Start Up No.991: US charges Huawei, Pentagon v deepfakes, Iranian cryptocurrency?, IBM goes quantum, and more


You think Apple could assemble iPhones in the US? Trouble is, there aren’t enough of these. CC-licensed photo by @abrunvoll on Flickr.

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A selection of 9 links for you. API-free. I’m @charlesarthur on Twitter. Observations and links welcome.

US authorities unveil sweeping set of charges against China’s Huawei • WSJ

Kate O’Keeffe and Aruna Viswanatha:

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The Trump administration unveiled a sweeping set of actions—including criminal charges—against China’s Huawei Technologies in its latest salvo against the telecom giant, with authorities unsealing a set of indictments just days before US-China trade talks are set to resume.

In a pair of cases unsealed Monday, federal prosecutors accused Huawei of violating US sanctions on Iran and of stealing trade secrets from a US business partner, portraying the company as a serial violator of US laws and global business practices.

The charges contained in separate indictments in Brooklyn, NY, and Washington state were detailed by senior officials from the departments of Justice, Commerce and Homeland Security on the first day the government reopened after a 35-day shutdown—and just two days before negotiators for the US and China are set to resume trade talks in Washington, D.C.

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Now it’s getting serious. Huawei clearly violated the Obama-era sanctions against selling equipment to Iran: the evidence collected by Reuters shows as much. The “trade secrets” is about T-Mobile. So this isn’t new, in that sense.
link to this extract


Deepfake videos: inside the Pentagon’s race against disinformation • CNN

Donie O’Sullivan and a host of others:

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Advances in artificial intelligence could soon make creating convincing fake audio and video – known as “deepfakes” – relatively easy. Making a person appear to say or do something they did not has the potential to take the war of disinformation to a whole new level. Scroll down for more on deepfakes and what the US government is doing to combat them.

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It’s an interactive – as you really need for this topic – with lots of food for thought.
link to this extract


Iran inches closer to unveiling state-backed cryptocurrency •Al Jazeera

Maziar Motamedi:

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Details of Iran’s new cryptocurrency were revealed last summer, after the Trump administration started reimposing sanctions over alleged “malign activities”.

The biggest blow to Iran’s economy came in November, when some of its banks were barred from SWIFT, the Belgian-based global messaging system that facilitates cross-border payments.

Countries excluded from SWIFT cannot pay for imports or receive payments for exports, leaving them crippled financially, and having to rely on alternative methods of moving money.

Iran’s cryptocurrency is expected to be rolled out in phases, first as a rial-backed digital token, to facilitate payments between Iranian banks and other Iranian institutions active in the crypto space, and later possibly as an instrument for the Iranian public to pay for local goods and services.

While it would not directly facilitate payments between Iran and other countries, the state-backed digital currency could lay the groundwork for Iran to join a blockchain-based international payments system that could emerge as an alternative to SWIFT.

There is no official confirmation of active participation between Iran and other nations in this area, or when any potential multilateral initiatives will yield results, but developments in recent months provide clues.

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The problem with this is the sheer volume of currency that Iran would need to be moving around. Who is going to swap cryptorials for anything?
link to this extract


The heroes of the Thai cave rescue • Macleans

Shannon Gormley has a long, detailed, insider-y reporting of what happened, including this as they were bringing one of the boys out – drugged so that he wouldn’t struggle:

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the boy is writhing like a salted snail; this time, no one is there to help.

Jim will have to help the boy himself. There’s a bit of a bank up ahead: the unmanned Station 4. He hauls the boy up onto the mud a little bit. He pulls the plastic safety cap off the syringe with his teeth. He stabs the needle into the boy. He waits for the boy to calm down. The boy calms down. He waits to be absolutely sure the boy has calmed down. The boy has absolutely calmed down. Jim sticks the needle in a crack of the cave wall so it doesn’t pierce the next divers, and he swims on to Grand Central Station 3, the final station on Jim’s journey.

Hand. Hand. Hand. Again. Again. Again.

Impossible, but there it is: the body doubling over. Again, Jim thinks it’s happening again. Again, it’s worse. This time, they’re far from a bank. And this time, the boy has nearly knocked his own air tank clear off—Jim can feel the cylinder just barely hanging on by the top rubber bind, flapping around in the water.

