Opinion

The greedy ways Apple got to $1 trillion

Posted by | Apple, Apps, Dongles, Earnings, eCommerce, Gadgets, hardware, Mobile, Opinion, TC | No Comments

For being the richest company ever with $243 billion in cash, Apple sure cuts corners in the stingiest ways. The hardware giant became the first trillion-dollar company this week. Yet it’s tough to reconcile Apple earning $11 billion in profit per quarter with it still screwing us over on cords and keyboards. The “it just works” philosophy has slipped through the cracks of the money-printing machine. It’s not that Apple couldn’t afford to fix the problems, it’s just ensnared in hubris such that it doesn’t see them as important.

We still turn to Apple because it makes the best core products. But the edges of the customer experience have frayed like the wires of a Lightning cable. The key to Apple’s fortune is obviously selling high margin iPhones, not these ways it nickels and dimes us. But the company has an opportunity to raise its standards after this milestone, and win back the faith that could push it to a $2 trillion market cap.

1. Frayed Charging Cables

Apple gives you that tingly feeling in the worst way. Can it not build Lightning cables and MacBook chargers a little sturdier? If you avoid losing one long enough to put in some serious use, it inevitably ends up splitting where the cord meets your iPhone or exits the laptop power supply. Whether it’s wrapping them in electrical tape or the spring of a retractable pen, people have come up with all sorts of Macgyver methods to make their Apple chargers last. It got so bad that Apple was sued into offering a MacBook charger replacement program, but that expired years ago. If these are what allow us to play with the fancy devices it invents, shouldn’t they get the same quality of industrial design?

Image via Sophia Cannon

2. Buried iTunes Subscriptions Cancellation

Want to cancel your Apple Music subscription or some other service you got roped into with a free trial? It’s SUPER easy. First, click the totally unlabeled and generic circle with a blotch in it that’s supposed to be a profile picture icon. You should see a “Manage Subscriptions” option…but you don’t. Instead, you’ll have to know to tap “View Apple ID”. Once you auth in with the same face or thumbprint that opened your phone in the first place you’ll find the option to cut them off. And as thank you for this convenience, you’ll get to pay 30 percent extra on some subscriptions if you pay through Apple. It’s clearly exploitative dark pattern design.

3. Keyboard Claptrap

The MacBook keyboard is the on-ramp to the information superhighway, yet a single grain of sand can cause a pile up. Renowned Apple pundit John Gruber called it “one of the biggest design screwups in Apple history”. The new butterfly key design Apple rolled out in 2016 can get jammed by dust, requiring a lengthy disassembly process often requiring a professional to fix. Suddenly your work grinds to a halt. Apple wouldn’t always cover this repair, even under warranty. It took a lawsuit and tons of public backlash for Apple to offer free fixes, and that still typically leaves you without a laptop for a few days. I’m typing this article on a cracked-screen 2013 MacBook Pro because I refuse to upgrade until they make the keyboard design more resilient.

4. Killing Affiliate Fees Blogs Rely On

Apple benefits from a legion of blogs obsessing over its hardware and software, hyping up everything it sells. Just this week it returned that favor by announcing it will cut off one of their core sources of revenue. Websites would previously earn a 7 percent commission from Apple in exchange for affiliate link clicks leading to purchases on the App Store. But over the past few years, Apple has begun to sell ads inside the App Store too, competing for advertisers with those external blogs. It’s also built up its own editorial team that curates what’s featured, and apparently doesn’t want competition in being a king-maker. So in October Apple is shutting down the affiliate program that app review sites like TouchArcade and AppShopper depend on, potentially spelling their doom.

5. Dongle Hell

What’s the opposite of “it just works”? Paying extra to lug around a slew of gangly cord connectors you need just to plug things into your laptop or phone. Dongles are the emblem of Apple’s abandonment of the user experience. A Thunderbolt 2 to Thunderbolt 3 dongle runs $50 while it will cost you $9 to plug in any pair of headphones from the past half-century once you’ve inevitably lost the Lightning dongle you’re allocated. Apple loves pushing us towards its vision of tomorrow, like Bluetooth headphones (that it sells) and USB-C fast-chargers (that it sells). But ditching headphone jacks and old school USB ports makes Apple’s latest devices incompatible with sanity. Even its own commercial shows musician Grimes struggling with her dongles. Sorry you can’t pass me the aux cord. I’m from the future.

Image via Notebookcheck

[Featured Image via Instructibles]

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Newly legal 3D-printed gun blueprints targeted by state lawsuits

Posted by | 3d printing, defcad, defense distributed, firearms, Gadgets, Government, gun control, guns, lawsuit, Opinion | No Comments

Hot on the heels of the effective legalization of 3D models used to print firearm components, 21 states have filed a joint lawsuit against the federal government, alleging not only that decision is dangerous but also that it’s illegal for a number of reasons. But the lawsuit may backfire via the so-called Streisand Effect, further entrenching the controversial technology.

