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

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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.

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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.

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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.

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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.

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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.

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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

The Transport Guy: The real reason fake news spreads is because tech companies don't believe in the truth (TWTR, FB, GOOG, GOOGL)

Steve Kovach February 17, 2018 at 06:00AM

• The Big Tech platforms Facebook, Google, and Twitter have made several efforts to combat fake news and abuse.
• But they all operate from the standpoint that the open nature of their platforms means they can't be "arbiters of the truth." It's a phrase people working at those companies use often when talking about the problem.
• If Big Tech can't or won't work to determine what the truth is, then the abuse and fake news will only continue.

---

Within hours of Wednesday's school shooting in Florida, screenshots of fake tweets from Miami Herald reporter Alex Harris started to go viral. The tweets showed images of Harris' account that were fudged to look like she was asking people at Marjory Stoneman Douglas High School for photos of dead bodies and whether or not the shooter was white.

In response to a BuzzFeed story on the matter, Twitter said the fake tweets impersonating Harris weren't a violation of its policies, despite the fact that Harris said she was harassed by other Twitter users as the fakes spread.

(Twitter CEO Jack Dorsey tweeted that he would investigate the matter after BuzzFeed's story published Thursday. In a response to BuzzFeed editor Mat Honan on Twitter Friday, Dorsey said Twitter doesn’t have the technical capability to monitor that kind of impersonation at a large scale yet.)

Twitter also pointed to a section of its policy that says the real-time nature of the platform means that people can fact-check fake tweets like the ones that impersonated Harris — which is probably little comfort for anybody who's ever been impersonated, and seen "their" tweets go viral. 

But there's another key phrase that stood out to me in the policy cited by Twitter:

"We, as a company, should not be the arbiter of truth."

I've heard that one before. Several times, in fact, over the last year or so as I've talked to people from Google, Facebook, and Twitter about their roles in today's media landscape. Sometimes they say it publicly. Often, they say it privately. But it's clear that Big Tech's default isn't to make sure the information they're spreading to billions is accurate, but that their platforms remain open and easy to manipulate.

If the platforms start from a position that the truth is subjective, the fake news problem will never get fixed.

Just because they don't view themselves as the arbiters of truth doesn't mean their billions of users aren't devouring news spread on those platforms, under the assumption that what they're seeing is true.

There's a reason media organizations go through a rigorous process of fact checking, research, and editing before publishing something. They have a responsibility to disseminate the truth as best they can. Mistakes happen, of course. But there are also consequences for those mistakes at responsible news organizations. Journalists get fired. Retractions are published. Credibility is always on the line.

By claiming they can't determine what the truth is, the messaging from tech platforms is that they don't feel they should be held to those same standards, despite the fact that the information they spread can reach millions of more people than any publication on earth can ever hope to reach.

You can see how that plays out in Big Tech's recent solutions to fix the spread of abuse and fake news on their platforms.

Facebook announced last month that it's tweaking the News Feed algorithm to start surfacing more news from "trusted" sources. But instead of choosing the outlets itself, it said it would ask Facebook users to determine where the truth should come from.

The survey is just two questions long, as BuzzFeed first reported. A user is presented with the name of a publication and asked if they recognize it. Then they're asked how much they trust the outlet with a range of options from "entirely" to "not at all." Facebook still hasn't provided a convincing answer for how it'll prevent the community from gaming those surveys.

Google and its subsidiary YouTube have also said they would promote "trusted" sources in search results for news topics, yet they haven't described their methodology for determining which outlets are trusted. All we know is that it's a mixture of some AI wizardry, and the promise to bring thousands more human moderators into the mix. And even then, the results have been mixed. YouTube was promoting conspiracy theories tied to the train crash involving Republican members of Congress just a few weeks ago, for example.

The problem isn't that Facebook, Twitter, and Google don't feel responsible for what happens on their platforms. I believe they're sincere when they say they want to fix abuse and fake news. Rather, the issue is the fact that they don't feel like they need to have a strong relationship with the truth, or that they have a responsibility to make sure it's the truth users see before anything else. In their view, the mob gets to determine what the truth is, and the lightning-fast speed of social media means that even when something false squeaks through, that same mob will work overtime to correct itself.

That sounds great in theory — but, as we saw in Florida this week, and countless other times besides, it's failed over and over and over again in practice.

