24 May 2022
Tech Pick of the Week
Microsoft relaxes cloud service terms only if customers are switching to a European cloud provider
…New terms mean that customers moving to an EU cloud provider will not have to buy additional licence to Microsoft’s services (such as Office) if they have already purchased Microsoft’s cloud services. Thus, it will remain the case that customers moving to non-Microsoft cloud services such as AWS or Google Cloud will need to purchase any Microsoft software. At the same time the EU cloud providers will end up adopting customers who are likely to continue with Microsoft software such as Windows and Office. The EU has been pretty open that they had been sleeping behind the wheel allowing US BigTechs to dominate the supply of its infrastructure to its digital economy. Microsoft’s change might be welcomed by the EU Commission, though it is likely to continue maintain a stake in customers which decide to switch.
Microsoft is under the EU Commission’s microscope over its cloud service practices. See here for rival’s AWS’ misgivings about Microsoft’s practices.
Short Note about the Cloud
Cloud is where a computing service is being provided via the internet. The opposite of cloud is called on-premises where you have a server and other IT infrastructure somewhere in your office providing the services. There are different extents of cloud computing:
Infrastructure as a Service – that’s where the server / storage of data (ie: infrastructure) is being provided by third parties eg. Microsoft (Azure), Amazon(AWS).
Platform as a Service – that’s where you can develop, manage and run apps via the internet. Used for developers and programmers.
Software as a Service – that’s applications that are provided to you via the internet eg. Microsoft Office, Hotmail, Google maps, Zoom and the like where you do not have to install the application on your desktop to use it.
Suppose a customer is using Microsoft Cloud Services (Azure) and has Microsoft software licences. When the customer moves to an EU cloud provider, the customer can now continue using the Microsoft software licence.
BigTech / Data / Platforms
UK to implement Product Security and Telecommunications Infrastructure Bill to be cyber resilient
…Manufacturers of connected devices expected to have security by design at the manufacturing stage, guarantee minimum security standards, report vulnerabilities, and regularly updatable.
Similar duties are assumed in the US as well. The US Federal Trade Commission has threatened to sue companies that failed to tackle a well known bug known as Log4j – which exploited known flaws in the programming.
Can Elon Musk walk away from the Twitter deal?
…Last week it was reported that Musk was claiming that the Twittter deal can’t go ahead at the accepted price (about $40bn) because there are more bots in the Twitter user base than that has been claimed by Twitter. How much more is not known and Musk said that Twitter claimed it knows but won’t explain to him. Musk says that this is a “Material Adverse Effect” which entitles him to re-negotiate/walk away. He says he should be able to rely on what is claimed publicly by Twitter, a public company. He will not be immune from buyer beware, caveat emptor, have you heard of the term due diligence? type gibes.
What are the possibilities with this deal at present?
- Musk walks away but has to pay a reverse termination fee $1bn to Twitter – sometimes called “break up fee” of $1bn. Either of the parties can walk away but the withdrawing party has to pay a reverse termination fee. For example, in the Microsoft/Activision deal in which Microsoft is proposing to take over Activision for about $70bn, there is a reverse termination fee of $2bn. When Nvidia proposed to purchase ARM off Softbank for $40bn and then withdrew (because Nvidia failed to get antitrust clearance) it paid ARM $1.25bn.
- But it isn’t easy as that, because if all other closing conditions are made, Twitter has the right to force Musk to conclude the deal – this is called “specific performance” in legal parlance. The clause states: The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this agreement.
- Can Musk rely on the Material Adverse Effect? – Possibly but he would have to show that that fact actually impacted on the value of Twitter, and in a significant way. Certainly it will have to involve litigation. Not good, for a busy person like Musk. Not good for Twitter either.
- Twitter can sue Musk for damages if the deal falls through – again this is litigation. Not good. Damages may be capped to $1bn though, potentially.
- Do some sort of settlement – either Musk to pay more than $1bn (baking in the litigation hassle factor) or Twitter accept a lower price (which may be Musk’s aim).
Background to all this could be the fall of tech stocks (all time low), which makes the accepted Twitter purchase price seem high, on hindsight. Tesla shares have also not been immune. This is relevant because Musk is proposing to buy Twitter using the falling Tesla shares as a collateral. It may well be that he needs to re-negotiate.
There is now a sexual misconduct claim against Musk (dubbed Elon-gate).
