India said on Monday that it is moving ahead with its plan to revise existing rules to regulate intermediaries — social media apps and others that rely on users to create their content — as they are causing “unimaginable disruption” to democracy.
In a legal document filed with the country’s apex Supreme Court, the Ministry of Electronics and Information Technology said it would formulate the rules to regulate intermediaries by January 15, 2020.
In the legal filing, the government department said the internet had “emerged as a potent tool to cause unimaginable disruption to the democratic polity.” Oversight of intermediaries, the ministry said, would help in addressing the “ever growing threats to individual rights and nation’s integrity, sovereignty and security.”
The Indian government published a draft of guidelines for consultation late last year. The proposed rules, which revise the 2011 laws, identified any service — social media or otherwise — that have more than 5 million users as intermediaries.
Government officials said at the time that modern rules were needed, otherwise circulation of false information and other misuse of internet platforms would continue to flourish.
The Monday filing comes as a response to an ongoing case in India filed by Facebook to prevent the government from forcing WhatsApp to introduce a system that would enable revealing the source of messages exchanged on the popular instant messaging platform, which counts India as its biggest market with more than 400 million users.
Some have suggested that social media platforms should require their users in India to link their accounts with Aadhaar — a government-issued, 12-digit biometric ID. More than 1.2 billion people in India have been enrolled in the system.
Facebook executives have argued that meeting such demands would require breaking the end-to-end encryption that WhatsApp users enjoy globally. The company executives have said that taking away the encryption would compromise the safety and privacy of its users. The Supreme Court will hear Facebook’s case on Tuesday.
India’s online population has ballooned in recent years. More than 600 million users in India are online today, according to industry estimates. The proliferation of low-cost Android handsets and access to low-cost mobile data in the nation have seen “more and more people in India become part of the internet and social media platforms.”
“On the one hand, technology has led to economic growth and societal development, on the other hand there has been an exponential rise in hate speech, fake news, public order, anti-national activities, defamatory postings, and other unlawful activities using Internet/social media platforms,” a lower court told the apex court earlier.
Facebook is willing to reverse course on its plans to tie its digital currency project to a synthetic currency tied to a basket of global currencies.
Reuters is reporting that Facebook’s head of the Libra project, David Marcus, told a group of bankers that the company’s main goal was to create a better payments system and was open to alternative approaches to the original structure of the project.
Facebook and its partners had intended to create its cryptocurrency by pegging it to a basket of national currencies whose holdings would be set by the Libra Association .
National banks considered the plan part of a dangerous end-run around their regulatory authority and have been holding up the project until they could assume tighter control over how the Facebook-architected cryptocurrency and payment technology would operate.
The scrutiny from regulators proved too much for some of Facebook’s largest, and earliest, partners in the Libra Association, whose members would determine how the cryptocurrency would operate.
In the past month seven of the Libra Association’s founding members dropped out including: PayPal, Mastercard, Visa, Ebay, and Stripe. Those seven represented a big chunk of the strategic value and commercial heft of the planned association, with Stripe, Mastercard, Visa, and Ebay standing in for a huge number of payment processors and merchant touchpoints that the new cryptocurrency would need were it to dramatically scale to the size Facebook wanted right out of the gate.
Now, in another strategic reversal, Marcus is conceding the synthetic currency in favor of stablecoins tied to the local currency in each market that Libra would operate.
“We could do it differently,” Reuters quoted the Libra Association chief as saying. “Instead of having a synthetic unit … we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc.”
All of this is happening against the backdrop of Facebook’s stated launch date of June 2020 for the Libra cryptocurrency. Marcus told Reuters that the June launch was still the goal, but that the association would not move forward unless it had addressed the concerns of regulators and received the proper approvals.
Those approvals are becoming harder to come by as the regulators who overseen global monetary policy cast a more skeptical eye at on stablecoins as well.
Reuters reported that the G-20 financial overseers wrote in a statement that money laundering, illicit finance and consumer protection need to be evaluated before any stablecoin projects can “commence operation.”
It echoes the same message from Kik’s chief executive Tim Livingston last week when he rebuffed earlier reports that the company would shut down amid an ongoing battle with the U.S. Securities and Exchange Commission. Livingston had tweeted that Kik had signed a letter-of-intent with a “great company,” but that it was “not a done deal.”
“Kik is one of those amazing places that brings us back to those early aspirations,” the blog post read. “Whether it be a passion for an obscure manga or your favorite football team, Kik has shown an incredible ability to provide a platform for new friendships to be forged through your mobile phone.”
MediaLab is a holding company that owns several other mobile properties, including anonymous social network Whisper and mixtape app DatPiff. In acquiring Kik, the holding company is expanding its mobile app portfolio.
MediaLab said it has “some ideas” for developing Kik going forwards, including making the app faster and reducing the amount of unwanted messages and spam bots. The company said it will introduce ads “over the coming weeks” in order to “cover our expenses” of running the platform.
Buying the Kik messaging platform adds another social media weapon to the arsenal for MediaLab and its chief executive, Michael Heyward .
Heyward was an early star of the budding Los Angeles startup community with the launch of the anonymous messaging service, Whisper nearly 8 years ago. At the time, the company was one of a clutch of anonymous apps — including Secret and YikYak — that raised tens of millions of dollars to offer online iterations of the confessional journal, the burn book, and the bathroom wall (respectively).
In 2017, TechCrunch reported that Whisper underwent significant layoffs to stave off collapse and put the company on a path to profitability.
At the time Whisper had roughly 20 million monthly active users across its app and website, which the company was looking to monetize through programmatic advertising, rather than brand-sponsored campaigns that had provided some of the company’s revenue in the past. Through widgets, the company had an additional 10 million viewers of its content per-month using various widgets and a reach of around 250 million through Facebook and other social networks on which it published posts.
People familiar with the company said at the time that it was seeing gross revenues of roughly $1 million and was going to hit $12.5 million in revenue for that calendar year. By 2018 that revenue was expected to top $30 million, according to sources at the time.
The flagship Whisper app let people post short bits of anonymous text and images that other folks could like or comment about. Heyward intended it to be a way for people to share more personal and intimate details — to be a social network for confessions and support rather than harassment.
The idea caught on with investors and Whisper managed to raise $61 million from investors including Sequoia, Lightspeed Venture Partners, and Shasta Ventures . Whisper’s last round was a $36 million Series C back in 2014.