Big Tech doesn't believe it has a responsibility to determine what the truth is, and the impact from that decision continues to show itself in the form of impersonations, fake news, and conspiracy theories promoted across their platforms. No action to fix those inherent problems will work until Big Tech realizes that the truth matters. 

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The real reason fake news spreads is because tech companies don't believe in the truth (TWTR, FB, GOOG, GOOGL) from Business Insider: Steve Kovach

The Transport Guy: This $400 smart-TV box lets you control your Apple TV, cable box, and everything else with your voice

Steve Kovach February 14, 2018 at 07:00AM

• Caavo is a new smart-TV device from a startup of the same name.
• Caavo manages all the stuff you plug into your TV like Apple TV, cable boxes, DVD players, and video game consoles.
• It's a great device if you're tired of managing multiple remotes and inputs, but the $400 price tag might turn a lot of people away.

---

Here's my living room TV setup:

I have a 65-inch Samsung smart TV. Plus a Verizon Fios cable box. Plus an Apple TV. Plus a PlayStation 4. Plus a Nintendo Switch. All of those devices have their own remotes, and switching between them means juggling a variety of different controllers cluttering my coffee table.

This is an all-to-familiar situation for many. As more people turn to streaming services pumped through boxes like Roku or Apple TV, there's still no easy or coherent way to manage all the stuff you subscribe to and just get what you want to watch when you want to watch it. And most cable-box interfaces are still stuck in the early 2000s. Good luck finding that show you DVR'd.

A startup called Caavo thinks it solved this problem with a new $400 box that promises to create one unified hub for all the stuff you plug into your TV. I've been testing a Caavo with my complicated setup for the last week or so, and it works as advertised for the most part. But it's really only ideal for people with three or more things plugged into their TV. The convenience might not be worth the heavy price tag for the rest of you.

How it works

Caavo is a long, thin box that lets you plug in up to eight different devices through HDMI. That's about twice as many ports as most high-end TVs have. You then plug the Caavo into your TV and use it for everything you want to watch or play from — cable boxes, DVRs, video game consoles, Rokus, Apple TVs, Amazon Fire TVs, Chromecasts, DVD players, and so on.

Caavo's software is based on Android, and it can automatically detect what your devices are. Caavo also comes with a universal remote that controls your TV, the Caavo box, and all your other devices.

If you want something even easier, you can use the remote's built-in microphone to tell Caavo what you want to watch and let the machine do all the switching and searching for you. (Caavo also works with Amazon Alexa, so you can use voice commands on your Echo instead of the remote. But that feature just launched in beta, so I haven't had a chance to thoroughly test it.)

That's the real benefit to Caavo. This isn't just an HDMI hub paired with a universal remote; it's a streamlined interface for almost everything you want to watch.

Caavo's software keeps track of everything you have plugged into your TV and does the heavy lifting for you. For example, telling Caavo to "watch 'Stranger Things'" will automatically switch inputs to your your Apple TV (or Roku or whatever), launch Netflix, and play the latest episode. 

It also works for cable boxes. Saying, "watch ESPN" will automatically tune to ESPN, for example. Caavo can also access content recorded on some DVR models, but it didn't work with the one I use through Verizon Fios.

One interface for everything

Caavo's software was compatible with almost everything I use, and it covers all the basics like Netflix, Hulu, HBO, and iTunes. If you ask for a show that's available on multiple services, Caavo gives you the option to select the one you want.

But there are some missing pieces. For example, when I asked Caavo for "The Good Place," it brought up an option to watch the first season on Netflix, but not the NBC app, which I had been using to watch season two. A Caavo representative told me the device doesn't index all streaming services yet, so there are likely a bunch of other holes like this I haven't run into yet.

Besides the voice control, my favorite aspect of Caavo was using just one remote for everything. I locked all my remotes away in my entertainment center cupboard and used the Caavo remote for everything without too many problems. That alone almost made it worth it. Caavo takes away the stress of managing multiple devices and remotes.

The software is clean too. Setup can be a bit tedious depending on how many devices you have. (It took me about 15 minutes to get my system going.) But everything just works once you're finished. There's a big "Caavo" button in the center of the remote that you can use to switch between devices, and you select the device you want to switch to, instead of having to remember which HDMI port number you plugged it into. The other menus are clean and easy to navigate, but you don't even need to look at them if you use voice controls for everything.

