The Transport Guy: How Amazon gets away with not paying taxes

Alyssa Pagano and Steve Kovach April 26, 2018 at 11:55AM

Amazon pays almost no federal tax, despite being worth over $700 billion. President Trump has criticized the company for this, yet he recently reduced the corporate tax rate, making it even easier for large companies to pay less. Following is a transcript of the video. 

Steve Kovach: Amazon is the new favorite punching bag for conservatives.

Tucker Carlson: The company's tax payments are not keeping up with its great wealth— okay that's a profound understatement.

Kovach: Wait, not paying enough taxes? That doesn't sound too conservative to me. This sounds conservative.

George Bush: Read my lips, no new taxes.

Kovach: But attacking Amazon for its tax practices is the new conservative line today. That's mostly because President Trump has been attacking Amazon over and over again about how it pays taxes and he's been at it for years.

Donald Trump: Amazon is getting away with murder tax-wise.

Kovach: But believe it or not, in some cases, Trump is right. Amazon's profits in 2017 were about $3 billion and it paid almost no federal taxes.

Bob Bryan: Amazon avoids paying federal taxes using a variety of tax credits and tax exemptions that are legal and built into the U.S. federal tax code. Some of these can include the research and development tax credit which allows them to deduct some of the costs of new investments and also a big one for this past year was the ability to deduct stock-based compensation of executives.

Kovach: Amazon does a really good job at avoiding federal taxes, and for most of its existence, it avoided charging you state sales tax, that's because Amazon used to take advantage of the Internet Tax Freedom Act which said online retailers didn't have to charge sales tax. It allowed Amazon and other retailers to sell tons of stuff to you effectively tax-free. By 2017, that all changed, Amazon started charging sales tax in all the states that have it, but it's not that simple, a lot of third-party sellers sell stuff through Amazon as well, and many of them don't charge sales tax.

Bryan: A lot of sites show that there are tens of millions of dollars every year in state sales tax that go uncollected from third-party sellers.

Kovach: Meanwhile, Amazon is looking for even more sweet tax deals. You've probably heard of HQ2, the new campus that it's trying to build somewhere in the United States, and cities are tripping over themselves to come up with new incentives to get Amazon to come into their town. New Jersey, for example, is offering $7 billion in tax breaks if Amazon builds its new campus somewhere around Newark, New Jersey. Those aren't the only tax deals Amazon has gotten. From 2005 to 2014, it's gotten over $600 million in tax breaks to build warehouses in certain states. It got another $147 million in tax breaks for building data centers around the country. Keep in mind Amazon is valued at over $700 billion, it's not like the company is struggling to save money. Amazon may be getting a lot of attention right now because of President Trump's attacks, but its tax practices aren't unique. A lot of big companies find ways to pay as little tax as possible.

Bryan: If you look at actually kinda the aggregate of the S&P 500, so the biggest 500 companies in the U.S., even though the old statutory tax rate was 35%, the average tax rate that was being paid last year was around 22%.

Kovach: The irony here, of course, is that even though President Trump loves to blast Amazon for the way it doesn't pay taxes, he's putting new laws that make that easier to happen. He just reduced the corporate tax rate from 35% to 21%, oh and that applies to himself too.

Hillary Clinton: He didn't pay any federal income tax, so--

Donald Trump: That makes me smart.

Join the conversation about this story »

How Amazon gets away with not paying taxes from Business Insider: Steve Kovach

The Transport Guy: How a tiny camera startup is taking on Amazon and Google

Jen Atalla and Steve Kovach April 23, 2018 at 11:09AM

It's very difficult for startup companies to build hardware that can compete against large companies like Google, Amazon, and Apple. Wyze Labs' first product — the Wyze Cam — has many of the same features as Google’s Nest Cam for nearly 10% of the cost. Following is a transcript of the video.

Steve Kovach - The big thing about Wyze is it offers a lot of the features that you might see from competitors like Nest and Amazon and all those other companies but it's way cheaper, it's 20 bucks. How do you guys do that? How do you even make money on this thing?

Elana Fishman - Founding this company, what we really focused on was thinking about how do we democratize technology? So there were four of us that founded this together. Our background, we met when we were working at Amazon.

We bring a very customer-centric focus to smart home and we looked at the smart home industry and realized that a lot of the products out there weren't meeting customer needs. So either very expensive or unreliable and glitchy and just weren't meeting the expectations of customers and we thought we could do better.

Steve Kovach - So on paper, spec by spec, it seems very similar to these pricier cameras. Nest cameras have been around for years, your former employer Amazon has their own version and they also just bought Ring. Just walk me through the specs of what this can do and what the competition can do.

Elana Fishman - Yeah, we're basically on par with the other smart home cameras that are out there. It's a 1080p camera, very fast connection when you pull it up into the app, we have the ability to add an SD card which a lot of cameras don't and that way you can do continuous recording locally on the hardware and be able to access that through the app.

A lot of our competitors charge for the cloud storage, we don't, we offer free cloud storage for 14 days. So spec by spec, we're basically on par with our competitors. And for us, what we really think about is not trying to make money on any individual product but getting as many products out there because we really believe that this technology can help people and we want to get it in as many hands as possible.

Steve Kovach - The idea here is you guys can go to suppliers out in Asia and say, "This is what we want" and they can kind of whip it together. Talk about that process.

Elana Fishman - Sure, so for this particular product, we have a very strong relationship with our manufacturer in China. We're not just looking for suppliers, we're looking for partners that believe in our mission of creating quality products at affordable prices. We're looking for partners that are already producing at scale, so have expertise on the supply chain side. So we can leverage their economies of scale and offer products at awesome prices to our customers.

We sold 100,000 in our initial sale and sold out almost immediately and have been chasing inventory since then. We have a lot of people that bought one not really believing they could get a quality camera for $20 and then came back and bought more.

Steve Kovach - And what your team does is mostly they have the hardware side locked down and you guys come in and create the apps that people are using?

Elana Fishman - Yeah, so we focus very much on the user experience. So we create a unique app for our products but at the same time, we work with the manufacturer to improve the hardware. So we just launched the version two of the Wyze Cam, we just started shipping that this week and for that, we took feedback from our customers of how they liked the first version and then we worked with our manufacturer to improve primarily internal components to improve the image quality, the night vision and some different aspects of the chipset within the camera.

So we start with things that may be a little more off the shelf and fine tune them and upgraded them as we hear from our customers on what they want.

Join the conversation about this story »

How a tiny camera startup is taking on Amazon and Google from Business Insider: Steve Kovach

The Transport Guy: How does MoviePass make money?

Jen Atalla and Steve Kovach April 17, 2018 at 08:36AM

By now, most people have heard of MoviePass and its deal of a movie a day in theaters for the price of $9.95 per month. In fact, there are multiple subreddits  dedicated to MoviePass. Even elitist moviegoers forego referencing Rotten Tomatoes for movie recommendations now that MoviePass has made the theater experience financially accessible.

Users of MoviePass ask about limitations of the subscription service from restrictions on theater locations to whether or not users are allowed to see the same movie twice. There are actually few limitations of service which further poses the question, how does MoviePass make money?

Mitch Lowe, CEO of MoviePass, sat down with Senior Correspondent Steve Kovach to discuss the MoviePass business model and the many ways MoviePass turns a profit. Following is a transcript of the video.

Steve Kovach: It's a service that sounds too good to be true. MoviePass, you pay 10 bucks a month, and you can watch pretty much unlimited movies in theaters.

You lose money when I see one movie. How does this business model work out for you in the end?

Mitch Lowe: I always find it interesting that, to get that question, because, you know, Netflix has to borrow billions of dollars a year to stay in business; to create the content, that they don't earn enough money to pay for. If you read the reports about Spotify, they spent two billion dollars more on content than the revenue they generated. And we're no different.

