Start Up No.1,025: Beto’s Dead Cow membership, Apple responds to Spotify, Facebook’s angry algorithm tweak, how the backstop deal broke, and more

The interface to the Flight Management System on a 737: part of the source of the problem that led to two crashes. CC-licensed photo by Frans Zwart on Flickr.

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A selection of 13 links for you. Not delayed yet. I’m @charlesarthur on Twitter. Observations and links welcome.

Flawed analysis, failed oversight: how Boeing, FAA certified the suspect 737 MAX flight control system • The Seattle Times

Dominic Gates:


That flight control system, called MCAS (Maneuvering Characteristics Augmentation System), is now under scrutiny after two crashes of the jet in less than five months resulted in Wednesday’s FAA order to ground the plane.

Current and former engineers directly involved with the evaluations or familiar with the document shared details of Boeing’s “System Safety Analysis” of MCAS, which The Seattle Times confirmed.

The safety analysis:

• Understated the power of the new flight control system, which was designed to swivel the horizontal tail to push the nose of the plane down to avert a stall. When the planes later entered service, MCAS was capable of moving the tail more than four times farther than was stated in the initial safety analysis document.
• Failed to account for how the system could reset itself each time a pilot responded, thereby missing the potential impact of the system repeatedly pushing the airplane’s nose downward.
• Assessed a failure of the system as one level below “catastrophic.” But even that “hazardous” danger level should have precluded activation of the system based on input from a single sensor — and yet that’s how it was designed.

The people who spoke to The Seattle Times and shared details of the safety analysis all spoke on condition of anonymity to protect their jobs at the FAA and other aviation organizations.

Both Boeing and the FAA were informed of the specifics of this story and were asked for responses 11 days ago, before the second crash of a 737 MAX last Sunday.


Eleven days. If the FAA had acted more quickly, scores of peoples’ lives could have been saved. (Thanks David Smith for the link.)
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Ethiopian Airlines crash: American leadership on air safety under question across the globe • The Washington Post

Anthony Faiola:


“The Americans may feel, and not without justification, that they have the greatest insight into the Boeing aircraft,” said Sandy Morris, an aerospace analyst with the Jefferies financial group in London. “But this is a case when others in the world decided that they wanted to bring the risk of another accident down to zero. What you’ve seen here is a rebellion.”

Perhaps nowhere was US leadership on aviation safety being questioned more than in China, the first country to ground the 737 Max — an unprecedented move for a government that long followed cues from American authorities.

A top Chinese regulator said his agency made its decision because the [US] FAA [Federal Aviation Authority] and Boeing had not provided China with satisfactory answers about the airplane’s software and safety issues after the first 737 Max crash — of Lion Air Flight 610 in Indonesia that killed all 189 passengers and crew.

Li Jian, deputy director of the Civil Aviation Administration of China, suggested that the FAA was reluctant to take strong measures against the 737 Max.

“They have had difficulty making a decision, so we took the lead,” Li told reporters on Monday…

Chinese officials probably welcomed the opportunity to establish their leadership credentials at an inflection point in the country’s aviation history, analysts said. China’s civil aviation market is expected to eclipse that of the United States in three years, while its first homegrown passenger jet, the C919 narrow-body model that is designed to compete with the 737 Max, is also expected to take to the skies by the mid-2020s, at least in China.


Not mentioned in this story, but mentioned by John Gruber (who linked to it on Friday) is that the FAA has been without a commissioner for over a year. Trump nominated his personal private jet pilot. Congress laughed.
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Beto O’Rourke’s secret membership in America’s oldest hacking group • Reuters

Joseph Menn:


The hugely influential Cult of the Dead Cow, jokingly named after an abandoned Texas slaughterhouse, is notorious for releasing tools that allowed ordinary people to hack computers running Microsoft’s Windows. It’s also known for inventing the word “hacktivism” to describe human-rights-driven security work.

Members of the group have protected O’Rourke’s secret for decades, reluctant to compromise his political viability. Now, in a series of interviews, CDC members have acknowledged O’Rourke as one of their own. In all, more than a dozen members of the group agreed to be named for the first time in a book about the hacking group by this reporter that is scheduled to be published in June by Public Affairs. O’Rourke was interviewed early in his run for the Senate.

There is no indication that O’Rourke ever engaged in the edgiest sorts of hacking activity, such as breaking into computers or writing code that enabled others to do so. But his membership in the group could explain his approach to politics better than anything on his resume. His background in hacking circles has repeatedly informed his strategy as he explored and subverted established procedures in technology, the media and government.

