finally adding offline viewing. Viewers of both Hulu's ads supported and ad-free subscription plans will now be able to download shows to watch on a plane, say, something Amazon and Netflix have both allowed for several years now. The only catch is, unless you've paid to go ad-free, then you'll be downloading the ads to watch along with the shows. Hulu says it's the first company to feature downloads of ads alongside content.

We will not only be live and on demand, but also untethered and on the go anytime, anywhere. No Wi-Fi needed, said Hulu CEO Randy Freer. Hulu was in New York City this morning for television up fronts, pitching their offerings to advertisers, and as a part of that, the company also announced what is being called its biggest kids and family deal to date by inking a multi-year deal with DreamWorks animation. So in the future, if you want to stream Boss Baby 2 or get your Shrek on, Hulu will be the exclusive place that you can do so. Moving from video streaming to music streaming,

Pandora apparently has learned a valuable lesson from its users. The company recently commissioned a study of its own users to attempt to determine what sort of ad load and what type of ads users would tolerate before they were turned off. The study segmented users into different groups and served them different numbers of ads per hour. Quoting from the wired piece that's highlighting the study, the study found that, quote, serving one additional ad per hour resulted in a 2% decrease in average listening time

and a 1.9% decrease in the number of days a user listened. The results were consistent across age groups, even though middle-aged users listen more hours and younger ones and older ones. The upshot from the study was that users who heard more ads were more likely to pay for Pandora's ad-free subscription service, but for each user that became a subscriber, three more abandoned Pandora entirely. The study also found that the amount of revenue Pandora would earn from new subscriptions did not make up for the revenue that it would lose from advertising it couldn't sell against those lost listeners. One more time today, a story from the Wall Street Journal, which, is reporting that the Pentagon is moving to halt sales of Huawei and ZTE phones in retail outlets

on U.S. military bases around the world citing potential security threats. The U.S. government fears that Beijing could order Chinese manufacturers such as these two to hack into products or conduct digital spying on the Chinese government's behalf. As the journal points out, Huawei is the world's third largest smartphone maker behind Apple and Samsung, but it is not a huge player in the U.S. market. ZTE, however, is the fourth largest seller of phones in the U.S. Army Major Dave Eastburn, a pedigone spokesman, said in a statement, quote, Huawei and ZTE devices may pose an unacceptable risk to the department's personnel, information, and mission. In light of this information, it was not prudent for the department's

exchanges to continue selling them, end quote. Major Eastburn admitted the government can't dictate which phones U.S. military personnel purchase for their personal use, but he urged personnel to be mindful of security considerations when they do so. The U.S. military was already reviewing the use of fitness tracking apps and fitness wearables on or near U.S. military bases as a potential security risk as well. A couple of interesting pieces to end with that I didn't want to fall through the cracks. First, Bloomberg has an interesting look at the frenzy to hire U.S. young tech talent in China, a place where age discrimination is actually legal and three quarters of tech workers are younger than the age of 30.

Quoting from the piece, Helen He, a tech recruiter in Shanghai is well acquainted with age-related pressures. Now 38, she's been told by her bosses not to recruit anyone older than 35. Most people in their 30s are married and have to take care of their family. They're not able to focus on the high-intensity work, she says, parroting the conventional wisdom though she also may be talking about her own future, should she find herself back on the job market. If a 35-year-old candidate isn't seeking to be a manager,

a hiring company wouldn't even give that CV a glance, she said. And over at Wired, there's a piece up about using artificial intelligence to predict box office hits in the movie business. Quoting from the piece, Volt is an Israeli startup founded in 2015 that is developing a neural network algorithm based on 30 years, of box office data, nearly 400,000 story features found in scripts and data like film budgets and audience demographics to estimate a movie's opening weekend. The company is only a couple

years in, but founder David Stiff recently told Fortune that roughly 75% of vault's predictions come pretty close to film's actual opening grosses, end quote. The title of the piece is could artificial intelligence predict the next Avengers Infinity War? But, But I'd point out, and the piece sort of alludes to, the fact that the whole reason we have cinematic universes is because Marvel and Disney have cracked the code on manufacturing IP that is essentially can't miss, at least so far. By rolling one Marvel film into another until it makes up an overarching tapestry of a story, Disney was under little doubt Infinity War would make $258 million last weekend because it spent the last few years getting us all invested in that story. That's what cinematic universes are all about. Manufactured, guaranteed, Bafo box office. That's all for today.

Thanks for listening to the TechMeme Ride Home. I've been your host, Brian McCullough. Follow me on Twitter at Brian MCC. Talk to you tomorrow. I swear, tech earnings season is almost over.