Headlines this week - Nov 27, 2022
Big Tech layoffs as an opportunity to do more relevant innovation. Ads in e-commerce sites hurt customer experience. The Twitter soap opera. Disney's organizational problems. EV supply chain issues
IN SUMMARY - TOP 15 THEMES THIS WEEK
(1) Is the Big Tech crisis an opportunity to relocate talent (to projects that do more to -really- change the world)?
The layoffs are creating an overload of available talent in the Silicon Valley, including many foreign H-1B Visa holders (BusinessWeek)
At the same time, there is a growing feeling that their previous companies were not working on the right problems (WSJ)
So some people see this as an opportunity to reallocate talent to questions that matter (from others that have not really moved the long-term needle for the world)
(2) E-commerce sites (led by Amazon) are gaining market share in advertising. But there are customer experience trade-offs
Amid the current digital advertising crisis, there is one segment that keeps growing: product positioning in e-commerce sites (just ask Amazon…) (FT)
The problem with this is that ads might reduce the quality of search results, a key driver of customer satisfaction with e-commerce sites. Amazon has started to feel the pain… (WashPost)(WSJ)
(3) Amazon is looking for new growth engines. And devices (including Alexa) don’t seem good candidates anymore
With problems to maintain momentum in e-commerce, Amazon is looking for new sources of revenues. Healthcare looks like a big (but risky) bet (TheEconomist)
At the same time Alexa, and the idea / promise that it would become a new internet gateway, controlled by Amazon, seems to be losing steam (Bloomberg)
(4) Facebook actions against low-quality content seem to be working… But there are increasing concerns about letting Big Tech firms edit content…
Meta is (very) successfully using AI to identify “toxic content” in its platforms. The company’s content report shows these AI tools are finally working very well (WSJ)
However, pressure grows against letting companies like Meta to make veto decisions on some content, even when they’re triggered by police requests (FT)
(5) News from Intel create additional momentum for TSMC
After Warren Buffet’s acquisition of a stake, everyone seems to like the TSMC stock these days. The claims are that there are lots of value to be captured in the long term (Bloomberg)
There are certainly some reasons to think so. This week we learnt of an executive departure at Intel that enlarges the shadow over the company’s chip fabrication ambitions (as a potential competitor to TSMC) (Bloomberg)
(6) Twitter: more job cuts. And more delays for the subscription service (or not)
Musk fired more people at Twitter. This time from the sales teams. And they had apparently accepted the new “hardcore culture” that he’s trying to impose (Bloomberg)(WSJ)
For some people, this (apparently chaotic) modus operandi is Musk’s characteristic style. And there seem to be precedents both in Tesla and SpaceX
(NYTimes)
Unpredictability is not only affecting jobs, but also commercial decisions. This week we learnt that there could be further delays for Twitter’s promised subscription service… (FT)
… But then, one day after that rumor, Musk said that they will launch a “verified service” offer next week. It is still unclear if this will be the expected subscription tier (or not) (WSJ)
An interesting point is that, even if a subscription offer succeeded, its revenue upside will be limited by the fees that Twitter would then have to pay to Apple’s and Google’s app stores (Bloomberg)
(7) Also: more worries on impact on content safety (and then, advertising revenues)
Twitter layoffs might have seriously affected teams tasked with regulatory and content issues (WSJ)
For instance, the company’s Brussels office has been closed, and European policymakers are worried that this could the company’s ability to deliver on EU content safety rules (FT)
There have even been comments about how this could increase risks for Western democracies (FT)
A problem for Musk is that, whatever he does with all these issues, there will always be a substantial part of the political spectrum that will be unhappy (WSJ)
(8) Disney changes CEO, revealing organizational problems
This week we’ve also seen Disney announce the departure of its current CEO, to be replaced by… the previous one! (WSJ)
Investors have received the change quite favorably, with the stock going up after months of disappointments. A priority for Iger, the returning CEO, will be to make streaming profitable (Bloomberg)(WSJ)
There seems to be a consensus that the task is challenging, and Iger’s potential success quite uncertain (FT)(Bloomberg)(WSJ)
Some people see the process as a result of Iger’s failure to successfully find a successor (Bloomberg)
In general, the whole thing looks very unfortunate. Chapek, the previous CEO, claims to have been quite under pressure since the beginning (WSJ)
And then the move to replace him was triggered by his own executive team, apparently still loyal to Iger. Potentially interesting material for a book, or a film…
(9) A cloud gaming boom on the way?
