Start Up No.1246: Apple warns on revenues, how cars make you fat (proven!), police say don’t Ring us, a Tesla teardown, the edgiest coronavirus cash-in, and more


Huawei couldn’t develop Face ID – so the Chinese government helped it out with a database of faces, a former Apple director says CC-licensed photo by jmarello on Flickr.

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

The age of cooptation: the high cost of doing business in Xi’s China • SupChina

Doug Guthrie is a former Apple senior director who was based in Shanghai:

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Huawei is often first in line for taking advantage of what these suppliers have learned from Apple. Sometime around 2015, there were rumors in the Chinese smartphone manufacturing community of something called FaceID (leading up to the launch of the iPhone X). There were also rumors of a hardware module, which would make FaceID possible. The rumors were that this would be a significant leap in innovation for Apple, and it would likely create a significant gap between Apple and its competitors. There were also rumors that Huawei was attempting to entice Chinese suppliers to reveal some of the secrets behind the new hardware module. This is the story I wanted Ken Hu and Madame Chen to confirm for me.

Huawei realized it would be a serious setback for the company if it didn’t have something similar to Apple’s FaceID, and Huawei went to the government for help. Initially, Huawei hoped the government would put some heat on Apple and force the suppliers to loosen up a little bit. Surprisingly, the government said the following (I am paraphrasing here, based on my conversation with Madame Chen):

Government: Forget about Apple suppliers on this issue.

Huawei: We can’t ignore this. It will be a serious competitive advantage for Apple iPhones if we don’t have something comparable.

Government: We did not say forget about FaceID, just forget about following Apple on hardware. What if we gave you access to a database of 1.4 billion faces and you used that database to develop an AI algorithm to recognize faces? Could you develop an AI solution rather than a hardware solution?

And that’s what Huawei did. The Chinese Government, which has probably been more aggressive (and intrusive) in collecting data through facial recognition than any government in the world, was offering to turn over a database of faces to a private company to build an AI algorithm for facial recognition.

Think about this: The Chinese Government was offering to make all of its facial recognition data available to a private company to help this company compete with an international, publicly-traded competitor. This type of coordination between the Chinese Government and the private sector would have been unthinkable six years ago. But what did Huawei owe the Chinese government as a result?

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How China’s coronavirus incompetence endangered the world • Foreign Policy

Laurie Garrett:

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This is much more than inside-baseball Chinese politics. It matters deeply for businesses wondering how long the pain of China’s shutdown will last and for public health leaders worried about how they might handle the coronavirus should it spread inside their countries, states, or cities. It has spilled over onto WHO Director-General Tedros Adhanom Ghebreyesus, who has faced sharp criticism—even a recall petition—for his meetings with Xi and other Chinese leaders and his apparent reluctance to declare the outbreak a global health emergency.

For his part, Xi disappeared from public view the day after his January 27 meeting the WHO’s Ghebreyesus, not to be seen again for twelve days, when he briefly strolled through the Chaoyang district of Beijing, wearing a medical mask.

The political crisis in China is prompting global concern about the reliability of epidemic data released by the Chinese government, the usefulness of Chinese guidance regarding how the virus is spread and who is at risk for death, and the measures best taken to protect health care workers from falling victim to the disease they are trying to treat. Since the first Dec. 30 announcement of a new disease in Wuhan, the CCP has woven a tapestry of narratives, primarily for domestic political purposes, aligning official case and death numbers with the storylines. Meanwhile, the international health community, from WHO all the way down to academic statisticians and infectious diseases analysts, has tried to infer from the dubious official daily tallies just how dangerous the coronavirus disease may be for the rest of the world.

The bottom line is trust, which appears to be waning inside China and is increasingly unraveling across the public health world.

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Coronavirus: Apple warns on revenue guidance due to iPhone delays in China • CNBC

Amelia Lucas:

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The company initially said that it expected to report net sales between $63bn to $67bn in its fiscal second quarter. Apple did not provide a new forecast for its fiscal second-quarter revenue on Monday.

The company said it provided a wider range than usual in late January, citing the uncertainty around the coronavirus outbreak.

“As you can see from the range, anticipates some level of issue there. Otherwise, we would not have a $4 billion range,” CEO Tim Cook said at the time.

Apple makes most iPhones and other products in China. The Coronavirus has caused it to temporarily halt production and close retail stores in China. Some Apple retail stores reopened in China with reduced schedules last week.

The company said Monday it is “experiencing a slower return to normal conditions than we had anticipated” after the extended Lunar New Year holiday. All iPhone manufacturing facilities in China have reopened, but Apple said it still expects supply shortages of the phone globally.