We're building a big subscriber base of film lovers who, over time, we have dozens of ways to make money. For example, marketing on behalf of studios. The film distribution system is completely broken. It's so hard to get a film out in the theater that's not a big blockbuster hit. And there's hundreds of millions of dollars spent marketing those films. We're an incredibly effective partner for those studios. We have people who are coming to our site, you know, four and five times a week where we can sell advertising. And we're on our way to get to break-even on our subscription.

Steve Kovach: So right now, just the subscription part, you're essentially break-even, maybe sometimes a little bit profitable.

Mitch Lowe: We're not there yet. When you do kind of an all-you-can-eat subscription, the first people who join are people in New York, people who go, "Geez, it's a no-brainer. I'm spending $15 on a ticket. This is $10, I'm gonna save money on my first ticket." Or they're the 11% of moviegoers who already go to 18 films a year. Over time, slowly but surely, you start to acquire more of the casual moviegoers. This is why we priced it at $9.95. So where 89% of film-goers, over 200 million people, only see four movies year. And they spend $40 to $60 a year on movie tickets. When they join MoviePass, now they're spending $120. We're increasing their consumption and they'll do it because it's $9.95 and it's an unlimited value for them.

Steve Kovach: So the hope is, it's kind of like the gym membership model, that maybe some of these people won't actually go to as many movies, and they'll, kind of, make up for the people who are going every day. Is that how you're thinking about it?

Mitch Lowe: Not quite. What it ends up is, if you look at the distribution between the casual moviegoer who now is going about 10, 11 times a year. That's roughly what, they're spending $9.95 and they're going a little bit less than one a month. They're kind of breaking even on it. And we add all these other values, like special screenings that are only for MoviePass subscribers. We're going to bring back some of the classics into the big screen that, you know, people haven't seen on the big screen ever, that will be exclusive for MoviePass subscribers.

Steve Kovach: So you're big pitch, is we have well over two million subscribers now, we should easily get to five by the end of the year, it's just going to grow from there. We're going to juice those numbers a little bit by offering these deals once every few weeks. Then you go to marketers and say, what can we do, how can we work with you? How can you pay us to access these people?

Mitch Lowe: Exactly, and our subscribers are so thrilled with the value they are getting, that they're very open to recommendations.

Join the conversation about this story »

How does MoviePass make money? from Business Insider: Steve Kovach

The Transport Guy: Face-swapping videos could lead to more 'fake news'

Kevin Reilly and Steve Kovach April 13, 2018 at 12:14PM

Fake news has been a problem swamping the internet. Now there is a way to make fake videos with nothing more than your laptop. FakeApp can be used to make fake videos of people using images or other videos of them. Several social media platforms are filled with these deepfakes. While the technology still needs works, it's been used to put celebrities into pornographic films. What would happen if world leaders became digital puppets? Following is a full transcript of the video. 

Steve Kovach: You've probably seen this Snapchat filter before. It's called Face Swap. It's an augmented reality feature that takes someone else's face and puts it on your own. But it turns out this fun technology is becoming easy for anyone to use. And not just in Snapchat.

This is called a deepfake. They're shockingly easy to make. And for the most part, people use them to make goofy videos. But there's a darker side to this. It used to be you had to be a world-class film editor to get this effect. But now anyone can do it with just a simple app. FakeApp is a free PC program based on Google's opensourced machine learning technology. Since it's opensourced, anyone can have access to this technology to make fake videos. Think of it as an advanced version of their Snapchat lenses. You feed the program hundreds or thousands of images, and it spits out a fake video.

Deepfakes have already started spreading through many online communities. Most are harmless, but they have crept into the darker parts of the internet too. Of course, a lot of these are silly and goofy. This deepfake shows Nicholas Cage as Lois Lane in a Superman movie. But some have used it for malicious reasons. Like taking celebrity images and putting them in pornographic videos. Gal Gadot and Taylor Swift were some of the many victims of this trend. Twitter, Reddit, and some adult sites have already promised to ban deepfake videos. But the problem doesn't end there. Some are worried that as technology gets better, it can be used to spread hoaxes, conspiracy theories, and fake news online.

Senator Mark Warner: The next wave of technology will be able to have your image with words coming out of your mouth that may not be said, or your face put on somebody else's body in terms of next wave of technology.

Kovach: Could you imagine making a digital puppet out of Barack Obama, or Donald Trump, or Vladimir Putin? Researchers at Stanford University already did this. Imagine someone making a video like that to make a world leader declare war on another country. It's a scary proposition. In the digital age, we've even seen governments use tools like Photoshop to spread propaganda, and with deepfake videos, it's going to take the problem to a whole new level. Social networks are designed to promote content with shock value and shareability. Companies like Facebook, Google, and Twitter have done little to prove that they can handle fake news.

Anchor: Facebook is the most important mechanism facilitating the spread of fake news.

Anchor: Facebook just allows us to quantify that more. How real do you think the fake news problem is?

Guest:  It's a real problem.

Anchor: Facebook CEO Mark Zuckerberg today finally speaking out. Admitting mistakes and vowing to correct them.

Kovach: But if they already have a problem weeding out fake news articles, how are they going to handle fake news videos? Congress hasn't shown that it's willing to regulate the tech industry, and it's unlikely someone else will come in and fix it before the problem gets worse.

The best advice to avoid deepfake hoaxes is the same advice to avoid all fake news and conspiracy theories. Stick to trusted news sources, that you know deliver reliable information. For now, deepfake technology isn't that great. But we should focus on it today, because tomorrow this could look pretty real.

President Trump: Eight billion. Net worth, not assests, not liabili--, a net worth.

Join the conversation about this story »

Face-swapping videos could lead to more 'fake news' from Business Insider: Steve Kovach

The Transport Guy: Facebook has gotten so big that no one can understand it, and it could be a good reason to break it up (FB)

Steve Kovach April 11, 2018 at 04:00PM

• Facebook has gotten so big that it's impossible to understand how it all works.
• Congress' concerns over data privacy are valid, but many missed a larger, deeper issue.
• More lawmakers should be asking if Facebook is getting too big and if it should be broken up.

---

When I load my Facebook News Feed right now, I see a picture of my nephew, an ad for a conference I'm speaking at next month, and a post from an old high school friend asking for recommendations for a new housekeeper. Your News Feed likely looks a lot different. Maybe it's a news article your friend shared. Or a political meme. Or a fundraiser for a charity your uncle is donating to for his birthday. 

The point is, there's no unified version of Facebook. Every new Facebook product, new update, and new algorithm adjustment is designed to make your experience better and ensure you're spending time connected to some Facebook-owned property, instead of anything else. Facebook is uniquely personal to you and the way you use it, and there are 2 billion different versions of it, one for each of its active users. That's not to mention the network of stuff outside the core app that the company owns, like Instagram, WhatsApp, and Messenger.

That's the best explanation for many of the weak questions Facebook CEO Mark Zuckerberg faced during his two-day marathon of congressional hearings. It's easy to say the members of Congress who grilled Zuckerberg were old and out of touch with technology: They asked basic questions about Facebook's business that let him coast through each session. Incidentally, his net worth soared by $3 billion over the course of the hearings as the company's stock skyrocketed.

But as a 32-year-old who grew up around technology and covers the industry every day, even I don't fully understand how Facebook works. And many of my fellow journalists struggled to get Zuckerberg to break script during his marathon media tour over the last few weeks.

And that's what makes the Facebook Problem so difficult to solve. This week's hearings proved that no one has a full grasp of what Facebook actually is. 

Is it a tech company? A communication tool? A media company? A drone-based internet service provider? A financial institution? A virtual reality gaming company? Fertile ground for abuse, harassment, and election meddling?

The answer to all of the above is: "Yes."

