Start Up No.1710: Apple at $3 trillion, the central crypto question, Wordle that fights back, Cortana’s Achilles heel, and more


Steve Jobs in 2007 posed for press photos with the iPhone. How big a revolution did it bring to our everyday lives? CC-licensed photo by Nobuyuki Hayashi on Flickr.

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A selection of 12 links for you. Happy new year! We’ve got a lot to get through today, so let’s get started. I’m @charlesarthur on Twitter. Observations and links welcome.


The paperback of Social Warming, my latest book, will be out in February. If you’ve been holding off because you hate hardbacks, your wishes will soon be answered!


15 years ago, the iPhone created ‘Big Tech’ • PC Mag

Sascha Segan:

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In a lot of ways, that iPhone release helped herald in our current era of “Big Tech,” where a few huge platform companies control so much of our software and services. Lots of other factors made it happen, to be sure, but Apple did a few key things to push our tech world into its current centralized state.

Back before the iPhone, carriers dictated a lot of the software preloaded on phones. A lot of that software sucked! But there were also a lot of carriers, which meant a lot of diversity and decentralization.

From 2007, I can think of AT&T, Cingular, T-Mobile, Verizon; Sprint and Nextel with the same ownership but different networks; MetroPCS and Cricket, both then independent companies; US Cellular, Alltel, and Dobson Cellular One. That whole list except the Big Three [AT&T, Sprint, Verizon] is now gone.

Apple broke the carrier control over software—in consumer’s favor!—by loading its own Google and Yahoo! relationships onto that first phone. Big Tech now dealt with Big Tech. And as the iPhone’s influence spread, especially after it became available on all US carriers in 2011, Apple’s sole power to make those deals grew.

…We’re very much now living in a world the iPhone made—a world of user-friendly, strictly controlled platforms in the grip of a small number of private companies.

And honestly, I don’t see how that changes. The current froth over “web3” and distributed organizations misses what made the iPhone great: simplicity and ease. Given a complex, difficult system like the new blockchain-based systems versus Apple’s simple user interfaces, policies, and guidance, consumers will almost certainly pick ease of use.

When the first iPhone came out, I saw it as a revolution. Revolutions, history tells us, often resolve into monarchies. Will the wheel turn again?

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The answer, as you’ll see in the next link, feels like “nope”.
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My first impressions of web3 • Moxie Marlinspike

Marlinspike is a very skilled cryptographer who works on the end-to-end encrypted app Signal, and who decided to really find out what the “web3” fuss is about:

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One thing that has always felt strange to me about the cryptocurrency world is the lack of attention to the client/server interface. When people talk about blockchains, they talk about distributed trust, leaderless consensus, and all the mechanics of how that works, but often gloss over the reality that clients ultimately can’t participate in those mechanics. All the network diagrams are of servers, the trust model is between servers, everything is about servers. Blockchains are designed to be a network of peers, but not designed such that it’s really possible for your mobile device or your browser to be one of those peers.

With the shift to mobile, we now live firmly in a world of clients and servers – with the former completely unable to act as the latter – and those questions seem more important to me than ever. Meanwhile, ethereum actually refers to servers as “clients,” so there’s not even a word for an actual untrusted client/server interface that will have to exist somewhere, and no acknowledgement that if successful there will ultimately be billions (!) more clients than servers.

For example, whether it’s running on mobile or the web, a dApp like Autonomous Art or First Derivative needs to interact with the blockchain somehow – in order to modify or render state (the collectively produced work of art, the edit history for it, the NFT derivatives, etc). That’s not really possible to do from the client, though, since the blockchain can’t live on your mobile device (or in your desktop browser realistically). So the only alternative is to interact with the blockchain via a node that’s running remotely on a server somewhere.

