Start Up: Facebook hits fake news, Japan’s holographic wives, malvertising v webmail, and more

Water damage is a problem for lots of smartphones – though waterproofing is changing that. Photo by londoncyclist on Flickr.

A selection of 11 links for you. Remember – the weekend is coming. I’m @charlesarthur on Twitter. Observations and links welcome.

Inside the turmoil at Faraday Future, the startup that wants to beat Tesla • BuzzFeed News

Priya Anand:


Faraday’s main financier is Jia [Yueting], founder and chair of a holding company called LeEco, which has been dubbed the “Netflix of China.” Publicly, there’s a lack of clarity around the nature of LeEco’s relationship with Faraday. But according to several former Faraday employees, the electric car startup – incorporated in Gardena, California – operates in practice as a branch of Jia’s Chinese company LeEco, sharing resources.

There is some evidence to support that characterization. In December 2015, employees at Faraday’s headquarters in Gardena, California, received a mandate from Jia: Design a prototype LeEco car that could be shown off publicly at a spring event in Beijing. According to several former employees, some of Faraday’s designers were pulled off of their core projects to work on the vehicle. And in April 2016, LeEco unveiled a sleek, electric sedan called LeSee. On stage, Jia, who has been outspoken about his plans to usurp Tesla, touted LeSee as a LeEco creation as the white sedan glided across the stage to park in a mock garage. The audience couldn’t see that the seemingly self-driving car was in fact being piloted from backstage via remote control.

Back in California, some Faraday employees were unsettled, sources told BuzzFeed News. Though they’d designed the car for LeEco per Jia’s request, they were not given credit for doing so, and the company didn’t receive payment in exchange.


And now faces lawsuits for payment. This isn’t going well. (The remote control thing is the sort of stuff companies occasionally pull, but that it has leaked out shows that the people there really are not happy.)
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News Feed FYI: addressing hoaxes and fake news • Facebook Newsroom

Adam Mosseri is VP of News Feed – what a poisoned chalice that must feel like now:


We believe providing more context can help people decide for themselves what to trust and what to share. We’ve started a program to work with third-party fact checking organizations that are signatories of Poynter’s International Fact Checking Code of Principles. We’ll use the reports from our community, along with other signals, to send stories to these organizations. If the fact checking organizations identify a story as fake, it will get flagged as disputed and there will be a link to the corresponding article explaining why. Stories that have been disputed may also appear lower in News Feed.

It will still be possible to share these stories, but you will see a warning that the story has been disputed as you share.

Once a story is flagged, it can’t be made into an ad and promoted, either.

Informed Sharing
We’re always looking to improve News Feed by listening to what the community is telling us. We’ve found that if reading an article makes people significantly less likely to share it, that may be a sign that a story has misled people in some way. We’re going to test incorporating this signal into ranking, specifically for articles that are outliers, where people who read the article are significantly less likely to share it.

Disrupting Financial Incentives for Spammers
We’ve found that a lot of fake news is financially motivated. Spammers make money by masquerading as well-known news organizations, and posting hoaxes that get people to visit to their sites, which are often mostly ads. So we’re doing several things to reduce the financial incentives. On the buying side we’ve eliminated the ability to spoof domains, which will reduce the prevalence of sites that pretend to be real publications. On the publisher side, we are analyzing publisher sites to detect where policy enforcement actions might be necessary.

It’s important to us that the stories you see on Facebook are authentic and meaningful. We’re excited about this progress, but we know there’s more to be done. We’re going to keep working on this problem for as long as it takes to get it right.


No way of course that disputing stuff will be abused.
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How Autonomy fooled Hewlett-Packard • Fortune

Jack Ciesielski:


In mid-November, the [US] SEC ordered the former CEO of Autonomy’s U.S. operations, Christopher Egan, to fork over $800,000 of compensation resulting from the takeover, in which HP relied on figures he had helped inflate. The facts of the case are now public. Although this case related to current IFRS revenue recognition rules, it can happen again, and to any company.

One fact really stands out: in each of the 10 quarters preceding the acquisition, Autonomy’s revenues were within 4% of analyst expectations. That’s a level of precision that should arouse suspicion. In hindsight, achieving revenue targets like clockwork looks awfully strange. Here’s how they did it.

Reseller transactions. Autonomy’s UK-based senior managers directed a program swelling revenues by almost $200 million. Autonomy sold its software through “value-added” resellers, legitimate businesses providing additional services and support to product end users while also selling Autonomy’s software. Just five resellers, in 30 transactions, provided services to Autonomy that couldn’t be called legitimate.