If explorers only thought about the destination they’re trying to reach, they would never see it. In a cave, short-sighted tunnel vision can be a lifesaver. Jim knows to home in on the critical elements of dangerous situations: Ignore your quickening heartbeat, concentrate on your breathing; forget what happens to you if your air runs out, focus on what you can do with the air that remains; disregard the fact that a hand might resume strangling your air tube at any moment, remember that you’re not quite dead yet.

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link to this extract


IBM launches commercial quantum computing – we’re not ready for what comes next • The Conversation

Carlos Perez-Delgado is a lecturer in computing at the University of Kent:

»

The one criticism typically laid against quantum technologies is that they are “too expensive”, and will continue to be so even as they become more readily available. This is certainly the case today. IBM isn’t making <a href="https://newsroom.ibm.com/2019-01-08-IBM-Unveils-Worlds-First-Integrated-Quantum-Computing-System-for-Commercial-Use“>its quantum computer available to buy but rather to access over the internet. But this shows the technology is on its way to becoming affordable in the near future.

Quantum computers are very easily disrupted by changes in the environment and take a long time to reset. So IBM has developed a protective system to keep the Q System One stable enough to perform tasks for commercial customers, which are likely to include large companies, universities and research organisations that want to run complex simulations. As a result, IBM believes it has a commercially viable product, and is putting its money where its mouth is…

…Quantum technologies are disruptive, and more so in cybersecurity than any other field. Once large-scale quantum computers become available (which at the current rate could take another ten to 15 years), they could be used to access pretty much every secret on the internet. Online banking, private emails, passwords and secure chats would all be opened up. You would be able to impersonate any person or web page online.

«

I’m ever so slightly dubious about this “quantum computer but only available via the internet”. So you don’t see it, just see its results? How does one distinguish results obtained from a quantum computer over a link where you’re timesharing from a result obtained from a top-speed non-quantum computer on a fast link? IBM’s press release, linked above, and its <a href="https://quantumexperience.ng.bluemix.net/qx/experience“>Q Experience page, don’t really explain this at all. Let’s hope this isn’t another Watson.
link to this extract


A tiny screw shows why iPhones won’t be ‘assembled in U.S.A.’ • The New York Times

Jack Nicas:

»

when Apple began making the $3,000 computer in Austin, Tex., it struggled to find enough screws, according to three people who worked on the project and spoke on the condition of anonymity because of confidentiality agreements.

In China, Apple relied on factories that can produce vast quantities of custom screws on short notice. In Texas, where they say everything is bigger, it turned out the screw suppliers were not.

Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple’s manufacturing contractor was relying on could produce at most 1,000 screws a day.

The screw shortage was one of several problems that postponed sales of the computer for months, the people who worked on the project said. By the time the computer was ready for mass production, Apple had ordered screws from China.

The challenges in Texas illustrate problems that Apple would face if it tried to move a significant amount of manufacturing out of China. Apple has found that no country — and certainly not the United States — can match China’s combination of scale, skills, infrastructure and cost…

…Apple has intensified a search for ways to diversify its supply chain, but that hunt has homed in on India and Vietnam, according to an Apple executive who asked not to be named because the executive was not authorized to speak publicly. The company’s executives are increasingly worried that its heavy dependence on China for manufacturing is risky amid the country’s rising political tensions with the United States and unpredictability, this person said.

“The skill here is just incredible,” Mr. Cook said at a conference in China in late 2017. Making Apple products requires state-of-the-art machines and lots of people who know how to run them, he said.

“In the U.S., you could have a meeting of tooling engineers and I’m not sure we could fill the room,” he said. “In China, you could fill multiple football fields.”

«

Cook has been making this point about China’s scale for years – and it remains true regardless of trade wars. (Nice implication that it was a paucity of screws that prevented the Mac Pro selling more.)
link to this extract


Apple in 2018: the Six Colors report card • Six Colors

Each year Jason Snell asks a fairly wide group of journalists and analysts to comment on how Apple’s year was, in hardware, software and so on. I’m quoted, though not in this bit:

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overall the MacBook line “remains entirely confused,” according to Fraser Speirs. John Siracusa said, “The story of the Mac in 2018 was dominated by a laptop lineup that remains both confusing and unsatisfying.” Adam Engst said, “Apple’s laptop line is even more of a confusing mess than before.”

“I honestly don’t know why [the 13-inch MacBook Pro without Touch Bar] is even being sold—It’s similar for the MacBook… there is no compelling reason this exists. And yet it is still being sold for more than a MacBook Air. I just don’t get it…. The gulf between what Apple charges and what its competitors charge is increasing in a way that doesn’t benefit Apple,” said Christina Warren.