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The point being that the “decentralised” has in fact to rely on very centralised servers. Marlinspike’s elegant post shows that web3 will inevitably become centralised (and in fact already is, very heavily) and also that it’s a complete mess. This blogpost is sure to be the touchstone for the rest of the year on this topic.
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The development of Cortana with Sandeep Paruchuri • Alice Newton Rex

Alice Newton Rex talks in depth to the person in charge of the development of Microsoft’s voice assistant, who details how its early success inside Windows Phone came about from being small and essentially unregarded, though clearance was still required all the way to the top:

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The one last hurdle to clear was approval from the CEO, a position which was in the process of being handed over from Steve Ballmer to Satya Nadella. ‘Ballmer had poor product taste,’ says Sandeep with a slight smile. ‘He wanted the whole thing to be Microsoft branded. And then his parting gift was to try to name it Bingo. But we waited it out.’ Luckily, Satya had different ideas, and was a huge supporter of the project because of his belief in the power of AI. Under his leadership, Cortana got to keep her name and was declared ready to ship.

Cortana was successfully released as part of Windows Phone 8.1. The user reaction was great – it seemed like the scenarios really landed, and people loved the scenarios, including package tracking and smart reminders, which allowed you to e.g. create a reminder to buy flowers next time you passed a flower shop. The investments in making Cortana have a strong personality and great look and feel were also noticed. Between when they started working on Cortana and when it launched, Google had released Google Now, which was based on the same insight about being proactive, but had the opposite approach to persona and approachability.. Reviews described Cortana as ‘smart and witty’ or ‘like Google Now, but with cohesion and polish’.

…We all know that Cortana didn’t have a bright future. Windows Phone itself was discontinued in 2017, and the Cortana apps were turned off for iOS and Android last year. I ask Sandeep what went wrong, after this promising start. He says the decline began immediately. ‘Everything that was right about the first release went wrong for the second release,’ he tells me. No longer did they have a small team (‘us against the world’), working in an iterative way, investing in a great toolkit. For v2, there were hundreds of PMs [product managers] trying to get in on the action, and getting anything done required dozens of cross-company meetings. All of the new people diluted the original ethos they’d built and diluted the focus. They’d worked out how to scale their product but not their culture.

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That last sentence contains multitudes.
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Adversarial Wordle • Things Of Interest

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ADVERSARIAL WORDLE by qntm

An adversarial version of the excellent Wordle.

I’m thinking of a five-letter English word. You have unlimited guesses.

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Of course Wordle is the hit of the Christmas break. This is the evolution. It’s adversarial in that you’ll never get any correct letters in your first attempt. And probably not your second. It looks at what you’ve typed and chooses – as you continue – a word that doesn’t use those letters, as far as it can. If you use a good strategy, you’ll probably corner it in about seven attempts.
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Apple at $3tn: the enigma of Tim Cook • Financial Times

Patrick McGee:

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Apple’s ascendancy during the “second coming” of [Steve] Jobs from 1997 to 2011 had set the paradigm for Apple as a disruptive innovator that could upend entire industries with single products. The launches of the iMac, iPod, iPhone and iPad became the stuff of movies. But Cook, who earned nearly $100m last year thanks largely to stock awards, does not fit this model. His skills lie in areas that popular culture doesn’t really comprehend, let alone appreciate.

“Steve was a visionary firebrand, and Tim is an efficiency expert, an operational guru,” says Ray Wang, chair of Silicon Valley-based Constellation Research.

“You need both in a company,” he adds. “You need a person that comes up with the great idea that gets people excited . . . and you need the person who puts it in the market at massive scale.” nous

Cook’s supporters insist he has fundamentally changed the nature of the company. During his time at the helm, Apple’s annual revenues have ballooned from $108bn in the year he took over to $365bn in 2021. Net profits have grown 3.7 times, from $26bn to $95bn.

But more significant is how Cook has built a services juggernaut to eke out every penny of the Apple ecosystem, garnering a steady stream of recurring revenues from App Store fees and nearly 800m customers paying for digital media that expanded during his tenure. That substantially reduced Apple’s dependence on the iPhone — and propelled the company’s share price to a level where its price-to-earnings ratio is now three times higher than what it was a decade ago.

“Tim Cook’s biggest success is the cultivation and the fostering of services, and the degree to which he’s been able to revolutionise the way that the company is perceived in the eyes of investors,” says [WSJ journalist Tripp] Mickle.

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Mickle has a book on post-Jobs Apple coming out, which we can confidently expect to be a lot better than the dire “Haunted Empire” published in 2014 by another then-WSJ journalist, Yukari Iwatani Kane, which insisted that Apple after Jobs would run into the ground, just like Sony after its founder Akio Morita. (Mickle’s book couldn’t possibly be worse.)