Ninth Circuit exonerates Twitter for moderating Trump tweets
…Twitter’s status as the world’s biggest digital town hall has come to the fore in particular since Musk moved to take it over, but the US Appellate Court ruled that it was not a state actor and as such not liable for constitutional violations. The plaintiff had complained that Twitter had taken away their right to view, comment and interact with Trump’s tweets which violated the right to free speech.
I would have thought it would have been difficult for the Court to rule otherwise when tech platforms including Twitter have been subpoenaed by the US House Committee to explain their contribution to Capital Hill riot of 2021, and what they have done to limit the spread of disinformation. Which segues nicely to…
Court in Florida rules that social media companies should be allowed to moderate content
…this is contrary to what the fifth circuit decided, which agreed that Texan law prohibiting content moderation should be enforced. The issue here is the equivalent law in Florida. The Court here ruled that the private entity’s decisions about whether, to what extent, and in what manner to disseminate third-party-created content to the public are editorial judgments protected by the First Amendment – like newspapers.
US Senators call on platforms to monitor Spanish messages containing disinformation targeted at the Latino community
…Letters were sent to Meta (WhatsApp), Signal and Telegram. “Unless they address this problem, dangerous lies and conspiracies will continue to go unchecked—fueling distrust in safe, effective COVID-19 vaccines, and undermining our elections”, it was said. There is evidence that platforms do not tackle Spanish content for moderation compared to that in English.
Canada bans network equipment from Huawei
…Move follows US, UK, Australia, the other members of the five eyes intelligence sharing network. New Zealand has not yet banned Huawei.
UK / EEA Children’s claim to go ahead against TikTok in the UK
…Former Children’s Commissioner for England Wales applied to serve a claim on TikTok in China on behalf of children of UK/EEA.
Cause of Action: Breach of GDPR and UK equivalent law, Data Protection Act 2018
TikTok’s conduct complained of: Processing children’s personal data, invasion of privacy and misuse, in particular being opaque about what children’s personal data was collected and for what purpose they were used.
Alleged loss: Non-material damages such as loss of control over subject’s personal data – per GDPR (no such qualification under the UK rules, the Data Protection Act). Loss of control is enough to trigger compensation, said the Claimant.
The Court allowed the Claimant to serve out of the jurisdiction, onto TikTok China. Note that Ireland’s Data Protection Commission is investigating TikTok for use of children’s data and investigating claims of unlawful data transfers to China.
TikTok seeks green light to settle US biometric law class action suit
… The complaint concerns facial recognition technology which scans faces for biometric identifiers. TikTok is alleged to have collected or stored that information without users’ consent, and failed to have informed users how it will be used, how long the data will be stored and when it will be destroyed. TikTok has agreed not to collect biometric data through the app, collect geolocation data, or transmit data outside the US unless it discloses this in its privacy policy and complies with the law. TikTok does not admit that it has collected biometric data, nor has it admitted that the data was shared with the Chinese government. It has though agreed to pay $92million in settlement.
Texas expands complaint against Google for collecting data without properly notifying users
…The Texan attorney general now additionally complains that Google collects users data (geolocation, browsing history) even where users are using the Incognito mode. In its original complaint Texas alongside other states had complained about the following Google features:
- Turning off location history does not prevent location data from being collected
- Collection of data when users interacts with Google products and services
- Use of dark patterns such as prompting users to allow location tracking to enable particular functions
ClearviewAI fined for scraping images of Britons from public database such as social media platforms by UK Information Commissioner’s Office and ordered to delete images of UK citizens
…ICO said people were not warned that their images may be scraped. Clearview AI matches an image with the image they have in their database, including where the images from their database are from. Clearview AI is no longer offering its services in the UK. Parallel proceedings are pending in the US.
Google agrees a deal pending trial with Match (makers of Tinder) and Epic (makers of Fortnite)
…Meaning certain of Match and Epic applications can remain on Google even though they do not utilise Google Play Billing.
Both Epic and Match, businesses behind major apps such as dating app Tinder and Epic, maker of popular first person shooting gaming app Fortnite have been locking horns with Google (and Apple) over the mandatory requirement to use their payment system (respectively, Google Play Billing and Apple pay) to facilitate in-app purchases which attracts a 15-30% commission on all transactions. Both allege that the requirement is anticompetitive. Google had set a deadline of 1 June by which all app developers must comply with the requirement or else be kicked out of the Google app store (Google Play). The parties had applied for a preliminary injunction to prevent the new rules from applying, and the Judge had urged them to think of a solution to avoid an injunction.
