Important Note
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.
Daily Podcast Episode 62 – September 22, 2017 (Sep 22, 2017)
The daily podcast episode for September 22 is up now on SoundCloud and should be syncing shortly to iTunes, Overcast, and other podcast apps. As usual, the podcast spends about one minute on each of the items covered on the site today, and also points to a few other items in the news today which I didn’t cover but which are nonetheless interesting. You can find today’s episode on SoundCloud and all episodes on iTunes, Overcast, and so on. The additional items covered are below:
Mark Zuckerberg Drops Plans to Create New Share Class to Retain Facebook Control (Sep 22, 2017)
Mark Zuckerberg has dropped plans to have Facebook create a new share class designed to allow him to retain voting control of the company even as he sells many of his shares to fund his philanthropic effort. The move had angered shareholders, who filed suit to prevent the change, and Zuckerberg appears to have caved rather than have to go to court to defend his actions (and potentially the broader issue of the special class of shares he already holds). His argument is that Facebook is doing so well that he can retain control while selling enough shares to fund his philanthropic efforts. The case would have been really awkward for Zuckerberg at a time when he’s been making significant changes and concessions to try to improve public perceptions of Facebook and him personally, so this was probably a smart move, and one which won’t have too many negative consequences for him (and none for Facebook as a company).
via Bloomberg
Facebook Announces Partnership with Nielsen to Measure Brand Lift Including TV (Sep 22, 2017)
Facebook has announced that it’s partnering with Nielsen to provide advertisers with a combined measurement of brand lift for campaigns that run across both Facebook and TV. That provides a consistent set of metrics for advertisers that use both platforms, but more importantly it puts a big dent in the idea that Facebook and TV are at war, a narrative the media seems keen to perpetuate but which Facebook itself has repeatedly downplayed. While it’s certainly the case that Facebook is chasing some of the same ad dollars as TV, and Facebook has even made the case that TV ads are less effective than Facebook ads, it’s also pushed back against the idea that it’s trying to kill TV advertising. This partnership suggests that Facebook is realistic about the fact that most advertisers are going to continue to run ads both online (including on its platform) and on TV, and that it can best support those advertisers by making it easier to measure the performance of campaigns in both media. It’s also making the argument that campaigns that run in this way actually see better results than those which only run in one place.
via Facebook
Apple Wins First Small Battles in Court Against Qualcomm (Sep 22, 2017)
I haven’t seen much coverage of this today, but it appears that Apple won a first couple of small battles in its various lawsuits with Qualcomm. A California judge ruled that Apple’s supply chain partners don’t have to pay the royalties they’re currently withholding until such a time as the proper amounts to be paid have been determined, and Qualcomm was also denied its request to end the litigation being pursued separately by Apple in other countries. These are initial steps in what’s going to be a potentially long and complex set of court cases between the companies, but it’s possible that the companies will end up settling once it becomes clearer which way the legal wind is blowing, and they would then likely drop all outstanding litigation. By themselves, these first decisions aren’t indicative of which way things are going to go, but they do put increased financial pressure on Qualcomm, which has seen reported revenues drop as Apple’s partners withhold royalties, which will likely push it to move to settlement sooner rather than later, something that’s probably good news for Apple.
via Apple Insider
Imagination Tech Announces Sale to Chinese-Backed Canyon Bridge (Sep 22, 2017)
Imagination Technologies, whose GPUs Apple said it would soon stop using back in April, prompting a massive selloff in the stock and a decision to explore strategic options, has announced that it’s agreed to sell most of its business to a Chinese-backed private equity firm, Canyon Bridge, with Silicon Valley investment fund Tallwood Partners buying the MIPS business it had previously said it might sell separately. Apple, of course, announced a GPU designed in-house at last week’s iPhone event, which means its abandonment of Imagination Tech as a chip supplier is going even more quickly than we might have thought. Since April, the story of Imagination has been a cautionary tale about what a double-edged sword being an Apple supplier is – on the one hand, a huge boon to your business, and on the other hand a massive risk that it someday pulls the plug because it’s found an alternative supplier or simply decided it can do things itself. It’s good to see Imagination find a way out, but the acquisition price of 182 pence per share, a significant premium over its recent share price, is still way below its high of 291.50 right before the Apple news came out.
