Tech News of the week
Amazon’s Fifth Anniversary in India
…This week’s tech news of the week is a bit of a curved ball. It is surprising to think that it is only Amazon’s fifth anniversary in India. But that’s not the point. The point is, this could be a turning point for India – and time for China to move over?
When Amazon bets, it bets big, with plenty of investment. Others are likely to follow. And we are reminded how strategically this is done at Amazon:
- India’s Prime subscribers are most interested in streaming content – unlike those in the west who sign up to get the free and fast delivery services
- By investing in streaming, Amazon aims to convert these subscribers into eCommerce subscribers – to me this seems to be key for expanding the Amazon empire
- Hence the recent purchase of GlowRoad, India’s social commerce company.
- 41 new titles on Amazon Prime video, and committed to double down on India specific content
- Amazon programmed in 10 different languages (the country itself has 22 constitutionally recognised languages)
- Mobile-only subscriptions has been made available [I guess some people don’t have TV sets/PCs, or that family members (of which there may be many in India) may wish to watch different kinds of programmes on individual devices]
Note also that
- India boasts to have the second largest population – meaning potential for collecting vast amounts of data
- But India has strict data laws (eg. data localisation)
Toyota is betting on India too
…Toyota, which has been slower on the uptake when it comes to EVs (they had bet on hybrid and hydrogen fuel cells, which may have hampered the EV trigger) plans to take up the chance to start from scratch in India, announcing that it will make EV parts in India. It has also partnered up with India to make standardised EV charging units in the country.
Apps
Ride sharing app Lyft’s shareprice tumbles as rival Uber’s sustained
…What could be the reason for this?
This is network effects at work, explains Jason Calacanis, host of podcast This Week in Start Ups. Lyft is an order of magnitude smaller than Uber, as it is not engaged in the food delivery business and not as global. In this case, the network effects work like this – it was explained:
- Difficulty with driver retention: The pool of potential drivers have the option to take up the Uber or Lyft ride request. With a larger client-base, drivers have more scope for earning on Uber with shorter wait times (time when the driver can’t earn). More drivers sign up to Uber with the result that Lyft needing to spend more to retain the drivers and costs of running the platform increases in comparison with Uber.
- Increasing customer base is difficult: Customers too, might be more inclined to sign up to Uber than Lyft because of the favourable wait times, because Uber simply has more drivers.
- Lyft does not undertake food deliveries, which affected the business during the pandemic; Uber drivers could operate during this time – some drivers may have been cautious about transporting passengers and so attracted more drivers. As the pandemic recedes, those drivers could then move over seamlessly to ferrying passengers.
Other examples of businesses that lost to rivals owing to network effects mentioned:
- Facebook vs MySpace
- Windows vs Macs
- iPhone vs Nokia
BigTech / Data/ Platform
Antitrust claim against gaming platform Steam (by Valve Corp) allowed to proceed in a case in Washington
…Game developer Wolfire in its amended case claimed that mandating developers to sign a most favoured nation clause (meaning Wolfire can’t offer its games on other platforms for a lower price) was anticompetitive, because it means in effect gaming developers would have to accept the 30% commission levied on the revenues generated using Steam. Wolfire had acquired World Opponent gaming platform in 2001 only to shut it down a few years later, coercing gamers to buy into the Steam platform, it was said – the Judge felt that this denoted market power on the part of Valve.
Similar antitrust claim has been levelled against Amazon which also levies a certain level of commission for third party sellers on the platform coupled with a most favoured nation clause. Sellers have complained that the most favoured nation clause means that it can’t sell its products more cheaply on other sites including their own, harming consumers.
Match.com (makers of Tinder) sues Google for forcing it to use Google’s own payments system meaning it has to pay Commission of up to 30% on purchases made on Apps downloaded on Android devices
…It echoes the competition complaint of popular game Fortnite maker Epic, against Apple (and Google) – which appeal is on-going. Match has succeeded on a similar competition complaint against Apple in the Netherlands although the claim is on appeal. Google says Match’s apps are eligible to pay just 15% for digital subscriptions. Google is at present apparently implementing a system that would allow developers to use other payments systems starting with Spotify. Match complains that Google has the choice as to who to offer the program, and that the offer is not open to everyone.