Fast forward to 2018 when Secret had been shut down for three years while YikYak also went bust — selling off its engineering team to Square for around $1 million. Whisper, meanwhile, seemingly set up MediaLab as a holding company for its app and additional assets that Heyward would look to roll up. The company filed registration documents in California in June 2018.
According to the filings, Susan Stone, a partner with the investment firm Sierra Wasatch Capital, is listed as a director for the company.
Heyward did not respond to a request for comment.
Zack Whittaker contributed reporting for this article.
Late last night the Financial Times reported that HuffPost, arguably one of the crown jewels of Verizon Media Group’s remaining network of media properties (which includes TechCrunch), is up for sale.
Verizon has been shedding media properties in a retreat from the strategy that it had begun to execute with the acquisition of AOL for $4.4 billion back in 2015. Through the AOL deal, chief executive Tim Armstrong became the architect of the telecommunications company’s media and advertising strategy.
Armstrong’s vision was to roll up as much online real estate as he could while creating a high technology advertising architecture on the back-end that could better target consumers based on their media consumption (which the telecom company would also own).
The idea was to provide a broad-based competitor to the reach of ad platforms on Google and Facebook which were also targeting users based on their browsing history and interests. The benefit that Google and Facebook had was that they had a more holistic view of what consumers did online and they positioned themselves as a distribution channel between media companies and users — essentially redistributing their articles and videos and hoovering up the ad dollars that had previously gone to those media companies.
The multi-billion dollar land grab continued when Verizon paid $4.5 billion for Yahoo in 2017.
Now it appears that Verizon has a multi-billion dollar case of buyer’s remorse. Part of the billions that Verizon spent on Yahoo was for the early social network Tumblr, which Yahoo had acquired for $1.1 billion back in 2013.
Earlier this year Verizon unloaded Tumblr for the cost of a luxury Manhattan apartment. That $3 million sale was presaged by the significant fall from grace of other former high-flying media and tech properties.
Vice was once worth $5.7 billion at the height of the media investment bubble, but earlier this year Disney wrote down its stake in the company to virtually nothing.
At least Vice is emerging as a survivor. the company has rolled up Refinery29. Vox Media is also doing well in the new world of media. It bought Recode back in 2015 and recently acquired the publisher behind New York Magazine to expand its purview into paper publications and get its hands on the popular New York websites Intelligencer, The Cut, Vulture, and Grub Street.
Other publications like Hello Giggles, which was founded by the actress Zooey Deschanel, were sold to Time Magazine. High-fliers like Buzzfeed, HuffPost, Vice and Vox have all had to lay off staff in recent months.
It’s been a wild ride for HuffPost, which began in 2005 as a collection of celebrity bloggers brought together under the auspices of Arianna Huffington, from whom the site took its name.
AOL acquired The Huffington Post back in 2011 in a deal that was valued at $315 million less than a year after picking up TechCrunch for $25 million.
Verizon announced layoffs across its media properties at the beginning of the year. It cut roughly 7 percent of its staff — or around 800 jobs — including some at HuffPost.
In a statement to the Financial Times, Verizon said that it would not comment on rumors and speculation.
Neither Verizon Media nor HuffPost responded to a request for comment by the time of publication.
Despite early-stage virtual reality market and augmented reality market valuations softening in a transitional period, total global AR/VR startup valuations are now at $45 billion globally — include non-pure play AR/VR startups discussed below, and that amount exceeds $67 billion. More than $8 billion has been returned to investors through M&A already, with the remaining augmented and virtual reality startups carrying more than $36 billion valuations on paper. Only time will tell how much of this value gets realized for investors.
(Note: this analysis is of AR/VR startup valuations only, excluding internal investment by large corporates like Facebook . Again, this analysis is of valuation, not revenue.)
Selected AR/VR companies that have raised funding or generated significant revenue, plus selected corporates as of September 2019.
There is significant value concentration, with just 18 AR/VR pure plays accounting for half of the $45 billion global figure. Some of the large valuations are for Magic Leap (well over $6 billion), Niantic (nearly $4 billion), Oculus ($3 billion from exit to Facebook), Beijing Moviebook Technology ($1 billion+) and Lightricks ($1 billion). While there are unicorns, the market hasn’t seen an AR/VR decacorn yet.
Across all industries — not just AR/VR — around 60% of VC-backed startups fail, not 90% as often quoted. That doesn’t mean this many startups crash and burn, but that 60% of startups deliver less than 1x return on investment (ROI) to investors (i.e. investors get less back than they put in). To better understand what’s happening in AR/VR, let’s analyze the thousands of startup valuations in Digi-Capital’s AR/VR Analytics Platform to see where the smart money is by sector, stage and country.
Free charts do not include numbers, axes and data from subscriber version, with underlying hard data sourced directly from companies and reliable secondary sources. Methodology in Digi-Capital’s companion Augmented/Virtual Reality Report Q4 2019
A rising tide lifts all boats, while an ebb tide reveals the rocks beneath the waves. Similarly, the AR/VR industry sectors in which startups operate have a big impact on how they deliver value. Across the 30+ AR/VR sectors that Digi-Capital tracks, some sectors appear to be more equal than others.
Core AR/VR tech startups have delivered the most value to date, with “picks and shovels” businesses supporting the entire market while avoiding customer risk in any one sector. The largest valuations are for core tech companies that operate across either augmented reality and computer vision markets (particularly in China), or games and AR/VR markets. These startups are not AR/VR pure plays, showing how revenue diversification can be highly valuable in early stage markets.
Smartglasses make up the next AR/VR sector in terms of valuation, with around two-thirds of that locked up in smartglasses platform company Magic Leap (again, this analysis is of startups only, excluding internal corporate investment like Microsoft mixed reality).
VR headsets come in at number three, due to Facebook’s acquisition of Oculus back in 2014. While that deal was arguably the catalyst for the current wave of AR/VR, other VR headset startups haven’t delivered similar levels of value to investors yet.
AR/VR games follow, with startup valuations dominated by Pokémon Go developer Niantic and smaller exits like Osmo. AR/VR photo/video is next, with a large chunk of that value having been realized for investors through exits such as Shenzhen Lianmeng Technology, Replay Technology and Magic Pony Technology. There are also ongoing startups like Goldman Sachs-backed Lightricks.
The long tail of 25 other AR/VR market sectors each make up a decreasing proportion of remaining startup valuations today. There are individual later-stage startups such as Beijing Moviebook Technology in AR/VR categories like social, but these are in the minority today (Note: this does not mean there isn’t significant value across remaining sectors or companies within them, but that value has not been quantified by exit value or investment round valuations yet).