Not even Zuckerberg could adequately define what Facebook is. (He defaulted to "tech company" but admitted Facebook has a responsibility to the parts of business that touch the media, privacy, and safety.) It's impossible to define Facebook because Facebook is everything.

And that leads us to larger issues.

Is Facebook a monopoly?

There's been a lot of talk about regulating the tech industry this week. Those are good conversations to have, especially when it comes to digital privacy standards that will shape the way online companies manage their users' data for decades to come. The EU's General Data Protection Regulation (GDPR), which goes into effect next month, seems like a good place to start. Facebook and the rest of the Big Tech platforms have already made it clear they're not equipped to handle privacy issues on their own.

But there are deeper questions surrounding Facebook, one that only a few of the dozens of members of Congress who grilled Zuckerberg touched on during the hearings this week. Should a company that offers so much, a company that strives to be everything to everyone, be broken up? Is it a monopoly today? Is it at risk of becoming one soon?

Zuckerberg choked whenever the issue came up. He pointed to the fact that Facebook has many competitors, but didn't mention them by name. He also threw out a stat that the average American uses eight apps every day.

Guess what? Facebook owns a lot of those apps.

If you open the US App Store right now on your iPhone, you'll see that three of the top 10 free apps are owned by Facebook: Instagram, Messenger, and the core Facebook app. WhatsApp is number 12. It's a similar story on Android. And don't forget Facebook tried to buy Snapchat, another top app, for $3 billion back in 2013.

Does that seem like a healthy, competitive social app ecosystem to you?

There are numerous other concerns, like Facebook using its wealth to connect users in developing countries for the internet for the first time. Those projects have noble intentions, but also ensure that the first version of the internet people experience is Facebook's version of the internet.

This week was just the beginning for Big Tech and its reckoning with lawmakers in DC. It got everyone thinking and talking about privacy standards and what the government's role in crafting those standards should be. It's not moving fast enough. But it is a start.

In the meantime, Facebook is only going to get bigger and more powerful. Same with Apple, Amazon, Google, and Microsoft. Moving beyond privacy, beyond election meddling, and beyond fake news is something more important. How big should these giants get? And what should the scope of their power look like?

It's worth talking about now before it's too late.

SEE ALSO: Dropbox CEO talks about how he went from rejecting Steve Jobs to an $11 billion IPO

Join the conversation about this story »

NOW WATCH: FACEBOOK COFOUNDER: How I negotiated with Mark Zuckerberg for a $500 million stake

Facebook has gotten so big that no one can understand it, and it could be a good reason to break it up (FB) from Business Insider: Steve Kovach

The Transport Guy: Why Apple makes it so hard to get a new iPhone battery

Kevin Reilly and Steve Kovach April 11, 2018 at 11:18AM

Apple recently announced that it was intentionally slowing down older iPhone models in order to preserve battery life. This had been a long-standing conspiracy theory floating around the internet. Apple lowered its battery replacement fee to $29 in response. However, many people have found it difficult to get Apple to change their batteries. We went to an Apple store to see what would happen when we tried to have the battery on an iPhone 6 replaced. Apple recommended that we keep the original battery. Following is a transcript of the video.

Steve Kovach: Has this ever happened to you? What about this?

That could be because your iPhone battery is old. Luckily, you can swap it out for a new one for just $29 and that will solve most of your problems. But Apple doesn't always make it easy.

Apple and other smartphone makers use a technology called lithium ion for their batteries. It's the best kind of battery for mobile devices, but it gets a little worse over time. After two years or so, your iPhone battery can only hold about 80% of its original charge. Apple decided to manage this problem by intentionally slowing down older iPhones so they would draw less power and avoid random shutdowns. But there was one problem, Apple never told anyone it was doing this. So while users noticed better battery life, they also noticed worse performance.

This has been a longstanding conspiracy theory about iPhones. Apple intentionally slows it down to encourage you to buy a new one. And it turns out, that conspiracy theory was mostly true. A site called Geekbench noticed that some older iPhone models were running slower than they should be. Apple finally admitted to what it was doing and apologized. It also changed its battery replacement program, dropping the price from $79 to just $29. But it's not that simple.

Since Apple announced its new battery replacement program, customers have complained that they've gone to get their batteries tested and Apple tells them everything is fine. My colleague Jen was having issues with her iPhone 6 battery life, so we made an appointment at an Apple Store here in New York City.

Employee: So as far as the battery goes, it's able to hold 93% of its charged capacity. Now that's all fine and good. I can tell you that the top two reasons why the phone would turn off is either battery or full storage.

Kovach: So why was she having bad battery life? In Jen's case, Apple said it was likely due to the fact that she was using up most of the storage on her iPhone.

Employee: My advice, don't worry about the battery. You got the phone in July of 2017, that battery should be fine. The issue that you're having is strictly an issue with storage.

Kovach: Okay, great.

After that visit, Apple added a new feature to iOS that lets users check the health of their batteries on their own phones. We tried it and got a slightly better reading. 

When we went back to the Apple Store, they said some apps were running in the background, causing the battery to drain faster. They suggested deleting those apps and redownloading them. 

This is another problem. Apple's battery tests may say everything is fine, but that doesn't show up in what the user is experiencing. Between those two visits, Apple Geniuses couldn't pinpoint the exact cause.

The good news, Apple told Jen she could still get her battery replaced for just $29. The bad news, she'd have to wait several weeks for that battery replacement to come in.

It's in Apple's best interest to make sure customers are upgrading to new $700 iPhones instead of extending the life of their current devices with a new $29 battery. About 2/3 of Apple's revenue comes from iPhone sales and Wall Street judges the company on how many iPhones it sells each quarter. On top of this, Apple has been giving customers fewer reasons to upgrade the iPhone each year. New iPhone models have looked the same pretty much since 2014 and the iPhone 8 doesn't have a lot in there to convince people to upgrade from the iPhone 7. And the iPhone X's $1000 price tag has turned a lot of people off from upgrading.

Even though this process sounds annoying, it's actually better than a lot of Apple's competitors. Samsung, HTC, Motorola, and several other companies have said they don't intentionally slow down their devices to preserve battery life but they also don't make it easy to replace it. It's not like there's a Samsung store you can walk into and get your battery replaced. You have to mail it in.

I used to tell people to upgrade their iPhone every two years or so. But with this battery replacement program, you can extend the life by another two years. My advice? If you're having bad battery life and performance, go into the Apple Store, pay that $29, get a new battery and you'll feel like you have a brand new iPhone.

Join the conversation about this story »

Why Apple makes it so hard to get a new iPhone battery from Business Insider: Steve Kovach

The Transport Guy: Stop blaming violent video games for mass shootings

David Anderson and Steve Kovach April 09, 2018 at 09:00PM

Violent video games are played all over the world but mass shootings are an American problem. So why have video games been getting the blame? Following is a transcript of the video.

Joe Lieberman: "This game encourages players to shoot this gun..."

Donald Trump: "I’m hearing more and more people say the level of violence on video games is really shaping young people’s thoughts."

LT. COL. (RET) Dave Grossman: "There's a clear unequivocal link between violent video games and violent behavior"

Steve Kovach: Actually... no. That's fake news. We need to stop blaming violent video games for mass shootings. Violent video games are played all over the world but mass shootings are a uniquely American problem. So why have video games been getting the blame for the last 20 years?

Patrick Markey: "We go through this thing called a moral panic..."

Steve Kovach: This is Patrick Markey, a professor at Villanova. He literally wrote the book on violence and video games.

Patrick Markey: Typically the older generation is fearful of something a younger generation is adopting that they don't totally understand or they don't see value in."

Chris Christie: "All you’re focusing on right now is gun control. What about the violence in our video games?”

Steve Kovach: That soundbite came shortly after the Sandy Hook shooting in 2013. And it's happening again now as students continue to fight for more gun control in the wake of the shooting in Parkland, Florida. President Trump even held a meeting with top video game industry executives on the issue. This is how he opened up the meeting. Gross, right?
But as unsettling as those images are, there's no link between violent games and real-world violence.