The US is considering passing the Open App Markets Act which will give developers a choice of payment systems they wish to use, as well as providing access to third party app stores, ability to install apps without using an app store – both of which will give the option for developers to avoid iOS/Android platform commission fees).
Antitrust rules which prohibits self-preferencing per se might in itself be anticompetitive says the American Bar Association
…American Bar Association seems to me to be saying, don’t be too eager to catch up with our EU counterparts, which is poised to implement the Digital Markets Act. This includes a provision which prohibits gatekeepers (large platform over a certain size) from engaging in the practice of self-preferencing (prime example is where in response to a search (eg toothbrushes), Amazon places its own products more prominently over other third party products). The US is also considering implementing the American Innovation and Choice Online Act which has an anti-self-preferencing rule of large platforms. It is in the advanced stages of law making.
The ABA considers that such blanket prohibition will dampen innovation – for example, it will discourage features utilised by the consumers (eg. Google maps appearing in response to Google search). The rules should apply subject to the conduct materially harming the competition, it said. It also suggested that, rather than looking at the absolute size of the platform, it should also look at the share of the market occupied by that platform.
Twitter launches Birdwatch to crowdsource the identification of misinformation
…You have to be a Birdwatch member. Twitter will ask a member about a controversial tweet, and they comment on it, and other Birdwatch members are asked to rate that comment with reasons why they rated in that way. No doubt, Twitter will amass these ratings and feed it to train an AI at some point, so that it will eventually be reliably able to focus on the tweets that might fall foul of the law (note Musk said Twitter under his leadership will not moderate content beyond the legal requirement).
This is not that different from what is stipulated by the Digital Services Act, which says that users need to be able to flag problematic content, with trusted flaggers to be given priority by the platform to tackle content on the platform efficiently.
Washington District court Judge makes interim decision on Amazon’s suit by consumers for recording, storing and sharing communications via Alexa
…the claim concerned the communication captured by Alexa without having activated the device by the user calling out “wake”.
In the Judge’s eyes, there were two kinds of people, registered users and unregistered users (eg. those who lived with registered users – or perhaps it might extend to guests of a registered user?). The registered users had consented to the practice by registering. Amazon had made known that Alexa would record once activated. The Judge dismissed the complaint that the notice was ineffective. The Judge also accepted that Amazon had notified users that it could record conversations upon false wake activations. However, he considered that unregistered users may have a case against Amazon.
Cause of Actions are under several states’ wiretap acts. There is also a claim under the Washington Consumer Protection Act concerning certain misrepresentations Amazon is alleged to have made, such as:
- the rarity of false wakes
- what Amazon does with the collected information
- monetizing users’ data for own benefit “depriving plaintiffs of the monetary value inherent in the data that was intercepted”
The last two points are interesting. How particular does Amazon have to be about the data they have collected? How should users’ data be valued? The thinking may not be dissimilar to that of the EU which considers that “free services” (eg. Facebook, Google) should not be considered free because in return the businesses do take users’ data.
225 anonymous electric shaver sellers on platforms such as eBay and Amazon sued for patent infringement in Illinois
…The patent owner has sought temporary restraining orders and asset freeze orders. These sorts of actions are more common for trade mark infringements. Asset freezing is key to recover infringements on platforms, especially if the provenance of the goods are abroad, notably China.
Non-operating company Advance Coding Technologies sue TikTok parent ByteDance for infringing video audio processing technologies
…Plaintiff here is a non-operating company, or NPE (non-practising entity) which does not use the inventions in the patents but buys patents from innovator companies and uses them to get licensing revenues. It means ByteDance can’t countersue for infringement because being an NPE, it carries out no infringing acts.
The plaintiff is a seasoned litigator, having litigated against Xiaomi (now settled), Oppo, Vivo and TCL for patent infringement proceedings in China for using technologies relating to a different technology, being Enhanced Voice Services (it is a standardised technology used by devices that deal in audio/speech).
German Competition Authority (Federal Cartel Office) deems Meta of “paramount significance for competition across markets”, meaning enforcement against it can be expedited
…In many ways it is a label of honour, as much as Meta would wish to resist the consequences. Google has been deemed the same in January.
Investigations into Meta over its practice of combining data from different sources (Facebook, WhatsApp, Instagram etc) and linking it into virtual reality headsets can now be expedited.