“There’s just this profound value in being able to be apart from the system and look at it critically and have fun while you’re doing it,” O’Rourke said. “I think of the Cult of the Dead Cow as a great example of that.”

An ex-hacker running for national office would have been unimaginable just a few years ago. But that was before two national elections sent people from other nontraditional backgrounds to the White House and Congress, many of them vowing to blow up the status quo.


In some ways it’s inevitable that a hacker would be a presidential candidate at some point. In the same way, a keen video game player will also be a candidate – and in time become president. It’s just numbers.
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Addressing Spotify’s claims • Apple


The only contribution that Apple requires is for digital goods and services that are purchased inside the app using our secure in-app purchase system. As Spotify points out, that revenue share is 30% for the first year of an annual subscription — but they left out that it drops to 15% in the years after.

That’s not the only information Spotify left out about how their business works:

• The majority of customers use their free, ad-supported product, which makes no contribution to the App Store.
• A significant portion of Spotify’s customers come through partnerships with mobile carriers. This generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers.
• Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.

Let’s be clear about what that means. Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100% of the revenue.


It would be quite a data point if we found out how many people signed up for Spotify through the iOS app. Especially given how much bigger Google Play is in user numbers.
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Norway joins list of countries canceling Elsevier contracts • The Scientist Magazine®

Catherine Offord:


Norway has become latest country to cancel its contracts with Elsevier following a dispute over access to research papers. In a statement published yesterday (March 12), the Norwegian Directorate for ICT and Joint Services in Higher Education and Research (UNIT), which represents a consortium of research institutions in the country, rejected Elsevier’s offer to lower some of its costs for Norwegian institutions because it didn’t go far enough to promote free access to published research.

“The offer from Elsevier is far from fulfilling the requirements of Norway for open access to research articles,” the agency says in a statement (translated by Google). “Nor is there any movement in the agreement [about] paying for publishing instead of paying for reading access. The agreement with Elsevier is therefore not renewed for 2019.”

Norwegian institutions had been arguing for a so-called “read-and-publish” arrangement. Currently, most institutions pay both to read articles on Elsevier, which hosts around academic 2,500 journals, and to provide open access to their own articles on the platform. A read-and-publish deal would combine those costs into one and make papers immediately available on publication.


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Margrethe Vestager to hit Google with another fine • Financial Times

Rochelle Toplensky:


The latest investigation has focused on Google’s AdSense business, which places its search box on third-party websites, such as news websites. The commission can fine up to an additional $13bn — which is 10% of the latest global turnover of Google’s parent company, Alphabet — but the penalty is expected to be significantly smaller than the maximum.

As outlined in their 2016 charge sheet, EU officials worried that Google “artificially reduced choice and stifled innovation in the market” by contractually restricting how third-party websites display search ads from rivals.

The EU case centres on Google demands, introduced in 2006, that required a number of popular third-party websites to use its ad service exclusively if they wanted to include the Google search box on their site. In 2009, the company relaxed the restrictions to allow the websites to show competing advertisers on their pages, but required they display a minimum number of Google ads in prime locations and give Google the right to authorise changes to competitors’ ads. The contract terms were ultimately phased out from 2016.

While next week’s fine will bring an end to the AdSense investigation, EU antitrust officials continue to scrutinise Google’s behaviour in other services — such as dedicated search for travel, jobs and local businesses — and could open fresh probes.


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Walmart readies low-priced rival to Apple iPad • Bloomberg

Matthew Boyle:


Look out Apple — Walmart Inc. is moving into iPad territory.

The world’s largest retailer plans to introduce an inexpensive, kid-friendly tablet computer under its ONN store brand, part of a broader redesign of its electronics department. The device will be made by a Chinese supplier and run on Google’s Android operating system, according to photos found on a database of wireless product applications filed with the U.S. Federal Communications Commission.

Tara House, a Walmart spokeswoman, confirmed the product is in the works, though declined to comment further. The price of the device, or when it will debut, hasn’t been disclosed.

Walmart’s device could bring some life to the sluggish tablet market, which has been declining for several years. Tablet users don’t buy new ones at the same pace as they replace smartphones, which have also grown in size and capacity, reducing the need for a larger device. In 2018 tablet shipments fell 6.2%, according to data tracker Strategy Analytics.