Source: Digi-Capital AR/VR Analytics Platform
The highest valuations on paper tend to be in later-stage startups for most tech markets, so it’s no surprise that companies at Series D and Series C stage in China and the USA make up around 45% of valuations in today’s AR/VR market. In terms of realized returns to investors, M&A has delivered over 12% of total global value. While the $3 billion Oculus exit to Facebook back in 2014 stands out, there have been a significant number of exits over the $100 million mark since that time.
When looking at all the different investment stages from Angel through to Series F, their valuation order is slightly jumbled. Series B, A, E and F (in that order) are a similar order of magnitude, followed by Seed, Pre-Seed, Angel and Accelerator at a much lower level. This is a product of the number and valuation of individual startups in each of these stages.
Source: Digi-Capital AR/VR Analytics Platform
The geographic distribution of value in AR/VR is extreme, with the USA and China accounting for more than 80% of all AR/VR startup valuations worldwide. These are followed at a much lower level by the UK, Israel, Switzerland and Canada, with a long tail of around 50 other countries. At the regional level, the running order is North America, Asia and Europe, with Latin America and MEA making up the balance. It’s worth noting that while a lot of stored valuation has been in US startups historically, Chinese AR/VR startups have raised far more money in recent years. However, Chinese VC investment dropped dramatically this year across sectors — not AR/VR specifically.
Augmented reality, virtual reality and mixed reality (XR) remain early stage, with both consumer and enterprise markets looking for an inflection point to help them truly scale. During a transitional period with many VC and corporate investors taking a wait-and-see approach, startups might need to focus on generating revenue and controlling costs rather than seeing VC funding rounds and exits delivering valuation/value increases. This could end up being a good thing in the long run, as the strongest AR/VR startups rise to the top. For those that do, there’s a lot more value to come.
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The Facebook CEO spoke yesterday at Georgetown University, sharing his thoughts on speech and “how we might address the challenges that more voice and the internet introduce, and the major threats to free expression around the world.”
Among his arguments: China is exporting its social values, political ads are an important part of free expression and the definition of dangerous speech must be kept in check.
Sydney-based Code Barrel was founded by two of the first engineers who built Jira at Atlassian, Nick Menere and Andreas Knecht. With this acquisition, they are returning to Atlassian after four years in startup land.
Swarm Technologies aims to connect smart devices around the world with a low-bandwidth but ever-present network provided by satellites — and it just got approval from the FCC to do so. Apparently the agency is no longer worried that Swarm’s sandwich-sized satellites are too small to be tracked.
Nintendo’s North American Switch unit sales have already surpassed the lifetime worldwide unit sales of the Wii U. The company announced Thursday that they had sold 15 million units of the popular handheld console in North America.
WarnerMedia has been on a shopping spree for its HBO Max service. It bought the rights to “Friends” and “The Big Bang Theory,” and now it’s using its outsized checkbook to bring beloved Japanese animation group Studio Ghibli’s films onto the web exclusively on its platform for U.S. subscribers.
The vehicle-maker has already been active in putting autonomous technology to work in various industries, with self-driving projects at quarries and mines, and in the busy port located at Gothenburg, Sweden.
Unity’s growth is a case study of Clayton Christensen’s theory of disruptive innovation. While other game engines targeted the big AAA game makers at the top of the console and PC markets, Unity went after independent developers with a less robust product that was better suited to their needs and budget. (Extra Crunch membership required.)
Facebook just lost a battle in its war to stop a $35 billion class action lawsuit regarding alleged misuse of facial recognition data in Illinois. Today it was denied its request for an en banc hearing before the full slate of ninth circuit judges that could have halted the case. Now the case will go to trial unless the Supreme Court intercedes.
The suit alleges that Illinois citizens didn’t consent to having their uploaded photos scanned with facial recognition and weren’t informed of how long the data would be saved when the mapping started in 2011. Facebook could face $1000 to $5000 in penalties per user for 7 million people, which could sum to a maximum of $35 billion.
A three-judge panel of ninth circuit judges rejected Facebook’s motion to dismiss the case and its appeal of the class certification of the plaintiffs back in August. One of those judges said that it “seems likely” that the Facebook facial recognition data could be used to identify them in surveillance footage or even unlock a biometrically secured cell phone. Facebook had originally built the feature to power photo tag suggestions, asking users if it’s them or a particular friend in an untagged photo.
Nicholas Iovino spotted the announcement today that we’ve attained and embedded below. When asked for comment, a Facebook spokesperson responded “Facebook has always told people about its use of face recognition technology and given them control over whether it’s used for them. We are reviewing our options and will continue to defend ourselves vigorously.”
[Image Credit: Mike MacKenzie]
Additional reporting by Zack Whittaker
With two high-level departures, and the passing of Safaricom’s CEO Bob Collymore, there are questions on how or if Alpha will continue to operate.
The space was established in 2017 to spur new product development for Safaricom, which is Kenya’s largest mobile operator and the provider of M-Pesa — East Africa’s most used mobile-money product.
As TechCrunch reported, one of the first objectives of Alpha was to build upon the success of M-Pesa.
As a telco, Safaricom has 69 percent of the Kenya’s mobile subscribers and generates around a fourth ($531 million) of its ≈ $2.2 billion annual revenues (2018) from M-Pesa. The fintech product has 20.5 million customers across a network of 176,000 agents.
While these stats have put Safaricom in a coveted position, the company’s former CEO Bob Collymore expressed concerns over the risk of too many eggs in one basket. For years, Collymore pressed his company to diversify product and revenue streams.
Through in-house development and partnerships, Safaricom added consumer and small business-based products, such as ride-hail app Little and website services, to its mobile and fintech network.
In 2017, Safaricom’s Chief Innovation Officer and first head of Alpha, Kamal Bhattacharya echoed Collymore’s mission to diversify the company’s offerings.
Bhattacharya — who’d come to Safaricom after senior positions at IBM Research Africa and a stint restructuring Kenyan innovation center iHub — recruited a team for Alpha, led by founder and computer scientist Shikoh Gitau.
From a market perspective, Alpha was something to watch since corporate incubators in Africa were (and continue to be) a relatively new component across the continent’s tech ecosystem.
Alpha staff in 2018
In a space purposely set up away from Safaricom’s HQ, Alpha’s team of innovators set to shaping new digital offerings.
In 2018, the incubator rolled out its first product, a social networking platform called Bonga, to augment M-Pesa.
Since M-Pesa was already established as a commercial network, the idea was to amplify that by creating more social media type transactions around it — channeling Facebook, YouTube, iTunes, PayPal, and eBay in one platform.