UK climbs down on regulating the IT sector
…Legislative teeth will unlikely be conferred to the Digital Markets Unit, which sits within UK’s competition authority (Competition and Markets Authority) – meaning the UK will not be setting regulatory rules for BigTechs and other internet businesses other than within the existing powers of Competition and Markets Authority – for now. No specific reasons appear to have been given for suspending the expansion of regulatory controls over tech businesses. The Digital Markets Unit takes a scientific approach, using the latest approaches in data engineering, machine learning and AI to understand how digital business operate.
Owners of iPhone 4S broker a settlement with Apple claiming bad updates made their phones buggy and slow
…The complaint representing iPhone owners in New York and New Jersey, said that iOS 9 updates made their phones slower to such an extent that some owners went to buy replacement phones. Apple was alleged to have misrepresented to its customers that the updates would make the phones run better. The case closed after 6 years of litigation. The point here is that, any app developer (especially car manufacturers that send software updates) which provide updates could face suit if their updates aren’t good enough.
Crypto
US Securities and Exchange Commission (SEC) says it will double its Crypto Assets and Cyber Unit
…SEC are recruiting new supervisors, attorneys, trial counsel and fraud analysts to double down on fraud and non-compliance with respect to decentralised finance, crypto, stablecoins and NFT activities.
Critics have said that the move is tantamount to regulation by enforcement, and rather, that regulatory uncertainties ought to be cleared first.
US Treasury sanctions crypto transactions mixing service Blender.io
… so it was decided after the North Korean state-sponsored hacking group Lazarus was revealed to have used the mixing platform after successfully hacking the video gaming service Axie Infinity. Mixing in the crypto world is the process of pooling money from different sources into a central fund and mixing the transactions to re-distribute currency back to the clients to remove tracks and/or to anonymise transactions. Mixing was a major money generating service for Hydra, the largest criminal marketplace for illicit goods and services, which was recently taken down following an international effort to clamp down on digital criminal activity.
Nvidia to settle US Security and Exchange Commission claim for inadequately disclosing demand driven by crypto miners to investors
…this is interesting because who knew that gamers and crypto miners were in a tug of war over Nvidia’s Graphic Processing Units (GPUs), supplies of which are scarce at present owing to supply chain problems around chips. Certainly the investors didn’t appreciate it and although Nvidia did manage to get the investor claims dismissed, Nvidia got fined for not making that clear. Nvidia agreed to pay the fine but have not admitted SEC’s findings.
Why does that matter for investors? For one, the crypto market is highly volatile. When the bubble burst in the past, so did the demand for the GPUs. Nvidia saw a steep drop in revenue for that reason back in 2019.
Nvidia is known for GPUs (the bit that does very complicated processing, such as graphics rendering and AI data processing involving huge volumes of data) a highly complex and specialist bit of processing hardware suited for computation heavy rendering; notably processing complex graphics quickly for gamers and crypto mining (ie: validating crypto currency transactions by solving complex equations) and minting (ie: creating tokens).
EV
Tesla does a long term deal with global miner Vale to secure Nickel supply from mines in Canada for its batteries
…We don’t need to list the critical Nickel facts to understand that this deal is most probably quite a shrewd move. But here they are anyway:
More than 80 percent of world’s Nickel processing is based in China.
60% of the world’s Nickel mines are Chinese owned.
16% of all high grade Nickel comes from Russia.
Nickel demand from car makers expected to jump approximately 8 times between the beginning and end of this decade.
Price of Nickel already increased 50% this year.
Bill Gates backed start up Kobold is using AI to find new Nickel mines
Tesla is using its own technology to mine Lithium (could Nickel be next???). Compounded on this are the chip supply and wiring harnesses that VW has already sold out in the US and EU for this year.
UK Lithium Refinery gets backing from Trafigura, one of the largest metal traders
…Similar theme to the Nickel story, the project aims to reduce dependency on China, as there are currently no refineries in Europe. Vast majority of metals critical to making EV batteries are produced by China (Lithium, Nickel, Cobalt and others), often using fossil fuels. In the case of Lithium, original raw materials come from Chile, Argentina and Australia. Note that, from 2024, battery and car manufacturers in Europe will face higher tariffs if raw materials are not sourced locally. To have a project using low-carbon refining technology such as this one would put real meaning to transitioning from internal combustion engines to electric powered vehicles from the green agenda perspective. UK Lithium Refinery project Green Lithium hopes to be operational by the end of 2024.
