Start Up No.1418: the US town the libertarians (and bears) took over, Mozilla hates Google (but loves its money), sayonara Quibi, and more


Tales of WeWork’s demise may have been overblown – it’s aiming for profitability next year. CC-licensed photo by Scott Beale on Flickr.

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

The town that went feral • The New Republic

Patrick Blanchfield reviews A Libertarian Walks Into A Bear, a book by Matthew Hongoltz-Hetling about what happened when a bunch of libertarians descended on Grafton in New Hampshire and attempted to turn it into a libertarian paradise:

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If the Libertarian vision of Freedom can take many shapes and sizes, one thing is bedrock: “Busybodies” and “statists” need to stay out of the way. And so the Free Towners spent years pursuing an aggressive program of governmental takeover and delegitimation, their appetite for litigation matched only by their enthusiasm for cutting public services. They slashed the town’s already tiny yearly budget of $1m by 30%, obliged the town to fight legal test case after test case, and staged absurd, standoffish encounters with the sheriff to rack up YouTube hits.

Grafton was a poor town to begin with, but with tax revenue dropping even as its population expanded, things got steadily worse. Potholes multiplied, domestic disputes proliferated, violent crime spiked, and town workers started going without heat. “Despite several promising efforts,” Hongoltz-Hetling dryly notes, “a robust Randian private sector failed to emerge to replace public services.” Instead, Grafton, “a haven for miserable people,” became a town gone “feral.” Enter the bears, stage right.

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Ah yes, the bears: black bears, which are the sort that will eat you if you play dead (that works for grizzlies and brown bears; I don’t know how you ask a bear what sort of bear it is). So you’d better either fight them or run like hell:

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Grappling with what to do about the bears, the Graftonites also wrestled with the arguments of certain libertarians who questioned whether they should do anything at all—especially since several of the town residents had taken to feeding the bears, more or less just because they could. One woman, who prudently chose to remain anonymous save for the sobriquet “Doughnut Lady,” revealed to Hongoltz-Hetling that she had taken to welcoming bears on her property for regular feasts of grain topped with sugared doughnuts. If those same bears showed up on someone else’s lawn expecting similar treatment, that wasn’t her problem.

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As Blanchfield says, it’s “simultaneously hilarious, poignant, and deeply unsettling”. It’s a metaphor, a parable, an object lesson. Improve your day: go and read the whole review. And then you could could order the book, like me.
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Google meddling with URLs in emails, causing security concerns • Hackaday

Lewin Day:

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Despite the popularity of social media, for communication that actually matters, e-mail reigns supreme. Crucial to the smooth operation of businesses worldwide, it’s prized for its reliability. Google is one of the world’s largest e-mail providers, both with its consumer-targeted Gmail product as well as G Suite for business customers [Jeffrey Paul] is a user of the latter, and was surprised to find that URLs in incoming emails were being modified by the service when fetched via the Internet Message Access Protocol (IMAP) used by external email readers.

This change appears to make it impossible for IMAP users to see the original email without logging into the web interface, it breaks verification of the cryptographic signatures, and it came as a surprise.

For a subset of users, it appears Google is modifying URLs in the body of emails to instead go through their own link-checking and redirect service. This involves actually editing the body of the email before it reaches the user.

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This only applies in G Suite (the corporate thing – what used to be called Google Apps For Your Domain), not the consumer version, and I’m guessing is a “protect paying corporate users from phishing and malware” thing.

And guess what: Google simply turned it on one day without consultation. There is an off switch buried in one of the G Suite settings, but the ordinary user can’t get at it.
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Kick Google all you like, Mozilla tells US government, so long we keep getting our Google-bucks • The Register

Simon Sharwood:

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Mozilla has responded to news of the US government’s antitrust lawsuit against Google by saying it welcomes it … provided it doesn’t get hurt.

Mozilla has weighed in on two fronts, firstly as an organisation that likes an open web.

“Like millions of everyday internet users, we share concerns about how Big Tech’s growing power can deter innovation and reduce consumer choice,” wrote chief legal officer Amy Keating, before getting to the hear of the matter: Mozilla has a deal to funnel search traffic to Google and the resulting royalties represent over 90% of the Mozilla revenue.

Mozilla’s second position is as an organisation that has a recently renewed deal to send search traffic to Google that is thought to see around $400m a year flow from the ad giant to the browser contender. That’s around 90% of Mozilla’s income.

Which is where things get complex, because as Keating noted: “In this new lawsuit, the DOJ referenced Google’s search agreement with Mozilla as one example of Google’s monopolization of the search engine market in the United States.”

So what’s a not-for-profit to do when it worries about Big Tech, but is also utterly dependent on it for revenue?

Keating has recommended the USA kick Google as hard as it wants, so long as Mozilla still gets paid by … someone.