With Bonga, Alpha appeared to have some momentum into 2018, before the innovation incubator lost two of its biggest backers.
First, Kamal Bhattacharya, exited Safaricom and his position of lead of Alpha in October 2018. The reason given by the company was a bit of corporate say-nothing-speak: “leaving to pursue other interests.”
The real reasons for Bhattacharya’s sudden exit were unclear. There was, however, plenty of scuttlebutt about powers within Safaricom — resistant to the brand of bureaucracy rattling change Alpha could bring — conspiring to push him out.
After losing its head, Alpha lost another key ally in Bob Collymore when he passed away in July of this year after a fight with cancer.
Alpha said farewell to another senior figure in August when Huston Malande left. It also rebranded Bonga to Zwuup this year — though Safaricom’s last two annual reports don’t indicate how the product has fared under either name, with no mention of Bonga, Zwuup, or Alpha.
What’s next for Alpha?
Several sources close to Safaricom (speaking on background) expressed doubt that it would have the support within the company to continue with Collymore’s passing.
One source suggested Alpha would more likely be morphed into the larger Safaricom bureaucracy rather than shut down completely, to avoid negative news that an abrupt closure would bring.
TechCrunch asked Safaricom directly on the future of Alpha, and specifically if it would confirm or deny reports the innovation incubator could shutdown. A Safaricom spokesperson said it could not comment on anything related to Alpha’s products or performance before Safaricom’s next earnings reporting, scheduled for November 1.
So Kenya’s tech community will have to wait a couple more weeks to see if Safaricom sticks to its experiment to spur inside innovation by creating an outside incubator — or not.
China is exporting its social values, political ads are an important part of free expression, and the definition of dangerous speech must be kept in check, Facebook’s CEO Mark Zuckerberg argued today.
He criticized how American companies that do business with China were becoming influenced by the country’s values. “While our services like WhatsApp are used by protestors and activists everywhere due to strong encryption and privacy practices, on TikTok, the Chinese app growing quickly around the world, mentions of these same protests are censored, even here in the US!” Zuckerberg said. “Is that the Internet that we want?”
Because Facebook couldn’t come to an agreement with Chinese censors and thereby doesn’t operate in the nation, “Now, we have more freedom to speak out and stand up for the values that we believe in and fight for free expression around the world.” While he didn’t mention Apple, the NBA, and Blizzard who are amidst scandals about cowwing to Chinese policy, the shade thrown at them was clear.
Zuckerberg spoke today at Georgetown University and then did a Q&A to share his thoughts on speech and “how we might address the challenges that more voice and the internet introduce, and the major threats to free expression around the world.” He discussed how “We want the progress of free expression without the tension” leading people to advocate for pulling back on free expression. “Where do you draw the line?”
Zuckerberg says that Facebook now has 35,000 people working on security, and the company’s security budget is higher now than the whole revenue of the company when it IPO’d, which was $5 billion in 2012. Facebook removes or downranks content that is objectively dangerous. Still, he says that he doesn’t want to “let the definition of what is dangerous expand beyond what’s absolutely necessary.”
On allowing political ads on Facebook even if they carry misinformation, Zuckerberg argues that “political ads can be an important part of voice, especially for local candidates, up and coming challengers and advocacy groups that the media might not otherwise cover. That way they they can get their voice into the debate.” While that may be true, the same system allows whichever group or candidate has the most funding to dominate the narrative.
I recently argued that Facebook should drop all political ads until regulation to prevent their use to spread misinformation was passed. President Trump is spending more than many of his Democratic party rivals combined while using lies about them planning to remove the second amendment to raise money.
Still, Zuckerberg argues, “Banning political ads favors incumbents and whoever the media chooses to cover.” He did not address who spends the most or how Facebook could still offer free expression of candidates to their own followers even if it banned political ads. He essentially drew no distinction between freedom of speech and freedom of reach aka paid amplification through ads. Instagram CEO Adam Mosseri echoed this sentiment, equating ads and speech, tweeting “I believe that people deserve to hear what politicians are saying and make up their own minds.”
This ignores how President Trump has spent $4.9 million on Facebook ads this year compared to $9.6 million spent by the 23 Democratic candidates combined, and that Trump had outspent them all put together as of March. Banning political ads wouldn’t prevent candidates from saying what they want and being judged, but it would stop richer candidates’ speech from having more weight.
Overall, Zuckerberg sounded more passionate and empathetic than in his recent testimonies on Capitol Hill. He seemed to take on some of the cadence and tone of former President Barack Obama, pitching up his voice to stress the urgency of challenges facing democracy. However, the speech format allowed Zuckerberg to avoid immediate pushback on his points, such as why political advertising favors challengers if it’s incumbents with the most money to spend. Zuckerberg did hold a Q&A after his speech, but the stream of that wasn’t broadcast from his Page like the prepared remarks, and he mostly reiterated points from the speech.
Zuckerberg drove home one important theme threaded throughout the talk, though. He attempted to link the idea of US companies potentially policing free expression to protect safety and elections with how China censors speech. And while other companies like the NBA and Blizzard that do significant business with the country try to downplay its influence, Zuckerberg spoke up about how the tentacles of China’s values are choking off speech far beyond its borders.
Over the past few years, gig economy companies and the treatment of their labor force has become a hot button issue for public and private sector debate.
At our recent annual Disrupt event in San Francisco, we dug into how founders, companies and the broader community can play a positive role in the gig economy, with help from Derecka Mehrens, an executive director at Working Partnerships USA and co-founder of Silicon Valley Rising — an advocacy campaign focused on fighting for tech worker rights and creating an inclusive tech economy — and Amanda de Cadenet, founder of Girlgaze, a platform that connects advertisers with a network of 200,000 female-identifying and non-binary creatives.
Derecka and Amanda dove deep into where incumbent gig companies have fallen short, what they’re doing to right the ship, whether VC and hyper-growth mentalities fit into a sustainable gig economy, as well as thoughts on Uber’s new ‘Uber Works’ platform and CA AB-5. The following has been lightly edited for length and clarity.
Arman Tabatabai: What was the original promise and value proposition of the gig economy? What went wrong?
Derecka Mehrens: The gig economy exists in a larger context, which is one in which neoliberalism is failing, trickle-down economics is proven wrong, and every day working people aren’t surviving and are looking for something more.