Cloud gaming might finally become massive, with Netflix-like subscriptions now expected to dominate future industry revenues. Microsoft is the leader, and Sony is trying to catch up (FT)
Even regulators believe it. In the UK they’ve started to pressure Apple and Google to eliminate “anti competitive practices” (fees?) for cloud streaming apps at their app stores (Gizmodo)
(10) Telecom operators struggle to monetize 5G, and remain conservative in network investments
5G monetization remains a challenge. Consumers are reluctant to pay more for faster downloads, specially in the current economic climate. Lack of innovation in the ecosystem (devices, services) doesn’t help (FT)
Linked to these perspectives, appetite to invest remains (relatively) low. In the UK, BT / Openreach is reducing the ambitions of its fiber deployment (FT)
On top of all this, some operators’ financial health has also been hurt by poor M&A deals, that are now reducing their flexibility to do the right network investments. E.g.: Vodafone (Bloomberg)
(11) Second Cold War: the Electric Car battlefield - geo-strategic conditions on US government’s subsidies disrupting car brands’ supply chains
Biden is limiting electric car subsidies and tax incentives to models fully built in the US, including all components. Most brands’ supply chain still depend on China, so there is stress (FT)
The ecosystem is reacting to this, and some leading battery companies from out of the US, like LG Chem, are building local factories (Nikkei)
Tesla’s dependence on China is even bigger (they sell a lot there). So any move would be risky for them. Their recall of some models this week, due to software issues, has fired all the alarms (FT)
(12) Second Cold War: the Chips battlefield - the US ban against China is already working, and it could backlash
Sanctions are already working: China is buying fewer chip-making machines, an essential tool to develop the country’s own semiconductor industry (Bloomberg)
The feeling remains that these policies could backfire. This week we read this analysis where they conclude that the ban could end up increasing prices of many products, and contributing to inflation (FT)
But that would be only if these policies will produce their desired impact. According to what Baidu said this week, no significant impact has happened, at least until now… (CNBC)
In any case, this could be reinforcing China’s ambitions to develop its own industry. They (and also the West) see this as an “existential” priority. But it’s also a huge challenge (Asterisk)
(13) Behind privacy, a deeper problem emerges: do Big Tech firms know how people’s personal data are used?
Meta is under pressure in Europe on personal data collection for ads. Activists claim that common procedures at the company violate local data protection regulations (Bloomberg)
In what could be the sign of a bigger risk for consumers, the company is also accused of being unaware of how its own (increasingly complex) systems are processing user data (Bloomberg)
In the US, pressure is growing on TikTok, accused of having misled Congress on how much data they send to China. Demands for banning the app in the US are coming back (Reuters)
(14) Climate change: After COP27, pessimistic views on international collaboration
The UN climate summit, COP27, ended last week, with an agreement that is perceived as a very weak one, with no increased ambitions or new actions (Bloomberg)
At the same time, the perception is that the green transition is not happening fast enough (FT)
Also, as progress depends on collaboration between US and China (as the two major emission generators), the current “Cold War” climate is not helping (TheAtlantic)
In parallel, the complexity of climate science makes it difficult to fully convince the skeptics. New research trying to link global warming with weather catastrophes shows “mixed results” (WSJ)
(15) Investing in the future: what is happening in long-term innovation
One more step in the de-centralization (and democratization) of AI. OpenAI used Minecraft videos, publicly available in YouTube, to (successfully) train a system to play the game (MITTechReview)
At the same time, activists complain that their (publicly available) data is used for this. A programmer is suing Microsoft about an AI system that learns to program by looking at GitHub (NYTimes)
The new Meta VR headset (Quest Pro) is receiving bad reviews, as people realize that the technology is not mature enough yet (TheVerge)
The consensus is that the most significant impact of the Metaverse, in the mid term, will happen in the enterprise space, with consumer use cases mostly limited to gaming (FT)
However, companies keep experimenting. This week we learned of a new “extended reality” technology being applied to broadcast pop music concerts to people’s homes (FT)
The FTX scandal has put all crypto initiatives into question. But this FT opinion piece is optimistic about the future of blockchain (e.g. with smart contracts to fight climate change) (FT)
China is now a hotspot in the global electric vehicle industry. Chinese brands are growing and threatening Volkswagen’s current #2 in global market share. And Tesla (#1) might be next (WSJ)
New hopes for hyperloop technology. HyperloopTT, a startup, is going public through an SPAC deal, and will receive more fresh cash. They’re valued at around $500m (Bloomberg)
NASA’s new mission to the moon (Artemis) is finally moving ahead. A full “Cislunar Strategy” plan, describing the objectives, has just been published by the US government (Vox)(Payload)
SpaceX could play a role in Artemis, at the expense of Boeing. Meanwhile, European countries try to back their local technology (Ariane) in the competitive fight vs. Musk’s firm (Bloomberg)
Electric car batteries can be used to store and then distribute energy for other uses. Ev.energy, a startup, has a software to do this, and aspires to be “the Android of car charging” (FT)
Brain scanning technologies are getting ready to make it possible for companies to monitor what workers do and help them be “happier and more productive”. Really exciting, isn’t it? (IEEESpectrum)