Earlier this month brought the news that the U.S. government dropped its case against Cody Wilson and his companies dedicated to the proliferation of 3D models of firearm parts. There are still restrictions on how guns can be made and sold, but the files containing 3D data and allowing people to print components seem to have been determined not to fall under those rules.

This was unwelcome news for those in favor of stricter gun control laws, a group apparently including the attorneys general of 21 states. Bob Ferguson, AG for Washington, announced that his team would be leading a lawsuit intended to block the federal actions that legalized this particular form of data.

“These downloadable guns are unregistered and very difficult to detect, even with metal detectors, and will be available to anyone regardless of age, mental health or criminal history. If the Trump Administration won’t keep us safe, we will,” he said in a press release issued today.

They allege that the administration needs the Defense Department to sign off on the decision, and that Congress needed to be notified 30 days in advance. The decision is also held (owing to a lack of on-record citations or consultations) to be “arbitrary and capricious,” and thus illegal under the Administrative Procedure Act.

The Tenth Amendment also gives states the right to regulate firearms, and the filers say that the federal action deprives them of this right and is therefore unconstitutional.

That’s all well in order, but the danger posed by these files is overestimated, as is the ability of the government, state or federal, to curtail their distribution. If this lawsuit is successful, it will have little or no effect on 3D printed guns at all.

“The status quo – which currently ensures public safety and national security by prohibiting publication of firearm design files on the Internet – should be maintained,” reads a letter sent from a number of AGs to Secretary of State Mike Pompeo and AG Jeff Sessions.

At the risk of dipping into an extremely charged debate and sensitive political topic (I’ve added the “Opinion” tag just in case), the status quo does no such thing. It must be said that if effective gun control is the goal, there are far more important steps to pursue. Loopholes abound in existing regulations, for instance gun show purchases of unregistered firearms and “80 percent lowers,” which are a quite legal method for creating them.

Furthermore, any attempt to remove something from the internet is doomed to failure, as we have seen again and again, often enough that the phenomenon has its own nickname, the Streisand Effect. Workarounds for illegal content are numerous and effective, and presumably the type of person interested in printing their own gun will not be shy about using a VPN or torrent site. If anything, a concerted effort to remove something from the internet usually causes that thing to be permanently maintained online as a sort of middle finger to the authorities. It’s not in the internet’s DNA to forget.

While it’s true that outlawing the 3D models would give prosecutors and investigators more to work with, the nefarious actors of the world haven’t been waiting with bated breath on the outcome of the previous lawsuit. Criminals, terrorists, foreign adversaries and so on in the first place don’t even need these files to obtain or create unregistered guns in the first place, nor would their being illegal deter them in the least.

The lawsuit may, it is true, tie up and possibly bankrupt Wilson and his supporters, but that’s not much of a victory and certainly doesn’t make anyone safer. Unfortunately this particular demon isn’t going back in the box.

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Why unskippable Stories ads could revive Facebook

Posted by | Advertising Tech, Apps, Facebook, Facebook ads, Facebook Earnings Q2 2018, Facebook Stories, Instagram Stories, Media, Mobile, Opinion, Snapchat Ads, snapchat stories, Social, stories, TC | No Comments

Prepare for the invasion of the unskippables. If the Stories social media slideshow format is the future of mobile TV, it’s going to end up with commercials. Users won’t love them. And done wrong they could pester people away from spending so much time watching what friends do day-to-day. But there’s no way Facebook and its family of apps will keep letting us fast-forward past Stories ads just a split-second after they appear on our screens.

We’re on the cusp of the shift to Stories. Facebook estimates that across social media apps, sharing to Stories will surpass sharing through feeds some time in 2019. One big reason is they don’t take a ton of thought to create. Hold up your phone, shoot a photo or short video and you’ve instantly got immersive, eye-catching, full-screen content. And you never had to think.

Facebook CPO Chris Cox at F8 2018 charts the rise of Stories that will see the format surpass feed sharing in 2019

Unlike text, which requires pre-meditated reflection that can be daunting to some, Stories are point and shoot. They don’t even require a caption. Sure, if you’re witty or artistic you can embellish them with all sorts of commentary and creativity. They can be a way to project your inner monologue over the outside world. But the base level of effort necessary to make a Story is arguably less than sharing a status update. That’s helped Stories rocket to more than 1.3 billion daily users across Facebook’s apps and Snapchat.

The problem, at least for Facebook, is that monetizing the News Feed with status-style ads was a lot more straightforward. Those ads, which have fueled Facebook’s ascent to earning $13 billion in revenue and $5 billion in profit per quarter, were ostensibly old-school banners. Text, tiny photo and a link. Advertisers have grown accustomed to them over 20 years of practice. Even small businesses on a tight budget could make these ads. And it at least took users a second to scroll past them — just long enough to make them occasionally effective at implanting a brand or tempting a click.