Amazon Runs Big Kindle Sale on Rival Alibaba’s Site in China (Sep 22, 2017)
Amazon is running a big sale of its Kindle hardware on rival Alibaba’s site in China, a concession that it’s way behind its domestic competitors and needs to leverage their platforms in the country to achieve meaningful hardware sales. It’s a useful reminder that, for all Amazon’s dominance in e-commerce in the US and a handful of other markets around the world, it’s largely failed to break into China in a meaningful way. One big reason is the same of localization that’s plagued other big US tech companies in China, something that Apple has recently been trying to fix. Amazon has arguably done much better with localization in India, which this Recode piece suggests is going rather better for Amazon at this point than its foray into China. It certainly isn’t giving up on China just yet, but does seem to be more willing to acknowledge its failures there and pursue other strategies to achieve at least some of its objectives there.
via Recode
Apple Stock Price Falls Most in 17 Months, Some Suggest Weak Demand for iPhone 8 (Sep 22, 2017)
This Financial Times piece seems like as good a hook as any to round up the week’s Apple news and to talk about perceptions of weak demand for the iPhone 8. The FT points out that Apple’s stock has had its worst week in 17 months, falling over 5%, as a result of some mixed reviews of its new products and perceived weak demand for new iPhones. As I said earlier in the week, the Apple Watch LTE reviews were particularly problematic, but I think much of the rest of the worry this week is overblown. It has been clear that overall demand for the iPhone 8 during the preorder period and in today’s first day on sale has been a little weak, but it’s also been clear that Apple has still sold out its first week or two of preorder inventory and that there were still lines in major stores despite the years-long decline in retail sales on the first day given the success of online pre-sales. From a financial perspective, all that really matters is that Apple sells a few more iPhones in the first ten days or so than it did last year, and that it has a strong December quarter, which will combine ongoing sales of the iPhone 8 line and the iPhone X line from about a month into the quarter onwards. It certainly seems to be the case that iPhone X interest has dampened early iPhone 8 sales somewhat, but as long as Apple has the X in decent supply in November and December, that needn’t be a problem, and it’s certainly not the case that the iPhone 8 isn’t selling at all. As such, I think Apple will be fine even if overall demand for the 8 line isn’t as strong as for the 7 line last year, but the big wrinkle will be supply of iPhone X models. If those are very constrained throughout the December quarter, that will be a bit more problematic.
via Financial Times
Google Confirms Both it and Partners Will Issue Refunds for Fraudulent Traffic (Sep 22, 2017)
Last month, the Wall Street Journal reported that Google was preparing to offer refunds to advertisers whose ads had appeared on sites with no legitimate traffic but who were nonetheless charged as if there had been traffic. The problem with the refunds was that Google itself could only refund a small portion of the total because much of the money from the advertisers went to ad exchanges also involved in the transactions. Google has now announced the refund program publicly, and said that several major exchanges will also join in offering refunds, which should return a much more substantial part of the total payment. As also reported earlier by the Journal, Google is also going to be participating in a program called ads.txt, which makes it much easier to validate sites claiming to have large amounts of traffic and therefore cuts down on ad fraud, which should be a big help in this specific type of fraud, even as others persist.
via WSJ
Sprint and T-Mobile Reportedly Nearing Agreement on Deal Terms (Sep 22, 2017)
Reuters reports that Sprint and T-Mobile are nearing agreement on key terms of a merger deal, and suggests that due diligence and other steps would need to come before announcement of a merger agreement in October. This is a follow-up to an earlier report this week that the two companies were in serious discussions, and fleshes out one or two details, though at least one seems off. The report suggests SoftBank’s stake might be as high as 40-50% after the merger, which seems much too high given the relative value of Sprint and T-Mobile and SoftBank’s stake in the former. Sprint’s Nextel merger had disastrous results in large part because the Nextel portion was valued much too highly in a touted “merger of equals” and the company spent the next several years slashing costs fiercely in a bid to justify the price with synergies, something which led to its terrible network performance and decline in the years afterwards. So neither Sprint nor T-Mobile should want to make that mistake again. With SoftBank driving the deal, I would expect it to make concessions and end up with a much smaller stake at the end of the day. But big synergies could indeed follow as the companies merge, and their combined scale would drive much more competitive network and advertising spend, retail presence, and other big benefits in their competition with the two big carriers.
