The UpStream

The mobile-focused streaming service Quibi has been in trouble since before its launch. This week, that trouble has turned to disaster, as the company has announced it is shutting down around December 1, 2020 and looking for a buyer for the corporate assets. The executives did everything in their power to raise the value and recognition of the brand months before it was made available. They signed an agreement with T-Mobile, which brought the service to T-Mobile Tuesdays offering 6 months for free. They also signed big-name content, such as Reno 911!.

However, the problem the company faced was a lot of competition and a difficult value proposition. The short-form content concept was going to be a difficult sell under normal circumstances, but 2020 did not make it better. While under 10-minute episodes would have been good while waiting in line, walking on a treadmill at the gym, or sitting at a diner, none of those things have been common this year because of the lockdowns. Quibi founder Jeffrey Katzenberg and CEO Meg Whitman said in a joint statement,

Quibi is not succeeding. Likely for one of two reasons: because the idea itself wasn't strong enough to justify a standalone streaming service or because of our timing. Unfortunately, we will never know but we suspect it's been a combination of the two.

The company began to recognize that the business model wasn't working, and experimented with a free tier, similar to the Peacock service. Unfortunately, the experiment was only run in Australia and New Zealand, so it was not enough of a test to see if it would work. Because of the limited content available, it was difficult to convince people that $5 per month was worth the investment. A free, ad-supported tier with a portion of the content may have attracted users to the platform in the same way that it has worked for Comcast.

In addition to issues with the value proposition, the company has also been sued over patent infringement with its shifting view for landscape and portrait mode. This lawsuit has hurt investment which may have been able to keep the lights on longer.

The future of the content that was produced is unclear. The agreements with creators were very creator-friendly. The company paid to produce the content, and then licensed the content under 2 year exclusivity deals. With the shutdown of the company, it's not clear if the exclusivity would expire. If it does, the creators could shop the content to other services. If it does not, Quibi might be able to sell the license to other services. Either way, it is going to be on a one-off basis.

2020 is shaping up to be a difficult year for Google legally. They have potentially lost its Supreme Court case against Oracle. Now, they will be heading back into court to defend themselves against the entirety of the United States legal system, care of an antitrust suit filed by the Justice Department. The suit has been imminent for months, but a formal filing marks a major change in the relationship between the government and the tech giant. This filing represents the largest US antitrust case since Microsoft in the 1990s that paved the way for Google's rise to power.

While Microsoft's case involved using the company's position in operating systems, Google's case involves its position in search. The suit claims that Google has continually used its search position to unfairly promote and prop up its other businesses. In a media call, Deputy Attorney General Jeffrey Rosen said,

Google is the gateway to the Internet. It has maintained its power through exclusionary practices that are harmful to competition.

The DOJ also points to its use of its other brands to increase and maintain its search position, including pre-loading Google Search onto its Chrome browser as well as Android devices. The Android issue has continued to pop up across the globe ever since Google changed its licensing rules, forcing manufacturers to maintain certain Google products on their devices if they want access to the Play Store. In 2018, the European Union fined Google $5 billion in an antitrust case over similar issues.

Google has publicly responded to the charges, saying that the case could not possibly help consumers. The statement said,

Today's lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they're forced to, or because they can't find alternatives.

This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.

Google makes the comparison between Android and Windows, pointing out that Windows comes preloaded with Edge, which uses Bing as its default. The search bar in Windows 10 also uses Bing as its search engine of choice. However, there is no rule in Windows that says that Edge must be the default in order to use core features of the ecosystem. If HP want to include Chrome on its computers, it is welcome to do so, giving consumers a choice.

Clearly, this is just the beginning of the process, with charges just being filed. The Microsoft suit took from May 18, 1998 when the suit was filed, through April 3, 2000 when the judgement was announced. The Microsoft case was fascinating to watch, as the government continually proved its lack of understanding of the topic. It's been over 2 decades since that case, but something tells me this will be no less confusing.

This week saw a pair of scenarios that could indicate an existential crisis to videogame streaming. Streaming has become a very big business, whether it be individuals streaming on Twitch and Facebook Gaming or competitions streaming the professional matches. In some cases, game developers and publishers are officially involved. For example, Ninja was reportedly paid $1 million to play and promote the launch of Apex Legends. However, for the most part, the developers and publishers are not involved. Twitch is filled with hundreds of everyday people playing games for others to watch.