Patrick Markey: When we look at games like Grand Theft Auto and Call of Duty, the two games tend to be kind of lightning rods and are often blamed for school shootings. We find that when those games first come out there's actually sudden dips in homicides in the United States. We've also done other things on when are people actually playing violent video games, this is kind of across the board, any type of violent video game and what we find is when people are playing violent video games we also see dips in violent crime: aggravated assaults, homicides and so forth."

Steve Kovach: By the way, we fixed the problem of easy access to violent video games decades ago. Remember this guy? That's former Senator Joe Lieberman in 1993. He really hated violent games, and he pushed for game makers to do something about it.

The ESRB formed, and video games would receive age-appropriate ratings. The ESRB was born in 1994 to do just that. And guess what? It's worked out pretty well. According to the ESRB, about 80% of physical retailers and over 90% of online retailers comply with ratings.

They test the effectiveness by sending secret underage shoppers into stores to buy games rated Mature. That means it's nearly impossible for a child under 17 to walk into a store and buy the latest Call of Duty game, or any other Mature title. They can only play these games if their parents buy it for them.

But what about all those killers? Why do we keep hearing they play video games? That's because the demographics of shooters usually lines up with the demographics of video gamers: Young and male.

Patrick Markey: "In fact, again, what is found in both studies is about 20% of school shooters showed interest in violent video games. Whereas the average high school student is about 70%. So what we find is the actual reality is the reverse of what we tend to think, that the school shooters tend to play less violent video games than the average high school student."

Steve Kovach: Of course, there's going to be a strong chance a shooter also played a lot of games. So do millions of other young males. Now, look at Steven Paddock, the man who committed the largest mass shooting in the country's history. He was 64 years old — not even close to the demographic that plays games. As journalists and investigators hunted for Paddock's motivation, video games never came up.

It's the same with other horrible shootings in recent history. Many of these shooters don't match the gamer profile.
They don't fit the narrative of a young, disaffected youth addicted to violent video games, so it was never brought up as a motivation.

Just because young males tend to play video games and also tend to be the ones who commit mass shootings, doesn't mean the two are linked. It's like saying all shooters wear sneakers, therefore sneakers cause gun violence.
So the video game industry makes it difficult for young people to access violent games. There's no correlation between violence and video games.

But what's it like in other countries where these games are played? And what does gun violence look like there?
Japan is a great example. Video games are deeply ingrained in the culture, and they're often more violent or perverted than what you find in the US. Guess how many gun deaths there are in Japan? Fewer than 10 most years. In a country of about 127 million.

There's only one common factor in every mass shooting. It's not video games. It's not exposure to violent movies. It's easy access to a gun.

Join the conversation about this story »

Stop blaming violent video games for mass shootings from Business Insider: Steve Kovach

The Transport Guy: Silicon Valley heavyweights are trying to fix the lack of diversity in tech – here's how (DBX)

Kara Chin and Steve Kovach March 28, 2018 at 02:22PM

Following is a transcript of the video.

Steve Kovach: Shifting gears a little bit I want to talk about diversity and gender issues in the Valley. I don't know if you've read it but I was really into this book by Emily Chang from Bloomberg, "Brotopia." One of the things they talked about in there was, it's kind of a slow moving thing you guys have released diversity numbers before, pretty much in line with a lot of your peers in the Valley. One of the solutions presented in that book, I'm curious for your take on this, is the gender pay gap issue. How it's one of those things sure, recruiting might take time, years even, and I know you're involved in efforts to help out with that and we can talk about that. But when it comes to gender pay isn't that something that can be fixed now? You can literally just flip a switch?

Drew Houston: Oh absolutely.

Kovach: Talk a little bit about how you're thinking about that.

Houston: I would say more broadly, we've always, Arash and I, have always wanted--

Kovach: Arash your co-founder?

Houston: My co-founder and I have always wanted Dropbox to be a great place to work for everyone. And we certainly believe that two people doing the same work should be compensated the same way. So I agree. There are certain, while as an industry we have a long way to go there are certainly things that are directly within companies' control and so by all means, within our company we take a close look at equity between, or gender pay equity, and I think every company should.

Kovach: And on the diversity end this week it came out that you're part of this new initiative that I think is pretty interesting. This idea that if you're a start-up seeking funding you won't accept the money unless there's good representation from the VC firm. Talk about what that's called and how you got involved in that.

Houston: Yeah, it's called Founders for Change and I think, along the same lines, we want so much of America, so much of Silicon Valley is based on this idea of equal opportunity and I think all of us want the Valley and tech to be a place where that is true. We want it within our companies and we want that same equal opportunity when it comes to our investors. It's a large group of founders. We got introduced to it through Sequoia who is our first venture capital backer. I think it's a really, I think it's great that the founders and the community can come together and try to move things forward.

Kovach: And is the idea here to start it with maybe smaller startups who are building themselves from the ground up? Is that why you're doing it through VC firms?

Houston: I think if all the founders can come together as a community and agree this is the world we want to live in and this is what we want our funding landscape to be. That's something that we hope the investment community would pay attention to.

SEE ALSO: The full interview with Drew Houston

Join the conversation about this story »

Silicon Valley heavyweights are trying to fix the lack of diversity in tech – here's how (DBX) from Business Insider: Steve Kovach

The Transport Guy: How one CEO went from rejecting an offer from Steve Jobs to an $11 billion IPO

Kara Chin and Steve Kovach March 27, 2018 at 09:52AM

Dropbox CEO Drew Houston famously turned down Steve Jobs when Jobs offered to acquire the company. After the rejection, Jobs not-so-subtly implied that he'd have to put Dropbox out of business instead. The following is a transcript of the video.

Steve Kovach: You have this interesting legend of the time you were summoned to Apple by Steve Jobs. You know what I'm going to ask you. What happened? And then how does that relate to where you're at today?

Drew Houston: Well I, we had — Steve had heard about Dropbox and we arrived at 1 Infinite Loop, and he started by telling us that we —  we started the meeting and he's like, "You've built a great product." And so you can imagine, kind of bucket list, okay, check that off.

Kovach: Steve Jobs said, "I love it."

Houston: And then it was actually, we were interested in building the company and we weren't looking to sell, so the formal part of the conversation was pretty quick. It's been a wild ride, for sure.

Kovach: Right, so the legend goes he said, not so subtly, well we're just gonna have to crush you guys and put you out of business. And 10 or so years later you're here. How does that feel to you? Do you feel vindicated by that at all?

Houston: It feels great. I mean we're really proud of the business that we've built and I'm just really proud of the team. It's sort of the culmination of a lot of hard work by many people. Just feeling really excited and really grateful.

Kovach: You're here now. Speaking of Apple, though, and these other giants, this industry is dominated by four or five big players and it seems like everyone else is kind of fighting over whatever is left. How do you compete in that environment where there's so much power influence in just a handful of players? How do you stay afloat?

Houston: Well we stay close to our customers and when I sit in round tables with customers they show me their phones. And they've got products from everyone, right? They have Dropbox, they've got all the Google products, they've got all the Microsoft products. And they turn to us and they're like, "Hey, can someone build a cloud to sync my clouds?" And so we provide a real, that's our strength, that we help tie everything together and we've found that while there's overlap with the larger companies, folks like Microsoft and Google have become partners over the years.

Kovach: What does that partnership look like when you partner with an Apple or you partner with a Google, what does that look like to me, as a user?

Houston: Well when you open an Office document in Dropbox you can then open it in the native apps on the phone and vice versa, and then Dropbox is a place where you can put all of your information. We certainly want — we share a lot of users between Dropbox and any major product and so those integrations are really valuable and we want to make sure that our shared experience is good.

