The UpStream

Elizabeth Warren pitches splitting Amazon, Google, and Facebook

posted Saturday Mar 9, 2019 by Scott Ertz

Over the past decade, a few companies have emerged as the strongest players in the technology field. The biggest of those faces have been Amazon, Facebook, and Google. Their moves tend to change the direction of the industry, whether or not they are the first ones there. Amazon was far from the first e-commerce platform, but without them, online shopping would be a very different experience. They were also far from the first to have cloud offerings (I think we all remember the Microsoft ad with Bill Gates and Jerry Seinfeld at the mall), but they made the term popular and brought the prices down significantly.

Google didn't invent email, but they changed what you can get for free. Before Gmail, a Hotmail or Yahoo account would give you 20MB of storage. After, both brands expanded their storage to 1GB, with those numbers shifting over time. Facebook didn't invent instant messaging, but they made it so that we could use IM to communicate not just with our friends, but also brands in our lives. All of this has come about simply because the companies had the resources to make it happen. In other words, their size.

Elizabeth Warren, a Democratic candidate for President of the United States, in an attempt to separate herself from a crowded field, has pitched destroying these three companies, simply because of their size. According to Warren,

Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as "platform utilities."

These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.

For smaller companies (those with annual global revenue of between $90 million and $25 billion), their platform utilities would be required to meet the same standard of fair, reasonable, and nondiscriminatory dealing with users, but would not be required to structurally separate from any participant on the platform.

To enforce these new requirements, federal regulators, State Attorneys General, or injured private parties would have the right to sue a platform utility to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.

This means that Amazon could not sell their own white-label products, such as AmazonBasics. It might even mean that their hardware division (Amazon Fire and Echo products) would have to be separated from their software division (Alexa). The same could be said for Google, who would not be able to have Google-made Android devices. More importantly for Google, it would force a separation of Google AdSense (the company's business model) and Google Search (which generates zero revenue). That would essentially end the value of Google Search, possibly forcing the closure of the product, as it would no longer be financially viable.

In addition, Warren's idea involves unwinding mergers that she alone deems anti-competitive, despite already being approved by various governmental oversight agencies as not being anti-competitive. For example, she wants Facebook to give up Instagram and WhatsApp, Google to give up DoubleClick, Nest, and Waze, and Amazon to give up Whole Foods and Zappos.

There are so many problems with this idea. First and foremost, there would be almost no way to extract a brand like Instagram from the inner workings of Facebook or Waze from Google, without the platform simply collapsing. The two are so intricately intertwined that it would likely take years to try and pull them apart if it is possible at all.

More importantly, however, is the general terribleness of the move. We've seen companies broken apart out of fear in the past, and it is never a success. Regulators believed that separating Bell into regional pieces would make the telecommunications industry better. In reality, innovation stalled and the telecommunications infrastructure languished. Because of the split, the US rollout of cellular technology was majorly hindered, and the Baby Bells could not compete with other, larger companies, and today they have all been acquired by those companies.

When it comes to research expenditures, some simply cannot be accomplished by smaller companies. Some innovations must come in the form of huge investments. Android could not have been brought to market with the budget of the small Android, Inc. It needed the support of Google. Google Search could not have happened in a vacuum, it needed the revenue of AdSense to make it profitable. The idea of free delivery on orders (now offered by Target, Wal-Mart, and more), could not have been offered initially without the budget of Amazon. Destroying these companies, and their business dealings will only end in a slowdown of major innovations.

Electronic Arts joins Sony in skipping E3 2019 press conferences

posted Saturday Mar 9, 2019 by Scott Ertz

Electronic Arts joins Sony in skipping E3 2019 press conferences

If you are a fan of the big, splashy press conferences at the Electronic Entertainment Expo, better known as E3, then 2019 might be a disappointment. As was announced in November, Sony will not participate in the E3 2019 press conferences. Sony marks the first of the Big 3 platforms to not participate this year, but will not be the only ones sitting it out. This week, EA announced that they, too, will skip their traditional E3 press conference in favor of smaller, online-only streams. It will also continue to hold its EA Play fan festival, which started in 2016 in LA.