McGee’s analysis here is excellent; the point that Services gives the ship stability is crucial.
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Podcasters are letting software pick their ads, and it’s already going awry • The Verge

Ashley Carman:

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The podcast industry is working up to something big; you can see it in the acquisitions. All the industry’s major players have, over the past two years, acquired companies focused on one feature: inserting ads into podcasts.

Of course, podcasting has always primarily depended on ad revenue, so this incoming era has more to do with getting podcast ads to act like the online advertising we see everywhere else. Wherever there’s a website, there can be a targeted ad, and now wherever there’s a podcast, there’s the potential of inserting a targeted ad, too. Whichever company can make that transition happen the fastest, across the most shows, and with the best data, could not only recoup all those millions of dollars in acquisition costs but make more on top of them.

The industry is sprinting toward this programmatic advertising future. However, there are some obstacles along the way, and podcasters are already running into them. The Verge has identified multiple examples of programmatic advertising going wrong, according to sources who asked to remain anonymous over concerns of fraying industry relationships. Ads are showing up in places they shouldn’t, signaling not so much a death knell for the effort, but more of a warning that if the trend continues, early trust between podcast networks and tech companies could fall apart.

Last year, an ad for the TV show The Sex Lives of College Girls popped up on an American Public Media (APM) podcast it shouldn’t have been approved for: a children’s show, a source familiar with the situation tells The Verge. Separately, a science podcaster says ads for BP and ExxonMobil were inserted into their program, despite them explicitly blocking ads for oil and gas companies. In both cases, the ads were served through the Spotify Ad Network, or SPAN, which launched last spring.

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Companies are reluctant to offer brand advertising with no immediate “call to (profitable) action” on podcasts. There used to be so many mattress ads on podcasts because one sale generated a lot of cash all at once, for a comparatively tiny outlay. Low-return ads didn’t get a look in.
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Google Home app update makes Speaker Group volume controls much worse • Android Police

Rajesh Pandey:

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Earlier this week, Google was handed a big blow in its legal tussle with Sonos over patent infringement. The US International Trade Commission found the company guilty of violating Sonos’ IP. Due to this, Google was forced to remove unified Speaker Group volume controls. Going forward, users will have to adjust each speaker’s sound level individually, with the option of controlling it using the phone’s volume buttons completely removed. A new Google Home app update (v2.47.79.5) is now out with the regressions in tow.

Pressing the volume rocker while on the Media screen in the latest Google Home app will adjust your phone’s volume. Previously, the same action changed the sound level of a speaker or an entire speaker group. You must now adjust the speaker output using the virtual slider in the Home app.

I am used to tapping the Cast playback notification on my phone’s notification shade to get to the Media screen in the Home app and then adjust the speaker playback volume. Admittedly, this change makes that process more frustrating, as controlling the volume is no longer as seamless. What was previously a two-tap process will now require my attention and fiddling around with a virtual slider, especially when controlling a speaker group.

You can avoid this change for now by ensuring you don’t install the latest Google Home update. However, this workaround is likely going to be temporary. While it is currently possible to control the full Speaker Group volume directly from your Nest Hub or Nest Hub Max, that functionality will also be pulled in the near future.

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So Google – which had $136bn in cash and equivalents at the end of 2020 (2021 data isn’t in yet) and operating cashflow of $89bn in the 12 months to December 2020 – couldn’t find the cash to pay for the patents to keep its customers’ systems running as before? How many Google Home devices are out there? Best estimate is about 30m in the US, where this would be relevant – though 8m homes there have multiple units, which accounts for more than half of them.
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How fake science is infiltrating scientific journals • Sydney Morning Herald

Harriet Alexander:

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Publishers and researchers have reported an extraordinary proliferation in junk science over the last decade, which has infiltrated even the most esteemed journals. Many bear the hallmarks of having been produced in a “paper mill”: submitted by authors at Chinese hospitals with similar templates or structures. Paper mills operate several models, including selling data (which may be fake), supplying entire manuscripts or selling authorship slots on manuscripts that have been accepted for publication.