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There’s a feeling that the revenue will come in below the lower end of that number. Or possibly Apple doesn’t quite know itself, given the uncertainty, and the fact that its quarter runs to the end of March – so much depends on how quickly things return to normal. It’s not clear whether the epidemic has peaked yet.
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Does owning a car hurt your health? • The Globe and Mail

Alex Hutshinson:

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To really establish that driving hurts your health, in other words, you need a randomized trial. But who’s going to assign long-term car ownership on the basis of a coin flip?

The city of Beijing, it turns out. Because of mounting congestion, Beijing has limited the number of new car permits it issues to 240,000 a year since 2011. Those permits are issued in a monthly lottery with more than 50 losers for every winner – and that, as researchers from the University of California Berkeley, Renmin University in China and the Beijing Transport Institute recently reported in the British Medical Journal, provides an elegant natural experiment on the health effects of car ownership.

Led by Berkeley economist Michael Anderson, the researchers followed 180 permit winners and 757 losers for roughly five years, and looked for differences caused by the acquisition of a car.

“The randomization of the lottery is what gives us confidence,” Anderson explained in a statement. “We know that the winners should be comparable to the losers on all attributes other than car ownership.”

Not surprisingly, the winners took 2.9 fewer rides a week on Beijing’s dense public-transit network, representing a 45% drop in usage. They also spent 24.2 fewer minutes each day day walking or biking than the non-winners, a 54% drop.

You’d expect these behaviour changes to have health impacts. Over all, the winners gained an average of just more than two kilograms, a difference that was not statistically significant. But the effects were more obvious when looking only at winners aged 50 or older: They gained an average of 10.3kg, a statistically significant and worrisome increase.

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Boris Johnson adviser quits over race and eugenics controversy • The Guardian

Rowena Mason:

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Andrew Sabisky, who was brought into Downing Street by Johnson’s senior aide Dominic Cummings as part of his appeal for “misfits and weirdos”, became the subject of intense media scrutiny after details emerged of his views on subjects ranging from black people’s IQs to whether benefits claimants should be encouraged to have fewer children.

But amid mounting criticism within the Conservative party after No 10 stood by the appointment, Sabisky said that he would be stepping down as a “contractor” to No 10.

He tweeted: “The media hysteria about my old stuff online is mad but I wanted to help [the government] not be a distraction. Accordingly I’ve decided to resign as a contractor. I hope No 10 hires more [people with] good geopolitical forecasting track records and that media learn to stop selective quoting.”

The news of Sabisky’s exit came despite the government’s apparent determination to ride out the controversy, with a Downing Street spokesman refusing to answer more than 30 questions from reporters on whether Boris Johnson agreed with Sabisky’s views.

His resignation represents a defeat for Cummings, Johnson’s most powerful aide, whose abrasive approach to government is causing consternation among some Tories and is thought to be partly behind Sajid Javid’s departure as chancellor.

Sabisky, a 27-year-old who describes himself as a “superforecaster”, had been contracted to work on special projects for Cummings, who had said in a job ad that he was seeking a team “to find and exploit, without worrying about media noise… ‘very high leverage ideas’ [that] these will almost inevitably seem bad to most.”

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This was a car crash waiting to happen as soon as Sabisky’s past postings hove into view. As some Cabinet members said, did nobody think to use a search engine on these candidates? There’s going to be some frantic deleting of posts by everyone else who’s just been hired. So there are more problems to come; it’s just delayed. Give it a few months.

Got to admit, I thought Cummings’s recruitment scheme would be better organised.
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Tesla teardown finds electronics six years ahead of Toyota and VW • Nikkei Asian Review

Hideyoshi Kume:

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Toyota Motor and Volkswagen each sell 10 million cars, give or take, every year. Tesla delivered about 367,500 in 2019. But when it comes to electronics technology, Elon Musk’s scrappy company is far ahead of the industry giants.

This is the takeaway from Nikkei Business Publications’ teardown of the Model 3, the most affordable car in the U.S. automaker’s all-electric lineup, starting at about $33,000.

What stands out most is Tesla’s integrated central control unit, or “full self-driving computer.” Also known as Hardware 3, this little piece of tech is the company’s biggest weapon in the burgeoning EV market. It could end the auto industry supply chain as we know it.

One stunned engineer from a major Japanese automaker examined the computer and declared, “We cannot do it.”

The module — released last spring and found in all new Model 3, Model S and Model X vehicles — includes two custom, 260-sq.-millimeter AI chips. Tesla developed the chips on its own, along with special software designed to complement the hardware. The computer powers the cars’ self-driving capabilities as well as their advanced in-car “infotainment” system.