Steven Aquino lamented “a lack of iteration on the Touch Bar.”

And did we mention the MacBook keyboards? Matt Deatherage said, “It defies reason for Apple [to offer] keyboards of inferior design and execution.” John Gruber said, “I may be biased as a writer and a keyboard aficionado, but it used to be the case that Apple’s notebook keyboards were widely hailed as the best in the world… that’s no longer the case and I think that’s a problem.” Shahid Kamal Ahmad said that the major failing of the keyboard was not its feel but “the inherent unreliability of the switches and their propensity to fail from the inevitable ingress of a subatomic particle.”

«

The chances that Apple reverts its keyboard design, or even offers the older scissor form as an alternative, are between zero and none. Yet this sort of complaint is going to continue; it’s like the hockey puck mouse, which everyone hated. Apple moved on there. Realistically, what will it do here?
link to this extract


China’s smartphone market falls 14% in 2018 • Canalys Newsroom

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In 2018, smartphone shipments in China fell to their lowest level since 2013, at 396 million units. The natural slowdown as consumers keep their smartphones for longer is one factor, but it has been amplified considerably by the economic slowdown in China and consumers&rsquo; weakened purchasing power. The latest quarter, Q4 2018, marked a 15% year-on-year drop, and the seventh consecutive quarter of decline.

<img src="https://www.canalys.com/static/press_release/images/pr20190128%20huawei%20takes%20record%20share%20.jpg” width=”100%” />

As shipments tumble, the market is rapidly consolidating. The top five smartphone vendors’ market share has increased from 73% in 2017 to 88% in 2018. Among them, Huawei and Vivo bucked the overall market decline, and grew 16% and 9% respectively. Oppo managed to hold onto second place, falling 2% but growing market share. Xiaomi ranked fourth, as a disappointing second half caused its full-year shipments to fall by 6%. Apple stayed in fifth place with a 13% decline in 2018. It still outperformed the market, but this was the worst growth rate in the top five, and Apple’s third consecutive year of shipment decline in China.

Huawei achieved a record market share of 27% in 2018, with 105 million shipments. “Huawei has penetrated the high-end with technological innovations, and a strengthening brand, which has helped it markedly extend its lead in China,” said Mo Jia, an analyst based in Canalys’s Shanghai office. “Its dual-brand strategy has been a huge success, with sub-brand Honor helping it cover a broad range of price bands. China continues to be a strong foundation for Huawei, and its launchpad for overseas expansion as Huawei aims to challenge Samsung for global leadership in 2019.”…

…Apple had the toughest year of the top five, with shipments falling 13%, as customers were deterred by the high pricing of its new iPhone. In addition, models such as iPhone 7 and 8 did not see significant uplift in China, even after prices were lowered after the launch of the iPhone XS. “Apple has several challenges in China, and the growing power of competitors is not actually its biggest,” said Jia. “…Apple must re-examine its China strategy, and find a way to revive its high-end brand image, in order to align with the purchasing behavior of local middle-class and upper-class demographics.”

Leading manufacturers will have even less breathing space in 2019, as Canalys expects the Chinese smartphone market to fall by 3% to 385 million units.

«

I think Apple’s problem was that the XS and XS Max don’t look different enough from last year’s (let’s call it the Stratechery Thesis). This is going to be a squeeze on the “others”.
link to this extract


Amazon changes tack on video offering, as Apple joins market • The Information

Jessica Toonkel:

»

Over the past few months, executives at the e-commerce giant have told entertainment companies that it is going to be more selective about which video services it adds to what it calls Amazon Channels. The offering now includes around 200 services, from small paid video services like Acorn to big ones like HBO Now and Showtime. Amazon has increasingly focused its attentions on the biggest channels on the platform which generate the most subscription revenue, said two people familiar with its plans.

The shift signals that Amazon’s vision for its digital video service has narrowed. While its own Prime Video streaming service is a strong competitor to Netflix—offering original series like “Transparent” and “Bosch” as well as reruns from TV networks—the Channels offering made Amazon the destination for all kinds of streaming services. It was the video version of Amazon’s Marketplace, where the e-commerce giant lets other merchants sell their goods on its site in exchange for a fee. In the case of the Channels service, Amazon takes a cut of subscription revenues, generating $500m last year, estimates BMO Capital Markets.

