Start Up No.881: Google faces Android penalty, trolls and feeding, peak oil (again?), truths about the DNC, and more

If Netflix can keep a new US customer for a year, it’s in profit, analysts reckon. Photo by Mon Œil on Flickr.

Please note: I’m taking a day off tomorrow for fun personal reasons, so there won’t be a Thursday edition. Back on Friday.

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A selection of 10 links for you. Use them wisely. I’m @charlesarthur on Twitter. Observations and links welcome.

It takes 11 months for Netflix to achieve payback on each new US subscriber • Videonet

John Moulding:


Netflix’s cost of adding new subscribers in the U.S. has rocketed in recent years, reaching $100 per net new subscriber, according to figures from Ampere Analysis, a leading research/analyst firm covering the entertainment sector. The cost of acquiring each new U.S. subscriber was stable at around $60 between 2013-2015, Ampere Analysis notes.

The company says 14% of Netflix’s expenditure is on marketing related costs today. Increased marketing spend, combined with falling subscriber growth on its home soil, mean it takes the SVOD giant 11 months to achieve payback on net new domestic customers.

Ampere Analysis believes that if international markets follow the same trajectory as the U.S., with increasing levels of marketing required to drive a steady rate of new customers, subscriber acquisition costs could rise to around one-fifth of Netflix’s total costs. Meanwhile, the analyst firm estimates that Netflix churn is running at 20% annually (you can see their methodology below).

“The lengthening payback period – coupled with ever-rising content costs – goes a long way to explaining Netflix’s recent testing of a new premium price tier,” Ampere Analysis declares. “That will help the streaming giant offset its rising cost base.”

Richard Broughton, Research Director at Ampere Analysis, says: “With declining domestic growth rates and spiralling acquisition costs, Netflix faces a very real set of challenges if it is to continue to command such a strong position. Our research shows that while Netflix can continue to enjoy relatively low acquisition costs for international subscribers and a buoyant market keen to embrace SVoD, it cannot afford to take its eye off the ball in the domestic market, even momentarily. Its ability to grow ARPU will be critically important to manage long-term growth – domestically and abroad.” 


To me that sounds… OK? Outside the US, the cost is $40-$45. With its growing catalogue and excellent interface, it has the killer product as fast internet spreads. Its UI in particular is so well tuned – if you compare it with rivals, it’s streets ahead.
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Walmart plots rival to Netflix, Amazon Prime Video • The Information

Jessica Toonkel, Tom Dotan and Priya Anand:


Walmart is considering launching a subscription streaming video service to compete with Netflix and Amazon Prime Video, people familiar with the situation told The Information. Such a move could be enormously costly for the retailer but would demonstrate its determination to compete on multiple fronts with Amazon in particular.

The Bentonville, Ark.-based retailer sees an opportunity to undercut Netflix and Amazon on price. Walmart is thinking of a service priced below $8 per month, according to one of the people. Netflix has been steadily raising the price of its service, which now costs between $8 and $14 a month, while Amazon charges $8.99 a month for its Prime Video service. Walmart is also considering an ad-supported free service…

…While Walmart already offers an online video on demand service called Vudu, that hasn’t become popular. Launch of a subscription service would be a major expansion in entertainment. In taking such a step, Walmart would join numerous tech and telecom companies that see TV shows as a way to attract customers. Apple is now financing production of shows for a new service, while Facebook has launched a video offering called Facebook Watch.


This is a bad idea. Sure, it’s big, but it’s an elephant trying to dance. Vudu should be enough warning.
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Europe tries to shut the Google stable door • CCS Insight

Geoff Blaber is an analyst at CCS; the EC is expected to announce on Wednesday a fine and “action” on Google’s tying of Google apps to Android:


The size and scale of the Android ecosystem, coupled with the business model interdependencies of Google, manufacturers, operators and app developers, mean the case is decidedly more complex than that of Microsoft’s Internet Explorer bundling. There’s a substantial risk that despite the commission’s best intentions, its action results in unintended consequences that ultimately penalize the consumer.

The strength of Google’s position has invited increased scrutiny by the European Commission. In the wake of the 2017 verdict on Google Shopping results, Android was a natural next target. With more than 2 billion active devices and stringent requirements for manufacturers about how Android is used when coupled with Google apps and services, it is unsurprising the commission has sought to take action.