This kind of electronic platform, with a powerful computer at its core, holds the key to handling heavy data loads in tomorrow’s smarter, more autonomous cars. Industry insiders expect such technology to take hold around 2025 at the earliest.

That means Tesla beat its rivals by six years. The implications for the broader auto industry are huge and — for some — frightening.

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Interesting if true. It would mirror the reaction at BlackBerry when they first got their hands on an iPhone and couldn’t believe that the demonstration hadn’t been faked.
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How a Chinese movie studio upturned its business model due to coronavirus • The Conversation

Mark Greeven:

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due to the outbreak of the Wuhan coronavirus, most movie theatres were empty and nearly 70,000 had to close their doors for fear of spreading the disease.

Huanxi stood to lose millions on its New Year-themed movie Lost in Russia. The company had committed to a theatrical minimum guarantee deal and expected billions of renminbi (RMB) in gross box office revenues. But now the theatres were closed, what should they do?

Studies have shown how Chinese businesses typically respond quickly to crises and with innovative solutions and agility. Agility is about linking hyper-awareness with decision-making and decision-making with action – all at speed.

In a clear demonstration of agility, Huanxi decided to fundamentally change its distribution approach and turned to an unlikely partner: ByteDance. ByteDance is the Chinese company behind the blockbuster app TikTok along with a number of native Chinese apps like Douyin, Jinri Toutiao, Xigua Video and Huoshan Video.

Despite the fact that ByteDance boasted hundreds of millions of daily active users, it was not an obvious partner. The company’s video streaming sites tend to focus on short form, user-generated content. TikTok, for instance, caps videos at 15 seconds. Lost In Russia, by contrast, was over two hours long. Chinese digital giants Alibaba or Tencent might have been more obvious partners, except that both owned competing movie studios.

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Google ends its free Wi-Fi program Station • TechCrunch

Manish Singh:

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Caesar Sengupta, VP of Payments and Next Billion Users at Google, said the program, launched in 2015, helped millions of users surf the internet — a first for many — and not worry about the amount of data they consumed. But as mobile data prices got cheaper in many markets, including India, Google Station was no longer as necessary, he said. The company plans to discontinue the program this year.

Additionally, it had become difficult for Google to find a sustainable business model to scale the program, the company said, which in recent years expanded Station to Indonesia, Mexico, Thailand, Nigeria, Philippines, Brazil and Vietnam. The company launched the program in South Africa just three months ago.

Over the years, Google also explored ways to monetize the Google Station program. The company, for instance, began showing an ad when a user signed in to connect to its internet service.

In an interview early last year, Gulzar Azad, who spearheads connectivity efforts for Google in India, told me that the company was thinking about ways to scale Station to more markets, but noted that as far as deployment at Indian railway stations was concerned, Google had reached its goal (to serve 400 railway stations).

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Must have cost a pretty penny, but achieved what it wanted: force others to push mobile data.
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Cute videos, but little evidence: police say Amazon Ring isn’t much of a crime fighter • NBC News

Cyrus Farivar:

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Ring promises to “make neighbourhoods safer” by deterring and helping to solve crimes, citing its own research that says an installation of its doorbell cameras reduces burglaries by more than 50 percent. But an NBC News Investigation has found — after interviews with 40 law enforcement agencies in eight states that have partnered with Ring for at least three months — that there is little concrete evidence to support the claim.

Three agencies said the ease with which the public can share Ring videos means officers spend time reviewing clips of non-criminal issues such as racoons and petty disagreements between neighbors. Others noted that the flood of footage generated by Ring cameras rarely led to positive identifications of suspects, let alone arrests.

Thirteen of the 40 jurisdictions reached, including Winter Park, said they had made zero arrests as a result of Ring footage. Thirteen were able to confirm arrests made after reviewing Ring footage, while two offered estimates. The rest, including large cities like Phoenix, Miami, and Kansas City, Missouri, said that they don’t know how many arrests had been made as a result of their relationship with Ring — and therefore could not evaluate its effectiveness — even though they had been working with the company for well over a year.

Ring’s rise also comes at a time when reports of property crimes, including package theft and burglaries, are already in steep decline across the United States.

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A year feels like too short a time to be certain, but you’d hope they’d have an inkling by now.
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Facial ID Respirator Masks

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We make N95 respiratory masks that work with facial recognition software.
Our masks are custom printed with your face making phone access easy during viral epidemics.

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This may mark some sort of ultimate “got lemons, make lemonade” move. Pandemic making it hard to unlock your phone? Capitalism has the answer! Although – small mercy – they’re not in production yet because of, oh, a shortage of available face masks. Surely will be a line in a comedy some day.
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Errata, corrigenda and ai no corrida: none notified

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