When Autonomy was negotiating a sale to an end user, but couldn’t close the sale by quarter’s end, Egan would approach the resellers on or near the last day of the quarter, saying the deal was nearly done. Egan coaxed the resellers to buy Autonomy software by paying them hefty commissions. The resellers could then sell the software to a specified end user – but Autonomy maintained control of the deals and handled negotiations with the end user without the resellers’ aid. There’s no way these transactions could be revenue.

Autonomy retained risks, rewards and ownership of the goods – not the resellers, and not the end users. Autonomy was still exercising continuing involvement to an abnormal degree for a real transfer of ownership to occur. And the benefits of the deals didn’t accrue to Autonomy until they were sold to an end user. These transactions “grew” Autonomy’s revenues by as much as 15% in some periods. They were critical: they enabled the firm to report financial results within the boundaries of analyst expectations.


Even so, one might have thought HP would have wondered about the ability to hit those targets that well again and again. Stuffing the last day of the quarter is pretty common; even someone who’s never been in sales (me) knows about that. So why not look for it?
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This Japanese company wants to sell you a tiny holographic wife • Motherboard

Madison Margolin:


Hikari was created to be a “comforting character that is great for those living alone.” The purpose of this cutesy anime character, blue hair, mini skirt, knee high socks and all, is to “do all she can just for the owner”—also referred to as “master.” It seems designed specifically to appeal to lonely bachelors.

In this ad, Azuma wakes her master up in the morning, notifies him of the weather (“Take your umbrella”), and even coddles him with emotional support. During the day, while he’s at work she texts him things like “Come home early” or “I can’t wait to see you.” When he finally gets home at the end of the day, she’s already made sure all the lights are on and jumps up and down inside her little glass frame, exclaiming “Missed you, darling.”

Azuma’s character even comes with her own profile. She’s 20 years old, likes donuts, dislikes insects, and her dream is “to become a heroine to help people who are working hard.” She’s also shown as wearing a wedding ring—needless to say, Gatebox plays up the virtual stay-at-home wife role Azuma is meant to embody.


Creepy hardly begins to describe it.

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One more sign the world is shrinking – eBay is for suckers • Matthew Sag

Matthew Sag:


If you live in an economy where officials are corrupt, contracts are hard to enforce, and trust is scarce, everyday transactions are burdensome and time-consuming. If you don’t want to get scammed, you either deal with people you know, people your relatives know, or you deal with repeat players who have an interest in their reputation. Lack of trust makes market small and transaction costs high.

The wonderful thing about eBay when it first arrived was that it freed so many people from the tyranny of small markets. eBay provided a marketplace where trust was built on reputation and feedback and the size of markets was only constrained by the cost of shipping.

Recently, however, eBay has reengineered its services so that buyer trust is based on a seemingly absolute guarantee that the seller will always lose in any dispute.

No one should be surprised that unscrupulous buyers use eBay to commit fraud on unsuspecting sellers. What surprised me was the extent to which eBay now facilitates this fraud through its “buyer protection program”. In October this year I listed a very slightly used iPhone 6S for sale on eBay and was quite satisfied when it eventually sold for $465. This satisfaction was short-lived, however, as I came to realize that I had been taken in by an eBay scammer.


And how. The item was particularly valuable, but the way Sag was bamboozled is a salutary lesson.
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Adgholas malvertising: business as usual • Malwarebytes blog

Jérôme Segura:


In October, there was the first instance of AdGholas going through Yahoo’s ad network to deliver their malicious ad. This one was delivered within the Yahoo mail interface (users checking their mail would be shown the rogue advert).

It was not until much later (11/27) that we were finally able to reproduce the malvertising chain from a genuine residential IP address with a machine clean of any monitoring tools, only capturing traffic transparently. Up until then, we only had very strong suspicions that something was going on, but without a network capture, we simply did not possess the ‘smoking gun’ required to make an affirmative claim. As soon as we had evidence of malfeasance (November 27th), we informed Yahoo of our discovery.

It was quite revealing that only a few days (11/30) after our report to Yahoo, we saw AdGholas switch to another domain on the very same server (broxu[.]com) being used with the exact same tricks.

Large publishers such as the MSN network were once again serving malware.


I wonder how you could hack millions of email accounts belonging to a company that served adverts with its email. (Related question: how good are Google’s defences against same for its majority of users who don’t use two-factor authentication?)
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The elephant in the smartwatch room • Above Avalon

Neil Cybart:


There have been only three legitimate players in the smartwatch industry.

Apple; Garmin; and Samsung.

Combined, these three companies have represented 78% of smartwatch shipments over the past two years. Even more remarkable, no other company has come close to these three in terms of unit sales. Since the beginning of 2015, only seven companies have shipped more than 200,000 smartwatches in any given quarter. Out of those seven, one will soon be broken up in a fire sale (Pebble), another just announced it was getting out of smartwatches (Motorola), and two have shown little interest in releasing new smartwatches (Huawei and LG). This leaves Apple, Garmin, and Samsung. 