Still, Caavo feels more like a hack for today's fragmented internet TV ecosystem rather than a realization of the dream that all your TV stuff can live on the same platform. When you ask Caavo to watch something on a streaming service, you can see it working in the background, adjusting the input and navigating where it needs to go. It can take up to a minute for what you want to actually appear on your screen. So while it's a great first start, it's not as ideal as having this intelligent software built into a TV. 

Not for everyone

Overall, Caavo pulled off an impressive feat on its first try. There are a lot of great connected TV boxes out there, but none of them provide a singular solution for everything you want to watch. Caavo fills in a lot of the gaps, and it's the best answer I've seen so far if you find yourself routinely juggling between multiple TV inputs.

Still, the price can be hard to swallow. You can buy several Apple TVs or Rokus for the price of one $400 Caavo. I also wouldn't recommend getting a Caavo if you only have one or two devices plugged into your TV. 

But if you're like me and subscribe to multiple streaming services across multiple different devices, Caavo will be a great fit in your living room.

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This $400 smart-TV box lets you control your Apple TV, cable box, and everything else with your voice from Business Insider: Steve Kovach

The Transport Guy: Facebook is so tough on leaks that one employee was concerned the company was tracking his phone's location (FB)

Steve Kovach February 12, 2018 at 07:14AM

• Facebook protects itself against leaks by tracking down the leakers and firing them.
• One Facebook employee who anonymously spoke to Wired recently asked the reporter to turn off his phone so the company couldn't track their location.

---

To corporate giants like Facebook, leaks to rivals or the media are a cardinal sin.

That notion was clear in a new Wired story about Facebook's rocky time over the last two years. The story talks about how Facebook was able to find two leakers who told a Gizmodo reporter about its news operations.

But one source for the Wired story highlighted just how concerned employees are about how their company goes after leakers. According to the story, the source, a current Facebook employee, asked a Wired reporter to turn off his phone so Facebook wouldn't be able to use location tracking and see that the two were close to each other for the meeting.

From the Wired feature:

One current employee asked that a Wired reporter turn off his phone so the company would have a harder time tracking whether it had been near the phones of anyone from Facebook.

Whether or not Facebook actually does track its employees this way doesn't matter. The fact that an employee would think such an option was on the table is telling of the culture at the company.

You can read the full profile on Wired.

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Facebook is so tough on leaks that one employee was concerned the company was tracking his phone's location (FB) from Business Insider: Steve Kovach

The Transport Guy: It's time to start asking if Alphabet's big gamble on 'Other Bets' is about to go bust (GOOG)

Steve Kovach February 10, 2018 at 05:00AM

• Google announced Wednesday that it would reabsorb Nest, the smart appliance company that was running independently under Google's parent Alphabet.
• The move calls into question what a successful exit looks like for one of Alphabet's so-called Other Bets companies.
• Alphabet insiders have expressed confusion over the mission for Other Bets as key executives headed for the door.

---

Two-and-a-half years ago, Google made a radical move that shocked the entire industry.

It split itself up.

The hodge-podge of side projects and skunkworks that didn't fit neatly into Google search and advertising business were spun out into their own separate companies, called "Other Bets."

Those projects, which included everything from self-driving cars to delivery drones, were reborn as independent entities with clever new names and big dreams: Verily (life sciences), Waymo (self-driving cars) and GV (a venture capital firm that invests in early-stage startups), to name a few. 

The hope was that one of these Other Bets would become the next multibillion-dollar tech company and help diversify parent company Alphabet's revenue sources beyond Google's digital ads business.

But this grand vision was always laden with some unanswered and uncomfortable questions: What does a successful Other Bet look like? When will one of those companies graduate from a mere "bet" to a winner that can stand on its own? Are they supposed to reach a point where they're big enough to spin out into a separate company outside Alphabet with a separate board of directors?

In short, when does an "Other Bet" stop being an Other Bet?

I've spoken to numerous people across various Alphabet companies over the last year, and none of them had a unified answer for what an Other Bet success story should look like.

On Wednesday, the question was thrust into the spotlight when Nest, a company that makes smart home appliances, was stripped of its Other Bet status and reabsorbed into Google. Instead of going it alone, Nest (which Google originally acquired in 2014 for $3.2 billion) was going into the mothership. 

I decided to loop back with some of those Alphabet insiders in light of the Nest news and get their thoughts. Nearly three years after the big Alphabet reorg, confusion remains. There's little consensus about whether the Nest move represents the first sign of a reversal of the Alphabet strategy. But it's clear that many insiders view Nest as the most overt example of significant shortcomings in the Other Bets blueprint which have until now played out more subtly. 