Didi (China’s answer to Uber) delists from the NYSE less than one year after floation
…It will list in Hong Kong instead, it says. The US has implemented law (to come into force 2024) which forces foreign companies to undergo a financial audit. The Chinese regulators could not accept potentially sensitive information leaking into the hands of the US government and mandated Didi to delist. No doubt other Chinese companies listed in the US will follow.
Cloud
Fee paying WhatsApp Business API on Cloud services launched
…Parent company Meta is investing multiple billions to build out the metaverse (which may or may not materialise, in any event in about a decade’s time), compounded to that, has recently seen a drop in ad revenues thanks to Apple’s new privacy feature allowing users to prevent activity tracking. This meant that Facebook was blocked from access to the all important user data that enabled it to carry out effective ad targeting. Advertisers stopped paying Facebook. As if to add insult to the injury, the economic downturn has meant that businesses have been shaving down on marketing spends. Meta needs the cash to plug its losses and it also needs first party data to enable it to provide better services, better ad targeting. One answer of the problem has been offered in the form of a fee bearing WhatsApp business API on cloud. It would enable businesses to manage customer enquiries and take orders and generally communicate with multiple customers through encrypted Whatsapp messaging.
Note on API
An API specifies how software components interact. A software might be built upon proprietary source code. The API refers to the code that the software developer makes available to third-party developers, which enables those developers to build further applications for the software. An API can allow for a third-party application to interact with the software and govern the extent to which it can access data, for example.
Cloud infrastructure adopted by traditional banks
…Major banks, which traditionally have their infrastructure of mainframe computers on premises (notably because the data is typically so sensitive) have started to depend on cloud services to gain all the advantages (cheaper, higher processing power, speed, scalability, quick deployment, automated updates etc) that cloud computing can provide.
This is probably necessary for all banks now because it gives the flexibility banks are likely to need as different types of technologies are taking off; fintech being one area. Although there is turmoil in the crypto markets there is every possibility that all banks will eventually be expected to work with them. One just has to observe that the UK treasury has said that it will be legislating to bring stablecoins into the UK payments infrastructure, UK Financial Conduct Authority is launching the Financial Market Infrastructure Sandbox to enable businesses to test out new technologies, some firms are paying their employees in crypto.
Broadcom considering purchase of VMWare
…Chipmaker Broadcom (which also has a sizeable software business) is talking about buying cloud computing/software group VMWare (stands for Virtual Machine Ware – subsidiary of Dell). Broadcom have obviously decided to strengthen its software business, having failed (owing to Trump interventions – Broadcom, led by Malaysian American entrepreneur Hock Tan was not thought to be American enough) to purchase Qualcomm.
VMWare is key cloud computing technology, allowing users to access business applications from any device, with all the requisite protection, efficiency and back ups. The top 3 cloud providers, AWS. Azure and Google Cloud provide VMWare capability.
EV
More news on battery production outside China
…This time in Norway. Swedish ABB and German Siemens leads the $100million fundraising in Norweigian Morrow, makers of batteries. The Morrow plant is expected to produce the battery packs for rooftop solar panels (even though the story is categorised under EV on this occasion). The Scandinavian battery industry is looking quite robust:
- Morrow (Norway): Has the aim of producing by the end of the year. It has a fundraising amount of $100million. Batteries are at present produced in South Korea. Batteries said to use less nickel and cobalt (of which there is shortage), and replaced with manganese.
- Norvolt (Sweden): Started production last December. Fundraising amount of $2.75billion
- Freyr (Norway)
The push to produce batteries in the region are threefold:
- Forecasted reduction of oil from Russia
- Less dependency from Asia owing to geopolitical tensions
- Increase in tariffs on imports from Asia.
You may recall Biden invoked the Defence Production Act aimed at supporting extraction for minerals required to make EV batteries (for the same reason).
Semiconductors
UK Government has weeks to decide whether to sell Welsh low spec semiconductor maker Newport Wafer Fab to Nexperia, a subsidiary of Wingtech Technology of China
…National Security and Investment Act would apply, and the government will have to consider whether the sale would accord with its industrial policy. So low tech is the product compared to other semiconductor peers that many do not consider that it impinges on national security. However, does it align with the industrial policy not only domestically but also with the strategic alliances with the US, having regard to the heightened geopolitical tensions? The government doesn’t have long to mull over.