Even more astounding, the “Other” category, the usual industry catch basin for dozens of other companies, is on track to account for just 11% of smartwatch shipments in 2016. One group of companies found in the “Other” category are the original sellers of utility on the wrist – watchmakers. The Swiss watch industry continues to dabble with connected watches. However, one would be correct in questioning the motivation guiding some of these companies. TAG Heuer, apparently in an attempt to claim its position as one of the more successful Swiss watchmakers when it comes to smartwatches, announced it will sell just 75,000 connected watches in 2016. Those kinds of sales make the Swiss watch industry completely irrelevant in terms of the broader smartwatch market.


It is brutal. May come down – as these markets seem to – to just two principal players, one of them being Apple.
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Over 100,000 smartphones are damaged by liquids every day in Western Europe • IDC


Smartphones offering resistance against water damage (and other liquids) grew 45.2% year on year in the first nine months of 2016 in Western Europe, while shipments of non-water–resistant smartphones declined 17% in the same period. Water resistant smartphones reached 22.5m units in the period to represent 23% of the total number of smartphones shipped in 2016 to date, according to the International Data Corporation (IDC) European Quarterly Mobile Phone Tracker.

The strong growth in this segment was supported by the success of Samsung and Huawei devices offering this feature and by the recently launched iPhone 7 and iPhone 7 Plus, both offering IP67 [submersion resistance].

Liquid damage is the second-largest cause of damaged smartphones in the world, representing 35% of all devices repaired. This results in significant costs to end users, phone manufacturers, carriers, retailers, and the environment in general. IDC estimates that over 100,000 smartphones get damaged by water or other liquids every day in Western Europe. The impact of liquids is estimated to be worth in excess of $10.7bn a year in the region.


I guess the biggest cause is simple dropping onto solid ground.
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2016’s word of the year should be gaslighting • Daniel Miessler



Teen Vogue has the single best analysis of Trump’s methodology of deceit that you’ll ever read.


Since reading it I’ve been struck by how well this gaslighting metaphor works for many things going on right now.

Someone was arguing in Twitter earlier that there’s no evidence that Russia hacked the elections. So the dance begins.

Russia hacked the elections; it’s pretty obvious.
“Do you have evidence?”
Only these 20 things. And plus the government’s cyber groups looked at it and they all said the same things—keeping in mind that they’re not all pro-liberal or anything.
“The government lies about things.”
True, but when you combine it all together…
“Anyone can say anything about anything. You don’t know who to trust. So I reject that Russia hacked the election.”

Well, fuck. He has a point. If you see the world that way.


There’s one extra point to this gaslighting: the people who deny all other evidence will take on absolute trust anything said by their single true source. 2016 has shown how vulnerable we are to our own confirmation bias.
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Uber blames humans for self-driving car traffic offences as California orders a halt • The Guardian

Sam Levin:


“It is essential that Uber takes appropriate measures to ensure safety of the public,” the California department of motor vehicles (DMV) wrote to Uber on Wednesday after it defied government officials and began piloting the cars in San Francisco without permits. “If Uber does not confirm immediately that it will stop its launch and seek a testing permit, DMV will initiate legal action.”

An Uber spokesperson said two red-light violations were due to mistakes by the people required to sit behind the steering wheel and said the company has suspended the drivers.

A video posted by Charles Rotter, an operations manager at Luxor, a traditional cab company, shows one of Uber’s computer-controlled cars plowing through a pedestrian crosswalk in downtown about four seconds after the light turned red. Elsewhere, a photo from a San Francisco writer showed one of the Uber vehicles entering an intersection against a red light.

“People could die,” Rotter said in an interview later. “This is obviously not ready for primetime.”


Rewind: “after it defied government officials and began..” So this is Uber being both foolhardy and headstrong, as well as wrong. Can we expect fines, both for breaking traffic laws and operating without a licence?

Oh yes, and these (dangerous) offences happened on day one of the illegal testing.
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How well do you really know your country? •

David Blood and Andrew Rininsland:


Ipsos MORI has published the results of its annual Perils of Perception poll of 40 countries, revealing some startling disparities between people’s preconceptions about their country and the realities.

Take our quiz to see how your perceptions compare to those of the country overall, as well as to other quiz-takers.


Simple sliders, nine questions, have your preconceptions challenged. Available for multiple countries, including the UK and US.

I’m hopeful the FT will do more of these. I think it might help people understand their biases if they also said, at the start or end, which media outlets they use.
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Errata, corrigenda and ai no corrida: none notified

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