Amazon is still interested in adding some of the bigger subscription services to its platform, and wants to expand internationally. But it is no longer is striving to offer every streaming service available, the people said.

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I had no idea Amazon offered these things (perhaps because I don’t own an Amazon Fire Stick). The timing for the Apple launch feels like it’s giving itself plenty of time to get people interested before it starts doing its own content in a big way.
link to this extract


Errata, corrigenda and ai no corrida: Any weird formatting is my fault – I had to rewrite the script to compile this in a hurry as Pinboard’s API was dead. Hurrah for web scraping to short deadlines.

7 thoughts on “Start Up No.991: US charges Huawei, Pentagon v deepfakes, Iranian cryptocurrency?, IBM goes quantum, and more

  1. re. Manufacturing in Texas: I’m not buying the screw excuse:
    1- they did get screws, in the end
    2- they do mention that due to wages, there was a single guy in charge of procurement, where there normally would be “a roomful”
    3- I’m not aware of Texas as a big manufacturing state. The quickest googling says it isn’t: http://www.areadevelopment.com/RegionalReports/Q1-2013/states-leading-US-manufacturing-resurgence-2665542.shtml , but it has the high incentives: http://www.globaltrademag.com/site-selection/state-spotlight/best-states-for-manufacturing .

    So, Apple skimping to save on costs. Not really a surprise.

    • “In the end” isn’t when you want to get screws for a product where most of its sales are likely to come early in its life – for a computer, say.
      You’re complaining that Apple, like other companies, aims to keep avoidable costs down? I never understand this. You want Apple to be spendthrift and waste money? The point in Texas was that it wouldn’t matter if you had a roomful of people trying to procure screws. The supply was not there in the volume and time needed.
      When it comes to “manufacturing”, you might want to focus on “high-tech” rather than the “bending lead pipes” end of manufacturing.
      However in this case you’re looking for
      – labour
      – big enough space to set up factory
      – suppliers
      which means that you can’t just stick a pin in a map, or even choose it by a quick search. The belief that complex problems have simple solutions is the bedevilment of modern public thinking, and you ought to be wary when you find yourself falling into it.

      • I think its important to point out here that plenty of other industries can manage to run 24 hours a day but they do it by offering higher wages, and I’m highly skeptical of any company complaining of staff shortages if they don’t offer more money, or here’s the crazy thought, training their existing workforce to skill up (which is a rarity in the US).

        Both are which China is doing pretty well at.

      • I want Apple to stop spinning everything like mad. And that PR to not be taken at face value all the time.

        The issue with making iPhones in the US isn’t “we can’t even get screws !”. It’s : ” We would have to not under-staff, not pick the worst state, no pick the most subsidized state, and that would drive the assembly+test costs of our $1,000 product from $25 to more, which is clearly unconscionable”

        The story here is that Apple understaffed and went for cheap-not-good, which is typical. Not screws.

  2. re. China market: Again, the salient fact to me is the consolidation. 75% for a weird “top 5” that de-bundles oppo and Vivo, so probably closer to 80% (these 2 are a single BBK, and you need to add OnePlus and Realme). And the same in India.

    As for the iPhone issues, I think the loss of buttons and audio jack have an impact too, as does pricing: why else would Apple be cutting prices in Asia ?

  3. re. MAcs I think the most logical explanation for the line-up is that Apple just wants to reduce upgrade friction by having a new model that corresponds to each old model. Prevents punters from entering extended evaluation mode: “Should I get my new Mac now ?” instead of “Which Mac should I get now ?”. Not a lot of vision/courage going on.

  4. re Diving: I used to do a fair bit of diving. It’s magical and fun, but things can descend into sheer terror rather quickly. The few times I went into enclosed spaces (a couple of boat wrecks, a few man-size tunnels) are still fairly vivid memories, while you can never exit a dive quickly once you get below 12m, being enclosed really brings the point home, with the added fun of stuff grabbing/yanking your tank and banging your body. I’ll stick to reefs, thank you. Those kids must have been utterly freaked out. IIRC, things were so tight you coudln’t even keep your tank on you, so the rescuers had to handle a loose tank and a panicking kid… I couldn’t have done it even with a fully charged super-ego.

    My own biggest freakout was when I stumbled across a 6m Great White laying in wait for me. After I calmed down, it turned out to be a 50cm gray of the crustacean-eating variety asleep in a recess. In my defense, it did look very shark-y, and sleeping sharks have fully white eyes, which adds a good 5m to their size ?

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