Start Up No.964: Indian virus scam arrests, loot boxes investigated, Microsoft v Apple, Mic drops, and more

Smartphone maker Gionee’s chief executive lost millions gambling. His company’s going down too. CC-licensed photo by John Wardell on Flickr.

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

That virus alert on your computer? Scammers in India may be behind it • The New York Times

Vindu Goel and Suhasini Raj:


On Tuesday and Wednesday, police from two Delhi suburbs raided 16 fake tech-support centers and arrested about three dozen people. Last month, the Delhi authorities arrested 24 people in similar raids on 10 call centers.

In Gautam Budh Nagar, one of the suburbs, 50 police officers swept into eight centers on Tuesday night. Ajay Pal Sharma, the senior superintendent of police there, said the scammers had extracted money from thousands of victims, most of whom were American or Canadian.

“The modus operandi was to send a pop-up on people’s systems using a fake Microsoft logo,” Mr. Sharma said. After the victims contacted the call center, the operator, pretending to be a Microsoft employee, would tell them that their system had been hacked or attacked by a virus. The victims would then be offered a package of services ranging from $99 to $1,000 to fix the problem, he said.

Such scams are widespread, said Courtney Gregoire, an assistant general counsel in Microsoft’s digital crimes unit.

Microsoft, whose Windows software runs most personal computers, gets 11,000 or so complaints about the scams every month, she said, and its internet monitors spot about 150,000 pop-up ads for the services every day. The company’s own tech-support forums, where people can publicly post items, also see a steady stream of posts offering fake tech-support services.

…The scam is quite lucrative. Researchers at Stony Brook University, who published a detailed study of fake tech-support services last year, estimated that a single pop-up campaign spread over 142 web domains brought in nearly $10m in just two months.


When I first reported on this in 2010, the focus was in Mumbai, but anywhere with a call centre will do. It’s endless: there’s always a call centre list, always willing people to run the scam, money to be made, people do be duped.

But you’d think they could stop the popup ads.
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Major sites running unauthenticated JavaScript on their payment pages • Terence Eden’s Blog

Terence Eden:


A few months ago, British Airways’ customers had their credit card details stolen. How was this possible? The best guess goes something like this:
• BA had 3rd party JS on its payment page
• The 3rd party’s site was hacked, and the JS was changed.
• BA’s customers ran the script, which then harvested their credit card details as they were typed in.

This should have been a wake-up call to the industry. Don’t load unauthenticated code on your website – and especially not on your payments page.


Deliveroo, Spotify, The Guardian, Fanduel, EasyJet (sorta), and British Airways. Argh.
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Microsoft is worth as much as Apple (again). How did that happen? • The New York Times

Steve Lohr on how Microsoft’s market capitalisation has come back to match – even pass – Apple’s:


There is a short-term explanation for Microsoft’s market rise, and there is a longer-term one.

The near-term, stock-trading answer is that Microsoft has held up better than others during the recent sell-off of tech company shares. Apple investors are worried about a slowdown in iPhone sales. Facebook and Google face persistent attacks on their role in distributing false news and conspiracy theories, and investor concerns that their privacy policies could scare off users and advertisers.

But the more enduring and important answer is that Microsoft has become a case study of how a once-dominant company can build on its strengths and avoid being a prisoner of its past. It has fully embraced cloud computing, abandoned an errant foray into smartphones and returned to its roots as mainly a supplier of technology to business customers.

That strategy was outlined by Satya Nadella shortly after he became chief executive in 2014. Since then, Microsoft’s stock price has nearly tripled…

…Mr. Nadella made the cloud service a top priority, and the company is now a strong No. 2 to Amazon. Microsoft has nearly doubled its share of that market to 13% since the end of 2015, according to the Synergy Research Group. Amazon’s share has held steady at 33% over that span.

Microsoft has also retooled its popular Office apps like Word, Excel and PowerPoint in a cloud version, Office 365. That offering caters to people who prefer to use software as an internet service and gives Microsoft a competitive entry against online app suppliers like Google.


Satya Nadella, without a doubt, has executed perfectly.
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Facebook considered charging for access to user data • WSJ

Deepa Seetharaman and Kirsten Grind:


Internal emails show Facebook Inc. FB +1.89% considered charging companies for continued access to user data several years ago, a step that would have marked a dramatic shift away from the social-media giant’s policy of not selling that information, according to an unredacted court document viewed by The Wall Street Journal.

The emails in the document also indicate that Facebook employees discussed pushing some advertisers to spend more in return for increased access to user information.

Taken together, the internal emails show the company discussing how to monetize its user data in ways that are employed by some other tech firms but that Facebook has said it doesn’t do.

At a congressional hearing in April, Facebook Chief Executive Mark Zuckerberg said, “I can’t be clearer on this topic: We don’t sell data.”