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Got to hope someone at Mozilla has a very fruity Plan B. As previously noted, VPNs aren’t a bad idea.
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The Google suit: we’re all anti-monopolists now • BIG by Matt Stoller

Matt Stoller:

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the Google suit is a stunning change in the consensus underpinning American politics. The complaint itself a tight, well-reasoned, and nicely framed case, and the scope will likely broaden over the next few months. What the DOJ is arguing is basically a carbon copy of the Microsoft case of the late 1990s, where the government accused Microsoft of illegally tying Internet Explorer to Microsoft Windows. Today, the DOJ is accusing Google of illegally tying Search to its mobile phone operating system Android and its browser Chrome. And the government is seeking to break up Google.

The details of the case aren’t particularly important for the purpose of this essay, but if you want to know them, you can read the complaint here or read my colleague Sarah Miller’s write-up in the Guardian.

Ideologically, this complaint is just a stunning victory for anti-monopolists, who largely congregated on the progressive and Democratic side of the aisle. Republicans have been traditionally hostile to antitrust doctrine, but are now shifting. Take the words of Arkansas Senator Tom Cotton, who said in response to the suit, “I commend the Department for finally holding Google accountable. When it comes to big tech, this is just the beginning. Winter is coming.” It’s an aggressive comment from any political leader, and it’s coming from a conservative Republican.

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Background: Stoller and Miller were among a group of people who were fired from a part-Google-funded think tank after they wrote an article praising the EC’s action against Google on Android. He’s very anti-monopoly, as is evident. But I don’t think this is a “carbon copy” of the IE case. In that, Microsoft was using its Windows monopoly to annex the new, fast-growing browser market. Here, Google is using its search monopoly to… continue its search monopoly?

There may be some room to argue that Android OEMs should be allowed to let rival search engines bid to be the default. Guess who would have the money to win the bids? Maybe instead you could institute a “search choice” screen, as happens in Europe. Guess which one people would choose?

I still think this is going after the wrong targets, and the fact that a conservative Republican backs the lawsuit doesn’t give it any legitimacy. They’re just mad because they think, wrongly, that Google’s censoring them. The right targets would be blocking Google’s destructive scraping and its strongarm tactics in AMP and other technologies.
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The WeWork arc • The Diff

Byrne Hobart argues that WeWork wasn’t that bad a business, and that Adam Neumann wasn’t actually bad at spotting a gap in the market:

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[the] greater-fool explanation [for WeWork’s growth] doesn’t quite hold water. WeWork’s initial capital came from the founders’ successful real estate dealings, and the first outside money came from another real estate investor. And they raised venture money from some sophisticated counterparties—even Softbank, which offered them a ridiculous valuation, was careful to structure the deal so it protected them from some downside risk.

And, strangest of all, the company didn’t go to zero. They fired Neumann (proximate cause: adverse PR from smoking marijuana on the company plane while traveling internationally; actual cause: inability to complete an IPO). [The marijuana wasn’t news to WeWork staff.] They laid off thousands of employees and sold some assets. And WeWork’s new CEO says it will be profitable in 2021 ($, FT), the most impressive transition from disaster to smooth landing since Apollo 13.

WeWork’s skill at fundraising turned out to be great for the early investors, and only a disaster for the last and biggest. Its talent strategy changed from underpaying at a small scale to overpaying at a large scale, so the company’s economics when they filed their prospectus overstated how unprofitable the undelrying business was. And while a coworking company is a terrible business in the middle of a pandemic, it’s a great business for a post-pandemic world where, as in the early 2010s, most companies are cautious about committing to space and willing to accept unconventional office arrangements.

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Media narratives often don’t capture the truth of something, but that’s because – as the saying goes – it’s the first draft of history. When others come along to correct it, that doesn’t mean that the first draft was intentionally wrong, but that everyone tends to hide a few things.
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Administration officials alarmed by White House push to fast track lucrative 5G spectrum contract, sources say • CNNPolitics

Jake Tapper:

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Senior officials throughout various departments and agencies of the Trump administration tell CNN they are alarmed at White House pressure to grant what would essentially be a no-bid contract to lease the Department of Defense’s mid-band spectrum — premium real estate for the booming and lucrative 5G market — to Rivada Networks, a company in which prominent Republicans and supporters of President Donald Trump have investments.

The pressure campaign to fast track Rivada’s “Request for Proposal” (RFP) by using authorities that would preclude a competitive bidding process intensified in September, and has been led by White House chief of staff Mark Meadows, who was acting at Trump’s behest, sources with knowledge tell CNN. To push his case, Meadows has sometimes used as his proxy an individual identified by sources in the telecommunications industry as a top financial management official in the US Army.
Sources tell CNN that Trump was encouraged to help Rivada by Fox News commentator and veteran GOP strategist Karl Rove, a lobbyist for, and investor in, Rivada.

Untold billions are at stake. A government auction of 70MHz of spectrum in August went for more than $4.5bn. The Rivada bid would be for 350MHz of spectrum – five times that amount.