“iPad rival”. Wow, is it 2012 again? Android Police’s take on this was “Crap store plans crap tablet“.
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Young entrepreneur series: Atta Elayyan • UC Centre for Entrepreneurship


Atta Elayyan is currently CEO of Christchurch-based app development company LWA Solutions. Atta co-founded the company with Mike Choeung in 2010 and has grown the company to a 12-strong team. The team has completed projects for both New Zealand and overseas customers such as Trade Me, Mediaworks, Microsoft and Aramex. The latter being the largest logistics and transport company in the Middle East. For Aramex, LWA Solutions facilitated an innovative and user-centered solution. In fact, Atta and his team spent a week in Jordan with Aramex courier drivers to observe their daily routine and gain insight into how the courier drivers could use technology to enhance their everyday work.

Replacing clunky and expensive devices, they implemented a bring-your-own-device system, turning smartphones into scanners. LWA Solutions crafted a solution with unique task management software applied to low-end smart phones specifically for Aramex. This enabled Aramex to completely streamline their business processes and enables scaling without huge hardware costs. Ultimately, a complete transformation of how Aramex do business. On reflection, it is amazing that such an incredible tech-driven international business can be run so successfully from Christchurch.


Sadly, he was one of the victims in the terrorist attack in Christchurch. New Zealand’s government is now looking to change its laws to prevent anyone getting hold of (or creating) semi-automatics. (Thanks Richard for the link.)
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One year in, Facebook’s big algorithm change has spurred an angry, Fox News-dominated – and very engaged! – News Feed • Nieman Journalism Lab

Laura Hazard Owen:


A new report from social media tracking company NewsWhip shows that the turn toward “meaningful interactions” has:

• pushed up articles on divisive topics like abortion, religion, and guns;
• politics rules; and
• the “angry” reaction (😡) dominates many pages, with “Fox News driving the most angry reactions of anyone, with nearly double that of anyone else.”

Of course, all that isn’t only Facebook’s fault. The content that dominates the platform now might have risen even without an algorithmic boost. But what’s clear is that Mark Zuckerberg’s January 2018 exhortation that the time spent on Facebook be “time well spent” has not come to pass: Instead, it’s often an angry, reactive place where people go to get worked up and to get scared. Here are the two most-shared Facebook stories of 2019 so far:

Engagement — likes, comments, shares, reactions — has risen. For the first few months of this year, it was 50% higher than it was in 2018, and about 10% higher than it was in 2017 (which, remember, included Trump’s inauguration, large-scale protests, and the chaotic early days of his presidency).

“There is a possibility that Facebook’s friends and family focus, getting people to read what their networks are sharing rather than what pages are promoting, may have contributed to this increase as people shared articles they enjoyed on the network,” NewsWhip says.


So you’re saying it’s still a cesspit, and that your “tuning” has made it worse, Mr Zuckerberg?
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Cryptocurrency startup Prodeum pulls exit scam, leaves a dick behind • The Next Web

Dimitar Mihov:


It remains unclear precisely how much cash the startup has lifted from its investors, but its entry on ICO Watchlist indicates Prodeum completed 18% from its funding goal. For context, its white paper lists the soft and hard caps for the ICO at 2,100 and 5,400 ETH, respectively. The current price of Ethereum is $1,194, according to CoinMarketCap.

Prodeum is the latest cryptocurrency company to pull an exit scam.

Last year, a sketchy Bitcoin investment platform known as BitPetite suddenly went dark, leaving with all of its investors’ coins.

Only weeks later, another cryptocurrency company, called Confido, wiped its digital fingerprints and dashed off with its customers’ investments. The move came days after its founders said they’ve ran into legal obstacles.


I’d be trying to sell any of those junk “coins” – actually penny shares without the voting rights – if I’d bought any.
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Xiaomi/Apple: all about Mi • Financial Times

The “Lex” opinion column isn’t keen on Xiaomi’s prospects:


Xiaomi is number one in India in shipment terms, and one of the top five in Europe. The group has partnered with Foxconn to make phones in India where just a third of the population use smartphones. Apple has just over 1% of that market. 

Margins are higher within an internet-of-things and household electronics business. Margins are higher here, but unlikely to offset weakness in Chinese smartphone sales.

Xiaomi lacks Apple’s pricing muscle. In 2016, Xiaomi held top market share in China, which accounted for more than 70% of its revenue. ZTE, Huawei, Oppo and Vivo have since undercut Xiaomi on value and through easier access via physical stores. 

