Artificial Intelligence
Google’s new language model PaLM can apparently understand humour and common sense
…Training general intelligence, such as humour, common sense, common knowledge to an AI system is one of the hardest things to do. Google seems to have made headway in the area.
EV
CATL, the largest EV battery producer of Chinese origin bids to set up factory in the US
…CATL (Contemporary Amperex Technology Limited) has been told that it can do so provided that it brings manufacturing technology and know how to the US, not just low-wage assembly jobs. It is known to be a supplier to auto majors such as Tesla and Volkswagen. It is also investigating the possibility of setting up factories in Canada and Mexico.
Lithium extraction commences in Cornwall, UK
…This will use an innovative method to process Cornish geothermal waters to extract lithium, for use in among other things, EV batteries.
Atlantic IP/Magnetar Capital subsidiary Scramoge sues Auto charging patents against charging device manufacturers Anker, Belkin, Morphie, Google, Apple and Samsung
…The patents originally belonged to LG.
BigTech
Google sued by various companies in US for massive price increases for using Google Maps API
…App developers complain about the following alleged anticompetitive actions of Google:
- Unfair bundling issue: Complainants use digital mapping service, but are made to purchase associated services such as
- Google Places API: provides information about the destination on the maps
- Working out the distances between two locations
- Routes Directions API – provides navigation information
- Prohibition of combining Google Maps API with third party services
- Offering free digital-mapping APIs allowing the provision of free maps from 25,000 per day to 930 per day – app services which were free became unviable
- Purchase of smaller competitors, such as Waze (navigation app)
US House antitrust committee reported that Google’s market share for digital mapping APIs was 80%. Google is most certainly likely dominant in the market (which means antitrust rules apply).
In a preliminary ruling, US Ninth Circuit says it’s not contrary to Computer Fraud and Abuse Act to scrape public information from websites
…Data analytics company HiQ had scraped volumes of profiles from publicly available Linked-in network. Linked-in complained that this was unlawful, and inter alia contrary to Computer Fraud and Abuse Act. There was no hacking (meaning circumvention of access measures such as passwords) involved on the part of HiQ, and so the Ninth Circuit, applying a Supreme Court decision called Van Buren, denied Linked-in’s complaint. It doesn’t mean HiQ is clear (and any event, this is a preliminary ruling). There are other privacy laws and also contractual obligations in play.
UK youths fall victims to impersonators on Instagram
…A common tactic is a fraudster impersonating as one of their friends, claiming their phones were stolen and they have a new phone number. UK’s Online Safety bill, which imposes duty of care by the platforms to users, to the rescue.
DC Attorney General asks Court to reconsider decision to toss Amazon antitrust case alleging Amazon is in breach of competition law by prohibiting sellers to sell goods at a price point cheaper than Amazon prices
What’s the problematic conduct?
Amazon prohibits sellers from selling goods at a cheaper price point on other platforms. It means third party platforms can’t compete with Amazon because they are prohibited from lowering their prices. Sellers have the burden to continuously monitor various platforms to make sure that products are not sold on other platforms more cheaply.
Why is it said to be anticompetitive?
Claimants say that Amazon’s term means Amazon’s high commission and fees are mandated on other platforms. Consumers are prohibited from being offered lower prices. Therefore, the term is anticompetitive. [note that, the EU Commission, have already stamped down on Amazon on the issue for its e-Books ]
What does Amazon say?
The term ensures prices are kept low on Amazon, and so it is pro-consumer.
Google makes it easier for users to jump ship from iOS to Android
…Switch to Android app is being launched on the Apple App Store [at the time of writing, not yet available]. This will transfer all contacts, calendar, photos and videos to a new Android phone, via the iCloud [Apple’s Cloud]. The reverse (Android to iOS) has been possible using Move to iOS app since September 2015. Note that EU Commission’s proposed Data Act provides that services providers must enable data portability (meaning users must be able to switch between different services).