Some current and former Alphabet employees have told me the structure has been good for Google. Google, under CEO Sundar Pichai, no longer has to worry about spending time and effort managing far-out projects like internet balloons and self-driving cars. It can concentrate on improving core products like search, Gmail, and Google Maps while investing in growth areas like YouTube, AI, and hardware. Google has had an incredible run since Alphabet formed under this new structure.

And the structure seems to have allayed pressure from antsy shareholders, worried that Google was spending too much money on fanciful projects.

But the benefits to the new structure stop there, according to many insiders.

An exodus of executives that speaks volumes

In 2016, about a year after Alphabet's formation, a string of key executives left the company. Tony Fadell, the Nest CEO, stepped down in June 2016. Bill Maris, the CEO of GV, left in August 2016. Chris Urmson, the former tech lead of Google's self-driving car division also left in August of 2016. Craig Barratt, the CEO of Access (Google Fiber) left in October 2016. And Dave Vos, the head of X's drone delivery division called Project Wing, also left in October 2016. 

The friction seemed to be that the heads of some of Alphabet's Other Bets, or of divisions that were on track to become Other Bets, were frustrated by the Alphabet structure, according to some close to the company. They signed up with the promise of being CEOs running their own startups, but were instead constrained from the top by Alphabet's CFO Ruth Porat, who controlled funding, as well as by the whims of Google cofounders Larry Page and Sergey Brin.

It's no coincidence that many of these departing executives went on to start their own companies. Urmson now has his own self-driving car startup called Aurora, and Tony Fadell is running a new VC firm called Future Shape that plans to back early-stage tech startups. 

The vision of Alphabet was to create nimble startups, but many of the entrepreneurs tasked with leading these startups concluded that they had better prospects of accomplishing their goals outside Alphabet than within. 

Make money or make an impact?

Complicating matters is the fact that the medley of Other Bets have different definitions of success, some of which have little to do with business fundamentals.

Take Jigsaw, an "incubator" within Alphabet that develops products to solve real-world problems like attacks on free speech by foreign governments. Laudable though they may be, the goals are broad and nebulous, based around achievements like having "impact" as opposed to creating products that make money. That alone is at odds with the notion that Other Bets are supposed to find a way to turn themselves into real businesses.

Then there's X, the so-called "Moonshot Factory" that works on ambitious projects like wind energy and drone delivery. X's mission is to "graduate" its ideas into real companies that benefit Alphabet. But even the projects that have already graduated from X are all over the map. Some graduates like Waymo, Verily, and Chronicle (a cybersecurity company) became new Other Bets under Alphabet. But other graduates, the geothermal energy company Dandelion and construction company Flux became a independent companies outside the Alphabet.

The big new revenue pool didn't even come from an Other Bet

In the fourth quarter, Alphabet announced a major milestone in its quest to expand beyond advertising revenue —one of the main motives for creating the Other Bet companies. But the new source of non-advertising revenue, pegged at $1 billion a quarter, was not from an Other Bet. It came from Google Cloud, a business within Google itself. 

Apparently the Other Bet strategy is not the most efficient way to create a new multi-billion dollar business.

As for Nest, Alphabet's decision to bring the smart appliance company back to Google has been well received. One Nest employee told me this week that the move will help Nest better compete with the likes of Amazon and Ring in the connected home space. Plus, there weren't any layoffs. All Nest employees will continue to work on the same stuff. (However, Nest's cofounder Matt Rogers is stepping down soon, a sign he may have wanted to see Nest succeed on its own like all those other top Alphabet executives who left in 2016.)

For Nest employees, it's a happy ending, even if it's one that doesn't answer the question of whether their project's life as an Other Bet was a success or a failure. For the other Other Bets, and for Alphabet's overall vision, the lesson of Nest is less reassuring: There is no cohesive strategy. Many of you will fail. And the definition of success is constantly shifting.

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It's time to start asking if Alphabet's big gamble on 'Other Bets' is about to go bust (GOOG) from Business Insider: Steve Kovach

The Transport Guy: The guy who cofounded Google's $3.2 billion smart home company is stepping down (GOOG, GOOGL)

Steve Kovach February 08, 2018 at 02:48PM

• Nest's cofounder Matt Rogers is leaving the company.
• The move comes a day after Google announced it would reabsorb Nest, a company it bought in 2014 for $3.2 billion.

