Big Tech Finance Problems – Spotlight #430

Good Monday Morning

And Happy August! The Senate Parliamentarian is expected to decide by Wednesday if Senate Democrats can pass a new tax, climate, and health care bill as part of the budget reconciliation process. If so, they’re expected to remain in session until the end of this week. 

Today’s Spotlight is 1,166 words — about 4 minutes to read.

News To Know Now

Quoted:“This moved us a year ahead of where we were, if not two.

— Biologist John McGeehan to the New York Times on Google DeepMind’s AI breakthrough that predicts the 3D structure of nearly every protein in bacteria, humans, animals, and plants.

Driving the news: The economy is hurting Big Tech in ways we didn’t see in 2008-09 or 2020.

a)Sketchy Clearview AI will have to face a class-action suit over its unauthorized use of images of Illinois residents’ faces, a federal judge ruled last week. We told you back in May that Facebook had to pay each of its members living there $397 for violating the same law.

b)Kobalt Music Publishing is removing its 700,000 song catalog from Facebook and Instagram in the U.S. after they failed to reach a licensing agreement renewal. Kobalt is the second publisher to report Meta troubles after Epidemic Sound filed suit against the social media company claiming “rampant” unauthorized use of its music. Kobalt claims that over 40% of the UK and US top chart hits in a typical week are part of its catalog.

c) Amazon sued the administrators of 10,000 Facebook groups that it identified coordinating fake reviews on the e-commerce site. A company announcement said that it had reported the groups to Facebook since 2020 and that more than half of the groups have been deleted. It’s important for you to realize the scope of fake reviews even on prominent websites.

Trends & Spends

Spotlight Explainer — Big Tech Finance Has Its Ugliest Quarter

We’ve seen Wall Street doubt Big Tech finance machinations before, but as we warned last week, the stakes are getting higher when companies with trillion dollar valuations miss their targets. And those misses were unprecedented:

  • Facebook parent Meta posted its first ever revenue decline
  • Snap and Roku both talked about “significant slowdowns”
  • Amazon posted its second straight quarterly loss
  • Microsoft and Google barely made their numbers, but both missed their whisper numbers

Sounding like Blue Chips of Yore
Call it whatever you like, but the economic pain is being felt in Silicon Valley and Washington. Statements about big tech finance are now sounding awfully similar to blue chip companies in past decades. 

Google CEO Sundar Pichai announced a new program called “Simplicity Sprint” and is publicly urging employees to be more productive and efficient. Amazon has already cut 100,000 employees after doubling head count when the pandemic began and is contending with a $3.9 billion write-down on its 18% stake in electric vehicle maker Rivian.

Services Affected Too
Meta’s Instagram launched and then somewhat walked back an effort to remake the site to be more like TikTok. That happened quickly after billionaire Kylie Jenner publicly chided the company. Jenner, who first came to fame as the daughter of Caitlyn and Kris Jenner, has more than 300 million followers on Instagram, a larger following than anyone else on that site.

Instagram head Adam Mosseeri said that the company would “temporarily” scale back its plans to show more video determined by algorithms and remain a predominantly image driven site. Meta CEO Mark Zuckerberg said that 15% of Facebook feeds and “an even higher percentage” of Instagram feeds are made up of Meta-recommended content rather than user-subscribed content and that he expects the percentage to double by next year.

More Cost Cutting
Axios reports that Facebook is allowing a number of deals with news publishers to lapse this year. The company reportedly paid $3-$20 million each to prominent media companies like CNN, the Wall Street Journal, and New York Times. Facebook has been under legal and industry pressure to pay news publishers for content, but reported last year that fewer than 1 in 25 Facebook posts contained links to a news story.

Google announced that it would continue using tracking cookies for at least two more years, an initiative that seemed designed to mollify Wall Street concerns about softening ad revenues. 

And although they hit their numbers, Amazon said that it would raise prices for Prime membership by 20% to 43% in Europe. Amazon also said that it would discontinue its storage service Amazon Drive. New files cannot be uploaded to the service after January 31, 2023, and files will be deleted at the end of 2023. The company insists that Amazon Photos will not be affected, but we think that you should double-check yours.

Did That Really Happen? — Biden Video Was Real

Prominent conservative media pundits began inaccurately claiming last week that a video of President Biden speaking about the Jan. 6 insurrection was “a deepfake” with the president’s face superimposed on an actor’s body. 

There was no evidence, and the BBC debunked this latest conspiracy theory.

Following Up — Denmark Bans Google Workspace and Chromebooks

We told you a couple of weeks ago about Italy banning Google Analytics 4 over privacy concerns. Now Denmark has banned Google’s Chromebook devices and the use of Google’s Workspace accounts from being used in schools. Denmark’s government cited the same lack of compliance with European privacy laws that Italy did earlier this year.

Protip — Identify Plants With Android Built-In Feature

Using Google’s default app on Android phones allows users to search by simply taking a picture. One nifty way to use this feature is to take a picture of a plant and have the search engine tell you the plant’s name and how to care for it. Here is a Tom’s Guide explainer.

Screening Room — Arby’s & Ryan Reynolds

We’re headed to Twitter instead of YouTube today for Arby’s cute and creative new spot featuring Ryan Reynolds.

Science Fiction World — The Strongest Hydraulics

Scientists have apparently found a way to use spider leg joints as a superstrong gripping system that can pick up objects 130% of their own body weight and are easy to reproduce because, uh, nature. The Mary Sue can fill you in on the details.

 Coffee Break — Free Photo Restoration

We’ve been telling you a lot about how machine learning software is creating text and images. Now you can try out one of the models that will restore old photos with blemishes. It’s a crude system because it’s noncommercial and free, but give it a whirl here and see if it helps restore some of those old pix that weren’t worth hiring someone for. 

Sign of the Times

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