Copyright
Instagram settle claim alleging Newsweek infringed copyright by embedding an Instagram post
…Newsweek had copied Instagram’s embed code from Instagram’s post. Newsweek had relied on a previous Ninth Circuit decision which held that websites do not “display” a protected image if it is stored on its original website and merely embedded in search results. Copyright owner had alleged that Newsweek had published and hosted the photo.
NFT
Texas and Alabama seek to prevent NFT sales to fund the development of virtual casinos on the metaverse
…The opposing states say that the NFTs considered are unregistered securities, contrary to security law. Sand Vegas Casino Club offered the NFTs for sale in return for share of the profits on the virtual casinos (to be built on Decentraland and Sandbox metaverses). The states say that the NFTs are stocks in all but name, and so security laws needed to apply.
Telecoms
Dish manoeuvres to shift Space X out of the running for US FCC’s Rural Digital Opportunity Fund
…Rural Digital Opportunity Fund, set up by the US Federal Communications Commission is a $20 billion subsidy fund set up to encourage businesses to deliver network services in the 12GHz band [this is the best bit of the spectrum for 5G communication] to rural areas, to reduce the digital divide between richer connected areas and rural areas which are not. Dish says that SpaceX’s satellite constellation will interfere with direct broadcast satellite operators that already operate in the band, like Dish.
In the Spotlight
Metaverse
Metaverse to take 47.5% of all Horizon World (Meta’s version of metaverse, formerly Facebook Horizon) virtual assets transactions
…It includes a 30% commission levied for purchases via Meta Quest App Store where apps and games are sold on Oculus (Meta manufactured VR headsets). Note however, the transactions do not relate to sales of NFTs, just digital assets (virtual items, costumes (so-called skins) on avatars). Horizon World is a free virtual reality online video game which lets users build and explore the virtual world.
Compare with:
Decentraland (blockchain metaverse with NFTs): levies creators 2.5%
Sandbox (same also as Decentraland): levies creators 5%
OpenSea: 2.5%
Extortionate!!! Or is it???…The answer is in the market reaction in the months to come.
What is Meta’s possible justification for this high commission fee?
Meta’s defence echoes the same message Apple is pushing out in its epic fight against the games maker Epic, which is all about whether the 30% commission levied on app developers on in-app purchases made on apps downloaded via the Apple’s App Store is too high and anticompetitive (ie: abuse of dominant position). Meta has had to, and is investing and risking colossal amounts of capital to build the infrastructure, devices, and the immersive world:
- last year, Meta invested $10 billion on the Reality Labs project [ie: Oculus],
- hired 18,000 employees – including those most skilled – in ALL areas from technology, infrastructure to supply chain – which demands high salaries
- building semiconductor fabs in Asia,
- building custom silicon
- purchased technology, such as CTRL Labs which cost around $500million -1billion [no antitrust issues in this area yet so get in quick!]
and remember, metaverse will likely not be properly realised for the next 10 years, if at all. Risking $10billion per year without any guarantee that metaverse will ever be a thing, is pretty gutsy.
Meta’s challenge will be to properly convey the reasons why the commission rate is so significant. Currently the VR devices (here, Oculus) need to be sold at a price point accessible to the masses, which means Meta makes a loss per sale of Oculus. Decentraland, Sandbox, OpenSea do not need to do that.
How are Meta doing in the VR space?
They seem to be doing OK.
- Oculus is already on the market, and sold more than Xbox, and its app was most downloaded app in the US over Christmas 2021.
- The VR device does not have to be connected to a phone which is a huge advantage
- The next iteration will have eye tracking – the avatar will reflect this – which makes the Oculus experience more immersive.
- CTRL Labs have cool tech – you can control your phantom limb (you need to strap it on your arm) – so you don’t need to control your VR device and eventually, Meta seeks to make an AR device which can also be controlled in the same way.
- Smart watch will be on sale this year which links up to Oculus
What is going for Meta vs other VR /AR competitors?
The biggest competitors in this space for Meta, be it Apple (apparently the clear second after Meta in this race), Google, Microsoft. The difference between Meta and the rest is that Meta has to succeed to survive, and hence the level of investment is reported to be way beyond other competitors. This could be the key to Meta’s ultimate success. Certainly, that is what Meta is banking on. Apple is though a formidable competitor, as master of hardware and supply chain.