Typhoon Studios (a Google Stadia studio) Creative Director Alex Hutchinson tweeted this week that he believed that anyone streaming a videogame should be forced to obtain a license from the game studio or publisher for that privilege. Obviously, the tweet was met with concern and mockery from the gaming community. He later tried to clarify his position, saying,

Amazing to me that people are upset at someone saying that the creators of content should be allowed to make some of the money from other people using their content for profit.

The argument is an interesting one, which is worth exploring. From a legal perspective, he has a point. Gamers, without written permission, have no right to stream the games that they are playing. All aspects of the game, from the story and art to the voice acting and music, are protected by the same copyright laws that protect television and movies. Some have long argued that it falls under Fair Use, though there is no aspect of Fair Use that would cover game streaming past 30 seconds.

However, there has always been an unwritten agreement between the studios and gamers that streaming is beneficial to both sides, so it is okay. A great recent example of this is Among Us, a game that has lived the past 2 years in obscurity until a group of Twitch streamers began playing it on the site. Today, Among Us is such a popular game that, while writing this paragraph, Facebook played a parody video of the game. In some cases, publishers recognize the value and have begun providing written, free licenses for streamers.

To add insult to injury, many Twitch streamers received a vague email, as pointed out on Twitter, claiming copyright infringement. The email contains no information about what the infringement is. It gives no way to counter the claim. In fact, it lets the creators know that their content has been deleted (not suspended). Likely, what has happened here is that RIAA has begun to index Twitch's content looking for copywritten music used without permission. Streamers have long ignored copyright law, possibly because of the unofficial treatment by the studios, and possibly because there have never been any repercussions. A day of reconning was inevitable, but Twitch's decision to flat out delete content without an appeals process should still be alarming.

It appears that, as game streaming gains in popularity, more interest will be placed on the industry. This is obvious from the comments and actions of the week, but is likely just the beginning. We've seen similar behavior in the podcasting space over the past few years, with podcasters having to answer for their behaviors with copywritten content.

On June 15, 2020, one of the biggest wireless outages in US history happened when a large portion of the T-Mobile network failed across the country. The system was down for 12 hours, with calls failing, including calls to 911. If you weren't a T-Mobile subscriber, you likely saw your friends posting on Facebook asking if anyone else was experiencing issues with their phones.

The investigation into the failure showed that the issue was caused by a cascade of failures. Unfortunately for T-Mobile, all of which have industry-standard practices to prevent, but they seem to have all been skipped. The company was installing new routers in the Southeast when a fiber transport link failed. If everything had been set up correctly, the network would have automatically switched to a secondary link and carried on - business as usual. However, things were not configured correctly, so the switchover never happened, isolating Atlanta's devices from the network.

As the Atlanta devices tried to re-assign to Wi-Fi or other nodes, they were blocked by a software issue that directed them back to their previous node, which was also isolated. The assignment process eventually got out of isolation, but the traffic cascaded, bringing more and more of the network to its knees. Voice over LTE (VoLTE) and Voice over Wi-Fi continued to fail nationwide, moving all voice traffic to the older smaller capacity 2G and 3G networks, causing over congestion and failed calls.

While the failure violated FCC guidelines and could have been prevented if the company had done what it was supposed to, the carrier has received absolutely no repercussions. It's not a huge surprise, as the FCC is notoriously lax on enforcement of rules. In fact, the FCC's only real response to the issue and the results of the investigation was a press release which just reminds all carriers to follow the rules. Hopefully, this will work to prevent these issues in the past.

When AT&T purchased DirecTV in 2015, a lot of people were surprised by the purchase. The brand had been struggling for years and AT&T was not a player in the media space. The idea that AT&T thought that they could revitalize a brand that was completely outside of their wheelhouse was a concern for investors and DirecTV subscribers. In the 5 years since the purchase, things have only gotten worse. AT&T has been sued by investors and investigated by the government. The last resort for the brand was to sell the brand.

This week, it was revealed that there is almost no interest in DirecTV. According to The New York Post, initial bids have been incredibly low.

Opening bids from a coterie of buyout firms came in at around 3.5 times DirecTV's roughly $4.5 billion of EBITDA, implying a valuation at around $15.75 billion, according to a source close to the process.

AT&T is receiving bids in the $16 billion range, while they paid around $67 billion for the brand just 5 years ago. This would represent a fire sale on the level of Myspace, which was purchased by News Corp for $580 million and sold for $35 million. Despite this massive drop in valuation, AT&T is moving ahead with the sale, though they are hoping to receive a second round of bids.