Although an open-source operating system, Android was introduced as a vehicle for Google’s licensable apps and services and to extend Google’s business model as engagement shifted to mobile devices. In this context, Android has been incredibly successful.

And yet Europe’s stance is arguably six to eight years too late. The commission is shutting the stable door after the horse has bolted. A related problem is that there is no clear alternative to Android. Apple’s iOS is an alternative from a consumer perspective, but Google has definitively beaten any licensable alternatives. Had the commission’s determination been made even five years ago, it would have opened a door of opportunity for others such as Microsoft. Today most contenders are themselves built on an Android code base.

Although a move to separate apps from the operating system may help foster competition over the longer term, Android has served its purpose in cementing Google services in consumers’ minds. At least in the West, manufacturers will still have to offer Google services to be competitive and meet consumer demand.


As he says: it’s years too late if it’s really to make a difference. I’ve never felt that the Android case is anywhere near as egregious as the Google Shopping case, where Google suppressed search results from other sites to favour its own.
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Greek court rules to extradite Alexander Vinnik, accused of laundering $4bn in bitcoin • Coin Telegraph

Helen Partz:


A Greek court has ruled to extradite the alleged former operator of crypto exchange BTC-e, Alexander Vinnik, to France, local news outlet CNN Greece reported Friday, July 13.

The 39-year old Russian national Vinnik, also known colloquially as “Mr. Bitcoin,” was indicted by U.S. authorities on charges of fraud and money laundering last year, reportedly involving up to $4 billion in Bitcoin (BTC).

Vinnik’s Greek lawyer Ilias Spyrliadis confirmed to Russian news agency TASS that “the court has granted France’s request for Vinnik’s extradition.” Spyrliadis also revealed that he is planning to appeal against the court’s decision in the Greek Supreme Court.

According to CNN Greece, Vinnik himself challenged the decision of the Greek court on extradition to France, denying the allegations of French authorities, who issued a warrant, in which the alleged BTC-e owner was accused of “defraud[ing] over 100 people in six French cities between 2016 and 2018.” Vinnik responded that he was “transferring e-money through a platform,” considering it as “legitimate personal transactions.”


Four billion? Billion??
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The conventional wisdom about not feeding trolls makes online abuse worse • The Verge

“Film Crit Hulk”:


Whether we’re talking about AOL, AIM, early 4chan, or the early days of Twitter, there has always been a myth about the time and place where things were more innocent, when trolling was all in good fun. But what everyone really remembers about these proverbial times isn’t their purity. It’s how they didn’t see the big deal back then. They remember how they felt a sense of permission, a belief that it was all okay. But that was only true for those who were like them, who thought exactly like they did. All the while, someone else was getting stepped on and bullied while others laughed. The story of the internet has always been the same story: disaffected young men thinking their boorish and cruel behavior was justified or permissible.

And it was always wrong.

The second great lie is that trolling is harmless…

…The third great lie is about what fixes it…

The premise of “don’t feed the trolls” implies that if you ignore a troll, they will inevitably get bored or say, “Oh, you didn’t nibble at my bait? Good play, sir!” and tip their cap and go on their way. Ask anyone who has dealt with persistent harassment online, especially women: this is not usually what happens. Instead, the harasser keeps pushing and pushing to get the reaction they want with even more tenacity and intensity. It’s the same pattern on display in the litany of abusers and stalkers, both online and off, who escalate to more dangerous and threatening behavior when they feel like they are being ignored. In many cases, ignoring a troll can carry just as dear a price as provocation.


Terrific article. I feel as though in technology, the hardware business is in stasis generally. Now we’re trying to work out the social and software side.
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Is the oil industry repeating a critical error? •

Kurt Cobb:


The recent rebound in oil prices should spur some investment elsewhere, especially where genuine financial returns await. But the punishing price decline in oil from 2014 to 2016 and the slow recovery that followed has resulted in deep cuts in exploration and development throughout the industry (if not so much in the U.S. tight oil fields).