Will antitrust law mean that Apple will have to allow Meta apps on their phone / Apple VR/AR glasses? Or would Apple welcome Horizon World to be made available on its apps/ Apple’s VR/AR headset if it means there is scope to charge Meta a sufficient level of commission?
BigTech
Elon Musk offers to buy Twitter (market cap = $37 billion around about the time of bid) for $54.20 a share (would amount to $43.2 billion valuation)
…Good deal right? But Twitter board is rejecting the offer. How could this be? [Check out Musk’s pointed jabs on Twitter].
What is Musk’s position?
In summary he says (in his letter to SEC and the TED speech he made soon after the announcement):
- Wants it to be a platform for free speech – which is a “societal imperative” [but Musk says he will ensure that Twitter operates within the legal framework; in which case free speech, the way he envisions it, is not really possible]
- Wants to privatise Twitter [note – as I understand it, SEC (Security and Exchange Commission – the US agency that controls securities markets)] can muzzle Musk on Twitter as long as it is public –once Twitter is privatised, SEC might find it more difficult to do that…]
- No confidence in Twitter’s management
- If not accepted he will sell his shares
- Wants it to run on open algorithm [this means that the code which decides what feeds are shown more prominently can be made available e.g on Github for anyone to examine and comment on – it could put an end to platforms’ practise of prioritising extremes/disinformation, co-ordinated campaigns sometimes using bots (activity known as “brigading”) to increase engagement (ie: profit), – note significant proportion of growth on Twitter activity owes itself to bots, spam accounts, unaccountable accounts]. One commentator says that it would allow users to game the algorithm and manipulate the content. Practically too, it might not be that easy to implement an open algorithm platform, let alone adjust the algorithms in accordance with the user’s desires.
- Not interested in making money out of Twitter [ie: not really interested in increasing share price for Twitter, though the fact that Musk being in charge may incidentally buoy share price]
Why have the board rejected the offer?
- The board may have considered that the offer is not generous enough – share price has slumped now, but it peaked at $77 early 2021. [Musk tweeted a screenshot of Goldman Sachs report from February showing an objective valuation of Twitter at $30 per stock with a “hmm” emoji]
- Musk not interested in money – might be motivated to make Twitter a better tool for himself / power users; note Tesla has zero advertising budget thanks to Musk’s high profile + public comms nous + Twitter [though he does say – it wants it to be beneficial to society as a whole, which may be right if the algorithms are opened up].
- Founder Jack Dorsey wants Twitter to be controlled by the people (ie: web3 – decentralised) – contrary to what Musk might want (that he controls Twitter centrally – though he does say he wants to bring the current shareholders along “as much as the law allows”).
- Hasn’t exactly endeared himself to the Twitter board and staff [plus most of the board will be sacked if not all and staff redundancies will ensue if Musk were allowed to takeover].
- In reality, free speech platform is just not possible, and a level of content moderation is essential. Plus Twitter is a global platform, and other countries have cultural ideas which do not involve free speech, which will make Twitter unusable if content moderation were abolished [except, combined with opening up the algorithm, you could end up with a similar result to content moderation – if this is practically possible].
Other knock on effects
- Free speech policy jars with Chinese speech policy – which could impose measures against Musk and his businesses there [and Tesla desires to expand in China].
- Tesla’s share prices dips due to potential distraction for Musk
- Furthermore opens up Musk’s other companies for backlash generally given the toxic nature of social media (especially Twitter)
- All of the above a problem for Twitter’s institutional shareholders who will likely have some form of stake in Tesla as well.
- Privatising Twitter could result in removing share options for highly skilled, highly sought after engineers – it could result in a brain drain from Twitter.
- Lower morale within the Twitter workforce
- He may possibly sell his shares which he has just bought – as he proposes, creating a further downward pressure.
