The UpStream (Page 54)

Chinese smartphone companies mired in surging new global concern

posted Saturday Dec 8, 2018 by Scott Ertz

Chinese smartphone companies mired in surging new global concern

Over the past few years, fears over Chinese smartphones manufacturers has grown. In the US, under the previous administration, Congress banned the import of any Huawei phones, later downgraded from an outright ban to a governmental ban. Under the current administration, bans were renewed and expanded to include ZTE, and then reduced once again. Following the US lead, Japan has reportedly banned governmental use of both manufacturers' handsets.

These bans come from reports of Chinese government-backed software included on the phones, with the intent to log keystrokes and data transmissions. These fears were raised after several security firms raised concerns over some software discovered deep inside the Android operating system installed on handsets tested. Handsets are not the only concern, however, as UK telecom company BT has announced they will not use Huawei's hardware for their 5G installation and will, in fact, remove all existing Huawei hardware over the next 2 years.

Adding to Huawei's global troubles is the arrest of CFO and deputy chairman, Meng Wanzhou. She was arrested by Canadian authorities at the request of US law enforcement, with extradition expected quickly. While charges have not been made public, it is likely that it has to do with violations of international sanctions against Iran. The company has reportedly shipped handsets to the country, despite sanctions over human rights concerns.

During the last Olympic games, Samsung had to scramble to deal with the sanctions themselves. While not shipping handsets to Iran regularly, their plan, as a title sponsor, was to give special phones to every Olympian. Unfortunately, sanctions prevented them from following through on the gifting to both Iran and North Korea. Olympians from those nations were required to return the phones after the games. Huawei could certainly learn a lot from the commitment of Samsung in this case.

This will not be the end of troubles for these two manufacturers, however. With 5G installations underway internationally, Huawei stands to lose a lot in their network infrastructure sales. And, if more countries follow the lead of the US and Japan, handset sales will be a problem, as well.

YouTube may make original content free, cut most new programming

posted Friday Nov 30, 2018 by Scott Ertz

YouTube may make original content free, cut most new programming

YouTube is always trying new ideas to monetize the platform. That is because video streaming is an expensive process, and making it profitable can be incredibly difficult. A couple of years ago, the brand tried something new: YouTube Red, a paid version of the platform that removed ads and gave access to original programming. This service was replaced by YouTube Premium earlier this year but additional changes may be coming to the service over the next year.

According to the Hollywood Reporter, YouTube may make original content free on the platform, with ads supporting the cost of production. This decision is likely being made for a number of reasons. The most likely is that not enough consumers are signing up for YouTube Premium to be able to pay for the content. By allowing everyone to watch the content, they expand their overall viewership and generate some new revenue off of ad sales, which is really the platform's bread and butter.

In addition to making content freely available, it is said that YouTube is considering cutting back on the amount of original content they produce. For the most part, the experiment with original content from YouTube has been a bust, as many of their contracts have been with existing YouTube creators who lock some of their content behind Premium. Since Red was announced, however, Patreon has come in and taken a lot of the wind out of the service's sails.

In response to the drop in interest for locked content, YouTube has added a number of actual series, but it might have been too little, too late. The value of Premium has dropped because those who might have paid for a subscription to see bonus material from their favorite YouTubers have moved to Patreon. That limits how much exposure these series have now behind their paywall. Expanded viewership will mean more potential revenue, assuming that these originals are worth watching.

There is no timeline for the change, as no decision has been made internally, according to the report.

Google ignoring privacy issues with Dragonfly, employees unhappy

posted Friday Nov 30, 2018 by Scott Ertz

Google ignoring privacy issues with Dragonfly, employees unhappy

Since word first got out about Google's Dragonfly project, a censored version of their search engine to acquiesce to China's internet filters, there has been a lot of concern, both externally and internally. The concern got worse when it was revealed that the company planned on connecting search history to users' phone numbers. The Chinese government has been known to imprison its citizens simply for searching about specific topics, such as democracy - something Google has previously assisted with.

Adding to the worries over Dragonfly, this week a 14-year veteran of the company, Yonatan Zunger, spoke about the corporate policies being ignored in the project. As the person in charge of implementing a privacy review of Dragonfly, Zunger said that Google executives, in particular, the head of operations in China Scott Beaumont, dismissed all of the privacy concerns raised by the review. He said,

(Beaumont) did not feel that the security, privacy and legal teams should be able to question his product decisions, and maintained an openly adversarial relationship with them -- quite outside the Google norm.

Google, on the other hand, claims that the issues being raised by Zunger are false.

This is an exploratory project and no decision has been made about whether we could or would launch. As we've explored the project, many privacy and security engineers have been consulted, as they always are. For any product, final launch is contingent on a full, final privacy review but we've never gotten to that point in development. Privacy reviews at Google are non-negotiable and we never short circuit the process.

All of this has not stopped employees from reacting to the project, however. With the revelation of phone number correlation, a number of employees left the company. Those who have stayed have voiced their concerns, some loudly. A few dozen employees wrote a public letter to the company requesting that they drop Dragonfly entirely. In the letter, the employees say,

Our opposition to Dragonfly is not about China: we object to technologies that aid the powerful in oppressing the vulnerable, wherever they may be. The Chinese government certainly isn't alone in its readiness to stifle freedom of expression, and to use surveillance to repress dissent. Dragonfly in China would establish a dangerous precedent at a volatile political moment, one that would make it harder for Google to deny other countries similar concessions.

As more governments are trying to censor the internet, most notably in the European Union, a private, censored version of Google Search would show these governments that it is not only possible but already a reality, to completely remove certain topics from the web. Having a strongly controlling authority, like the Chinese government or the EU, with the ability to wipe content from the web for their is a scary prospect, and being aided by Google makes it not only worse, but seem a legitimate option.