In response, the International Energy Agency has been waving its arms for some time that this dearth of investment will mean constrained supplies after 2020. In addition, Rystad Energy, an independent energy research firm, reported at the end of last year that 2017 saw a record low in oil discoveries. It noted that exploration expenditures had dropped 60% from 2014 to 2017. Without a substantial reversal of this trend, the firm expects supply deficits. (Translation: There won’t be enough oil to go around in the not-too-distant future.)

Meanwhile, writer Gail Tverberg has been pounding home her counterintuitive thesis that peak world oil production won’t be accompanied by high prices. Rather, it will be the result of prices too low for much of the remaining oil to be extracted profitably. In other words, in Tverberg’s opinion there isn’t an oil price that is both low enough to avoid economic stagnation (i.e., a price that consumers can readily afford) and yet high enough to incentivize oil companies to extract sufficient quantities of oil to prevent a decline in the overall rate of production worldwide.


It’s been ages since I thought about Peak Oil (probably true for you too). But prices are creeping up again, up 50% in a year – though well short of their 2012-14 levels.
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App traps: how cheap smartphones siphon user data in developing countries • WSJ

Newley Purnell:


For millions of people buying inexpensive smartphones in developing countries where privacy protections are usually low, the convenience of on-the-go internet access could come with a hidden cost: preloaded apps that harvest users’ data without their knowledge.

One such app, included on thousands of Chinese-made Singtech P10 smartphones sold in Myanmar and Cambodia, sends the owner’s location and unique-device details to a mobile-advertising firm in Taiwan called General Mobile Corp., or GMobi. The app also has appeared on smartphones sold in Brazil and those made by manufacturers based in China and India, security researchers said…

…Thi Thi Moe, a sales clerk in Mandalay, Myanmar, said she was unaware until being informed by The Wall Street Journal that GMobi was collecting data from her Singtech P10 phone. She said she had become annoyed in recent months at frequent advertisements on its screen for mobile games.

“I don’t want that kind of app on my phone,” said the 28-year-old, who added that she bought her phone last year for $77. “I’m not familiar with the technology, but it seems like it shouldn’t be taking my private information.”

…Upstream Systems, a London-based mobile commerce and security firm that identified the GMobi app’s activity and shared it with the Journal, said it bought four new devices that, once activated, began sending data to GMobi via its firmware-updating app. This included 15-digit International Mobile Equipment Identification, or IMEI, numbers, along with unique codes called MAC addresses that are assigned to each piece of hardware that connects to the web. The app also sends some location data to GMobi’s servers located in Singapore, Upstream said.

Upstream also said that in recent months it blocked GMobi’s app from making suspicious attempts to sign up users for paid services, such as mobile games. Had the app been successful, users would have been billed more than $7m in total across eight countries, Upstream said. GMobi’s Mr. Wu said the company wasn’t responsible for any malicious activity emanating from its app.


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Trump’s ‘missing DNC server’ is neither missing nor a server • Daily Beast

Kevin Poulsen:


It’s true that the FBI doesn’t have the DNC’s computer hardware. Agents didn’t sweep into DNC headquarters, load up all the equipment and leave Democrats standing stunned beside empty desks and dangling cables. There’s a reason for that, and it has nothing to do with a deep state conspiracy to frame Putin.

Trump and his allies are capitalizing on a basic misapprehension of how computer intrusion investigations work. Investigating a virtual crime isn’t a like investigating a murder. The Russians didn’t leave DNA evidence on the server racks and fingerprints on the keyboards. All the evidence of their comings and goings was on the computer hard drives, and in memory, and in the ephemeral network transmissions to and from the GRU’s command-and-control servers.

When cyber investigators respond to an incident, they capture that evidence in a process called “imaging.” They make an exact byte-for-byte copy of the hard drives. They do the same for the machine’s memory, capturing evidence that would otherwise be lost at the next reboot, and they monitor and store the traffic passing through the victim’s network. This has been standard procedure in computer  intrusion investigations for decades. The images, not the computer’s hardware, provide the evidence.

Both the DNC and the security firm Crowdstrike, hired to respond to the breach, have said repeatedly over the years that they gave the FBI a copy of all the DNC images back in 2016. The DNC reiterated that Monday in a statement to the Daily Beast.