The Sydney Morning Herald has learned of suicides among graduate students in China when they heard that their research might be questioned by authorities. Many universities have made publication a condition of students earning their masters or doctorates, and it is an open secret that the students fudge the data. The universities reap money from the research grants they earn. The teachers get their names on the papers as contributing authors, which helps them to seek promotions.

International biotechnology consultant Glenn Begley, who has been campaigning for more meaningful links between academia and industry, said research fraud was a story of perverse incentives. He wants researchers to be banned from producing more than two or three papers per year, to ensure the focus remained on quality rather than quantity.

“The real incentive is for researchers to get their papers published and it doesn’t have to be right so long as it’s published,” Dr Begley said. He recently told the vice-chancellor of a leading Australian university of his frustration with the narrative that Australia was “punching above its weight” in terms of research outcomes. “It’s outrageous,” Mr Begley told the vice-chancellor. “It’s not true.”

“Yes,” the vice-chancellor replied. “I use that phrase with politicians all the time. They love it.”

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The ticking bomb of crypto fascism • In These Times

Hamilton Nolan:

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The crash of crypto is bound to happen for the same reason that all Ponzi schemes eventually crumble: there is not an infinite supply of new people willing to pay ever-increasing prices for the stuff that you currently own. The more interesting question is not whether many small-time investors will lose a lot of money on their crypto investments, but what will happen when they do?

Here is what will happen when hundreds of thousands of younger investors are smashed by the crypto crash: they will be radicalized. This will not be experienced as simply a decline in prices, because crypto represents much more than a simple investment to its most fervent adherents — it represents a way out of the American trap. It represents the existence of opportunity, the possibility of economic mobility, the validation of the idea that you, a regular, hard working person without connections, can go from the bottom to the top, thanks to nothing but your own savvy choices. When that myth is shattered, disillusionment with the American system will follow. Unfortunately, given the realities of the moment, these newly disillusioned and radicalized and angry and broke people are far more likely to turn to fascism than to socialism.

Crypto, a portfolio of inherently worthless online tokens, is already sustained almost entirely by myth. Its value proposition is so inscrutable that when it melts down, almost any narrative could be crafted to plausibly explain it. It was the Fed! The government! The leftists who hate entrepreneurialism! It was the dark and devious forces of the shadowy deep state! Anything will do. It will enforce the priors of those who placed their faith in crypto as a good substitute for the American dream — a crowd of Barstool Sports readers and tech libertarians and the types of people who used to buy silver bars from Alex Jones before they turned to Bitcoin.

The crypto-evangelist population skews heavily towards a sort of New Age libertarian, anti-government right wing-ism, and when they see their financial dreams evaporate, they will likely set their sights for revenge on the things they already despise. The broad effect will lead to a large number of newly angry, bitter, disillusioned, hopeless people who are too steeped in the culture wars to turn towards working class solidarity, and instead turn towards hate. 

…If the crash strikes, say, six months before the 2024 presidential elections, it could be sufficient fuel to propel Donald Trump or one of his acolytes back into the White House and to further poison the national dialogue with rage and a spirit of vengeance. A fun thing to speculate on.

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Happy 2022. Oh well.
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Opinion: the American polity is cracked, and might collapse. Canada must prepare • The Globe and Mail

Thomas Homer-Dixon gives the Canadian perspective of what happens if the US plummets into authoritarianism, or civil war (which look like less and less remote possibilities):

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A terrible storm is coming from the south, and Canada is woefully unprepared. Over the past year we’ve turned our attention inward, distracted by the challenges of COVID-19, reconciliation, and the accelerating effects of climate change. But now we must focus on the urgent problem of what to do about the likely unravelling of democracy in the United States.

We need to start by fully recognizing the magnitude of the danger. If Mr. Trump is re-elected, even under the more-optimistic scenarios the economic and political risks to our country will be innumerable. Driven by aggressive, reactive nationalism, Mr. Trump “could isolate Canada continentally,” as one of my interlocutors put it euphemistically.

Under the less-optimistic scenarios, the risks to our country in their cumulative effect could easily be existential, far greater than any in our federation’s history. What happens, for instance, if high-profile political refugees fleeing persecution arrive in our country, and the U.S. regime demands them back. Do we comply?