And so you have a situation in which the system we put together to create employment, to create our communities, to build our housing, to give us jobs is dysfunctional. And within that, folks are going to come up with disruptive solutions to pieces of it with a promise in mind to solve a problem. But without a larger solution, that will end up, in our view, exacerbating existing inequalities.
(UC Berkeley’s Dr. Stuart Russell’s new book, “Human Compatible: Artificial Intelligence and the Problem of Control, goes on sale Oct. 8. I’ve written a review, “Human Compatible” is a provocative prescription to re-think AI before it’s too late,” and the following in an interview I conducted with Dr. Russell in his UC Berkeley office on September 3, 2019.)
Ned Desmond: Why did you write Human Compatible?
Dr. Russell: I’ve been thinking about this problem – what if we succeed with AI? – on and off since the early 90s. The more I thought about it, the more I saw that the path we were on doesn’t end well.
(AI Researchers) had mostly just doing toy stuff in the lab, or games, none of which represented any threat to anyone. It’s a little like a physicist playing tiny bits of uranium. Nothing happens, right? So we’ll just make more of it, and everything will be fine. But it just doesn’t work that way. When you start crossing over to systems that are more intelligent, operating on a global scale, and having real-world impact, like trading algorithms, for example, or social media content selection, then all of a sudden, you are having a big impact on real-world, and it’s hard to control. It’s hard to undo. And that’s just going to get worse and worse and worse.
Desmond: Who should read Human Compatible?
Dr. Russell: I think everyone, because everyone is going to be affected by this. As progress occurs towards human level (AI), each big step is going to magnify the impact by another factor of 10, or another factor of 100. Everyone’s life is going to be radically affected by this. People need to understand it. More specifically, it would be policymakers, the people who run the large companies like Google and Amazon, and people in AI, related disciplines, like control theory, cognitive science and so on.
My basic view was so much of this debate is going on without any understanding of what AI is. It’s just this magic potion that will make things intelligent. And in these debates, people don’t understand the building blocks, how it fits together, how it works, how you make an intelligent system. So chapter two (of Human Compatible was) sort of mammoth and some people said, “Oh, this is too much to get through and others said, “No, you absolutely have to keep it.” So I compromised and put the pedagogical stuff in the appendices.
Desmond: Why did computer scientists tend to overlook the issue of uncertainty in the objective function for AI systems?
Dr. Russell: Funnily enough, in AI, we took uncertainty (in the decision-making function) to heart starting in the 80s. Before that, most AI people said let’s just work on cases where we have definite knowledge, and we can come up with guaranteed plans.
On September 17, HTC announced that cofounder Cher Wang would be stepping down as CEO. In her place, Yves Maitre stepped into the role of Chief Executive, after more than a decade at French telecom giant, Orange.
It’s a tough job at an even tougher time. The move comes on the tail of five consecutive quarterly losses and major layoffs, including a quarter of the company’s staff, which were let go in July of last year.
It’s a far fall for a company that comprised roughly 11 percent of global smartphone sales, some eight years ago. These days, HTC is routinely relegated to the “other” column when these figures are published.
All of this is not to say that the company doesn’t have some interesting irons in the fire. With Vive, HTC has demonstrated its ability to offer a cutting edge VR platform, while Exodus has tapped into an interest in exploring the use of blockchain technologies for mobile devices.
Of course, neither of these examples show any sign of displacing HTC’s once-booming mobile device sales. And this January’s $1.1 billion sale of a significant portion of its hardware division to Google has left many wondering whether it has much gas left in the mobile tank.
With Wang initially scheduled to appear on stage at Disrupt this week, the company ultimately opted to have Maitre sit in on the panel instead. In preparation for the conversation, we sat down with the executive to discuss his new role and future of the struggling Taiwanese hardware company.
When Elizabeth Warren took on Mark Zuckerberg and Facebook earlier this week, it was a low moment for what New Yorker writer Andrew Marantz calls “techno-utopianism.”
That the progressive, populist Massachusetts Senator and leading Democratic Presidential candidate wants to #BreakUpBigTech is not surprising. But Warren’s choice to spotlight regulating and trust-busting Facebook was nonetheless noteworthy, because of what it represents on a philosophical level. Warren, along with like-minded political leaders, social activists, and tech critics, has begun to offer the first massively popular alternative to the massively popular wave of aggressive optimism and “genius” ambition that characterized tech culture for the past decade or two.
“No,” Warren and others seem to say, “your vision is not necessarily making the world a better place.” This is a major buzzkill for tech leaders who have made (positive) world-changing their number one calling card — more than profits, popularity, skyscrapers like San Francisco’s striking Salesforce Tower, or any other measure.
Enter Marantz, a longtime New Yorker staff writer and Brooklyn, N.Y. resident who has recently trained his attention on tech culture, following around iconic figures on both sides of what he sees as the divide of our time — not between tech greats whose successes make us all better and those who would stop them, but between the alternative figures on the “new right” and the self-understood liberals of Silicon Valley who, according to Marantz, have both contributed to “hijacking the American conversation.”
Marantz’s first book, “Antisocial: Online Extremists, Techno-Utopians, and the Hijacking of the American Conversation,” will be released next week, and I recently had a chance to talk with him for this series the ethics of technology.
Greg Epstein: Congratulations on your absolutely fascinating new book Antisocial, and on everything you’ve been up to.
PayPal is the first company to walk away from Facebook’s Libra cryptocurrency.
“PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in an emailed statement. “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”
It could be that PayPal isn’t the only firm to walk away from the ambitious effort to transform the entire global financial system.
Mastercard, Visa and other companies may join PayPal in backing away from the Libra project, which has been the subject of mounting criticism since its launch.
As we reported when Libra first launched, Facebook doesn’t control the Libra organization or currency, but gets a single vote alongside the remaining partners which include Uber, Andreessen Horowitz, the venture capital firm with roughly $10 billion in assets under management, Mastercard and Visa. Each partner has invested at least $10 million in the project and the association will promote the open-sourced Libra Blockchain.
The partners will not only pitch the Libra Blockchain and developer platform with its own Move programming language, plus sign up businesses to accept Libra for payment and even give customers discounts or rewards.
Facebook has a lot more riding on the success of the Association that just it’s Libra stake. The company has also launched a subsidiary company called Calibra that handles crypto transactions on its platform that would use the Libra blockchain.
Governments around the world have been up in arms about what they see as Facebook and its partners making an end run around the existing financial services.
And earlier this month, Facebook chief executive Mark Zuckerberg indicated that the company would be willing to push back the launch of the cryptocurrency past its planned 2020 launch date, in an interview with the Japanese Nikkei news service.