---

Matt Rogers, the cofounder of Google's smart home company Nest, is leaving, CNET first reported.

Rogers cofounded Nest with Tony Fadell. Fadell was Nest's original CEO and left the company in 2016, a little over two years after Google bought it for $3.2 billion.

Google announced Wednesday that it was reabsorbing Nest. Nest had been a standalone company under the Alphabet since 2015. Nest, which makes smart thermostats, security cameras, and smoke detectors, is now part of Google's hardware division, which makes devices like the Google Home speakers and Pixel smartphones.

Rogers will spend the next few months with Nest to help smooth the transition, and then depart to spend more time at Incite.org, his politically-active venture firm. 

SEE ALSO: Google reabsorbs Nest

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The guy who cofounded Google's $3.2 billion smart home company is stepping down (GOOG, GOOGL) from Business Insider: Steve Kovach

The Transport Guy: Smart home company Nest is being folded back into Google

Steve Kovach February 07, 2018 at 11:17AM

Alphabet's smart appliance company Nest is being spun back into Google, the companies announced Wednesday.

The move puts Nest under the purview of Rick Osterloh, the head of Google's hardware division that makes devices like the Pixel smartphones and Google Home speakers. Nest makes devices like smart thermostats, smoke detectors, and security cameras.

Here's the announcement published by Osterloh, the head of Google's hardware division:

Smart homes are no longer just a thing of the future. They make families feel safer with connected security systems. They help you save energy and money with intelligent thermostats. And they offer hands-free help and answers to a universe of questions with voice-activated smart assistants.

Since Nest joined Google four years ago, the team has experienced incredible momentum. The company doubled its hardware portfolio last year—selling more devices in 2017 than the previous two years combined. Meanwhile, Google has sold tens of millions of products for the home in just the last year, as more people use the Google Assistant to listen to their favorite music, control their connected devices, and get useful information about their day.

To build on this momentum, we're excited to bring the Nest and Google Hardware teams together. The goal is to supercharge Nest’s mission: to create a more thoughtful home, one that takes care of the people inside it and the world around it. By working together, we’ll continue to combine hardware, software and services to create a home that’s safer, friendlier to the environment, smarter and even helps you save money—built with Google’s artificial intelligence and the Assistant at the core.

We’ve had a head start on collaborating since our teams already work closely together, and today we’re excited to make Nest an integral part of Google’s big bet on hardware.

This story is developing...

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Smart home company Nest is being folded back into Google from Business Insider: Steve Kovach

The Transport Guy: LIVE: Snap Q4 earnings (SNAP)

Steve Kovach February 06, 2018 at 12:44PM

Snap, the company that makes the Snapchat app, will report its fourth-quarter 2017 earnings on Tuesday shortly after the markets close.

Here's what Wall Street is expecting, according to Bloomberg analyst estimates:

• EPS (adjusted): -$0.16
• Revenue: $252.8 million

Snapchat announced last year that it would redesign its app in order to help juice user growth and make it easier to use for newcomers. But that was three months ago, and the redesign still hasn't rolled out to most users. It was originally supposed to launch last December, Business Insider first reported. The company will also allow users to embed content from stories on the web, the first time Snap has formally allowed content to be shared outside the core app.

Snap appears to be exploring alternative revenue streams beyond advertising in Snapchat. Last week it began selling Snapchat merchandise like T-shirts, dancing hot dog plush dolls, and hats inside the app.

Business Insider will be covering the results live as they roll in, so hit refresh or click here for the latest details.

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LIVE: Snap Q4 earnings (SNAP) from Business Insider: Steve Kovach

The Transport Guy: Facebook had a pollster measuring Mark Zuckerberg's approval ratings, but he quit after six months (FB)

Steve Kovach February 06, 2018 at 12:03PM

• Facebook had a full-time pollster tracking CEO Mark Zuckerberg's public perception.
• The pollster quit after six months.
• It is unusual for a company to hire someone full time to track public perception of its executives.

---

Facebook hired a full-time pollster to track Mark Zuckerberg's approval ratings last year as the young CEO was making his 50-state tour across the country. 

But the pollster, Tavis McGinn, quit the gig six months later after becoming disillusioned with Facebook, he told The Verge in an interview published on Tuesday. He said he joined the company because he thought he could change things from the inside, but later realized his efforts were futile.