Following this news, AT&T announced other issues related to the global lockdown in the media division. Layoffs in the thousands are headed to the entertainment division, including HBO, Warner Bros, and other WarnerMedia properties. At the beginning of the year, WarnerMedia had almost 30,000 employees. There were already layoffs earlier in the year, and now thousands more will be without jobs. In a statement, WarnerMedia said,

Like the rest of the entertainment industry, we have not been immune to the significant impact of the pandemic. That includes an acceleration in shifting consumer behavior, especially in the way content is being viewed. We shared with our employees recently that the organization will be restructured to respond to those changes and prioritize growth opportunities, with an emphasis on direct-to-consumer. We are in the midst of that process and it will involve increased investments in priority areas and, unfortunately, reductions in others.

All of this should be worrying for both AT&T shareholders and employees. Layoffs are not the sign of a thriving business, and AT&T has proven they have not been able to keep control over its acquired media brands. Sure, the lockdowns have changed the face of media, with production coming to a stop across the globe, but these troubles started long before the lockdown. With the confused HBO streaming brands, massive price increases, and more, the media aspirations of AT&T might be falling apart.

Anyone who regularly uses Yelp's rating service knows that user ratings should always be taken with a grain of salt. Far too often, user reviews are published by accounts that haven't been to the location, are associated with the business or a competitor, or over emphasize the negative impact of their experience. We've all seen a user rate a restaurant 1 star because the place setting was missing a fork, or because the server was a little slow to get water for the table during a busy service.

We've also seen a business get flooded with reviews from a social media mob trying to destroy the company because of a minor or unrelated issue. There are even businesses that, for a fee, will add negative reviews to a listing in order to damage its reputation. As we often say, whenever you create rules you create a game, and all games will have professional players.

It is those professional players which worry us with Yelp's newly announced feature. The company will now add a warning label to listings that have an uptick in reviews pointing out racist behavior, speech, or symbology. According to Noorie Malik, VP of User Operations,

Yelp's User Operations team already places alerts on business pages when we notice an unusual uptick in reviews that are based on what someone may have seen in the news or on social media, rather than on a first-hand experience with the business. Now, when a business gains public attention for reports of racist conduct, such as using racist language or symbols, Yelp will place a new Business Accused of Racist Behavior Alert on their Yelp page to inform users, along with a link to a news article where they can learn more about the incident.

Almost all tech companies (except maybe Coinbase) have spent the last 6 months trying to show how connected they are to the struggle for racial justice. However, whenever a company makes decisions quickly and without regard for the business model or user experience, bad things can happen, and that is where the potential for trouble comes in here. Professional or organized nefarious actors can easily use this new feature to completely destroy a business without any real evidence.

According to the company's own announcement, if a nefarious actor can get an article published about a negative experience and an uptick in negative reviews referencing racial discrimination, this warning could go into effect. Over the past 6 months, we have seen a huge influx in inaccurate racial accusations against individuals and companies, including attacks at restaurants across the country.

Because of the sensational nature of the events, the news covers these events on the local and national level. When "protesters" harassed and attacked restaurant patrons here in Saint Petersburg recently, it made the national news because of the nature of the event. Those attacking the patrons claimed that they were racist, without even knowing who the diners were. But, the event did create articles on reputable news sites referencing the racial nature of the complaints. If an uptick in Yelp reviews were to accompany this event, these restaurants, which were already defamed publicly, could see their reputations ruined forever because of a warning that has no basis in reality.

Of course, this has always been the problem with crowd-sourced ratings. However, there is a difference between knowing that a location's rating is based on user reviews, and seeing an official stamp from the company. The warning represents an official position from the platform itself. The problem is that there is no way that Yelp has a team that can accurately verify each one of these accusations. There won't be Yelp lawyers or compliance officers showing up to a restaurant to verify racially charged speech, or racially insensitive symbology. That task will fall to operations employees in Yelp offices.

The other issue at hand is the ever-changing definition of racism. Merriam-Webster defines racism as the belief that one race is better than another or the behaviors that support the belief. Today, the definition is fluid, meaning something different to different people. As such, not having a clear working definition of what constitutes racist speech or behavior means that it will be open to the interpretation of the employee reviewing the listing. Inconsistency in this area, which can directly affect the livelihood of dozens of people, should not be acceptable to anyone.

In addition, the company has been unclear about the process for a business to clear the alert and any media coverage from their business's listing.