Start Up No.904: blocking the monopolies, users shun Facebook, VR market swoons, what AI?, and more


People didn’t miss having a home button on the iPhone X – so say farewell. Photo by Mark Mathosian on Flickr.

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A selection of 12 links for you. That’s what they are. I’m @charlesarthur on Twitter. Observations and links welcome.

I am part of the resistance inside the Trump administration • The New York Times

A “senior official” in the Trump admin – whose identity has been verified, but not published, by the NYT – writes about what’s going on:

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It may be cold comfort in this chaotic era, but Americans should know that there are adults in the room. We fully recognize what is happening. And we are trying to do what’s right even when Donald Trump won’t.

The result is a two-track presidency.

Take foreign policy: In public and in private, President Trump shows a preference for autocrats and dictators, such as President Vladimir Putin of Russia and North Korea’s leader, Kim Jong-un, and displays little genuine appreciation for the ties that bind us to allied, like-minded nations.

Astute observers have noted, though, that the rest of the administration is operating on another track, one where countries like Russia are called out for meddling and punished accordingly, and where allies around the world are engaged as peers rather than ridiculed as rivals.

On Russia, for instance, the president was reluctant to expel so many of Mr. Putin’s spies as punishment for the poisoning of a former Russian spy in Britain. He complained for weeks about senior staff members letting him get boxed into further confrontation with Russia, and he expressed frustration that the United States continued to impose sanctions on the country for its malign behavior. But his national security team knew better — such actions had to be taken, to hold Moscow accountable.

This isn’t the work of the so-called deep state. It’s the work of the steady state.

Given the instability many witnessed, there were early whispers within the cabinet of invoking the 25th Amendment, which would start a complex process for removing the president. But no one wanted to precipitate a constitutional crisis. So we will do what we can to steer the administration in the right direction until — one way or another — it’s over.

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Seems like the Woodward book has triggered something. (There are 1,212 people this could be.)
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The monopoly-busting case against Google, Amazon, Uber, and Facebook • The Verge

Russell Brandom:

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Antitrust crusaders have built up serious momentum in Washington, but so far, it’s all been theory and talk. Groups like Open Markets have made a strong case that big companies (especially big tech companies) are distorting the market to drive out competitors. We need a new standard for monopolies, they argue, one that focuses less on consumer harm and more on the skewed incentives produced by a company the size of Facebook or Google.

Someday soon, those ideas will be put to the test, probably against one of a handful of companies. For anti-monopolists, it’s a chance to reshape tech into something more democratic and less destructive. It’s just a question of which company makes the best target.

To that end, here’s the case against four of the movement’s biggest targets, and what they might look like if they came out on the losing end.

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A good read. Blocking acquisitions is quite a big part of it.
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What current iPhone X users tell us about the opportunity for the new models • Tech.pinions

Carolina Milanesi:

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When looking at the features individually, 79% of the sample was very satisfied with the Swipe-based gesture UI and 65% was very satisfied with Face ID. The ambivalence on Siri comes across clearly when looking at how the sample was distributed: 33% was somewhat satisfied, 27% was neither satisfied nor dissatisfied and another 21% was somewhat dissatisfied. While this is not great for Apple it is not all bad news either. Users clearly don’t see Siri as a purchase driver or positive differentiator, but they also do not see it as detrimental to their overall experience.

Satisfaction is a very good indicator, but we really wanted to get to how users felt about some of the changes implemented on the iPhone X, so we asked if they agreed or disagreed with some very specific statements.

70% of the panel strongly disagrees that they “miss the home button from previous iPhone models”. Another 14% said they somewhat disagree.

Because some people think differently about the Home Button and Touch ID we wanted to make sure we asked about both. Some users think of Touch ID as an enabler for Apple Pay and authentication across the board, while they think of the Home Button as the “control center” to navigate the iPhone. We asked whether they agreed or disagree with the statement “ I miss having Touch ID on my iPhone”. Here while the overall sentiment remains positive it was a little more muted with 50% saying they strongly disagreed and 21% saying they somewhat disagree.