This move follows in Nintendo's footsteps, who transitioned from their splashy press event to a series of livestreams in 2013, and is expected to continue that behavior this year. This move makes a lot of sense for a variety of reasons. The first, and likely most important, is the fact that the majority of people who are truly interested in the news from the companies will be watching the streams of the press conferences anyway. The "breaking news" from those in the room is almost non-existent. When you factor in the almost complete lack of internet access in the room for the media representatives, it is easier to get the news from the stream.

Another big factor in Sony's decision is the growing lack of interest in the expo itself. Gaming companies have been taking their big announcements away from E3 and using individual, brand-focused events, instead. For example, EA themselves announced and launched Apex Legends, their Fortnite competitor, without the help of any expo or conference. Instead, they sprung it on the market with little to no warning. Microsoft launched the adaptive controller and Halo arcade game shortly before E3 2018.

We have been seeing the decline in E3 interest for a number of years. In fact, the overall interest in coverage has been so low that we stopped covering the event almost entirely in 2013. With the change in the industry, it would not be surprising to see the event disappear entirely in the next few years.

Philadelphia is first city to ban cashless stores, preventing Amazon Go

posted Saturday Mar 9, 2019 by Scott Ertz

One of the trends we've seen in the past year or so is the trend away from cash. The move makes a lot of sense for certain businesses, such as Amazon Go, the automated convenience store. These stores are designed to be functional with little to no employee interaction, making it easy to pick up what you want and just walk out. When you do, the card on your Amazon account is automatically charged. Because of that, cash is not really an option for the business model. However, thanks to a new law in Philadelphia, Amazon Go is not permitted.

The new rule prevents any cashless stores, including the Amazon convenience brand, from operating within the city. The move has less to do with fear over progress and more to do with a claim of protecting "unbanked" consumers. The fear is that people with a lower income will be disenfranchised by the increasing popularity of cashless stores. The bill's co-sponsor and City Councilman Bill Greenlee spoke with the New York Times,

It just seemed to me unfair that I could walk into a coffee shop right across from City Hall, and I had a credit card and could get a cup of coffee. And the person behind me, who had United States currency, could not.

The bill is the first major move in the new clash between an ever-increasingly digital world and the people who feel left behind by the change. The problem here is that the move to a digital world, with digital payments, isn't going to change. A law like this can only serve to leave Philadelphia behind as the world changes around it. If the city council was actually concerned about people being left behind, they would encourage new ways for the "unbanked" to be able to participate in a new, digital world. We have seen solutions in other countries, so it should be possible in Philadelphia, as well.

The "Momo Challenge" doesn't exist; Internet confuses the uninitiated

posted Saturday Mar 2, 2019 by Scott Ertz

The

An internet meme referred to as the "Momo Challenge" resurfaced this week after an uncredited blog posted a vague piece about an unattached YouTube video. The site, called pedimom (which now appears to be offline) contains an anonymous post by an author who claims to be a "physician mom," but cites no references to verify. In the post, the author claimed to have spotted a video appearing in YouTube Kids that cut from a cartoon to a guy walking in, offering instructions on how to kill themselves.

This post is a resurgence of the story, which became prominent last year. In the UK, the death of a 12-year-old girl was blamed on the "challenge" which, at the time, was being attributed to WhatsApp instead of YouTube. Neither this death nor any others in the world have been actually linked to this "challenge," which doesn't actually exist.

Following this anonymous post, which provides no evidence, including the video referenced by the post, publications all over the world ran with the story, creating mass hysteria. Schools, counties, and social media went crazy spreading false information about a child safety issue that never existed and was never verified, panicking parents and educators alike. The lack of evidence is verified by YouTube, who released a statement saying,

We want to clear something up regarding the Momo Challenge: We've seen no recent evidence of videos promoting the Momo Challenge on YouTube. Videos encouraging harmful and dangerous challenges are against our policies.

