Tech Narratives was a subscription website, which offered expert commentary on the day's top tech news from Jan Dawson, along with various other features, for $10/month. As of Monday October 16, 2017, it will no longer be updated. An archive of past content will remain available for the time being. I've written more about this change in the post immediately below, and also here.
Qualcomm Files Response to Apple Lawsuit (Apr 11, 2017)
Qualcomm has now officially filed a response to Apple’s lawsuit over anticompetitive practices and breach of contract, including both answers to the specific allegations in the suit and a number of counter-claims. One of the main counterclaims is that, by “inducing” regulators to look into Qualcomm, Apple breached the companies’ “Cooperation agreement” and therefore was no longer entitled to certain payments it had received previously. The document further alleges that Apple made many false statements in the course of both its own suit and the discussions it had with regulators, and tried to insert itself into relationships between Qualcomm and other Apple suppliers. Perhaps most interestingly, Qualcomm brings to light something which was covered in the press at the time but didn’t get much attention: the allegation that Apple deliberately hamstrung the Qualcomm chips in the iPhone 7 such that performance would be consistent with those models that had Intel modems, and then prevented Qualcomm from talking about it. On the face of it, that allegation has nothing to do with the broader allegations, but it’s an area where Apple’s public reputation could be vulnerable, and I’m guessing it’s been included in the suit to garner more attention than Qualcomm would get through focusing on the patent and other issues alone.
Here’s our second LeEco story of the day, both fairly momentous (the first was news that the Vizio acquisition had fallen through). This one fits with the recent narrative of financial troubles at LeEco, and if the numbers in here are right, then things are indeed going very badly, with revenue of $15 million versus a target of $100 million in 2016 and layoffs of around a third of the US employee base planned. I’ve been skeptical of LeEco’s strategy from the beginning, and have only become more so as we’ve seen that strategy play out in the shadow of the financial troubles of the parent company. More broadly, LeEco’s struggles in the US demonstrate how different the US and China still are as markets, and how hard it is for companies to go either way across that chasm. No big Chinese company has yet been successful in the US, and Apple remains something of an exception as a US company that has done well long-term in China. LeEco was up against this from the beginning and its focus on an ecosystem play was always going to struggle without a big known brand like Vizio at the center of it here in the US.
Important update for Tech Narratives RSS feed users (Apr 10, 2017)
An important update for those of you using the Tech Narratives RSS feed:
From launch in January, I’ve said that the site was eventually going to have a paywall which would put much of its content into a subscription service, and as of this week that process has now begun. From today onwards, the RSS feed will only carry the few articles each day which will be freely available, and others will be behind the paywall. The subscription is $10/month and there is a 30-day free trial, so you can try it out before spending any money. You can sign up here, and as part of the subscription you will have access to a private RSS feed which will allow you to keep receiving posts in your feed reader as long as you remain a subscriber. You’ll need to update your RSS reader to reflect that new link if you choose to subscribe.
Twitter Opens Advertising Analytics to Third Parties (Apr 10, 2017)
As per the Marc Pritchard interview I covered earlier today, many advertisers are still concerned that they’re essentially being defrauded when placing ads online, because they don’t know which ads are really being seen by human beings as opposed to bots. One of the big requests these brands have had for ad platforms is increased outside auditing by independent firms which have standardized measures for things like viewability and can compare metrics across multiple platforms. We’ve already seen Facebook and Google open up both for outside auditing and for measurement by third parties, and Twitter is now joining them. Twitter’s analytics around advertising have been an area of weakness, so even nothing here directly improves Twitter’s own tools, open up to third parties should at least help some advertisers feel better about the data they’ll get back when advertising on Twitter.
Twitter today announced Custom Hearts, an equivalent of sorts to Snapchat’s Sponsored Filters product for advertisers. Advertisers can now use the Custom Hearts product to replace the standard heart icon that users use to show appreciation for a live video stream in Periscope or Twitter with a brand image of some kind. The example used here is the movie franchise The Fast and the Furious using “F8” as an alternative to promote its eighth film, which premiered over the weekend. It’s a lot subtler than Snapchat’s Sponsored Filters, and it doesn’t have the same social multiplier effect of users applying a sponsored filter to a picture or video and sharing it with their friends, but it’s good to see Twitter innovating to find new forms of advertising given its recent struggles with growing ad revenue. More importantly, it’s also doing more with analytics, something I’ll cover in a second post shortly.