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People didn’t mind the lack of a home button, and got used to the gesture-based interface quickly. Same for me: after a few days, you don’t notice it, and going back to a button-based phone seems weird and retrograde.
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Inside the world of Eddy Cue, Apple’s services chief • The Information

Aaron Tilley:

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In 2012, Mr. Cue took on even more responsibility when Mr. Cook fired Scott Forstall, then a senior vice president of the iOS software powering iPhones. Mr. Forstall had overseen the launch of Apple Maps, which was panned due to misplaced landmarks, distorted satellite images and other problems. With Mr. Forstall gone, Mr. Cue took over Apple Maps and Siri, the intelligent assistant that launched as a major feature of the iPhone 4S the prior year.

From the moment he gained responsibility for Siri, Mr. Cue seemed to lack much interest in it, according to people who worked on the project. When Siri team members presented Mr. Cue with technical data around the performance of the assistant—an area of frequent criticism of the technology—Mr. Cue appeared bored and seemed to fall asleep in at least two meetings, said a former Apple employee who was present…

…One obstacle for Mr. Cue, in his meetings with television executives, was that he didn’t encounter the kind of desperation that made it possible for Apple to sign all the major record labels, then being ravaged by piracy, to iTunes. Cord-cutting—people dumping their cable and satellite subscriptions—had not yet emerged as a problem. “Apple kept wanting to use the same playbook, and it’s not going to work in the video world,” said a former Apple executive who worked on video.

Around four years ago, Mr. Cue oversaw development of a version of Apple TV that could integrate with cable services, with the goal of replacing set-top boxes distributed by the likes of Comcast and Time Warner Cable, said a former Apple employee. The Apple TV box—with a coaxial cable port for plugging into cable networks and software to handle the combination of live and on-demand video—never launched due to disagreements with the potential cable partners. Apple engineers involved in the product were dispirited, said a former employee.

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There’s a huge amount of fluff in this piece (at least, if you know anything about Apple; these two items are about the only new elements in it.
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Many US Facebook users have changed privacy settings or taken a break • Pew Research Center

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Just over half of Facebook users ages 18 and older (54%) say they have adjusted their privacy settings in the past 12 months, according to a new Pew Research Center survey. Around four-in-ten (42%) say they have taken a break from checking the platform for a period of several weeks or more, while around a quarter (26%) say they have deleted the Facebook app from their cellphone. All told, some 74% of Facebook users say they have taken at least one of these three actions in the past year.

The findings come from a survey of U.S. adults conducted May 29-June 11, following revelations that the former consulting firm Cambridge Analytica had collected data on tens of millions of Facebook users without their knowledge.

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Personally, I haven’t used Facebook for more than a couple of minutes a month during this year. Twitter, I’m on all the time. I guess it depends what you’re looking to get out of a platform.
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Goldman drops bitcoin trading plans for now: Business Insider • Reuters

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Goldman Sachs Group is ditching plans to open a desk for trading cryptocurrencies as the regulatory framework for crypto remains unclear, Business Insider reported on Wednesday, citing people familiar with the matter.

In recent weeks, Goldman executives have concluded that many steps still need to be taken, most of them outside the bank’s control, before a regulated bank would be allowed to trade cryptocurrencies, the financial news website reported.

“At this point, we have not reached a conclusion on the scope of our digital asset offering,” Goldman Sachs spokesperson Michael DuVally told Reuters.

Major cryptocurrencies plunged on the news. Bitcoin fell nearly 5% to touch a five-day low at $6,985 on the Luxembourg-based Bitstamp exchange. Ethereum slid 9%, Litecoin 7.1% and Ripple 7.7%.

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“For now”. I couldn’t find the original BI article, so I guess we’ll have to take this on faith.
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Germany still aims for ‘fair taxation’ of internet companies, says German Finance Ministry • Reuters

Michael Nienaber and Tom Körkemeier:

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Germany has long been cool on proposals from the European Commission which would make firms with significant digital revenues in Europe pay a 3% tax on their turnover on various online services in the European Union. That would bring in an estimated 5bn euros ($5.78bn).

The Bild report said finance ministry officials recommended that profits should continue to be taxed only where a company’s headquarters are based. All other options would bring disadvantages to Germany’s export-oriented industry, it said.

The finance ministry spokesman said the newspaper had “very selectively” cited from an internal document in which officials had simply summarized various models and proposals.