via Reuters
★ Uber Loses License to Operate in London Over Bad Behavior (Sep 22, 2017)
Transport for London, the entity that oversees public transportation and taxi services in the UK capital, has refused to renew Uber’s license to operate a private ride for hire service in the city, citing several examples of bad behavior. It’s perhaps the most tangible sign yet that Uber’s toxic culture, disregard for regulation, and general willingness to do what it takes to win in the market have come home to roost. The timing is unfortunate given the ouster of Travis Kalanick and the recent appointment of Dara Khosrowshahi as CEO, but clearly stems from behavior that took place long before those recent changes. Uber has said it plans to appeal and Khosrowshahi has said both in communications to employees and in public on Twitter that the decision is in part Uber’s own fault, which is heartening. It’s important to note that this decision isn’t about ride sharing services in general but specifically about Uber’s bad acts, so Uber needs to address those specific concerns even as it makes its usual arguments about the benefits to society a service like Uber provides. This is an unusual situation for Uber to be in – being banned in a city where it’s well established and generally well regarded, without a broader ban on ride sharing services. If I were Dara Khosrowshahi, I’d be on the next plane to London to talk to TfL, understand exactly what the issues are, fix what still needs fixing, and promise to do much better in future. Losing its presence in a city like London could be enormously damaging to its business in the UK and Europe more broadly because so many people travel through London.
via Bloomberg
EU Competition Chief Says Google’s Shopping Remedy to be Approved by Competitors (Sep 22, 2017)
This seems like a totally bizarre stance from the EU’s Competition Commissioner in response to Google’s proposed remedy to its alleged abuse of its dominant market position. Google is reported to have offered an auction to fill the Shopping slot it previously occupied exclusively, and Margrethe Vestager says her office won’t approve the remedy as such, but will wait to see whether it works in the market. That’s enormously unfair as an approach because it means Google could act in good faith, believing it’s proposed an adequate remedy, only to find out much later than it hasn’t and is subject to back-dated fines. Given that the European Commission found that Google violated its rules, it should surely also be the arbiter of whether the proposed remedy fixed things or not. And allowing the comparison shopping services that prompted the investigation in the first place to be the judges instead seems particularly unreasonable given that they have a vested interest in continuing to extract concessions from Google. I said when the proposed remedy was reported last week that I thought it unlikely to be sufficient, but to leave Google in legal limbo on this point just isn’t reasonable. It gives the impression that the EU has an axe to grind with Google and wants it to suffer rather than simply providing the legal clarity it should be entitled to.
via Bloomberg
Daily Podcast Episode 61 – September 21, 2017 (Sep 21, 2017)
The daily podcast episode for September 21 is up now on SoundCloud and should be syncing shortly to iTunes, Overcast, and other podcast apps. As usual, the podcast spends about one minute on each of the items covered on the site today, and also points to a few other items in the news today which I didn’t cover but which are nonetheless interesting. You can find today’s episode on SoundCloud and all episodes on iTunes, Overcast, and so on. The additional items covered are below:
Baidu Announces v1.5 of its Autonomous Platform and $1.5bn Fund to Invest in Projects (Sep 21, 2017)
Baidu has announced version 1.5 of its Apollo autonomous driving platform with several new features and also announced a $1.5 billion (10 billion yuan) fund to invest in 100 autonomous driving “projects” over the next three years. All the detail in the press release is around the platform, the traction it’s gained, and the new features, which include obstacle perception, planning, cloud simulation, high-definition (HD) maps and
“end-to-end deep learning” capabilities. When the platform first launched, it sounded impressive on paper but in practical terms appeared to be rather piecemeal and unfinished, with many necessary components missing. The new features certainly fill some gaps but don’t supply all the missing pieces, and it’s likely that the platform still isn’t really ready for prime time deployment, especially outside of China where Baidu doesn’t have granular mapping data. The fund, meanwhile, is not detailed at all in Baidu’s release and it’s really not clear whether it will be a venture capital-style fund for investing in companies, or whether it will be more in the nature of grants supplied to companies using Baidu’s technology in some way. Either way, it’s a significant chunk of money in what’s already a very crowded and high-spending field.