- Lawsuit against the board members by the shareholders for breach of fiduciary duty (this extends to shareholders as a whole, including the minority shareholders – Twitter board members do not have sufficient level of share ownership, and their interest may be to remain on the board, and so there may well be a conflict of interest) – Musk tweeted: It would be utterly indefensible not to put this offer to a shareholder vote (then he took a poll on Tweet to survey whether Twitter users agreed – it was a resounding yes, unsurprisingly).
Will Musk up the offer?
- This is the best and final offer, he says. A tactic used by Warren Buffet – known to stick to best and final offers on the opening gambit because he doesn’t want to spend the time further negotiating. But unlike Buffet, Musk is known to make u-turns – the offer to join the board only to reject the idea being one of them.
- He could potentially lower the offer if share price of Twitter takes a downturn as a result of the maelstrom caused by Musk himself.
The board defends the hostile takeover bid by establishing a poison pill
In this case, if Musk acquires more than 15% share of the company without board approval, Twitter can issue more shares to enable existing shareholders to buy more at a discount. This would then dilute Musk’s share, which will prevent him from buying the company.
Musk no longer the biggest shareholder
Vanguard is now the biggest shareholder with 10.3% holding. But they may agree with Musk in terms of vision going forwards. Not necessarily bad news for Musk.
What does the market think?
The market is not entirely sure about what happens next. Share price is, at the time of writing, nowhere near Musk’s offer.
And there is a query whether Musk has sufficient funds or have the means to gather sufficient funds. Though he intends to bring with him as many shareholders as he can (which will help with the funding – but will they if Musk has no desire to increase share value?).
Delving Deeper
Intellectual Property
A licensed Bluetooth component manufacturer sells infotainment system to Fiat group company. Can Fiat etc sell its cars incorporating the infotainment system without a trademark licence from Bluetooth?
…It depends, said the US Ninth Circuit, remanding the case back to the District Court.
What does the First Sales Doctrine / Exhaustion of intellectual property rights mean?
This is the rule where, if you sell a product protected by intellectual property right (eg TM right), which would usually involve a premium (a good example is say, Gucci – Gucci and its licensees are the only ones allowed to put the Gucci mark on its garments entitling Gucci to sell products at a premium) once that product is first sold by the intellectual property owner, all its intellectual property rights protecting that product is exhausted.
This means the purchaser is entitled to sell that product to any third party and Gucci can’t claim trademark right infringement against the purchaser/on-seller. It happens a lot in eBay for example, people buying branded products from discount stores and selling it with a slight mark up on eBay. The original brands owner can’t generally complain (there are various exceptions which is beyond the scope of this note).
How Does Bluetooth licensing work?
We all know and have used Bluetooth. It’s short range wireless communications technology. There is a body called Bluetooth SIG which licences the use of the technology and Bluetooth TM. To use the Bluetooth TM, you have to get a licence from Bluetooth (which involves payment) and component manufacturers have to carry out and pass certain testing. End product manufacturers don’t have to carry out further testing to incorporate the qualified component.
What was the issue?
FCA – who sells cars under brands such as Fiat, Chrysler, Jeep, Dodge and Ram purchased infotainment systems (which utilises Bluetooth technology) from licensed component manufacturers. But FCA did not seek a licence from Bluetooth and nevertheless sold cars with infotainment systems bearing the Bluetooth trademarks.
Bluetooth sued FCA for TM infringement. FCA said Bluetooth’s TM rights are exhausted.
What’s the law
Essentially as stated above, but there are jurisdictional differences. In the US (where this claim was advanced), a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark is not infringing.
Why did the Ninth Circuit remand the case back to the District Court?
The panel said it all depended on whether FCA had adequately disclosed its relationship with, and qualification to use, Bluetooth technology. The issue is whether purchasers of the cars would be confused. This is fact sensitive which ought to have been considered by the District Court.
Incidentally in the UK the question of exhaustion may well depend on factors such as
- licensing terms between the TM owner and the component producer
- how the component product has been modified
- notices given to the purchaser
- where the transactions are taking place
Note: in the US it’s trademark, in Europe, it’s trade marks.