“Such reports are common practice to inform the head of the ministry,” the spokesman said, adding that Scholz was still weighing his options.

Scholz remains convinced that large digital companies must make a “fair contribution” to the financing of public goods, in particular by preventing them from avoiding taxation by shifting profits and through tax optimization, the spokesman said.

French Finance Minister Bruno Le Maire called on Scholz and other European counterparts to make a decision soon.

“We need to have decided on this matter by January 2019,” Le Maire told television broadcaster LCI, adding politicians would be judged on their actions in next May’s European elections.

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Probably not many votes in not levying taxes on them, so you can imagine it’s just a question of figuring out how.
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Despite a sharp decline in VR headset shipments in Q2 2018, market outlook remains positive • IDC

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Worldwide shipments of virtual reality (VR) headsets were down 33.7% year over year in the second quarter of 2018 (2Q18), according to the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. IDC expects this to be a temporary setback as the VR market finds its legs. The arrival of new products, such as the Oculus Go and HTC Vive Pro, and new brands, combined with the need for greater headset fidelity all point to a positive outlook for the quarters ahead.

Screenless viewers brought a lot of attention to VR in the early days as the entire market was artificially propped up by brands like Samsung, Alcatel, and Google that bundled the headsets with smartphones. However, since then, the screenless viewer category has declined substantially, shrinking from 1 million headsets in 2Q17 to 409,000 in 2Q18. This category was the largest contributor to the decline in shipments for the overall VR headset market.

Tethered VR headsets declined 37.3% in 2Q18 largely because major brands like Oculus and Sony were unable to maintain the momentum established during a period of price reductions in 2Q17. As a result, the two brands managed to ship 102,000 and 93,000 headsets respectively in 2Q18. The category leader, HTC, shipped close to 111,000 headsets (excluding the standalone Vive Focus) thanks to the growing popularity of the Viveport subscription service as well as the launch of the Pro headset.

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I would not have guessed HTC would be the category leader in VR headset sales.
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I’ve seen the future of consumer AI, and it doesn’t have one • The Register

Andrew Orlowski went to IFA, the poor lad:

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If ever there was a solution looking for a problem, it’s ramming AI into gadgets to show of a company’s machine learning prowess. For the consumer it adds unreliability, cost and complexity, and the annoyance of being prompted.

How is this so? There are clearly some use cases where, empirically, the statistical predictions made by neural networks has improved the output – speech recognition is a clear example. There are 44 English phonemes: overlapping nets help add valuable context that produce more accurate guesses (and remember, this is all about guessing). And then… there are some use cases that aren’t improved. These turn out to be quite numerous.

In Berlin, I saw two desperate armies converging on the battlefield of consumer AI: white-goods manufacturers looking to add value and margin, and technology companies looking to get into new areas of consumer electronics. LG and Samsung are both, with decades of white goods and tech behind them. As you might expect, both are smitten by AI, LG even more so than its bigger rival, and their vast floor space touted this loudly.

For LG it’s a fairly indiscriminate application of AI – with everything rebranded “ThinQ” and fairly limited in what it can do.

LG, Google and Innit trumpeted a smart kitchen. How is it smart? Well, there’s “voice control, step-by-step guided cooking, and automated expert cook programs”. We learn that “consumers may have had to open up six or seven apps to get the help they need cooking, including nutrition information, recipes, shopping lists, how-to videos, and remote control apps for various devices”, but now they can “enjoy a single elegant journey”.

How is it smart, though?

For example, LG says, if a fridge “knows” there’s a chicken in it, you select a recipe and the oven comes on to start roasting. Most of my very limited number of chicken recipes were learned years ago, however, and when I’m browsing for new ideas, I don’t necessarily want to start cooking right away. And perhaps like me you need to clear the oven of ancient metalware and possibly flammable material before it’s safe to turn on. I wondered how many fires AI will start?

I suppose a connected oven will tell you, and hopefully the fire brigade, that your house is on fire. The AI at the smart insurer can then hike your premiums.

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He isn’t wrong.
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Google wants to kill the URL • WIRED

Lily Hay Newman:

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Porter Felt and her colleague Justin Schuh, Chrome’s principal engineer, say that even the Chrome team itself is still divided on the best solution to propose. And the group won’t offer any examples at this point of the types of schemes they are considering.

