Thursday Sep.19, 2019

Watch Facebook's TV. It'll watch you back.

_Facebook's Portal TV camera will follow you like a spotlight_
_Facebook's Portal TV camera will follow you like a spotlight_

Hey Snackers,

Apple is now trying to trademark the term "Slofie." Slow-mo selfies. Now a thing.

Stocks inched up as the Fed cut interest rates for the 2nd time this year — America's central bank is worried global issues will hurt the US economy's mojo so it's making it easier/cheaper to borrow and spend.

Watch

Facebook launches Portal TV — this just started "The Living Room Wars"

The "I-don't-know-what-to-get-mom/dad-for-Christmas" gift... Facebook's $149 Portal TV turns your tube into an eerily smart and aggressively social streaming device (it's a spinoff of Zuck's AI-powered Portal tablet). ETA is November, but the high-tech camera/speaker bar boasts 1 crucial gadget: A low-tech privacy knob you slide to block the camera.

The snuggling is sold separately... True to Facebook's original mission — connecting people online — the Alexa-powered Portal TV lets you and bae be together even when you're apart. Here are its 2 most powerful features:

  • Video call using Facebook Messenger or WhatsApp. The face-recognizing camera follows you around while you wash lettuce, bake a pie, and set the table mid-call.
  • "Watch Together" lets you stream videos on Facebook Watch but keep the corner of the screen on video chat — Your remote plus-1 is watching with you on the screen. Portal TV then adjusts the volume when you need to chit-chat about where you've definitely seen that actor from before.

The Living Room Wars... They're 1 chapter away from The Streaming Wars. You've heard about the battles between Netflix, Disney+, and others over who owns Seinfeld and Peter Pan. Even Comcast announced yesterday it's making its "Xfinity Flex" streaming device free for all cord-cutters, which dropped Roku shares 14%. Now it's all-out conflict for the living room, and Zuck wants in.

Iconic

Ancient glass-icon Corning snags $250M from Apple for your phone screen

Tapping is the new clicking... And iPhone swipe/touch/scroll is like a massage for Corning's key product: the iPhone screen. The glass legend was founded before the Civil War in Corning, NY (population 10,700 and it's still HQ'd there). It supported the creation of the light bulb, car windshields, and — in 2006 — the iPhone. And it just earned a $250M investment from Apple.

One's not like the other... Seems weird that Apple's investing in a 19th-century supplier of glass parts. But it makes sense for two reasons:

  1. Public Relations pandering: All iPhones are made in China. To show it's contributing to American jobs too, Apple put $6B into the Advanced Manufacturing Fund to support its American parts suppliers. This was one of its investments.
  2. Product tempting: Apple needs new features to convince you to splurge/upgrade to future iPhones. Corning's using the $$$ for its scratchless "Gorilla Glass" – it's researching new versions for foldable phones and glass-backed wireless charging.

Tiny slice of good news, big slice of bad... Corning's Apple announcement was outmatched by a bad one about the rest of its biz. Corning also makes TV screens and fiber optic cables (for the telecom industry) — The stock dropped 7% after its earnings revealed the outlooks for both are dimmed. Looking at where its revenues come from, it's clear why:

  • 12.5% of sales = Specialty Materials (like Gorilla Glass): The Apple news affects this part of Corning.
  • 87.5% of sales = Other glass sales: This part's all non-Apple products. — nearly all of Corning's revenues. That's what investors focused on this week.

What else we’re Snackin’

  • Resumés: Amazon's HR team is handling 208K applications during its epic career day this week
  • Makeover: Lay's potato chip bag and UPS workers both get a bag/uniform redesign
  • Rethink: AT&T acquired DirecTV in 2015 in the peak-satellite era — now it's considering selling it in the cord-cutting era
  • Smoked: Juul loses advertising on CBS and other TV stations as the recent e-cig scare grows into something bigger

Thursday

  • Earnings from Olive Garden owner Darden Restaurants
  • Existing Home Sales tell us if the housing market is rebounding

Disclosure: Authors of this Snacks own shares of Amazon

20190919-957342-2884728

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Power

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing the US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, that means that Uncle Sam loses more than two cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢

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Business

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

Tech

Meta’s not telling where it got its AI training data

Today Meta unleashed its ChatGPT competitor, Meta AI, across its apps and as a standalone. The company boasts that it is running on its latest, greatest AI model, Llama 3, which was trained on “data of the highest quality”! A dataset seven times larger than Llama2! And includes 4 times more code!

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

Today’s earnings: Who’s making money edition

Here are some some notable numbers out this morning, as earnings season gathers steam. Thursday’s main event will be Netflix after the close of trading. (Keep an eye on its advertising business.) But until then...

7.13%

The 30-year fixed rate mortgage is back above 7%, according to weekly numbers from the Mortgage Bankers Association, the highest level in four months. High borrowing costs are creating havoc for would-be buyers, as affordability lingers at the low levels not seen consistently since the late 1980s.

Business

Amazon’s spy ops on rivals: shell companies, printed docs, and a fake Japanese streetwear brand

Some companies check out rivals’ websites, stores and public filings to stay abreast of the competition. Amazon made its own fake shell company and brands, transacted hundreds of thousands of dollars per year undercover on competitors’ platforms, and kept its intel operation a secret for nearly a decade even from others at Amazon, according to a fascinating investigation by the Wall Street Journal.

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Crypto
Jack Morse
4/17/24

Worldcoin pivots to the blockchain… with a 'humans only' discount

Worldcoin, the “proof of personhood” crypto project launched by OpenAI’s Sam Altman, said it plans to launch its own ethereum layer-2 (L2) blockchain dubbed World Chain. The pitch: a blockchain where it’s both easier and cheaper for people to transact than bots.

Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.