At age 27, Jordan Fudge is quietly making a splash in the VC world.
Fudge is the managing partner of Sinai Ventures, a multi-stage VC fund that manages $100 million and has more than 80 portfolio companies including Ro, Drivetime, Kapwing, and Luminary. His 2017 investment in Pinterest — a secondary shares deal from his prior firm that was rolled into Sinai when he spun out — will have returned the value of Sinai’s Fund I by itself once the lockup on shares expires next week.
Fudge and co-founder Eric Reiner, a Northwestern University classmate, hired staff in New York and San Francisco when Sinai launched in early 2018. Today, they’re centralizing the team in Los Angeles for its next fund, a bet on the rising momentum of the local startup ecosystem and their vision to be the city’s leading Series A and B firm.
Fudge and Reiner have intentionally stayed off the radar thus far, wanting to prove themselves first through a track record of investments.
A part-time film financier who also serves on the board of LGBT advocacy non-profit GLAAD, Fudge describes himself as an atypical VC firm founder, an edge he’s using to carve out his niche in a crowded VC landscape.
I spoke with Fudge to learn more about his strategy at Sinai and what led to him founding the firm. Here’s the transcript (edited for length and clarity):
Eric Peckham: Tell me the origin story here. How did Sinai Ventures get seeded?
Jordan Fudge: I was working for Eagle Advisors, a multi-billion dollar family office for one of the founders of SAP, focused on the tech sector across public markets, crypto, and eventually VC deals. Two years in, I pitched them on spinning out to focus on VC and they seeded Sinai with the private investments like Compass and Pinterest I had done already, plus a fresh fund to invest out of on my own. It was $100 million combined.
Facebook’s relentless blatant feature copy of Snapchat have been seen as one of the chief examples of the company’s competitive overreach, but Snap CEO Evan Spiegel isn’t sure whether antitrust activity from the government is going to change the company’s near-term prospects of competing with Instagram.
“I mean the history of antitrust would basically say that these investigations last like seven to ten years or something like that and that basically nothing happens,” Spiegel said onstage at TechCrunch Disrupt SF. “I think a lot can change in the seven to ten years that this process will take.”
Though Spiegel didn’t seem to have the most faith in the process giving Snap a more level playing field to take on Facebook, he did say there were clear public concerns with how Facebook was responding to competition in the market.
“The thing that everyone’s concerned about is like is that they’ve seen that competition has been what has motivated Facebook to make those changes over time,” Spiegel said onstage. “So, if you look at Snapchat, the inventions that we create around ephemerality, around privacy, those have really motivated Facebook to dramatically change their product offering in order to compete.”
Whether Facebook was specifically suppressing Snapchat content, Spiegel said, “It’s hard to say and I you know I’d probably be stupid to talk about it here.”
“I think what everyone is concerned about is what they would characterize as anti competitive practices so for example, you know, people upload snaps they create on Snapchat to Instagram, all the time, and then Instagram suppresses you know the Snapchat hashtag or they suppress people’s ability to post snap codes as their profile picture or suppress their ability to link to Snapchat on their profile. And that’s an example of anti-competitive behavior.”
Spiegel also confirmed that the company had put together a list of some of Facebook’s competitive moments called Project Voldemort, noting that the list had been started several years ago. The initiative’s existence was first reported by The Wall Street Journal.
“I didn’t make it, our legal team put it together,” Spiegel said. “I think just because they kept hearing from our partners all of these things that Facebook was doing and it was actually so many that people couldn’t actually remember them all so they started writing them down.”
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U.S. Attorney General William Barr, acting U.S. Homeland Security Secretary Kevin McAleenan, U.K. Home Secretary Priti Patel and Australia’s minister for home affairs, Peter Dutton, have co-signed an open letter to Facebook calling on the company to halt its plan to roll out end-to-end encryption across its suite of messaging products.
Facebook isn’t the only messaging company using end-to-end encryption, but it’s in governments’ crosshairs on account of a plan to expand its use of e2e crypto.
The scooter startup’s new round comes a few months after TechCrunch reported Bird was looking to raise a Series D round at a $2.5 billion valuation.
What if Instagram could automatically tell your Close Friends you’re home, working, on-the-move or chilling and might want to hang out? That’s the idea behind its new companion app Threads.
“What public markets do is indeed the great reckoning,” Benioff said while onstage at Disrupt SF. “But it cleanses [a] company of all of the bad stuff that they have.”
HVSD (named after renowned physicist and electrical engineer Oliver Heaviside) is an electric aircraft designed to go anywhere and land anywhere fast and quietly. Sebastian Thrun’s aviation startup has been working on the aircraft for two years.
This isn’t really a new ban, but rather a reiteration of an existing one. The company says it won’t allow ads supporting a candidate, political party or issue, because they don’t fit with the “light-hearted and irreverent feeling” that the app is aiming for.
An Indian startup that is increasingly posing a threat to established food and grocery delivery businesses, as well as to e-commerce giants, just closed a new financing round.
Facebook plans to challenge Europe’s top court, which today ruled that EU countries can order Facebook to globally remove content that violates local laws. Facebook currently complies with proper legal requests to remove content that breaks a nation’s laws, but can leave it up for global viewers if the post doesn’t violate its Community Standards.
But today during a livestreamed Q&A with Facebook employees, CEO Mark Zuckerberg said that “This is something I expect us and other companies will be litigating.”
Zuckerberg explained that Facebook had “successfully fought” overly broad takedown requests in the past. He also noted that “a lot fo the details about exactly how [the ruling gets] implemented will depend on national courts across Europe.”
Facebook told TechCrunch in a statement today that:
“This judgement raises critical questions around freedom of expression and the role that internet companies should play in monitoring, interpreting and removing speech that might be illegal in any particular country.
At Facebook, we already have Community Standards which outline what people can and cannot share on our platform, and we have a process in place to restrict content if and when it violates local laws. This ruling goes much further.
It undermines the long-standing principle that one country does not have the right to impose its laws on speech on another country. It also opens the door to obligations being imposed on internet companies to proactively monitor content and then interpret if it is “equivalent” to content that has been found to be illegal.
In order to get this right national courts will have to set out very clear definitions on what “identical” and “equivalent” means in practice. We hope the courts take a proportionate and measured approach, to avoid having a chilling effect on freedom of expression.”
Zuckerberg hadn’t done a livestreamed Q&A recently, but holds them weekly inside Facebook. Yet after The Verge’s Casey Newton published two-hours of leaked audio from Facebook internal all-hands meetings, Zuckerberg is trying to show he has nothing to hide.