FTC to look into legality of videogame loot boxes

posted Friday Nov 30, 2018 by Scott Ertz

FTC to look into legality of videogame loot boxes

Over the last year or so, the topic of loot boxes has become a focal point of countries around the world. This controversial practice involves a game either giving or selling players a box which represents a number of unknown items. Loot boxes have never been particularly popular with gamers, as most people want to know what they are buying unless there is an incentive for not knowing (grab bags in retail, for example).

Last year, EA took the concept up a notch with Star Wars: Battlefront II, which was met with anger from gamers. In time, the company admitted defeat, but left the door open to return the process in the future. The problem with the game was that purchasing loot boxes was almost required to advance through the game. In fact, the game would require 4,500 hours of gameplay (roughly 6 months) or $2,100 to complete. Neither of these options was particularly likely.

The US Federal Trade Commission has decided to look into the legality of loot boxes. In particular, they are worried about the relationship between loot boxes and gambling. Senator Maggie Hassan said in a hearing,

So given the seriousness of this issue, I think it is in fact time for the FTC to investigate these mechanisms to ensure that children are being adequately protected and to educate parents about potential addiction or other negative impacts of these games.

Loot boxes definitely have a lot of similarities to gambling, especially when they are purchased versus rewarded. You spend money and receive an unknown collection of items with an unpredictable combined value. For example, look at Overwatch. A loot box could potentially contain 4 sprays (stencils), icons, or voice lines: all of which are low value. It could also contain a costume or costume piece, or potentially all costumes and costume pieces, all of which are worth far more than the previous collection. The rush that comes with the potential of what you could get is very similar to the rush you get when pulling the handle on a slot machine.

The investigation process is in the very early stages, as the US Senate Commerce, Science, and Transportation subcommittee has only just asked the FTC to look into the process. If their findings are anywhere similar to those of other countries, regulations over the process are likely to follow.

Apple is hoping to prevent customers from suing using old ruling

posted Friday Nov 30, 2018 by Scott Ertz

Apple is hoping to prevent customers from suing using old ruling

What do Apple and concrete blocks have in common? The Supreme Court has been asked to answer that exact question. In the 1970s, a group of concrete block manufacturers got together to regulate the price they all charged for their product. This guaranteed that the price of the product would be higher than if they competed against one another. The State of Illinois sued, claiming that the inflated costs of blocks would increase the price of construction projects for the state.

The case made it to the US Supreme Court, who ruled that the state could not sue for damages because damages could not be proven. The Court said that it would be impossible for any court to unravel the cost distribution from supplier to sub-contractor, sub-contractor to general contractor, general contractor to state with any meaningful way. As such, they ruled that only the direct customer of the company could sue for damages from anti-trust.

Now, how does this apply to Apple? The company is trying to use this ruling to prevent consumers from suing over anti-trust issues. Specifically, a class-action lawsuit filed in 2011, claims that Apple is using its monopoly position as the exclusive app store provider for iOS to gouge consumers on price. Apple has argued that they do not set the price for the products and provide distribution as a service to app developers, so the app developers are their customer, not the consumer.

While Apple claims that their App Store is a service for developers, and is more like being the owner of a mall rather than a store (despite its name), the Justices did not seem to buy into the argument. Justice Sonia Sotomayor said,

The first sale is from Apple to the customer. It's the customer who pays the 30 percent.

This ruling has the potential to have major repercussions throughout the industry, as legally defining who the customer of an app distribution platform is, could change the way Apple, Google, Microsoft, Amazon, and more, treat their consumers. If consumers are not customers, these companies could increase their fee to developers because they can retain a monopoly. If consumers are customers, and the lawsuit can continue, we might see alternate distribution methods appear on Apple devices.

Logitech planning to expand their product line again with Plantronics

posted Saturday Nov 24, 2018 by Scott Ertz

Logitech planning to expand their product line again with Plantronics

It was only a few months ago that popular computer accessory manufacturer Logitech announced the purchase of Blue Microphones. This once beloved brand lost some of its brand loyalty after designed Skipper Wise left the company, but has remained popular among YouTubers and game streamers. When paired with Logitech's keyboards, mice, and webcams, the company now has everything it needs to produce a full streaming package.

According to a report from Reuters, Logitech may be looking to expand its offerings with the purchase of Plantronics. Plantronics is best known for their headsets, including wired, Bluetooth, and even gaming. While Logitech makes gaming headsets, it is not really the proc=ducts that they are best known for. They purchased gaming headset manufacturer Astro to help augment their internal offerings. Adding the expertise of Plantronics, in both microphone quality and in noise cancelation, Logitech is poised to make a big play for the growing streaming market against current leader Razer.

If this report is accurate, the purchase will be the largest ever for Logitech, coming in at $2.2 billion. While that price may sound like a lot, it is actually a bit of a steal. Earlier this year, Plantronics purchased commercial phone and teleconferencing manufacturer Polycom for $2 billion. That means that the indirect price of the Plantronics purchase is only $200 million, just about the price they paid for Blue Microphones ($117 million) and Astro ($85 million) together.

Depending on what their intentions truly are with Plantronics, there is the possibility that there are divisions that will need to be spun off, or made to function independently. While it seems that the majority of their purchases have been to strengthen their gaming and streaming prowess, the purchase of Plantronics brings with it a number of commercial products. In addition to Polycom, Plantronics is still the largest manufacturer of phone headsets for call centers and offices. However, when combined with Logitech's own c920 webcams, there could be a strong play for the office, as well.

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