ESG
Samsung under attack as it fails to commit to 100% renewable energy
…Unlike Apple, TMSC and Korean chipmaker SK Hynix. Among G20, South Korea had the second lowest share of renewable energy in 2020. An analyst at SK Securities in Seoul is reported by the FT to have said “If Samsung cannot meet ESG standards, it may not even become an option for overseas customers in the long term… Environmental problems will soon emerge as systemic risks in the form of non-tariff barriers.”
Whilst the world is lacking in chip supply, Samsung may survive taking that stance. But the point the analyst makes about non-tariff barriers should be heeded by all businesses, because there is no reason why it won’t span both products and services.
Plant-based meat company Impossible Foods sue rival Motif in Delaware for patent infringement concerning iron based molecule
…plant based meats will be increasing as we all try eat less meat to preserve the planet. The latest spat follows a similar dispute, in which The Better Meat Company sued Meati over fementation technology.
Right to Repair
Apple enables users to repair some of the newer iPhones
…Initially in the US with plans to roll out in the EU, Apple are enabling users to repair their newer iPhone models. Users will need to purchase individual parts and tools (Apple’s parts including screws are proprietary and as I understand it, requires a proprietary tool to unscrew) and rent tool kits (for $49) to enable users to repair at home – or more like, individuals to set up shop in especially rural parts so that locals can get their iPhones repaired.
In the Spotlight
Semiconductors
Venture Capital backed Hilco wages war on the US semiconductor industry using a single patent right
…Hilco is reported to have sued Advanced Micro Devices, Kioxia America, Qualcomm, Nvidia, Marvell, NXP, Infineon, and Socionext America across multiple districts in the US and the ITC (US International Trade Commission) for the infringement of a single patent owned by it. The patent was originally applied for by LSI Logic Corporation. For a company that owns many patents, and for a litigation which is so significant in magnitude, it is interesting that this and in other cases of similar nature (see below) only one patent is used in the enforcement action. If the patent is invalidated, everything falls away.
A success before the ITC could mean that the defendant semiconductor companies are ordered to stop importing infringing goods (ie: chips) into the US. If Hilco were to win, then the shortage of chip supplies in the US will worsen (impacting US tech economy + national security) – which is why I bet as a non-US qualified lawyer –that the ITC would be reluctant to issue an injunction, or else White House intervention would be a possibility. Still, the ITC action can be used to pressurise the alleged infringers into settlement. After all, what Hilco is really after, is cash. It has been speculated – and I agree – that the recent wave of litigation may have been encouraged by the high damages awards (multiple billions) which were awarded to another funded patent owner, VLSI, against Intel for infringing semiconductor patents.
Hilco owns Bell Semiconductor LLC and Bell Northern Research LLC which have purchased a number of patents from other companies, most notably Broadcom in 2017. They have been very litigious:
- Last few years saw Bell Semiconductor LLC suing Renesas and its subsidiary Integrated Device Technology, and Microchip Technology, NXP Semiconductors, and Texas Instruments. (Settlement has been achieved with those that are underlined)
- Bell Northern Research LLC has sued BBK Electronics (OnePlus), BLU Products, HMD Global, Lenovo (Motorola Mobility), Sonim, and TCL (TCT Mobile) before the ITC
- Bell Northern Research LLC has also got litigation campaigns going against against Apple, CommScope, Dell, and HP concerning standard essential patents relevant to the WiFi standards (which means injunctions may be more difficult to be awarded – which in turn means there is less leverage against the defendants).
Other semiconductor patent battles are afoot in the US, many initiated by non practising entities (or NPE ie: business concerns receiving patent licensing revenues)
- Mediatek v NXP & NXP v Mediatek and others (several patents asserted)
- Pearl IP Licensing v AT&T, MicroDevices, Thermo Fisher and others (1 patent asserted)
- Waverly v AT&T, AnkerDirect, Granite River Labs and others (1 patent asserted)
- Celebration IP v AlphaOmega Semiconductor, On Semiconductor, Allied Electronics and others (1 patent asserted)
Many of these have been successfully settled.