During pre-question remarks, Zuckerberg also discussed the US Attorney General Bill Bar’s open letter from the US, UK, and Australia demanding that Facebook halt the expansion of encryption across all its messaging apps. “We get that there are real concerns with doing that ” Zuckerberg said. “There are these different equities we try to balance”, specifically safety needs like catching child abusers and terrorists versus privacy and protecting political dissidents as well as normal citizens.
The CEO argued Facebook could still police encrypted apps, noting the “There’s a lot we can do with detecting patterns” including linking accounts together so it can shut down the WhatsApp accounts of bad actors on Facebook, and that Facebook can “find it upstream” by analyzing suspicious activity outside of the messages threads themselves.
Zuckerberg was asked about concerns that his comments regarding Facebook would likely sue to stop an attempt by regulators to break it up. He’d discussed how Presidential candidate Elizabeth Warren had made the break-up a core piece of her policy slate, which led to questions about whether Facebook might try to minimize the reach of her statements or avoid voter registration that could aid.
Zuckerberg crystallized the question, saying “If Facebook is worried about Elizabeth Warren becoming president because of that thing, …how can we be trusted to be impartial and make sure she and other people get a voice?” He said that “Even when people disagree with what I think would be good…I still want to give them a voice . . . We need to be able to put what people want to express…above our preferences all the time.”
Today’s session certainly felt more guarded than the leaked Q&As. At one point Zuckerberg noted he wouldn’t share stats on Facebook Dating because it wasn’t a private discussion. Yet the talk still helped clarify critical Facebook policy positions are a tumultuous time for the company.
Zuckerberg joked at the beginning of the Q&A that he’s making this one publicly available because “I do such a bad job in interviews that it’s like, what do we have to lose?”
Here we go again. Western governments are once again dialling up their attack on end-to-end encryption — calling for either no e2e encryption or backdoored e2e encryption so platforms can be commanded to serve state agents with messaging data in “a readable and usable format”.
US attorney general William Barr, acting US homeland security secretary Kevin McAleenan, UK home secretary Priti Patel and Australia’s minister for home affairs, Peter Dutton, have co-signed an open letter to Facebook calling on the company to halt its plan to roll out e2e encryption across its suite of messaging products. Unless the company can ensure what they describe as “no reduction to user safety and without including a means for lawful access to the content of communications to protect our citizens”, per a draft of the letter obtained by BuzzFeed ahead of publication later today.
If platforms have e2e encryption a “means for lawful access” to the content of communications sums to a backdoor in the crypto.
Presumably along the lines of the ‘ghost protocol’ that UK spooks have been pushing for the past year. Aka an “exceptional access mechanism” that would require platforms CC’ing a state/law enforcement agent as a silent listener to eavesdrop on a conversation on warranted request.
Facebook -owned WhatsApp was one of a number of tech giants joining an international coalition of civic society organizations, security and policy experts condemning the proposal as utter folly earlier this year.
The group warned that demanding a special security hole in encryption for law enforcement risks everyone’s security by creating a vulnerability which could be exploited by hackers. Or indeed service providers themselves. But the age-old ‘there’s no such thing as a backdoor just for you’ warning appears to have fallen on deaf ears.
In their open letter to Facebook, the officials write: “Companies should not deliberately design their systems to preclude any form of access to content, even for preventing or investigating the most serious crimes. This puts our citizens and societies at risk by severely eroding a company’s ability to detect and respond to illegal content and activity, such as child sexual exploitation and abuse, terrorism, and foreign adversaries’ attempts to undermine democratic values and institutions, preventing the prosecution of offenders and safeguarding of victims. It also impedes law enforcement’s ability to investigate these and other serious crimes.”
Of course Facebook is not the only messaging company using e2e encryption but it’s in the governments’ crosshairs now on account of a plan to expand its use of e2e crypto — announced earlier this year, as part of a claimed ‘pivot to privacy’. And, well, on account of it having two billion+ users.
The officials claim in the letter that “much” of the investigative activity which is critical to protecting child safety and fighting terrorism “will no longer be possible if Facebook implements its proposals as planned”.
“Risks to public safety from Facebook’s proposals are exacerbated in the context of a single platform that would combine inaccessible messaging services with open profiles, providing unique routes for prospective offenders to identify and groom our children,” they warn, noting that the Facebook founder expressed his own concerns about finding “the right ways to protect both privacy and safety”.
In March Mark Zuckerberg also talked about building “the appropriate safety systems that stop bad actors as much as we possibly can within the limits of an encrypted service”.
Which could, if you’re cynically inclined, be read as Facebook dangling a carrot to governments — along the lines of: ‘We might be able to scratch your security itch, if your regulators don’t break up our business.’
Ironically enough the high profile intervention by officials risks derailing Facebook’s plan to unify the backends of its platforms — widely interpreted as a play to make it harder for regulators to act on competition concerns and break up Facebook’s business empire along messaging product lines: Facebook, WhatsApp, Instagram.
Or, well — alternative scenario — Facebook could choose to strip e2e crypto from WhatsApp. Which is currently the odd one out in its messaging suite on account of having proper crypto. Governments would sure be happy if it did that. But it’s the opposite of what Zuckerberg has said he’s planning.
The government is demanding backdoor access to the private communications of 1.5 billion people using #WhatsApp. If @Facebook agrees, it may be the largest overnight violation of privacy in history. https://t.co/qkxO1pJuUh
— Edward Snowden (@Snowden) October 3, 2019
Curiously the draft letter makes no mention of platform metadata. Which is not shielded by even WhatsApp’s e2e encryption. And thus can be extracted — via a warrant — in a readable format for legit investigative purposes. And let’s not forget US spooks are more than happy to kill people based on metadata.
Instead the officials write: “We must find a way to balance the need to secure data with public safety and the need for law enforcement to access the information they need to safeguard the public, investigate crimes, and prevent future criminal activity. Not doing so hinders our law enforcement agencies’ ability to stop criminals and abusers in their tracks.”
The debate is being framed by spooks and security ministers as all about content.
Yet a scrambled single Facebook backend would undoubtedly yield vastly more metadata, and higher resolution metadata, on account of triangulation across the services. So it really is a curious omission.
We’ve reached out to Facebook for its reaction to the letter. BuzzFeed reports that it sent a statement in which it strongly opposes government attempts to build backdoors. So if Facebook holds firm to that stance it looks like another big crypto fight could well be brewing. A la Apple vs the FBI.