via Baidu
Microsoft Confirms Plans for First UK Store (Sep 21, 2017)
Microsoft’s retail presence is about to add another country: the UK. Microsoft confirmed plans for its first UK store after some reporting over the last couple of days about an imminent lease for property in London’s Oxford Circus area, after years of rumors and apparent attempts and failures to secure appropriate space. Microsoft has just under 90 full stores worldwide and ten or so additional kiosk-type stores in the US, with all but one of its stores in North America (most in the US, with a few in Canada and one in Puerto Rico), with just one in Australia. Apple, by contrast, has just under 500 stores globally, including over 270 in the US and 38 in the UK, which was for a very long time its second largest retail presence, eclipsed by China only in the past year or so. But Microsoft’s retail presence has in general never been nearly as successful as Apple’s, in part because it’s never had enough of its own hardware to show off there, and has to rely instead on a mishmash of first and third party gear, with store employees often poorly informed about the details of individual products. The key driver behind the stores, though, has been wanting to pull all of the products based on Microsoft’s platforms together in one place in a more compelling way than big box retailers, which tend to do a terrible job ranging and displaying premium Windows laptops in particular. Just launching a new store in a new country is therefore not really what Microsoft’s retail strategy needs – instead, it needs a rethink of its entire purpose and role in Microsoft’s broader strategy.
via TechCrunch
BuzzFeed is Readying its Morning Show for Twitter Starting Next Week (Sep 21, 2017)
This AdAge report on BuzzFeed’s coming Twitter live morning show is long on facts and short on analysis but nonetheless provides some interesting detail. It sounds like the show will be roughly an hour long and focused on covering the day’s news in a fairly lightweight and Twitter-centric way, and will feature four two-minute ad breaks featuring 30-second commercials. Because it’s BuzzFeed there will also be some sponsored editorial content within episodes, and because it’s Twitter some of the ads and related content will also be parceled up as shorter-form content for the platform. This is all, of course, part of Twitter’s broad expansion into live video with many different partners, and a good test of whether people actually have the time and inclination to watch something like this on Twitter, which I suspect for most people is something they dip in and out of rather than something they have permanently “on” in the way they might do with Twitter. The time slot reference in the article is vague – it merely says 10am, but doesn’t state which time zone that refers to, while earlier articles had suggested an 8am slot, which would put it extremely early in western time zones. 10am ET would certainly make more sense, catching at least some of the country in the pre-work slot when they’re more likely to be able to watch a live show than when they get to work.
via AdAge
eMarketer Data Shows Google and Facebook Share of US Online Ads at 63% (Sep 21, 2017)
A key part of the Advertising Sustainability narrative on the site is the issue of two companies’ dominance of online advertising in the US and to a lesser extent other western markets. New data from eMarketer is a useful checkpoint in measuring that dominance – it says that the two companies will suck up 63% of US online ad spend in 2017, an increase from its earlier forecast of 60%. Microsoft comes in third place way behind the top two, with Verizon in fourth for now and Amazon projected to take its place over the next couple of years. Google and Facebook’s dominance is neither surprise nor mystery at this point – the former has the unique combination of timeliness and relevance that search offers, while the latter has created the most powerful combination of audience and native advertising, dominating their respective categories and leaving the dregs for smaller competitors and less effective forms of advertising. Importantly, though, eMarketer doesn’t see the two companies’ share rising dramatically over the next couple of years – it projects just 68% share in 2019, meaning that other companies will still capture nearly a third of the market, and their dollar share of the total will actually rise since the market is still growing rapidly. eMarketer’s blog post with all the numbers is here.
via Mashable
Snap Cuts Jobs, Changes Management for Hardware Unit (Sep 21, 2017)
Snap Inc has apparently cut about a dozen jobs and shuffled management in its hardware unit in recent weeks, according to Bloomberg. The only hardware this group has shipped so far are the Spectacles camera-glasses launched late last year, which had sold less than 150,000 units as of the end of June by my estimates, and accounted for less than 5% of revenue during that time. Hardware may still end up being an important future revenue stream for the company, but that future certainly isn’t here yet, even though there have been reports about drones and other hardware in the works. Eliminating marketing people from the group suggests either that Snap was unhappy with their work or that it won’t have new hardware to market anytime soon (or both), which reinforces the sense that a meaningful hardware revenue stream is still way off. To put the job cuts in context, though, 12 people represent a tiny fraction of Snap’s overall employee base, which sat at 2600 at the end of June and has likely risen significantly since then (it was under 2000 at the beginning of the year). I argued at the time of the launch that the vending-machine-based scarcity marketing for Spectacles was a very clever way to get far more attention than raw demand itself would warrant, but it never led to much more actual demand.