Kovach: Going into today, your IPO day, there was a little bit of worry about your valuation, how it seemed like you might be IPOing at a price under the valuation you were at a few years ago which is reportedly $10 billion. Today how do you feel now that, I think it was up, the stock was up some 40 odd percent, approximately up to $12 billion valuation. How does that feel?

Houston: Again we're really proud of the business we've built and one thing I tell the team is get used to the stock going up and down. This will be a normal, everyday occurrence and so whatever the price is today it'll be something different tomorrow. That's outside of our control so what I really make sure that the team stays focused on is that our customers don't really care if we're public or private. They just want a great experience and they're the ones at the foundation of the business we're building so we need to stay focused on keeping our customers happy and building the best products.

SEE ALSO: The full interview with Drew Houston

Join the conversation about this story »

How one CEO went from rejecting an offer from Steve Jobs to an $11 billion IPO from Business Insider: Steve Kovach

The Transport Guy: Dropbox CEO talks about how he went from rejecting Steve Jobs to an $11 billion IPO (DBX)

Steve Kovach March 23, 2018 at 03:49PM

 

Dropbox CEO Drew Houston famously turned down Steve Jobs when Jobs offered to acquire the company. After the rejection, Jobs not-so-subtly implied that he'd have to put Dropbox out of business instead.

On Friday, Dropbox went public, with its stock popping 35% by the end of the first day of trading, defying the rest of the bleak market.

Houston is probably feeling pretty good about rejecting the tech legend. He's now a billionaire a few times over.

Going into Dropbox's IPO Friday, there were worries that the company's valuation would be well below the $10 billion that private investors pegged it at a few years ago. But those concerns were quickly squashed. It now has a market cap of $11.03 billion.

In an interview with Business Insider on Friday, CEO Houston said he wasn't concerned about near-term stock price of his newly public company. He told his employees not to focus on what could have been, and could still be, a fluctuating stock price.

"One thing I tell the team is get used to the stock going up and down," Houston said. "This will be a normal, everyday occurrence... that's outside of our control. So what I make sure the team stays focused on is that our customers don't care if we're public or private. They just want a great experience."

Dropbox is the first of the so-called tech unicorns — companies valued over $1 billion — to go public this year. Music streaming service Spotify will have its IPO in the coming weeks, and Lyft, Uber, and Airbnb, are all seen as the next major tech companies likely to go public either this year or next year.

"I think we're all excited about this cohort of companies," Houston said. "And I'm looking forward to see Daniel [Ek] take Spotify public. A lot of these founders are my friends. It's certainly a lot of fun to watch them scale their businesses." 

Houston's take on Silicon Valley's troubles

Dropbox may not be mired by accusations of spreading fake news or mishandling personal user data, but it is growing in an environment tainted by a lack of employee diversity. Dropbox released its latest employee diversity stats in February, and they don't look much better than other Silicon Valley tech companies. Women make up 39% of Dropbox's workforce, and the company is 55% white and 32% Asian.

Houston recently joined a group called Founders for Change, a coalition of tech companies and startups that have pledged not to take venture capital funding from groups that didn't have a woman or person of color who could write the check.

It's one of many efforts to fix the diversity problem in Silicon Valley, but it's not going to happen overnight.

But one quick fix that can be made is the gender pay gap, when female employees are paid less for the same work. It's simply a matter of analyzing salary data and making sure all employees are getting equal pay for the same work. Houston said that's an issue Dropbox is looking at too.

"While as an industry we have a long way to go, there are things that are directly within companies' control, and so by all means within our company we take a close look at gender pay equity, and I think everybody should," Houston said. 

And then there's the other black eye on Silicon Valley's reputation. Facebook's failure to protect user data that was given to third-party developers sent the company headfirst into one of its biggest crises since its founding. In a series of interviews this week, Facebook CEO Mark Zuckerberg said he's be open to some form of government regulation.

Even though Dropbox isn't a major social network, Houston did say it's responsible for keeping user data stored on its servers secure.

"We shouldn't wait for [regulation]," Houston said. "I think we all realize that it's critical that we trust all the services we use, and that's certainly top of mind for us, as you can imagine."

"I think what the government does from a regulation standpoint, from a policy standpoint, can go in a lot of different directions," Houston later added. "But we want to make sure that we — whether as a public company or whether as a private company — are doing everything we can to keep our user's information safe."

You can watch Business Insider's full interview with Houston in the video above.

SEE ALSO: What Dropbox's COO says about the company's post-IPO future

Join the conversation about this story »

Dropbox CEO talks about how he went from rejecting Steve Jobs to an $11 billion IPO (DBX) from Business Insider: Steve Kovach

The Transport Guy: YouTube and Facebook have a serious problem with 'promoted' conspiracies about the Parkland shooting

Lamar Salter and Steve Kovach March 05, 2018 at 12:45PM

YouTube promoted a video claiming to show evidence that one of the survivors of last week's school shooting in Parkland, Florida, is a paid actor. Similar videos and articles are showing up on YouTube and other social media sites like Facebook. The issue is an example of a potentially troubling problem for social media sites and how news is delivered to the world. Following is a transcript of the video.

The fake news problem on social media is not going away. We learned that firsthand in the wake of the Florida shooting that took 17 lives. After the shooting, a lot of student activists from the school, started speaking out for more gun control. One of those students was David Hogg. Hogg has appeared on many news outlets, and eventually conservatives started to take notice. And some conservatives started to promote a new conspiracy theory that Hogg was a paid actor to promote liberal agendas, like gun control. At first those conspiracy theories kind of bubbled under the surface, until it broke through on YouTube. YouTube promoted a video saying Hogg was a paid actor, as the top video on its trending section.

Within hours, YouTube caught the mistake and said it was their fault. YouTube said its algorithm detected that the video was an authoritative news source, and therefore was able to make it through to the top of the trending section. But that's not where the problem ended. If you searched for David Hogg's name on YouTube, dozens of videos came up propagating the same conspiracy theory. It happened on Facebook too.

In the trending section on Facebook, if you clicked on David Hogg's name, you saw some legitimate news articles about him, but you also saw a lot more of the same conspiracy theories we were seeing on YouTube and a lot of fringe conservative websites. Facebook called that content abhorrent and a product manager told me they were taking it down. But this gets to a larger issue. Every time a major news event happens, especially tragedies like mass shootings, the social networks are perverted and abused to promote conspiracy theories like the one we saw about David Hogg. And it goes to an even deeper problem.

Big tech companies like to say that their platforms can't be, quote, arbiters of the truth. And that really means, they view the truth as subjective instead of objective. And if they're starting from a point where the truth is subjective, there's no way the fake news problem can actually be fixed. Facebook is trying to play the role where users decide what are trusted and authoritative news sources. For example, Facebook is issuing surveys to users, asking if they believe certain outlets are trusted and authoritative sources. However, they haven't said how they're going to prevent these surveys from being gamed. It could easily lead to more fake news in your newsfeed. One of the best ways to combat this problem, will take an entire rethinking of the ways these tech platforms operate.

They need to realize they have the same responsibility that traditional news organizations have. That means editors, that means fact checkers, that means people monitoring the content to make sure what gets out there is as close to the truth as possible. And when they mess up, there need to be consequences, just like there are consequences for normal media organizations. When a journalist screws up, he has to issue a correction. He gets fired. We don't see those kind of repercussions with social media. Both Facebook and YouTube have said they're going to hire thousands of human content monitors to address this issue. But so far, we haven't seen any indication that that is working. We don't know who these content monitors are, what rules they're operating under, and even if they're full time employees of these companies.

Facebook, Google, Twitter, they're all operating from a standpoint that the truth is subjective. And until they change that mindset, the fake news problem can't be fixed.