I wrote a piece last week for Techpinions about the fragmentation in the TV market as everyone launches their own streaming services, and here comes yet another example of that. It sounds like Comcast is working on a service that would combine content from NBC and the NBCU cable networks into a single subscription package, although the conditions on the Comcast-NBCU merger make it unlikely that it will debut in the next 18 months or so. But we’ve already seen the premium cable networks (HBO, Starz, and Showtime) go over-the-top, along with broadcaster CBS and NBC itself with a comedy subscription service called Seeso. As cord cutting and cord shaving eat into cable network subscriber numbers, we’re going to see lots more of this direct-to-consumer stuff. In principle, that sounds great for consumers, who will now be able to pick and choose just the content they want, but in practice they’re likely to end up spending more and dealing with multiple bills, user interfaces, and content models to get it, which is in turn going to lead to an opportunity for re-aggregation down the road.
This shouldn’t be a surprise to anybody – Google actually showed off what appeared to be multi-user support in its demo of Google Home at I/O last year, but then it turned out the finished product didn’t support it when released in the fall. A little while back, rumors began surfacing that it would add the feature soon (and Amazon too), but that hasn’t materialized yet. The screenshot shared here suggests it’s imminent at this point. This is important, because assistants have to be personal if they’re to be really useful, and most people live in homes with other people, whether family members or roommates, and so things like calendar, email, to-do lists aren’t much use to individuals unless they can be recognized and served up different results. That’s not easy to do, especially because these speakers tend to process voices before recognition takes place, which actually makes it harder to recognize the speaker, but the companies were bound to figure it out eventually. If Google does end up launching this before Amazon, this will be yet another performance advantage, even though its distribution disadvantage remains enormous.
via The Next Web
At this point, I’m pretty sure the only people still worrying about the Note7 and the impact the recall has had on demand for Samsung phones are reporters. All the evidence from consumer surveys right from the start has suggested that (a) no-one’s views on Samsung were changed all that dramatically by the recall, and more importantly (b) those with recent direct experience of Samsung products budged least in their views. In other words, if you’d used lots of Galaxy smartphones and they’d never blown up, you had reasonable confidence the next one you owned wouldn’t either. These new statements from Samsung back that up, and it looks like the phones are doing even better than last year’s, which shouldn’t be surprising because they really do look pretty compelling, at least on paper (reviews should be coming out in the next week or so and that may change demand for the better or worse). Given that sales are mostly going to be coming from existing owners of Galaxy S phones, none of this should surprise anyone. And I know from talking to them that Samsung employees are desperate to put the Note7 behind them, and quite reasonably so at this point.
Cadillac takes aim at Tesla’s Autopilot with ‘hands-free’ Super Cruise technology – The Verge (Apr 10, 2017)
One of my big objections to Tesla’s Autopilot technology has always been the name, which connotes a level of autonomy the system doesn’t actually aspire to and which it certainly doesn’t deliver. Tesla has partly dealt with that issue by updating its software to require users to keep their hands on the wheel, but does little else to ensure attention, which means that even when the system performs as it should, there’s little guarantee that the human driver will. Cadillac today announced a new Autopilot-like feature but very sensibly named it in a way much more likely to give buyers and users an accurate impression of what it does, tying it to the very familiar cruise control already in almost all new cars. However, the more important thing in my view is that the system also comes with lots of protections designed to ensure that the driver does actually pay attention, which is a huge issue in situations where attention but not activity is required, such as driving a car with this kind of intelligent cruise control running. There’s a long history of scientific research in this area, and it all says that paying attention in a passive way like this is something human beings aren’t good at, and Cadillac’s new system is designed to help the driver stay attentive. The big question about this new system, though, is that although it’s being billed as LIDAR-based, it’s not using a LIDAR in the car but instead using mapping data previously generated by LIDAR, which means it’s non-real-time. That, in turn, means that if anything has changed in the road environment since the map was generated, the car won’t know about it, and GM doesn’t seem to have talked much about how frequently it’s going to update its maps of US and Canadian highways to mitigate this.
via The Verge
LeEco’s Acquisition of Vizio Officially Called Off – Variety (Apr 10, 2017)
There have been several signs that this acquisition wasn’t going smoothly, starting late last year when the companies said it wouldn’t close until 2017, pushing back the original close date, and continuing recently. The official reason for the collapse of the deal is regulatory headwinds, and supposedly tighter restrictions on getting Chinese capital out of the country, though of course LeEco has recently had a tough time getting money out of China to pay salaries in the US too, and that had nothing to do with regulatory barriers, so it’s possible that the real reason is some combination of factors. At any rate, what was to have been by far LeEco’s most prominent product and brand here in the US now won’t be, and it’ll have to fall back on its other, much less well known, products instead, giving it even more of an uphill climb in penetrating the US market.