via Bloomberg
Facebook Addresses Russian Election Ads and Broader Election-Related Changes (Sep 21, 2017)
Mark Zuckerberg’s first big action on returning from paternity leave today was to make a statement via his company’s live platform about the ongoing issue of Russian ad buying to influence last year’s US presidential election and related issues, the text of which has now been posted to Zuckerberg’s Facebook page. The key news from the statement is that Facebook will make the ads in question available to the US Congress, something that it had previously not done out of concern for violating privacy laws. But Zuckerberg also addressed the broader issue of Facebook’s use as a tool to meddle in elections. To my mind, he was refreshingly honest in conceding that Facebook was never going to be able to eliminate this behavior, and would focus instead on the more realistic goal of making it harder. He promised to continue investigating what happened during the election last year and share as much as possible about the findings. He announced a change to how political ads are displayed on Facebook, making it clear which entities are showing ads to which users at any given point in time, something it had previously resisted doing, ostensibly again out of privacy concerns.
There are several other elements to today’s statement which are worth reading in full, but the key takeaway is that Facebook is taking the issues seriously and responding to them in a variety of ways. One of the most notable lines in the statement, though, is this: “We don’t check what people say before they say it, and frankly, I don’t think our society shouldn’t want us to. Freedom means you don’t have to ask permission first, and that by default you can say what you want.” That’s always been Facebook’s default position, and I think it’s the right one – the minute it gets into policing which content is and isn’t acceptable ahead of time, it’s in an increasingly powerful and dangerous role, and it has a sometimes poor track record of making those calls. (A current example is its banning of the Rohingya insurgent group in Myanmar, which is at the very least a highly political decision in light of the ongoing actions of the Burmese government.) My feeling is that election meddling and many other issues facing Facebook – including the recent problems with ad targeting – are 99.9% problems: in other words, if Facebook can stop 99.9% (or some other very large percentage) of that activity from happening, that should be good enough, because trying to solve 100% of them is likely to involve far more work and cost both in financial and freedom of speech terms than it’s worth.
via Mark Zuckerberg (Facebook)
Spotify Launches a Self-Serve, Automated Audio Ad Creation Tool in Beta (Sep 21, 2017)
It’s been increasingly clear in recent months that Spotify has big ambitions for its advertising operation, even going so far as to pitch itself as a threat to Google and Facebook in time. One thing essentially every big ad platform has in common, though, is self-serve tools to enable the long tail of small and medium-sized businesses to buy ads, and that’s an area Spotify hasn’t emphasized enormously just yet. One big challenge is that audio ads are rather tougher to create for small businesses than display ads, and that’s one of the things Spotify is now looking to solve with what it calls the Spotify Ad Studio. The tool will allow advertisers to upload a script and choose music and other options while text-to-speech technology creates the voiceover. That sounds like it could be terrible if it’s anything like other robotic sounding TTS software, but the key is that it dramatically expands the range of advertisers that could run audio ads on Spotify, which now has a large and rapidly growing audience in the US. Given how poorly ad-based streaming music is monetized today, anything which boosts the demand side of the ad market should help raise prices and therefore improve the overall economics, though it’s never likely to rival paid streaming in terms of revenue per user.
via Adweek
Google is Reportedly Working on AI-Based Subscription Help for Publishers (Sep 21, 2017)
The Financial Times reports that Google is working on an AI-based tool that will help publishers identify possible subscribers for their newspapers. This is a somewhat fleshed-out version of a report from a month ago on Bloomberg, which had fewer details but said Google was testing a number of different approaches. As a reminder, the context here is the tension between news organizations and both Google and Facebook over business models, the increasing power of the internet companies, and the challenges of selling online subscriptions and building brands when search and social serve as channels for so much news consumption. As I’ve said before, Facebook began taking this tension seriously some time ago and pouring oil on troubled waters, but it seems to have taken Google longer to come around, and it’s still mostly at the testing stage in its efforts. Putting AI to work in the service of solving the problem is a classic Google move, but it remains to be seen how effective that will actually be. Certainly, the publishers quoted by the FT seem heartened but not yet won over by Google’s new approach.
via Financial Times