The emails—most from about 2012 to 2014—are far from conclusive, lacking context and in some cases truncated. But they provide a window into mostly sealed court filings—which a British lawmaker has pledged to make public next week—from a lawsuit against Facebook filed by a company called Six4Three LLC…

…The Wall Street Journal viewed three pages of unredacted material from one 18-page document that showed portions of some internal emails. In other court filings, Facebook said these excerpts were subsequently redacted because they contained “sensitive discussion of Facebook’s internal strategic analysis of third-party applications, the release of which could damage Facebook’s relationships” with those apps.


Or you can go and read them unredacted at Ars Technica, where Cyrus Farivar discovered you could just put the document into a text editor and, aha. (Choose the text option.)

The discussion it reveals, via internal Facebook emails, is pretty shocking.
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New bill would make cash-free businesses illegal in New York • Grub Street

Alexia Tsoulis-Reay:


New York city councilmember Ritchie J. Torres will formally introduce legislation that could ban so-called cashless businesses from operating in New York City. Like lawmakers in Philadelphia, Washington, D.C., and New Jersey, Torres, who represents the 15th Council District in the central Bronx, believes that cash-free establishments are discriminatory by design. If his bill is passed, any business that refuses to accept cash will face fines — a move that would impact the many cash-free restaurants, coffee shops, and cafés that have recently emerged across New York City. On the eve of announcing his bill, Grub Street talked to him about the racism and classism that he believes are at the heart of the so called “cashless revolution.”

Q: How did you become aware of cash-free businesses?
RJT: I started coming across coffee shops and cafés that were exclusively cashless and I thought: But what if I was a low-income New Yorker who has no access to a card? I thought about it more and realized that even if a policy seems neutral in theory, it can be racially exclusionary in practice. Therein lies the problem with card-only policies. I see it as a way to gentrify the marketplace.

Paper money is a universal currency. We all use it at some point in our lives, and delegitimizing paper money with a card-only policy should be unlawful.

Q: Why do you think cashless business models “gentrify the marketplace”?
RJT: On the surface, cashlessness seems benign, but when you reflect on it, the insidious racism that underlies a cashless business model becomes clear. In some ways, making a card a requirement for consumption is analogous to making identification a requirement for voting. The effect is the same: It disempowers communities of color.

These are public accommodations. The Civil Rights Act established a framework for prohibiting discrimination in matters of housing, employment, and public accommodations. If you’re intent on a cashless business model, it will have the effect of excluding lower-income communities of color from what should be an open and free market.


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iOS 12 adoption crosses 75%, according to Mixpanel, beating iOS 11 upgrade rate • 9to5Mac

Benjamin Mayo:


iOS 12 adoption continues to steadily increase, outpacing iOS 11 by several weeks. Last year, Mixpanel recorded 75% share for iOS 11 on December 17th. iOS 12 reached the same milestone yesterday, or about three weeks faster.

Mixpanel data comes from analytics frameworks inside apps and mobile websites, logging the OS version for iPhone, iPad and iPod touch devices it sees in the wild …

The analytics company currently says that iOS 12 has a 75.05% share of the iOS install base, with iOS 11 at 19.5% and older versions making up less than 5.5% of the total pie.

Both Mixpanel’s data and Apple’s official charts show that iOS 12 adoption is happening at a faster rate than iOS 11, but both vary a bit on the nominal percentage figures.

For its part, Apple said that iOS 12 crossed the 50% mark on October 10th. As of October 29, it reported that 60% of all devices are using iOS 12. When it next updates its chart, it should be comfortably above the 70% mark.

iOS 11 was widely seen as a fumble in software quality, which led to Apple making performance a key focus of iOS 12. The strategy certainly seems to have paid off, with many customers reporting that their ‘old’ phones (especially devices like iPhone 5s and 6 Plus) have been given a fresh breath of life. There also have not been any major showstopper bugs associated with the iOS 12 launch.


Mixpanel’s data tends to skew American; Apple doesn’t seem to give this adoption data any more. (It used to be on its developer site.)
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Mic has laid off the majority of its staff • Recode

Peter Kafka:


Mic is laying off the majority off its staff, while the digital publisher works on a deal to sell the remainder of its assets to Bustle Digital Group.

Mic CEO Chris Altchek announced the layoffs at a staff meeting this morning. Until today the company had employed more than 100 people. I’ve asked Mic to provide details on the layoffs, including the total number of people who will lose their jobs.

Cory Haik, Mic’s publisher, has already left the company. I’m told that the under the proposed terms of the Bustle deal, Altchek and co-founder Jake Horowitz would stay on after the acquisition.

Mic raised more than $60m to build a millennial-focused news company, but couldn’t find a business model to support its costs, which include a two-floor office in Manhattan’s World Trade Center.

Facebook recently cancelled a deal with Mic to publish a news video series.


Great ways to burn through $60m in seven years: rent two floors of prime real estate in New York, plus others in other cities; and be a web property whose domain name isn’t a Googlewhack. (By comparison I offer you “daring fireball” and “asymco”, both Googlewhacks in their beginnings.)