“The FBI was given images of servers, forensic copies, as well as a host of other forensic information we collected from our systems,” said Adrienne Watson, the DNC’s deputy communications director. “We were in close contact and worked cooperatively with the FBI and were always responsive to their requests. Any suggestion that they were denied access to what they wanted for their investigation is completely incorrect.”

The FBI declined comment for this story, but in testimony before the House Intelligence Committee last year, then-director James Comey said that Crowdstrike “ultimately shared with us their forensics.”


Most people don’t know what computer forensics involves (even though the process has been pretty much the same for about 30 years), nor how much information a computer collects (pretty much everything, apart from the specific keystrokes – and sometimes even those).
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US ban on China’s ZTE forces telecoms to rethink business: sources • Reuters

Eric Auchard:


[Russian and emerging markets carrier] Veon was especially hard hit, suffering launch delays at its Italian joint venture and in Ukraine, near network outages in Bangladesh, and lesser disruptions at its Pakistan operations, sources at the Amsterdam-based operator told Reuters. “Veon has decided to second source everything,” a person familiar with the strategy shift at Veon said of moves to reduce dependence on any one supplier of network gear.

“We don’t want the company to be in the same position we were in when the U.S. (ban on ZTE) came out: It caused massive problems in three or four of our markets,” the source said.

Perhaps the biggest setback was for Italian mobile operator Wind Tre, which had a €1bn ($1.17bn) contract with ZTE to upgrade radio equipment.

The ban forced ZTE to abandon more than half of the remainder of the contract, and Wind Tre will use gear from network supplier Ericsson instead, sources told Reuters.

The original deal had marked ZTE’s biggest breakthrough into the European market, which has been dominated by regional players such as Ericsson of Sweden and Nokia of Finland.


It still feels as though Trump let ZTE off the hook too easily. What has China offered, exactly?
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The secret Facebook groups for people with shocking DNA test results • The Atlantic

Sarah Zhang:


not all biological parents want to be found. In conversations and correspondence with more than two dozen people for this story, I heard of DNA tests that unearthed affairs, secret pregnancies, quietly buried incidents of rape and incest, and fertility doctors using their own sperm to inseminate patients. These secrets otherwise would have—or even did—go the grave. “It’s getting harder and harder to keep secrets in our society,” says CeCe Moore, a prominent genetic genealogist who consults for the television show ‘Finding Your Roots’. “If people haven’t come to that realization, they probably should.”

St. Clair told me she sees it as a generational shift. The generation whose 50-year-old secrets are now being unearthed could not have imagined a world of $99 mail-in DNA kits. But times are changing, and the culture with it. “This generation right now and maybe the next 15 years or so, there’s going to be a lot of shocking results coming out. I’d say in 20 years time it’s going to dissipate,” she predicted. By then, our expectations of privacy will have caught up with the new reality created by the rise of consumer DNA tests.

But until then, hundreds, maybe thousands, of people like St. Clair are left to piece together their family histories, containing the fallout of a DNA test however they can. The best help, many have found, is each other.

“It was better than therapy,” Dawn, 54, says of joining the DNA NPE Friends group. “I tried therapy. It didn’t work.” (The Atlantic agreed to identify by first name only the people who have not revealed their misattributed parentage to friends and family.) Therapists, friends—they all had trouble understanding why the revelation mattered so much. When Dawn told her close friends that her biological father had Italian heritage, they joked about making cannoli. “They don’t understand the gravity,” she says. She herself didn’t quite understand until it happened to her either. Dawn had spent her whole life suspecting her father was not her biological father, yet the revelation still left her unmoored. “The very foundation of who I thought I was was ripped out from under me,” she says. “Until that moment, I had no idea how much stock I had put in my family to identify to find who I was.”


What had been a staple of reality TV morning shows becomes untelevised reality.
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Errata, corrigenda and ai no corrida: none notified

1 thought on “Start Up No.881: Google faces Android penalty, trolls and feeding, peak oil (again?), truths about the DNC, and more

  1. Streets ahead ! I didn’t know that one existed in the wild !

    The Google problem is that they have a stranglehold on ad revenue and user data. They can pretend to be open, knowing in the end they’ll out-monetize any competition. Startups can at best hope to get bought out before VC runs out.

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