In this context, it’s worth noting the words of Dmitry Muratov, the courageous Russian journalist who remains one of the few independent voices standing up to Mr. Putin and who just received the Nobel Prize for Peace. At a news conference after the awards ceremony in Oslo, as Russian troops and armour were massing on Ukraine’s borders, Mr. Muratov spoke of the iron link between authoritarianism and war. “Disbelief in democracy means that the countries that have abandoned it will get a dictator,” he said. “And where there is a dictatorship, there is a war. If we refuse democracy, we agree to war.”

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Clubhouse’s explosive growth has slowed. Its CEO does not care • Financial Times

Hannah Murphy and Miles Kruppa:

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Ahead of publication, Clubhouse disputed the App Annie figures [of about 28m downloads in total, 920k in November], which do not include downloads to tablet devices and do not include re-installs or app updates. Clubhouse said its own data shows 1.8m downloads in November. It declined to share download figures for other months. It also declined to share an active user number.

Davison remains unconcerned. “We’ve gone from a single community of beta testers last year to a global network of many different communities,” he said, pointing to recent growth in geographies such as Thailand. “It’s a big graph now with different clusters that are growing at different times.”

He added that over the course of summer alone, the number of conversation “rooms” created a day more than doubled from 300,000 to 700,000, driven by a rise in the number of private groups in particular.

After he declined to share a more up-to-date figure, the company later said this was “700,000+” rooms per day, adding that there was an “acceleration in growth in recent weeks”.

Despite this, Davison denied ever seeking out Clubhouse’s dizzying rise in the first place, citing the decision to make the app invite-only at first, until July this year. “We’ve never tried to grow. We’ve only tried to not grow,” he said. “I think that when you scale online communities, if you go too quickly, things can break.”

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No idea why there’s any pretence that Clubhouse is like Radio 4. It’s long since raced right to the bottom – it’s a haven for cryptogrifters and the rest. But it’s probably small enough that it won’t burn through the investment cash for a while. We’ll check back in three months unless something happens.
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What the hell is this company the 76ers just partnered with? • Defector

Maitreyi Anantharaman and Chris Thompson:

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It’s worth taking a few moments to dig around in the history of this Color Star operation [which just signed a deal with the famous basketball team to “collaborate on content featuring exclusive interviews”]. This company proposes to operate a metaverse, and thus to facilitate the refashioning of your human identity, to host as much as you are willing to relocate of your moment-to-moment social engagement away from the physical world, and to occupy a frankly alarmingly substantial part of your very experience of living. Proposing such a thing ought to require some sort of burden of proof, if not a straitjacket. If nothing else, we ought at least to know something about those inviting us to digitize and monetize our infinitely precious lives. Are these Metaverse Lords sufficiently grounded in whatever fields might conceivably make a person qualified to operate, uhh, existence itself? Or are they, for example, a hastily retrofitted construction materials outfit hoping to cash in on a sudden frenzied pan-cultural lurch into blockchain hell?

The Sixers spokesperson pointed out that the company is traded on NASDAQ, which it is; shares of Color Star Technology Co., Ltd. closed Wednesday [near the end of December] at $0.52. Certain facts can be learned about Color Star from a trove of boring old filings the company has made over time to the Securities and Exchange Commission since Color Star began issuing shares in 2018. According to a summary found in the company’s 2019 annual report, Color Star began its life way back in 2005, as TJS Wood Flooring, and in 2007 was subsequently incorporated (like so many companies seeking maximally favorable business conditions) in the state of Delaware. A year later, but still long before TJS Wood Flooring became Color Star: Administrator Of The Metaverse, it was renamed China Advanced Construction Materials Group, after something called a “reverse acquisition transaction.” In 2013, China Advanced Construction Materials Group did something called a “reincorporation merger” with a wholly owned subsidiary, and was suddenly operating out of Nevada. At this point the company still at least postured as if straightforwardly operating in the construction industry, and in fact would continue doing so through the end of 2019.

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It’s simultaneously hilarious and terrifying that a serious company like the 76ers would sign a deal with what looks like a bunch of chancers like this. Then again, English cricket once happily signed up with a complete fraudster, so maybe it’s something about sports.
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Errata, corrigenda and ai no corrida: none notified

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