Join the conversation about this story »

YouTube and Facebook have a serious problem with 'promoted' conspiracies about the Parkland shooting from Business Insider: Steve Kovach

The Transport Guy: Amazon will stop selling Nest smart home devices, escalating its war with Google (GOOG, AMZN)

Steve Kovach March 02, 2018 at 04:20PM

• Amazon decided not to sell any of the newer products from Google's smart home division Nest.
• Amazon currently sells a limited number of Nest products, but those will disappear from the site after it sells the inventory it has left. Nest decided to no longer work with Amazon selling the limited number of products it was selling on the site.
• Amazon's move heats up its war with Google over the future of the smart home. The two are also battling over video devices and services.

---

It was an awkward phone call, but one the Nest team had been expecting.

After weeks of silence, Amazon's retail team informed Nest employees on a conference call late last year that it would not list any of the newer Nest products recently announced by the company, according to a person familiar with the call. The products in question include the latest Nest thermostat and the Nest Secure home security system, among others.

On that call, says the person, Amazon told Nest that the decision came from the top — and that it had nothing to do with the quality of Nest products, which had great reviews on Amazon. Nest employees who were on the call ended the discussion under the impression that the decision had come from Amazon CEO Jeff Bezos, although Amazon's retail team didn't explicitly say that at any point, according to a person familiar with the call.

As a result of Amazon's decision, Nest decided to stop selling any of its products through Amazon, meaning the limited number of Nest devices listed on Amazon today are expected to disappear from the site once current inventory is sold out, according to a person familiar with the matter.

Amazon's decision not to sell Nest products has huge implications as it strives to carve out a new computing platform — and as it continues to clash with Google over the future of computing. 

After missing out on smartphones and finding limited success with its line of Fire tablets, Amazon is betting big on Alexa as a new computing platform. Alexa is both Amazon's AI assistant and its platform for smart home gadgets, including connected lights, door locks, and music speakers. The company has gotten more aggressive with competitors recently — especially Google, the owner of Nest, which is Amazon's biggest competitor in the smart home with its own Google Assistant platform. Amazon also announced in February that it would buy Ring, the maker of camera-equipped doorbells and other connected home security devices, in a deal said to be worth about $1 billion.

Nest was warned of Amazon's decision, even before that fateful call. Representatives from Google, its sister company at the time under their Alphabet parent company, told Nest that they had heard from Amazon that the ecommerce giant had decided not to sell newer Nest devices. Google reabsorbed Nest last month.

A person familiar with Nest's thinking said the company decided to remove its current set of older products from Amazon because it wanted to be able to offer its full portfolio of devices, or nothing at all.

It's possible you may be able to find Nest products on Amazon in the future through Amazon's Marketplace program, which lets third-party retailers sell items through Amazon. But it's unclear if Amazon plans to restrict Nest sales from its Marketplace partners too.

A Nest spokesperson declined to comment. An Amazon spokesperson also declined to comment.

Amazon doesn't appear to be blocking sales of smart home products from companies other than Nest. For example, Lighthouse, an AI-powered connected camera made by a startup of the same name, is available on Amazon. Products from August, a connected home company best known for its smart door locks, are also available to buy on Amazon, along with products from several other smart home device manufacturers. 

Amazon's war with Google

Amazon's move against Nest comes as it works to beef up its smart home ambitions after a successful holiday season for the Alexa assistant and its Echo hardware. Last month's Ring acquisition puts Amazon in a much better position to integrate its products with Alexa, accelerating its ability to compete with Google's own smart home ambitions.

Nest is Google's smart home products division. It makes devices like connected cameras, thermostats, smoke detectors, and security systems. Google bought Nest in 2014 in a $3.2 billion deal. Nest later became its own company after Google reorganized into the Alphabet conglomerate, only to be reabsorbed back into Google in February. 

Nest is now under the same hardware division as the rest of Google's hardware products, which will create a streamlined organization from which Google can better compete against Amazon.

Amazon built up an early lead in voice-controlled computing thanks to Alexa and its line of Echo devices. But Google is rapidly catching up. Google Assistant, a rival to Amazon Alexa and the Google Home speakers, which compete with the Amazon Echo, are rapidly gaining market traction.

Amazon had about two-thirds of the smart speaker market towards end of 2017, but that figure doesn't reflect the full holiday shopping season, when Google likely gained more market share.

The stakes are huge. Both Amazon and Google are building out a new voice-powered operating system that can control everything in your life — from your lights to your garage door to the music and video you stream. Amazon's acquisition of Ring will give it a nice boost on the hardware side as it continues to build out Alexa's AI. Ring was already one of Nest's biggest competitors. Now it has the nearly-limitless funding needed from Amazon to go after its Google-backed rival.

The rivalry between Amazon and Google extends beyond the smart home, though.

In addition to ending sales of Nest products, Amazon does not sell other Google hardware like the Google Home Speaker or Pixel smartphone. In a seemingly retaliatory move, Google has blocked its YouTube native app from running on Amazon's Fire TV and Echo Show. (Google, for its part, has said the block is because Amazon products violate YouTube's terms of service.) Amazon will start selling Google's Chromecast streaming devices soon, which may help ease tensions between the companies and convince YouTube to bring its service back to the Fire TV and Echo Show.

Beyond hardware and apps, Amazon is also beefing up its digital ads business, a direct threat to Google's core business, as CNBC reported last year. Amazon and Google also compete in providing cloud computing services to companies, through its respective Amazon Web Services and Google Cloud divisions. 

Amazon's beef with Google isn't unique in an industry dominated by a small handful of giants. Amazon also had a rocky relationship with Apple. It took about two years for whatever was going on between the two companies to get resolved after Apple opened up the Apple TV to all third-party developers. Amazon started selling the Apple TV again last year, and it later added its video-streaming app to the Apple TV App Store.

While Amazon's decision to keep Nest products of its site may seem nefarious to some, it likely isn't illegal under US antitrust law, as Chris Sagers, a professor of law at Cleveland State University told Business Insider in an interview. Because Amazon doesn't have a monopoly in the connected home, the move isn't anticompetitive.

"It's probably not illegal," Sagers said. "It's ugly... but American law says even monopolists have broad freedom to choose with whom they deal."

SEE ALSO: Sorry, Siri, Alexa's got you beat — Here's why Apple's going to lose the voice computing war to Amazon

Join the conversation about this story »

NOW WATCH: We asked Jamie Dimon why JPMorgan is forming a new healthcare company with Amazon and Berkshire Hathaway — here's what he said

Amazon will stop selling Nest smart home devices, escalating its war with Google (GOOG, AMZN) from Business Insider: Steve Kovach

The Transport Guy: Two of the most powerful people in media are building a case against Facebook and Google — and a war is brewing (FB, GOOG)

Steve Kovach February 26, 2018 at 01:10PM

• The heads of CNN and News Corp have both spoken out against the power Facebook and Google have over digital media.
• On Monday, CNN president Jeff Zuckerberg said the government should look at Facebook and Google's monopoly power. News Corp executive chairman Rupert Murdoch said in January that Facebook should pay media companies for content they post to the site.
• The comments hint at a war brewing between the interests of Big Media and Big Tech.

---

If CNN President Jeff Zucker's comments on Monday are anything to go by, Big Media is taking on Big Tech.

Over the last few years, smaller, digital-native companies have had to grapple with the changing whims of Big Tech platforms run by Facebook and Google. Small adjustments in the Facebook News Feed or Google search algorithms can have an outsized, disastrous impact on those smaller firms. 

For example: Just last week, Vox Media, which publishes sites like Racked, The Verge, and SB Nation, laid off 50 staffers, mostly from departments working on native social media. It was the latest sign of turmoil as digital media companies grapple with big, tech-driven shifts in the industry.

But this year, traditional media companies have started to wake up to the power and influence of the Big Tech platforms as they try to transition to digital. Speaking at the Mobile World Congress (MWC) event in Barcelona on Monday, CNN President Jeff Zucker said the government should look into the monopoly power Google and Facebook have over certain industries.