Facebook is using a milestone of 5 million advertisers to talk about its efforts to attract small and medium-sized businesses as customers, and it appears Sheryl Sandberg has been doing the rounds talking to various publications about the effort. They key points here are that this number has been growing rapidly – up from 4 million last September and 3 million just over a year ago – and that it’s still just a fraction of the 65 million businesses that have Pages on Facebook. Facebook’s big advantage here is that building websites is the sort of thing no small business wants to do because it’s either hard or costly (or both) to build and maintain, and the results often aren’t that great anyway, so using a Page instead has enormous advantages – it’s easy to build and maintain without any technical knowledge, and it’s in the place where your customers likely already spend a lot of time each day. Adding very targetable advertising on top is therefore an easy sell for businesses who already use their Pages as one of their main ways to attract and communicate with customers, and much of Facebook’s growth over the last few years has come from getting deeper and deeper into that base of companies already using Facebook to promote themselves organically. Twitter, by contrast, has suffered recently in part because it hasn’t been able to break through into this segment and therefore has had to focus on the larger advertisers rather than enabling a much longer tail of more automated buying by smaller businesses, hence its very high sales and marketing cost relative to revenues (over a third of revenue vs. 13-15% at Facebook over the past year).
Amazon’s Third-Party Sellers Hit By Hackers – WSJ (Apr 10, 2017)
The bigger you get in almost any technology business, the more hackers will try to find ways to infiltrate that business and skim off some of the money. That now appears to be happening at substantial scale with Amazon’s third party sellers, many of which are likely relatively unsophisticated from a computer security perspective. The hackers are engaging in at least two separate behaviors, in some cases merely redirecting sellers’ proceeds into different bank accounts, and in others taking over dormant seller accounts and posting fraudulent products. Though it sounds like Amazon is making both buyers and sellers whole, it could be doing more to prevent the issues from occurring in the first, place, not least by requiring two-factor authentication for seller accounts. Though there’s often reluctance to force 2FA on users in the consumer space, these aren’t consumers, and the amounts of money involved make that an entirely sensible precaution. Given how much of Amazon’s total sales goes through third party sellers at this point, this could become a massive issue if it doesn’t do more to lock things down.
Though 5G standards haven’t been finalized yet, it’s already clear that some major networks will be running in much higher frequency bands than previous generations of technology, and specifically in what’s known as the millimeter-wave bands between 30 and 300GHz, mostly in the lower part of that range. As such, spectrum in those bands has suddenly become much more valuable, and companies are starting to snap it up. AT&T already bought some earlier this year and now is spending $1.6 billion to buy up a holding company which owns a decent chunk of it. Straight Path hadn’t actually been putting it to use as required by its purchase contract, and so has been forced by the FCC to hand it over to someone else, precipitating a sale process. Given how little spectrum is available generally, this is a decent price for an increasingly valuable asset, and it will likely increase interest in other holders of higher-frequency spectrum, including DISH. We’re still very early in the 5G rollout phase, but we’re going to see lots more purchases like this (including some of actual businesses rather than mere holding companies) over the next couple of years as the big existing players and some new entrants line up 5G spectrum.
P&G Chief Brand Officer Renews Calls for Advertising Platforms to Grow Up – New York Times (Apr 10, 2017)
I won’t cover this in depth again here – I covered Marc Pritchard’s remarks in January at the time, and his line hasn’t changed much. But given all that’s happened in the interim it’s worth reiterating that Pritchard remains a prominent voice advocating for change in the digital advertising platforms on behalf of big brands. Specifically, he’s arguing for more transparency in what can be a very opaque value chain from start to finish. None of these issues are going away soon, though it’s arguable that what the brands really want here is more leverage, so I would guess that they’ll keep beating the drum while slowly getting more and more of what they want. The crisis of sorts around ads showing up against undesirable content is likely to blow over soon enough, but the ongoing tension between advertisers and these platforms won’t go away any time soon.
On the face of it, this could look like the in-app purchase model that so many other games have used so successfully over the last few years, which would look like capitulation on the part of Microsoft to the prevailing model. However, even though the article implies towards the end that that’s what’s happening here, this is actually something different. Whereas the classic IAP model often holds progress in the game hostage to the purchase of various items through the medium of in-app currency, Minecraft has always eschewed that model, instead charging a high up-front fee to purchase the game in the first place, with a small number of in-app purchases for specific items. It is now opening up that latter model to a small number of third parties, and while the use of in-game currency as the medium may carry echoes of the classic IAP model, this is something very different. Given the addictive qualities of the IAP model, that’s a very good thing, given that the game’s audience is largely children. The last thing Microsoft wants is for Minecraft to get a reputation for being a sort of Candy Crush for kids, whereas it’s currently known as a game that has at least some educational qualities.