This is yet another example of the problems facing modern news consumers: no publication can be trusted. Everyone involved in this hoax has something to gain, except the parents. The Washington Post, The New York Times, etc., all get eyeballs and ad impressions because the story is "sensational" and is bound to scare parents, who will share it on social media, increasing the eyeballs and ad impressions. The hoax site gets eyeballs and ad impressions because these publications all link to the original post, which contains scary words and absolutely no information.

We need to hold publications, especially well-regarded brands, accountable for taking advantage of ignorance, fear, and bias to spread knowingly false information.

FTC fines TikTok for violating child privacy laws, others might follow

posted Saturday Mar 2, 2019 by Scott Ertz

FTC fines TikTok for violating child privacy laws, others might follow

Over the past year, the issue of child privacy and protection online has become a big topic, and for good reason. Many large companies have either passively ignored their responsibilities, or have actively gone out of their ways to target children. Last April, YouTube was accused of purposely collecting information from minors, with a significant amount of evidence. Only a week later, another report exposed a large number of violations in Google Play. In July, Facebook and Instagram began purging profiles of those who do not have parental permission for an account.

All of these problems come about because of a US law entitled Children's Online Privacy Protection Act (Coppa). Passed in 1998, and amended in 2012, the law regulates the way that information about children under 13 must be handled. Essentially, no company operating within the US can collect any identifying information about children. For some platforms, this is no problem. However, for platforms like Facebook, Instagram, or YouTube, it is the basis of their business model to collect info. By their very nature, if a child creates an account, authorized or not, their information will be tracked passively.

Some companies, however, go out of their way to try and attract children into their platforms. One of the biggest offenders of this is TikTok, the Chinese replacement for Musical.ly. The company, Beijing ByteDance, purchased the Musical.ly platform in December of 2017 and rebranded it under their existing TikTok brand. Musical.ly, however, was known for appealing to children, and the company, both before and after the buyout, knew that their userbase skewed very young. In fact, 7 of the most popular accounts were all under 13.

That is why the US FTC has fined the company $5.7 million, for violating various aspects of COPPA. For example, Musical.ly required users to enter their real names, email addresses, phone numbers, and profile pictures before using the app. In addition, the platform made profiles public by default and still exposed photos and usernames publicly if made private, as well as allowing direct messages. The company even turned a blind eye after thousands of parental complaints about this, plus the fact that there was no infrastructure for parental consent. The FTC's decision was 5-0 in favor of the fine.

PlayStation eliminates free games for PS3; Xbox, Nintendo expand

posted Saturday Mar 2, 2019 by Scott Ertz

PlayStation eliminates free games for PS3; Xbox, Nintendo expand

If you are a PlayStation Plus subscriber, you may have noticed a change to your free game selection this month. That's because, starting March 2019, Sony will no longer include PlayStation 3 or PlayStation Vita games in the selection. This is not a surprise, from the perspective that Sony announced a year ago that it was coming. It is a surprise, however, from the perspective that the company's competitors are moving the other way.

Over on the Xbox side of the world, the free games that are made available has recently begun including games from the original Xbox. For example, available right now is Star Wars Republic Commando

, a game originally released in 2005. While the free title won't play on the original Xbox itself, it will run on all models of the Xbox 360 and Xbox One. The only reason it won't run on the original hardware is that the original Xbox Live was shut down in favor of bringing new features for the 360 and One.

On the Nintendo Switch side of things, the recently launched Switch Online service has focused exclusively on classic titles. This service is only available on Switch, meaning that the games cannot be played on the NES, but that is obviously to be expected.

By eliminating the free games on Sony's older consoles, it creates a few new problems for the company. The most obvious is that anyone who is exclusively using the older hardware and has not upgraded to a PlayStation 4, have essentially no motivation to keep the service. This is because there are very few benefits, outside of the free games, on the older hardware. This is going to encourage the company, through financial means, to drop more support for this hardware in the near future. It also means that Sony is essentially bringing about the end-of-life for support of this hardware. Most of the PLuGHiTz Live team regularly uses older gaming hardware, and this abandonment is a disappointment for those who continue to support Sony.

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