“Everyone is looking at whether these combinations of AT&T and Time Warner or Fox and Disney pass government approval and muster. The fact is nobody for some reason is looking at these monopolies that are Google and Facebook. That’s where the government should be looking, and helping to make sure everyone else survives. I think that’s probably the biggest issue facing the growth of journalism in the years ahead," Zucker said during his MWC speech, according to Variety.

(AT&T is currently in a legal battle with the DOJ over its acquisition of Time Warner, which owns CNN. Disney is in the process of buying most of 21st Century Fox.)

Zucker's comments mirrored those made by News Corp executive chairman Rupert Murdoch last month. In a statement, Murdoch said Facebook should adopt a model that pays content producers, just like cable companies pay networks to carry their content. Murdoch's statement also blasted Facebook's fake news problem.

"Facebook and Google have popularized scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable," Murdoch said.

The comments from Zucker and Murdoch this year are the clearest signs yet that large media organizations are building a case against digital giants like Facebook and Google, which take in the vast majority of digital advertising dollars.

The defensive statements come with good reason. It turns out they're no more immune to Big Tech's influence on media than their small, digital-only counterparts — and they're starting to feel the ill effects. Earlier this month, CNN laid off a few dozen staffers and restructured its digital business. CNN's media correspondent wrote that the layoffs were "symptomatic of problems throughout the digital media marketplace."

That digital marketplace is dominated by Facebook and Google, with little room for established Big Media players like CNN and Fox News to break through.

It's happening slowly, but it is starting to sound like a war is brewing between media and tech.

SEE ALSO: There's one way to hold tech companies hostage and fix the spread of hoaxes, conspiracy theories, and misinformation

Join the conversation about this story »

NOW WATCH: I quit social media for a month — and it was the best choice I've ever made

Two of the most powerful people in media are building a case against Facebook and Google — and a war is brewing (FB, GOOG) from Business Insider: Steve Kovach

The Transport Guy: Apple is working on high-end headphones that may launch as soon as this year (AAPL)

Steve Kovach February 25, 2018 at 06:16AM

• Apple is making over-ear headphones, according to a new report.
• The accessory will be Apple-branded and focus on audio quality.

---

Apple is developing a new pair of over-ear headphones, according to analyst Ming-Chi Kuo, the KGI Securities analyst with an excellent track record of predicting future Apple products. Apple Insider first found Kuo's report.

Kuo says the headphones will have a new design, but doesn't go into specifics. It sounds like the headphones will be similar to the over-ear headphones Apple makes through its Beats subsidiary. They would also build on the success of AirPods, Apple's wireless earbuds and carry the Apple branding, not Beats branding.

Apple is also likely to focus on audio quality to set the headphones apart from Beats and other similar headphones. They could launch as soon as this year.

Read more details on Apple Insider.

SEE ALSO: Roku’s CEO explains why he hasn't been crushed by giants like Apple and Amazon — and why a newcomer can conquer the streaming TV market

Join the conversation about this story »

NOW WATCH: Elon Musk's The Boring Company sold out of these $500 flamethrowers

Apple is working on high-end headphones that may launch as soon as this year (AAPL) from Business Insider: Steve Kovach

The Transport Guy: There's one way to hold tech companies hostage and fix the spread of hoaxes, conspiracy theories, and misinformation (FB, TWTR, GOOG, GOOGL)

Steve Kovach February 24, 2018 at 05:00AM

• Hoaxes and fake news continue to be promoted on big tech platforms run by Facebook and Google.
• The companies have proven in the past that they can make big changes when properly incentivized.
• Advertisers could pull their ads from Facebook and Google in order to force the companies to fix the fake news problem.

---

It's amazing how advanced the technology behind Facebook and YouTube can be.

Both sites can prevent porn from ever reaching your feed, identifying and deleting the offensive content almost in real time. They can scrub certain speech that's illegal in some countries, like pro-Nazi content in Germany. Suicides and murders? Nope. (For the most part.) The technical wizardry that goes into that kind of moderation for sites that take in such massive quantities of user-generated content each day is incredible. 

These people are super-geniuses.

And yet, none of the so-called Big Tech companies, with all their smarts, ingenuity, and experience weeding out the bad stuff, can seem to stop the spread of hoaxes and fake news — even after several promises and changes to their algorithms. For a bunch of super-geniuses, they're doing a pretty bad job at solving a relatively straightforward problem.

It happened again Wednesday when conspiracy theory videos claiming that Florida shooting survivor David Hogg was a paid actor made it into YouTube and Facebook's trending sections and search results. Both companies admitted the screwup, and much of the hoax content was gone by late in the afternoon.

But it was too late. The damage was done. And there's little reason to believe something similar won't happen next time there's a major national tragedy. We've seen it happen so many times already.

Now for the big question: Why are Facebook and YouTube so good at keeping stuff like porn and copyrighted material off their platforms, but are consistently caught with their pants down every time users game the system to spread hoaxes tied to major news events?

As I wrote last week, I think one answer is they don't believe in the truth. But I also think they lack the proper business incentive to make it happen.

Yes, fake news is a big problem, but it only makes up a tiny fraction of all the user-generated content posted on Facebook and YouTube. And in some ways, allowing those hoaxes and conspiracy theories on the platform keeps a subset of users happy. John Herrman of the New York Times interviewed the anonymous YouTube user who uploaded the Hogg conspiracy video that made it to the top of the site's trending section. The user said he had every intention of uploading more videos like it in the future.

So if the incentive isn't coming from users or a group of journalists writing about every time Facebook, Google, or Twitter screws up, maybe it should come from advertisers.

It's worked before.

As we learned when several big-name advertisers fled YouTube after learning some of their ads were appearing next to extremist videos, YouTube moved quickly to make changes. Within a few weeks, it added technological safeguards to make sure ads don't run next to extremist videos. After the Logan Paul suicide video fiasco last month, YouTube promised human moderators will look over all content posted by the company's "preferred creators," the group of high-profile video channels that attracts big-name advertisers.

It turns out, you have to hit Big Tech companies in the pocketbook if you want them to take change seriously. Fake news isn't a problem they can't fix; it's a problem they're not properly incentivized to fix.

That's where advertisers can come in and force change by withholding advertising. They could take the moral high ground, effectively holding Facebook and Google hostage until the problem is fixed.

Some big advertisers have already started to speak out. AT&T still hasn't returned to YouTube since others initially abandoned the site last year. The company's chief brand officer Fiona Carter told The New York Times that AT&T has concerns YouTube's algorithms aren't good enough to ensure ads won't appear next to bad content. Unilever's CMO Keith Weed threatened to reduce its ad spend online if the big tech platforms didn't clean things up.

As my colleague Mike Shields wrote, an advertiser boycott is unlikely to have a big effect on Facebook and Google's bottom lines. Most of Facebook and Google's advertisers come from small businesses, not giants like Unilever or PepsiCo. It'd make a dent, but it wouldn't be catastrophic.

But I think a number of big brands banding together and pulling advertising their advertising would force change. It worked last year with those extremist videos on YouTube. The Logan Paul controversy was big enough to spook YouTube into proactively finding a solution before there was any advertiser blowback. It's not worth the PR nightmare and the cascading effect it would have throughout the industry as other brands joined the boycott.

Shields also pointed out that advertisers could shun new initiatives, like Facebook's new video section Watch. Watch videos are well-produced, TV-style shows designed to attract big ad dollars away from traditional TV networks. If those advertisers threatened to stay away from Watch until Facebook fixed its fake news issues, I have a feeling that'd create enough leverage to force change.