"I worked there for six months and I realized that even on the inside, I was not going to be able to change the way that the company does business. I couldn’t change the values. I couldn’t change the culture. I was probably far too optimistic," he said in the interview.

Facebook was not immediately available for comment.

It's rare for companies to have a full-time staffer monitoring an executive's approval ratings. Facebook told The Verge it measures Zuckerberg's public perception because he often promotes company initiatives.

Read more about how Facebook polled its users on The Verge.

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The Transport Guy: The tech market 'law of gravity' reversed during the holidays and it could be the beginning of the end for the smartphone industry's insane run

Steve Kovach February 02, 2018 at 05:27PM

• Smartphone sales declined slightly in 2017, reversing a trend of rapid growth over the past decade.
• Meanwhile, PC sales grew in the fourth quarter of 2017. It's a sign the PC's decline has finally bottomed out.
• 2018 could be a challenging year for smartphone manufacturers as they run out of room to grow.

---

If you've been paying attention to the PC industry over the last decade or so, you're used to the same story: Traditional PC sales continue to decline as smartphone sales grow.

As personal computing finishes its transition to mobile devices, consumers are hanging onto their PCs longer and opting to upgrade their smartphones every couple of years instead. Smartphone sales growth has been off the charts since the modern smartphone era kicked off in 2007.

But 2017 was different. Strangely, those two trends reversed themselves.

According to research firm IDC, PC sales were actually up slightly (0.7%) in the fourth quarter of 2017. Smartphone sales were down for the quarter by 6.3%. And for the first time in recent memory, smartphone sales were down slightly (0.7%) for all the full year, according to IDC.

So what caused this phenomenon?

Apple may have played a part in the smartphone decline. The company reported its fourth-quarter earnings Thursday and said it sold 77 million iPhones during the holiday period, a 1.3% decline from the year before. Wall Street was expecting Apple to sell around 80 million iPhones, but it seems like the high-priced iPhone X spooked some would-be upgraders.

Samsung also had an off quarter: Shipments of its smartphones declined 4.4% year-over-years and Samsung lost its traditional spot as the world's No.1 smartphone vendor to Apple, according to IDC.

"Even though we have seen new full-screen displays, advanced biometrics, and improved artificial intelligence, the new and higher price points could be outweighing the benefits of having the latest and greatest device in hand," analyst Anthony Scarsella said in IDC's smartphone report Thursday.

Both Apple and Samsung released expensive new smartphones last fall with high-end specs and large, edge-to-edge screens. Samsung's Galaxy Note 8 sold for about $930. The iPhone X started at $999. Apple also raised the prices of the iPhone 8 and 8 Plus by $50. Despite the positive reviews, it seems like the high price tags kept enough people from upgrading.

As for the surprise rebound in PC shipments, IDC pointed to a variety of factors including businesses upgrading PCs for their staff as well as strong demand in parts of Asia and South America.

The research firm also mentioned "pockets" of the consumer market buying PCs for "emerging use cases that require more compute power." While that sounds a little like bitcoin mining, those rigs are typically built on special racks loaded with GPUs rather than arrays of full-fledged PCs. 

According to data from Statista, annual PC shipments have declined every years since 2011. So it's also possible that the PC industry has finally bottomed out after years of decline, and that 1% or 2% fluctuations of sales in either direction are now the norm. 

Was it just a fluke?

It's hard to determine this early if 2017 was just a fluke, or if it was a sign of darker times for the smartphone market. The stakes are pretty high though. Apple still generates about two-thirds of its revenue from the iPhone, Google plans to continue ramping up its own hardware business, and Samsung will have to prove it can catch up to the iPhone X with its upcoming Galaxy S9.

Meanwhile, Chinese smartphone manufacturers like ZTE and Huawei are struggling to grow outside of Asia as US carriers refuse to sell those devices.

After ten years of booming smartphone sales that have put the gadgets in the hands of so many consumers throughout the world, it's very possible we're seeing the beginning of the end of the smartphone industry's insane growth.

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The tech market 'law of gravity' reversed during the holidays and it could be the beginning of the end for the smartphone industry's insane run from Business Insider: Steve Kovach

The Transport Guy: LIVE: Here come Alphabet earnings (GOOG)

Steve Kovach February 01, 2018 at 12:33PM

Alphabet, Google's parent company, will report its quarterly earnings after markets close Thursday.

Most are expecting a strong quarter fueled by advertising growth and new hardware products announced last fall, like the Pixel 2 smartphone and additional Google Home smart speakers.