China’s move to 5G this year will bring significant demand for new smartphones over the next few years. But Xiaomi’s premium plan is fraught with risk. Raising prices in its home market may threaten its tenuous grip on its number five spot. Doubts about Xiaomi’s strategy when it came to market have proved well-founded. The shares have fallen 43% from their peak shortly afterwards, and may fall further.


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How Theresa May’s winning backstop deal was done… and why Geoffrey Cox blew it apart • RTE

Tony Connelly, for the Irish radio station:


The [UK]Attorney General [Geoffrey Cox, who provides legal advice to the UK government] was already on the defensive. The UK had had to drop the very public demands for a unilateral exit clause or expiry date. Cox therefore wanted independent arbitration to be the next best thing as a way out.

He first suggested the arbitration be outside the dispute mechanisms already enshrined in the Withdrawal Agreement. That was immediately rejected by Barnier.

He [Cox] then made further arguments which baffled and irritated the EU side. 

First, he suggested that if the trade negotiations broke down then it would, by default, mean the backstop applying indefinitely. Since Article 50 was designed to be a temporary state, that meant the EU was breaking its own rules.

Cox then argued that Northern Ireland citizens would be subject to single market rules, yet not represented in the European Parliament or in ministerial meetings. The backstop was therefore in breach of the European Convention on Human Rights (ECHR). Combine those arguments and the UK should be entitled to walk away from the backstop. EU officials were in disbelief. 

“There was a fundamental disagreement,” recalls one official, briefed on the dinner. “It wasn’t on the principle of arbitration. It was on what the arbitration can cover, and what comes next.”

The mood in Brussels darkened. Cox and Steve Barclay, the Brexit Secretary, returned to London. Sabine Weyand continued technical talks with Olly Robbins, her opposite number. 


Cox was both negotiating, and declaring what the negotiations meant – “marking his own homework”, as one MP put it. I suspect he thought his ECHR twist was very clever and would show those Brussels suits who was the smartest person in the room. Turns out, that didn’t really matter. The full story also shows how much high-level negotiation is now done via Twitter, which is quite weird.

American readers will probably find this impenetrable. You’re not alone, folks.
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Two-thirds of all Android antivirus apps are frauds • ZDNet

Catalin Cimpanu:


An organization specialized in testing antivirus products concluded in a report published this week that roughly two-thirds of all Android antivirus apps are a sham and don’t work as advertised.

The report, published by Austrian antivirus testing outfit AV-Comparatives, was the result of a grueling testing process that took place in January this year and during which the organization’s staff looked at 250 Android antivirus apps available on the official Google Play Store.

The report’s results are tragicomical – with antivirus apps detecting themselves as malware – and come to show the sorry state of Android antivirus industry, which appears to be filled with more snake-oilers than actual cyber-security vendors.


Only two-thirds? Though I think you can say that 100% of iOS “antivirus” apps won’t be able to detect if something bad is going on, because they wouldn’t be allowed out of their sandbox. I leave it to readers to decide how to describe that.
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Errata, corrigenda and ai no corrida: none notified

3 thoughts on “Start Up No.1,025: Beto’s Dead Cow membership, Apple responds to Spotify, Facebook’s angry algorithm tweak, how the backstop deal broke, and more

  1. Interesting analysis of Apple'(s answer to Spotify:

    They say it much better than I would ;-p

  2. Re Xiaomi’s pricing power: I think the article is missing 2 points:
    1- Xiaomi recently peeled off its high-volume Redmi brand into a separate business. This means whatever experiment they do at the high end, their core business at the mid and low end won’t be impacted. I’d have done it the other way and launched a premium sub-brand, but…
    2- Xiaomi is fully aware it has no pricing power, see their “5% margin” commitment. It is very vague there are a million ways to calculate margin, but it shows awareness.
    3- Xiaomi does have brand awareness and brand value, so a bit of pricing power. When I’m looking for cheap and/or experimental stuff (my <$100 trial drone, an air filter for my asthmatic brother, batteries and cables…) I'll first look for Xiaomi stuff knowing it won't be crap. They're making a killing on e-scooters.
    4- Xiaomi is sneakily building a non-smartphone business. I think a previous link of yours showed 30% of their sales are in other areas in India (so probably more elsewhere). That's probably higher margin, and certainly a stabilizer. I'm wondering if, long-term; smartphones are simply a loss-leader.

    So, 4 points.

    I'm worried that my giant Mi Max -a blown up Redmi Note- for some reason has been in the Mi not Redmi line up to now… Hopefully they'll fix that and/or not rise prices on it.

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