Meanwhile, we know the Big Tech platforms have the power and capability to fix the problem. If a bunch of untrained amateurs can identify fake news being promoted on Facebook or YouTube, then so can a bunch of super geniuses working at companies approaching trillion-dollar valuations. Plus, all the Big Tech platforms have proven they know how to filter out content when it affects their ability to operate somewhere, even if it's against their founding principle that they should serve as an agnostic service. 

Unfortunately, none of this seems likely to happen. After saying he might reduce spending online, Unilever's Weed later walked back those comments a bit in an interview with Business Insider. Instead, he said he wanted to work with Facebook and Google to fix the problem.

But that's been the status quo for ages. It's not working.

Advertisers have an opportunity to make a change to a problem plaguing tech platforms that affect the way people get news, think, and even vote. That seems like an accomplishment that would be much more profound than running another ad in someone's News Feed.

Even better, it wouldn't cost them a cent.

SEE ALSO: Roku’s CEO explains why he hasn't been crushed by giants like Apple and Amazon — and why a newcomer can conquer the streaming TV market

Join the conversation about this story »

NOW WATCH: Goldman Sachs is telling its multimillionaire clients not to worry about valuations or inflation

There's one way to hold tech companies hostage and fix the spread of hoaxes, conspiracy theories, and misinformation (FB, TWTR, GOOG, GOOGL) from Business Insider: Steve Kovach

The Transport Guy: Roku’s CEO explains why he hasn't been crushed by giants like Apple and Amazon — and why a newcomer will conquer the streaming TV market (ROKU)

Steve Kovach February 21, 2018 at 05:28PM

• Roku, the streaming TV platform company, competes with giants like Apple and Amazon.
• But even though those big tech companies have similar gadgets, Roku continues to thrive.
• Roku CEO Anthony Wood attributed the company's success to a variety of factors like its superior software designed specifically for TVs.

---

Roku CEO Anthony Wood is not afraid to go toe-to-toe with industry heavyweights.

The scrappy streaming TV company he leads is tiny player, with a relatively modest $5 billion market cap, competing against giants like Google (market cap: $770 billion), Apple (market cap: $868 billion), and Amazon (market cap: $717 billion) in the quest to dominate the future of TV. 

Yet against all odds, Roku appears to be holding its own. The company's 19 million users streamed more than 4 billion hours of video in the last three months of 2017 and its stock has tripled since its September IPO (Although the stock was down in after hours trading on Wednesday when investors got spooked by the company's outlook for 2018.)

Why hasn't Roku become road kill? 

According to Woods, the smart TV is new playing field where size, history and TK don't offer any advantages for the tech giants that have dominated PCs, smartphones and other platforms. 

"Look at the trends. Every time a new computing platform emerges, the operating system has changed," Wood told Business Insider in an interview on Wednesday..

"The way I think about these things, they used to be small companies too," Wood said of the tech giants Roku competes with. "They competed with ginormous companies. But when markets change, opportunities abound."

No original content means no conflicts

Roku sells inexpensive hardware gadgets that connect to TVs and allow users to stream online video. The company also licenses its software to TV makers so they can integrate its service directly into their products. Unlike some of its competitors however, Roku's goal isn't just to sell a bunch of dongles and boxes. The goal is  to get its software platform onto as many devices as possible and to become the operating system of choice for the new generation of smart TVs.

Roku's lack of history in the tech industry is actually one of its biggest advantages, Wood argues. Roku is wholly focused on building an operating system for smart TVs from the ground up instead of trying to shoehorn existing software into the TV, the way Google, Apple, and Amazon do. (Apple TV's operating system is based on iOS, and Google and Amazon base their TV platforms on Android.)

Roku's software is designed specifically for TV and TV hardware. Wood said that rival TV operating systems from Apple and others were originally designed to run on pricey smartphone hardware, which can cost hundreds of dollars. Roku's software can run on hardware that costs a lot less and is optimized for TV.

Wood also credited Roku's openness for allowing it to compete against its larger rivals. Roku doesn't produce or sell its own video shows. Roku is effectively a neutral player that supports any and all streaming services, from Netflix to Hulu to Youtube.

By contrast, Apple, Amazon, and Google all make or sell their own content, which creates competing interests as they try to establish their hardware and software products as the smart TV standard. Amazon's Fire TV gadget doesn't support a native YouTube app, for example. Users who choose one of those companies' platforms miss out on content they want to watch. 

That's not good for users, but it's great for Roku.

SEE ALSO: Here's why Apple's going to lose the voice computing war to Amazon

Join the conversation about this story »

NOW WATCH: I've used the iPhone for 10 years and these are my favorite tips and tricks

Roku’s CEO explains why he hasn't been crushed by giants like Apple and Amazon — and why a newcomer will conquer the streaming TV market (ROKU) from Business Insider: Steve Kovach

The Transport Guy: LIVE: Here comes Roku ... (ROKU)

Steve Kovach February 21, 2018 at 12:55PM

Roku, the maker of connected TV boxes and software for smart TVs, will report its quarterly earnings after the markets close Wednesday.

Here's what Wall Street is expecting, according to Bloomberg. We'll update this post with the results as soon as they come in.

• EPS (adjusted): ($0.10)
• Revenue: $182.5 million

Roku has been on a huge run since it went public last year. Even though it faces competition from tech giants like Apple, Google, and Amazon, Roku's stock is nearly triple its IPO price. Part of the stock's success is tied to the company's success with its ad platform.

Join the conversation about this story »

NOW WATCH: This vest could help people cope with anxiety and stress by simulating a hug

LIVE: Here comes Roku ... (ROKU) from Business Insider: Steve Kovach

The Transport Guy: YouTube is promoting a video that the far-right has used to claim one of the Florida school shooting survivors is a paid actor (GOOG)

Steve Kovach February 21, 2018 at 07:17AM

• YouTube promoted a conspiracy theory video that claims one of the Florida school shooting survivors is a paid actor.
• The video was first in the site's list of trending videos Wednesday morning.
• YouTube continues to struggle with people gaming the site to promote fake news.

---

A video that claims to show evidence that one of the survivors of the school shooting in Florida last week is a paid actor was promoted by YouTube as the top video in the site's trending section on Wednesday.

The video shows a local news clip featuring David Hogg, one of the shooting survivors who has made several news appearances over the last few days calling for gun control. The segment comes from a CBS Los Angeles local newscast from last summer that shows Hogg telling a reporter how he got into an argument with a lifeguard. Conspiracy theorists say the clip is proof that Hogg shows up in media appearances as a paid actor.

Hogg has become a central figure in a the far-right's effort to discredit the survivors of last week's shooting as they call for tighter gun control laws.

YouTube has failed to weed out fake news and conspiracy theories from its trending sections, search results, and other corners of the site that are promoted through algorithms in the wake of several major news events over the last several months. It happened with the mass shooting in Las Vegas last fall. It happened with the Amtrak crash involving Republican members of Congress. It happened too many times to count.

YouTube has said it made changes to its search algorithms to make sure it promotes news videos from "trusted" sources. The company has also said it plans to hire thousands of human content moderators to make sure videos comply with its policies.

It's possible the video squeaked by YouTube's algorithm because its title frames the clip as going "viral" as the far-right hoax spreads. That tactic has been used in the past to skirt YouTube's content moderation rules, like when several people reposted YouTube star Logan Paul's video that showed a suicide victim last month. But watching the video provides no further context. It's just the local news segment. The subtitle for the video is "DAVID HOGG THE ACTOR...."

The video had more than 200,000 views Wednesday morning. A YouTube representative was not immediately available to comment.

SEE ALSO: Insiders say Google never answered a key question about its Alphabet gamble and now it's coming back to haunt them

Join the conversation about this story »

NOW WATCH: How compression pants work and why they are so popular

YouTube is promoting a video that the far-right has used to claim one of the Florida school shooting survivors is a paid actor (GOOG) from Business Insider: Steve Kovach