We'll have the results as soon as they hit. In the meantime, here's what Wall Street is expecting, according to Bloomberg:

• Net Revenue: $26.23 billion, up 24% year-on-year
• EPS (GAAP): $10.04

Refresh this post for the latest.

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LIVE: Here come Alphabet earnings (GOOG) from Business Insider: Steve Kovach

The Transport Guy: There’s a rift growing between what Wall Street and the rest of the world thinks about Facebook — and only one side will win (FB)

Steve Kovach February 01, 2018 at 11:05AM

• Facebook reported Wednesday that 50 million fewer hours are being spent on the service per day as a result of its News Feed algorithm change.
• But Facebook argues its users are getting a higher quality experience, which is good for its business long term.
• Wall Street is eating it up. Facebook's stock was up Wednesday, despite other fundamental problems with the company like rampant abuse of its platform.

---

It turns out Facebook might not need a News Feed full of memes, clickbait, and viral videos to be successful. Even though much of the public and media may have soured on the social network, Wall Street remains bullish on the company's capability to grow.

On Wednesday, Facebook announced that its recent overhaul of the News Feed algorithm caused users to collectively spend 50 million fewer hours per day on the service. Another worrying statistic: Facebook reported that daily active users fell in the US and Canada for the first time.

But Facebook also reported impressive fourth-quarter results despite the changes, which are designed to weed out content from media publishers and brand pages and instead promote posts that spur "meaningful" engagement like comments, rather than likes and shares.

On the earnings call Wednesday, the messaging from Facebook's management was clear: Decreased usage might actually be a good thing, leading to better ads with higher margins. It's also good news for Facebook's video product, Watch, which features high-quality videos produced by traditional media companies and Facebook itself.

"By focusing on meaningful interaction, I expect the time we all spend on Facebook will be more valuable," Facebook CEO Mark Zuckerberg said during Wednesday's earnings call. "I always believe that if we do the right thing, and deliver deeper value, our community and our business will be stronger over the long term."

Wall Street is lapping it all up, and investors seem to buy Facebook's line that the changes will result in a better experience over the long term for users, thus driving higher advertising rates. After an initial dip after Facebook's earnings were first released Wednesday, the company's shares hit an all-time high on Thursday, jumping 4% based on all that optimism.

"We continue to believe that any slowdown in time spent will be compensated for by higher-quality time spent, and that any trimming of ad load will be compensated for by higher ad pricing," Michael Graham, an analyst at Canaccord, wrote in a research note Thursday.

There are now two competing narratives surrounding Facebook.

On the one hand, you have a company that's proven over and over that it's struggling to combat abuse of its platform. Hours before its earnings were released Wednesday, Facebook's trending section was promoting conspiracy theories about the Amtrak crash involving GOP members of Congress. The company has offered numerous solutions to its abuse problems thanks to several News Feed algorithm tweaks and the promise to hire more human moderators, but so far most of those efforts have fallen flat.

On the other hand, the future of Facebook's business has never looked brighter. There's no indication its ad margins are slowing down, and investors remain bullish on its ability to grow despite all the failures and criticism from the media and governments.

Facebook may be facing a reckoning for its role and influence on politics, media, and social well being, but Wall Street seems to be ignoring all that for now. 

But Facebook is an advertising business, and advertising demands time and attention. With all the problems Facebook is facing, reworking the News Feed to demand less attention from users could be dangerous.

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There’s a rift growing between what Wall Street and the rest of the world thinks about Facebook — and only one side will win (FB) from Business Insider: Steve Kovach

The Transport Guy: Google's parent company Alphabet is exploring a relationship with Saudi Arabia's oil company Aramco to build data centers in the Middle East (GOOG)

Steve Kovach February 01, 2018 at 06:54AM

• Alphabet is talking to Saudi Arabia's state-owned oil company Aramco about building a "tech hub" in the Middle East.
• According to The Wall Street Journal, Alphabet would build data centers in the region.

---

Google's parent company Alphabet is exploring a deal with Saudi Arabia's state-owned oil company Aramco to build data centers in the Middle East, the Wall Street Journal reported Thursday.

The report says Alphabet wants to help Aramco build a "tech hub" in the region as competition from other companies like Amazon heats up.

The deal is not finalized, and a partnership may never materialize, the report says.

Read The WSJ piece for more details.