Instagram Stories has been a huge hit, in part because it taps into the same instincts that have driven Snapchat’s massive success: it allows people to share photos and videos in a way that’s more casual and therefore more natural. It’s therefore smart that in advertising the feature in a global campaign, that’s one of the elements the company is focusing on. But an out-of-home campaign like this also suggests Instagram wants to attract new users to the feature and to Instagram, not just ride its existing base in growing adoption of Stories. Note that this story quotes the same 150 million user number we’ve seen for Stories in the past from Facebook – when it reports financial results for Q1 in a few weeks, it’ll be worth looking for an update on that number, to see whether it’s stagnated (or whether growth has slowed).
Update: on April 13th, Facebook announced that Instagram Stories now has 200 million, so looks like growth is still going strong.
Flipkart raises $1.4Bn from Tencent, eBay & Microsoft at $11.6Bn valuation, acquires eBay India – Economic Times (Apr 10, 2017)
There were recent rumors that Japan’s SoftBank might want to combine its investment in Snapdeal with an acquisition of Flipkart, but this funding news suggests that’s going to come later if it comes at all. The trio of companies investing here is intriguing. Tencent is perhaps the least surprising, as a company that invests heavily overseas including the US in minority stakes. eBay is apparently using this investment as a vehicle to buy into a bigger e-commerce business in India, as it’s transferring its own Indian operations to Flipkart as part of the process. Microsoft is the most interesting of all – though Flipkart recently switched to Azure for cloud services, Microsoft has no significant direct stake in an e-commerce anywhere else, so this is something of a departure for them, though of course major competitor Amazon already combines cloud and retail. Flipkart had in the past seemed to be the leader in the Indian e-commerce market, but has fallen from that role in the last couple of years as two overseas companies – Amazon and Alibaba – have made inroads there. This is a down round over the company’s previous valuation, but it and its new investors will be hoping the infusion of cash helps it get back into contention.
via Economic Times
There’s some good analysis here from the FT around a couple of different metrics relating to the performance of larger and smaller companies in the US tech industry. Specifically, the FT suggests larger companies’ shares have performed better, and that they vastly outspend smaller companies on R&D, something that makes it extremely tough for smaller companies to compete on a level playing field. This absolutely rings true: over the last few years, not only scale but also broad scope have become extremely important as competitive differentiators as companies increasingly build not just individual products and services but interconnected ecosystems. Those companies also regularly acquire smaller companies that develop interesting new technology, using M&A as another form of R&D on top of the billions they already spend organically. All of that makes it extremely difficult for smaller companies not only to compete but to grow to any decent size. Snap is one of the few big consumer tech companies to get large enough to reach IPO stage in recent years, and only because it has explicitly rebuffed acquisition offers along the way. Even then, it’s still a tiny fraction of the size of the big players in terms of revenue or user base. Companies that make it this far have always been the exceptions, but that’s only going to become more extreme going forward.
via Financial Times
Google accused of ‘extreme’ gender pay discrimination by US labor department – The Guardian (Apr 7, 2017)
The Department of Labor is suing Google over an alleged failure to adequately disclose its compliance with equal opportunity laws as a federal contractor. During the course of the court case, the DoL has accused Google of having a significant gender pay disparity, something Google strongly denies. Were the allegations to be true, it would be extremely damaging for Google’s reputation as an employer, but given that Google hasn’t given the DoL all the documents it’s asking for, you have to ask whether the Department has a full picture of Google’s pay practices. Google, in turn, has argued that the DoL has gone too far in its request for documents and that it has already adequately complied with the applicable regulations. Recent surveys have shown significant gender and race pay disparities within the industry, so it wouldn’t be surprising if those patterns held at Google too, but it claims its own data shows no such disparity. The court case will presumably eventually come down one way or another both on this question and whether Google has adequately complied with regulations, so it’s worth keeping an eye on how this develops.
via The Guardian
Jay-Z quietly removes catalog from Apple Music and Spotify as Tidal continues fight for exclusives – 9to5Mac (Apr 7, 2017)
Jay-Z, one of the owners of the Tidal music service, has apparently pulled all his solo music from both Apple Music and Spotify, though without any kind of official explanation or much fanfare. In theory, it’s likely that he’s trying to reinforce one of the original value propositions of Tidal, which was that its artist-owners would provide exclusives for their music, though in practice most of the owners have continued to license their music to other streaming services, which have far bigger subscriber bases. Tidal has struggled financially, and recently got something of a lifeline from Sprint, but it may have decided that it needs more exclusives to drive interest and subscriber numbers. I’m not convinced it’s going to do all that well on that basis given that the vast majority of the global music catalogue is still available on other services, but this is yet another sign that exclusives – whether temporary or long-term – are one of the few sources of differentiation to streaming music services, whether or not that’s good for their subscribers.