Once you’ve done that, failure is pretty much assured. Sympathies to those laid off, but the warning signs were there long ago. Suggestions are that Bustle (which is skilled at buying distressed media properties) might buy it for less than $10m. At its last funding round, Mic raised $21m at a valuation of hundreds of millions – don’t ask me how.
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South Korea charges 11 with selling Samsung technology to China • Bloomberg

Sam Kim:


The chief executive officer of a Samsung supplier and eight of his employees received 15.5 billion won ($13.8m) after conspiring with two representatives of the Chinese company to transfer organic light-emitting diode knowhow, according to a statement from prosecutors in Suwon. The names of the companies and individuals weren’t disclosed.

Intellectual property theft is a national concern for South Korea as it tries to maintain its narrowing technology lead over China. The mainland is pouring billions into becoming self-sustaining in areas such as memory chips and displays, two fields where Samsung is the world leader. Curved-edge OLED screens have become a signature feature of the Suwon-based company’s high-end Galaxy smartphones, including the Note 9.

The US is also concerned about what it considers a state-backed campaign of technology theft by China. Earlier this year a former Apple Inc. engineer was arrested in the US on charges of stealing driverless car secrets. Earlier this month Fujian Jinhua Integrated Circuit Co. and Taiwan’s United Microelectronics Corp. were indicted on charges they conspired to steal trade secrets form Micron Technology Inc…

…The South Korean supplier transferred “3D lamination” technology and other equipment to the Chinese screen maker between May and August, violating a non-disclosure agreement with Samsung, according to the prosecutors. They were caught while loading additional pieces onto a ship headed for the mainland, they said.

Prosecutors said the supplier sold the technology after its sales dipped and that the CEO set up a fake company headed by his sister-in-law. They accused him of building the equipment at another factory in an attempt to cover up the alleged plot.


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The FTC may be coming after video game loot boxes • BGR


During a US Senate subcommittee hearing this week, New Hampshire Sen. Maggie Hassan grilled commissioners from the Federal Trade Commission about video game loot boxes — about how prevalent they are as well as the fact that stricter oversight of them might be needed. “Loot boxes are now endemic in the video game industry and are present in everything from casual smartphone games to the newest, high-budget video game releases,” she said during the Senate’s Commerce, Science, and Transportation subcommittee hearing on Tuesday. “Loot boxes will represent a $50 billion industry by the year 2022, according to the latest research estimates.” She then asked commissioners if they would be willing to look more closely at their usage in video games, and the commissioners said they would.

A number of news headlines are out today saying the FTC will “investigate” loot boxes, but we should note the agency doesn’t appear to have given a full indication as of yet regarding the details here. Nevertheless, the various players are already reacting accordingly.

The Entertainment Software Association, for example, sent this position statement on loot boxes to Polygon following that Senate hearing. In it, the trade group tries to beat down the insinuation left in the hearing that loot boxes represent a form of gambling, which of course would need to be strictly regulated: “Loot boxes are one way that players can enhance the experience that video games offer. Contrary to assertions, loot boxes are not gambling. They have no real-world value, players always receive something that enhances their experience, and they are entirely optional to purchase. They can enhance the experience for those who choose to use them, but have no impact on those who do not.”


Entirely optional: true of gambling.
No impact on those who don’t do it: true of gambling (unless it’s used to fix matches, but that’s a different level of impact).
No real-world value: applies to casino chips and other gambling tokens.
Always receive something that enhances their experience: the point is that the value of the “something” is random compared to the amount paid. That is gambling.

Loot boxes are gambling. It’s about time.
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Did ‘billion-dollar’ gambling loss in Saipan imperil Chinese smartphone maker Gionee? • South China Morning Post

Li Tao:


“I did participate in gambling in Saipan, but how could I possibly lose that much (10 billion yuan)? If it is true, shares of Imperial Pacific [the casino owner] should have surged,” Liu Lirong, Gionee’s chairman and chief executive, said in an interview with Securities Times in Hong Kong at the weekend, responding to recent reports that his gambling loss of 10bn yuan (US$1.44bn) had resulted in the collapse of Gionee.

When asked how much he lost gambling, Liu told the Securities Times reporter, “a bit more than 1 billion yuan”.

Gionee, which ranked behind Apple in sixth place for handset sales in China last year, is now on the verge of bankruptcy restructuring as suppliers have halted component sales after failing to receive payments for several months, according to the report. Liu admitted in the interview that Gionee’s total debts amount to 17bn yuan ($2.45bn), with 10bn yuan of this owed to banks, 5bn yuan to upstream suppliers and about 2bn to advertising agencies.

As the “absolute authority” at Gionee – a company he founded – for 16 years, Liu said in the interview that he may have confused his private assets with those belonging to the company as he has borrowed frequently over the years for personal reasons…

…Liu denied in the interview that Gionee’s troubles were primarily the result of his gambling. He said the company had been losing money since the beginning of 2013, with average losses of no less than 100m yuan per month between 2013 and 2015, and the monthly loss further widened to no less than 200m yuan in the past two years.


Gionee was apparently the fifth biggest phone maker in China; sold about 40m handsets in 2016; last public product launch in November 2017; fired half its factory staff in April. As I said: time to leave the dancefloor.
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Errata, corrigenda and ai no corrida: none notified

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