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Got to get that grift in place before January.
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Covid: no safety concerns found with Oxford vaccine trial after Brazil death • BBC News

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Trials of a Covid-19 vaccine being developed by AstraZeneca and Oxford University will continue, following a review into the death of a volunteer in Brazil.

Brazil’s health authority has given no details about the death, citing confidentiality protocols. Oxford University said a “careful assessment” had revealed no safety concerns.

The BBC understands that the volunteer did not receive the vaccine.

Only around half the volunteers in the trial are given the actual Oxford University Covid-19 vaccine. The second group are being given an existing licensed vaccine for meningitis.

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Sure that the anti-vaxxers will go wild even so, but always useful to have the facts.
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Girl, 8, pulls a 1,500-year-old sword from a lake in Sweden • BBC News

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An eight-year-old found a pre-Viking-era sword while swimming in a lake in Sweden during the summer.

Saga Vanecek found the relic in the Vidostern lake while at her family’s holiday home in Jonkoping County.
The sword was initially reported to be 1,000 years old, but experts at the local museum now believe it may date to around 1,500 years ago.

“It’s not every day that you step on a sword in the lake!” Mikael Nordstrom from the museum said.

The level of the water was extremely low at the time, owing to a drought, which is probably why Saga uncovered the ancient weapon.

“I felt something in the water and lifted it up. Then there was a handle and I went to tell my dad that it looked like a sword,” Saga told the broadcaster Sveriges Television.

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I think this means she’s now in charge of Britain? Suits me fine. Can’t do a worse job than the current bunch.
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To understand Facebook today, read its earliest critics • OneZero

Joanne McNeil:

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Zuckerberg has every incentive to convince people that Facebook was once “glowingly” received. If the company had been a universally celebrated project several years ago, it would mean that simple reforms and regulations could rein it in — that with just the right policy, the social network could return to the benevolent path it once tread on.
But the truth is Facebook has always been a problem. There is no good Facebook that Facebook can return to being.

This mistaken belief that Facebook had few detractors years ago erases the groundbreaking work of its early critics — a circle that includes David Fincher and Aaron Sorkin. The Social Network (2010), which celebrated its 10th anniversary this year, won three Academy Awards and earned $224.9 million at the box office—it’s hardly an obscure example. The film was The Social Dilemma of its time: It picked the right target but with the wrong approach. The movie focused on Zuckerberg’s character — he’s depicted as a backstabbing genius — while the script barely touched on anything unique about Silicon Valley as an industry or the risks that the company posed to society. Nevertheless, the mere existence of The Social Network should dispel any notion that users and the general public were naive about Facebook’s growing power and influence.

Much better criticism from scholars, journalists, and even former employees was published long before the company had amassed two billion users. For anyone who wants a more complete picture of what the company is and has always been, I can think of no better place to begin than these four books that illuminate the problems inherent in Facebook’s culture and business model.

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Quibi is shutting down as problems mount • WSJ

Benjamin Mullin and Joe Flint:

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Quibi Holdings is shutting itself down, according to people familiar with the matter, a crash landing for a once-highflying entertainment startup that raised $1.75bn in capital.

The streaming service has been plagued with problems since it launched in April, facing lower-than-expected viewership, disappointing download numbers and a lawsuit from a well-capitalized foe.

On Wednesday, Quibi founder Jeffrey Katzenberg called investors to tell them he is shutting the service down, some of the people said.

Quibi’s shutdown marks a disappointing turn of events for Mr. Katzenberg, who pitched the streaming service as a revolutionary new entrant to the video-streaming wars.

The service served up shows in 5-minute to 10-minute “chapters” formatted to fit a smartphone screen, targeting subscribers who wanted entertainment in a hurry. It was primarily aimed at mobile viewers, but the coronavirus pandemic forced would-be subscribers away from the kinds of on-the-go situations Quibi executives envisioned for its users.

Quibi attracted blue-chip advertisers including PepsiCo Inc., Walmart Inc. and Anheuser-Busch InBev SA, securing about $150m in ad revenue in the run-up to its launch. Those deals came under strain earlier this year amid lower-than-expected viewership for Quibi’s shows, prompting advertisers to defer their payments.

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Come on. This failure was never about Covid, although it’s true that Quibi did launch in the US in April, a calamitously unfortunate piece of timing. But if you have a service that’s compelling, no matter what for, then people will take an interest. Everyone had their smartphone with them all the time over the past six months. That’s not why they didn’t watch Quibi.

And yet, as Maya Kosoff points out, Quibi’s dedication to shortform content extended even to its lifespan.
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Errata, corrigenda and ai no corrida: Yesterday’s labelling of Google’s blogpost about the DOJ’s lawsuit should have called the lawsuit a lawsuit rather than a blogpost (thanks to many who pointed this out), though I’d argue the DOJ’s work is closer in quality to a blogpost than a lawsuit.

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