In another announcement being made today, the UK and the US have signed a “world first” Bilateral Data Access Agreement that’s intended to greatly speed up electronic data access requests by their respective law enforcement agencies.
The agreement is intended to replace the current process which sees requests for communications data from law enforcement agencies submitted and approved by central governments via a process called Mutual Legal Assistance — which can take months or even years.
Once up and running, the claim is the new arrangement will see the process reduced to a matter of weeks or even days.
The agreement will work reciprocally with the UK getting data from US tech firms, and the US getting access from UK communication service providers (via a US court order).
Any request for data must be made under an authorisation in accordance with the legislation of the country making the request and will be subject to independent oversight or review by a court, judge, magistrate or other independent authority, per the announcement.
The UK also says specifically that it has obtained “assurances” which are in line with the government’s continued opposition to the death penalty in all circumstances. Which is only mildly reassuring given the home secretary’s previous views on the topic.
The announcement also makes a point of noting the data access agreement does not change anything about how companies can use encryption — nor prevent them from encrypting data.
What if Instagram could automatically tell your Close Friends you’re (home), (working), (on the move), or (chilling and might want to hang out)? That’s the idea behind Instagram’s new companion app Threads, a Close Friends-only messaging experience that opens to the camera with shortcuts for instantly sending specific people photos and videos. Threads offers two brand new features called Status and Auto-Status that allow you to manually set an emoji as an away message to show Close Friends what you’re up to, or opt in to letting Instagram select one automatically based on your location, accelerometer, and even your phone’s battery level.
Launching globally today on iOS and Android, this is Facebook and Instagram’s next big swing at Snapchat, specifically targeting its top use case: rapid-fire camera and text messaging with your best friends. Sick of randos in your inbox? Only people in your Instagram Close Friends list show up in Threads so you can trust its notifications are important. You can still just use Instagram Direct in the main app or the two in parallel, though.
What’s most unique is that Threads finally sees the launch the Facebook “Your Emoji” status feature we reported it was prototyping 18 months ago. Threads Status and Auto-Status offer conversation starters, contextual clues to why someone might not respond, and opportunities to meet up offline. But importantly, it leaves out a map or any exact location sharing to avoid being creepy and instead focus on what Close Friends are up to — which determines if they can chat or hang out more than where they are.
Threads offers “persistent connection”, Instagram’s Director of consumer product management Robby Stein tells me. It was designed with three priorities: the ability to “fully control who can reach you”, speed because “If most of your messages only go to a couple of people, why isn’t the experience built around that?”, and “Having more of a connection through the day . . . even if you don’t have time for a conversation.”
By building Threads as a separate app, Instagram has little to lose if it flops and could learn about what features to pull back into its main app. But if it succeeds, Threads cement itself as where you stay in touch with your favorite people, while pigeonholing other messaging options like SMS, WeChat, as Snapchat as noisy channels full of unwanted alerts.
Social networks have an inevitable problem. Eventually out of coincidence and courtesy, you add too many people as friends, filling the apps with people who’s content you don’t care about and who’s messages you don’t always want. Facebook, the catch-all network for everything from family to bosses to acquaintances. That leads people to feel uncomfortable sharing too much, and to distrust that the notifications they get are important.
Now Instagram is doubling-down on Close Friends which launched last November at TechCrunch Disrupt Berlin to let you secretly set a special group of best pals who get to see special Stories you set as visible to only them. Facebook had tried complicated Lists products in the past and never seen them gain significant traction because it’s too tough to keep track of who’s in each. Instagram nailed the concept with a single list you edit as needed, though people don’t know if they’re added or removed. I’m surprised Facebook doesn’t already have its own Close Friends feature and it’d be smart to build one.
Instagram already tried building its own standalone Direct messaging app, but shut it down after low usage since it didn’t offer anything beyond what you already got in the main app. Casey Newton of The Verge reported Instagram was building an app with automatic activity sharing in August.
Now with Threads, Close Friends creates the foundation for something different. The only entries in your inbox are Close Friends, which you can edit in the app with the list syncing with your list on Instagram. You can hide any of those chats or group chats with exclusively close friends if you don’t want to see them.
When you open Threads, you’ll see open immediately to the camera like Snapchat. At the bottom are “Camera Shortcuts” that show friends’ faces you can tap on to send a photo or tap and hold for a video. You can also tap the “default camera” shutter and the select everyone you want to message. Swiping up reveals the Threads inbox, where you can tap into a conversation for a full-featured messaging experience just like in Instagram Direct.
With Status, you can set an emoji as your away message for one to four hours. You can select from pre-made ones with their own text tag lines, or define a new one from the full range of emoji. Meanwhile, Auto-Status defaults to off but can be turned on to give Instagram the ability to use data signals to choose an emoji for you. It will match your exact location to specific places like Home, Work, cafes, bars, traveling out of town and more. Your accelerometer lets it show if you’re biking or driving. And your phone battery can let it display that you’re low on juice or currently charging.
Why share my batter status? Stein tells me that if you’re charging your phone, you might not be next to it and could be slow to respond. Or if you’re low battery, you might suddenly stop replying all together. That’s helpful knowledge to share with Close Friends even if it’d be weird to post it more widely.
One problem is that who you want to message with often might include family or co-workers that you don’t want to have see your Close Friends Stories, but the list is used for both. At the same time, Threads could boost Close Friends usage, leading people to share more intimate and silly stuff on Stories which do help Instagram earn money thanks to the ads in between.
For now, though, Instagram tells me there’s no plan to monetize Threads directly or show any ads in it. In fact, Facebook won’t even use the exact locations pulled from the app to power ad targeting. Coordinates are only sent so it can match them to locations like a movie theater to show you’re at the movies. Facebook won’t store the locations and they only stay on your device for a short period before they’re deleted.
Still, Auto-Status is sure to rile some who think Facebook and Instagram are too creepy to give any more data. But if the convenience of knowing your friend is available to hang out or is probably too stressed for a chat outweighs the company’s toxic brand, Instagram could develop an important new social behavior. Even if it doesn’t monetize it directly, Threads could keep users locked into the Insta ecosystem where they’ll see plenty of feed and Story ads between message bouts.
Social graph bloat causes a chilling effect on sharing. It’s what Snapchat, Path, and other apps have tried to solve but ended up succumbing to. Instagram accepts that you’ll inevitably connect with people you don’t care much about out of social obligation, pity, or apathy. But by building whole products around just sharing with your favorite subset of people, it could unlock what we self-center — the real us.