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Google's parent company Alphabet is exploring a relationship with Saudi Arabia's oil company Aramco to build data centers in the Middle East (GOOG) from Business Insider: Steve Kovach

The Transport Guy: ALPHABET EARNINGS PREVIEW: A monster quarter tainted by YouTube's nasty year (GOOG, GOOGL)

Steve Kovach February 01, 2018 at 05:00AM

• Alphabet, Google's parent company, reports earnings Thursday.
• Wall Street is expecting $26.23 billion in net revenue, and EPS of $10.04.
• Google may have to address questions about abuse of its platforms, even as it continues to deliver impressive financial results.

---

Google's parent company Alphabet will report its fourth-quarter earnings on Thursday after the markets close.

Like the other top Big Tech firms, Alphabet is expected to have notched strong revenue growth for the final three months of the year even as it grapples with thorny challenges like platform abuse that are rippling across the broader internet industry.

Here's what to look for.

The scoreboard

First, here are the results Wall Street expects Alphabet to deliver. These numbers come from Bloomberg's estimates Wednesday afternoon:

• Net Revenue: $26.23 billion, up 24% year-on-year
• EPS (GAAP): $10.04

Now for everything else you should pay attention to.

Increased traffic costs

Traffic acquisition costs (TAC) have become an increasingly large expense for Google in recent years. These are the payments Google makes to third parties like Apple and Firefox to make sure web searches on those platforms go to Google instead of rival search engines.

Alphabet's CFO Ruth Porat does not like being asked about rising TAC, but it'll be the top of everyone's mind anyway.

As more web searches shift to mobile, TAC continues to increase for Google. The company paid $4.84 billion in total TAC in the year-ago quarter. Expect to see that number go up again and expect to hear Porat brush it off as just the cost of doing business.

Beyond advertising

While the vast majority of Alphabet's revenues come from Google advertising, but Google has been bullish in recent quarters over other areas of growth like cloud services and hardware.

Last fall, Google introduced new hardware products like the Pixel 2 smartphone, Google Home Mini connected speaker, and Pixelbook laptop. Google's "Other Revenues" category should give a strong indication how well those products sold. There's also a chance Google provides more detail on the hardware division's growth.

AI, AI, and more AI

If you're going to play a drinking game during Alphabet's earnings call Thursday, downing a shot every time Google CEO Sundar Pichai mentions the promise of artificial intelligence could make you woozy very quickly.

Artificial intelligence and voice-controlled computing are two big bets that Google thinks will power its future, and Pichai and company have been hyping it even more than ever during the past year.

Google Assistant, Google's version of Apple's Siri and Amazon's Alexa assistants, is now present in practically all its products from Pixel phones to the online Google Photos service. Google's promise is to make products that work better for you automatically, all powered by AI and machine learning. Google believes this is an area where it has a big competitive advantage, but investors may soon put pressure on the company to show how it's paying off.

YouTube's reckoning

YouTube is the Google property that has suffered the most from Big Tech's reckoning with abuse across various platforms: Child abuse videos; Fake news in search results; Extremist videos; And some of its biggest stars like Logan Paul and PewDiePie posting inappropriate content that most advertisers would never want to go near.

It just keeps getting worse.

YouTube has announced numerous plans to tackle the abuse of its platforms. It says it will use AI to identify fake stories and promote videos from trusted sources in search. It's booted abusers like Paul from its preferred advertising platform, which helps YouTube creators earn more money. And it says it will hire 10,000 human moderators to help weed out all the bad stuff.

So far, none of these initiatives have completely worked. Once one hole gets plugged, another seems to form. It's likely something Pichai and Porat will have to address during the earnings call.

Other bets

Outside the core Google business, Alphabet has several companies called "Other Bets" such as Waymo for self-driving cars, Nest for connected home products, and Verily for health and life sciences. When lumped together as a single category, Alphabet's Other Bets lose a lot of money, and the company has come under pressure to reduce losses.

So far, none of the Other Bets have generated significant revenue. The hope is that a few of them eventually become successful businesses. In the meantime, investors are tracking how much red ink these bets continue to bleed.

Business Insider will have Alphabet's results as soon as they come in shortly after 4 p.m. Eastern Thursday.

SEE ALSO: Facebook's usage decline should have investors worried — no matter what Mark Zuckerberg says

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ALPHABET EARNINGS PREVIEW: A monster quarter tainted by YouTube's nasty year (GOOG, GOOGL) from Business Insider: Steve Kovach