The focus right now, they say, is on identifying all the ways people use URLs to try to find an alternative that will enhance security and identity integrity on the web while also adding convenience for everyday tasks like sharing links on mobile devices.

“I don’t know what this will look like, because it’s an active discussion in the team right now,” says Parisa Tabriz, director of engineering at Chrome. “But I do know that whatever we propose is going to be controversial. That’s one of the challenges with a really old and open and sprawling platform. Change will be controversial whatever form it takes. But it’s important we do something, because everyone is unsatisfied by URLs. They kind of suck.”

The Chrome team has been thinking about URL security for a long time. In 2014, it tried out a formatting feature called the “origin chip” that only showed the main domain name of sites to help ensure that users knew which domain they were actually browsing on. If you wanted to see the full URL, you could click the chip and the rest of the URL bar was just a Google search box. The experiment garnered praise from some for making web identity more straightforward, but it also generated criticism. Within a few weeks of showing up in a Chrome pre-release, Google paused the origin chip rollout.

“The origin chip was Chrome’s first foray into the space,” Porter Felt says. “We discovered a lot about how people think about and use URLs. [But] frankly, the problem space proved harder than we expected. We’re using the feedback that we received back in 2014 to inform our new work.”

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Bear this in mind as a marker in the sand. How do you improve URLs? All the attempts that have been made (have more domains, add “https” in front of them, make them longer, make them shorter) have come back to the place they used to be.
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Blood-testing firm Theranos to dissolve • WSJ

John Carreyrou:

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In the wake of a high-profile scandal, the company will formally dissolve, according to an email to shareholders. Theranos will seek to pay unsecured creditors its remaining cash in coming months, the email said.

The move comes after federal prosecutors filed criminal charges against Theranos founder Elizabeth Holmes and the blood-testing company’s former No. 2 executive, alleging that they defrauded investors out of hundreds of millions of dollars and defrauded doctors and patients.

The executives have denied the charges and face a coming criminal trial.

The dissolution process was precipitated by the fact that Theranos breached a covenant governing a $65 million loan it received from Fortress Investment Group last year. Under the loan terms, Fortress was entitled to foreclose upon the company’s assets if its cash fell beneath a certain threshold.

In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the New York private-equity firm ownership of the company’s patents but leave its remaining cash—estimated at about $5 million—for distribution to other unsecured creditors.

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The letter to stockholders begins “I write with difficult news about the future of the Company.” It’s not difficult news – it’s bad news. Taylor also says that the company owes “at least” $60m to unsecured creditors, meaning they’ll get about 8c per dollar.

Appropriate of course that it’s Carreyrou writing this article, as it was his painstaking reporting which set the whole implosion off. I expect he’ll be there when the office furniture is auctioned off and the doors finally close. Ahab was never so happy.
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Evernote lost its CTO, CFO, CPO and HR head in the last month as it eyes another fundraise • TechCrunch

Ingrid Lunden:

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This is the second major revamp of the startup’s leadership team in a little over two years. In March 2016, the company lost its founding CTO and made a number of other appointments amid a wave of departures and other big changes.

Chris O’Neill, who joined as CEO after long-time leader Phil Libin stepped away from the role, had already shuttered a number of unprofitable operations that Evernote had launched in an attempt to grow the company, including the closure of its accessories business, and several other app efforts such as some versions of Skitch and its Food app. (Today, it has three smartphone apps, its flagship Evernote app, Skitch and Scannable for digitising business cards, receipts and other paper-based items; plus handwriting recognition app Penultimate for tablets.)

In the years since then, Evernote has been somewhat quiet, but there have been other significant changes and divestments. In June, Evernote announced that it would spin out its Chinese operations and become a minority shareholder. Yinxiang Biji, as it’s called, accounted for 10% of Evernote’s revenues. And some of the company’s movement has been problematic: a controversial change in the company’s privacy policy, which would have made it possible for employees in the company to read a user’s notes in the app, got quickly reassessed and altered as people publicly slammed the company.

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Sounds like a company in trouble. Formerly valued in unicorn territory, having received $290m in funding, it’s now proving that not everything goes up relentlessly.
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Errata, corrigenda and ai no corrida: none notified

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