Stories, and Stories ads, are fundamentally different. They require big, tantalizing photos at a minimum, or preferably stylish video that lasts five to 15 seconds. That’s a huge upward creative leap for advertisers to make, particularly small businesses that’ll have trouble shooting that polished content themselves. Rather than displaying a splayed out preview of a link, users typically have to swipe up or tap a smaller section of a Story ad to click through.

And Stories are inherently skippable. Users have learned to rapidly tap to progress slide by slide through friends’ Stories, especially when racing through those with too many posts or that come from more distant acquaintances. People are quick with the trigger finger the moment they’re bored, especially if it’s with an ad.

A new type of ad blindness has emerged. Instead of our eyes glazing over as we scroll past, we stare intensely searching for the slightest hint that something isn’t worth our time and should be skipped. A brand name, “sponsored” label, stilted product shot or anything that looks asocial leads us to instantly tap past.

This is why Facebook COO Sheryl Sandberg scared the hell out of investors on the brutal earnings call when she admitted about Stories that, “The question is, will this monetize at the same rate as News Feed? And we honestly don’t know.” It’s a radically new format advertisers will need time to adopt and perfect. Facebook had spent the past year warning that revenue growth would decelerate as it ran out of News Feed ad inventory, but it’d never stressed the danger as what it was: Stories. That contributed to its record-breaking $120 billion share price drop.

The shift from News Feed ads to Stories ads will be a bigger transition than desktop ads to mobile ads for Facebook. Feed ads looked and worked identically, it was just the screen around them changing. Stories ads are an entirely new beast.

Stories ads are a bigger shift than web to mobile

There is one familiar format Stories ads are reminiscent of: television commercials. Before the age of TiVo and DVRs, you had to sit through the commercials to get your next hit of content. I believe the same will eventually be true for Stories, to the tune of billions in revenue for Facebook.

Snapchat is cornered by Facebook’s competition and desperate to avoid missing revenue estimates again. So this week, it rolled out unskippable vertical video ads it actually calls “Commercials” to 100 more advertisers, and they’ll soon be self-serve for buyers. Snap first debuted them in May, though the six-second promos are still only inserted into its longer-form multi-minute premium Shows, not user-generated Stories. A Snap spokesperson said they couldn’t comment on future plans. But I’d expect its stance will inevitably change. Friends’ Stories are interesting enough to compel people to watch through entire ads, so the platform could make us watch.

Snapchat is desperate, and that’s why it’s already working on unskippable ads. If Facebook’s apps like Instagram and WhatsApp were locked in heated battle with Snapchat, I think we’d see more brinkmanship here. Each would hope the other would show unskippable ads first so it could try to steal their pissed-off users.

But Facebook has largely vanquished Snapchat, which has seen user growth sink significantly. Snapchat has 191 million daily users, but Facebook Stories has 150 million, Messenger Stories has 70 million, Instagram Stories has 400 million and WhatsApp Stories (called Status) leads with 450 million. Most people’s friends around the world aren’t posting to Snapchat Stories, so Facebook doesn’t risk pushing users there with overly aggressive ads, except perhaps amongst U.S. teens.

Instagram’s three-slide Stories carousel ads

That’s why I expect we’ll quickly see Facebook start to test unskippable Stories ads. They’ll likely be heavily capped at first, to maybe one to three per day per user. Facebook took a similar approach to slowly rolling out auto-play video News Feed ads back in 2014. And Facebook’s apps will probably only show them after a friend’s story before your next pal’s, in-between rather than as dreaded pre-rolls. Instagram already offers carousel Stories ads with up to three slides instead of one, so users have to tap three times to blow past them.

An Instagram spokesperson told me they had “no plans to share right now” about unskippable ads, and a Facebook spokesperson said “We don’t have any plans to test unskippable stories ads on Facebook or Instagram.” But plans can change. A Snap spokesperson noted that unlike a full 30-second TV spot, Snapchat’s Commercials are up to six seconds, which matches an emerging industry trend for mobile video ads. Budweiser recently made some six-second online ads that it also ran on TV, showing the format’s reuseability that could speed up adoption. For brand advertisers not seeking an on-the-spot purchase, they need time to leave an impression.

By making some Stories ads unskippable, Facebook’s apps could charge more while making them more impactful for advertisers. It would also reduce the creative pressure on businesses because they won’t be forced to make that first split-second so flashy so people don’t fast-forward. Employing unskippable ads could also create an incentive for people to pay for a hypothetical ad-free Facebook Premium subscription in the future.

If Facebook makes the Stories ad format work, it has a bright future that contrasts with the doomsday vibes conjured by its share price plummet. Facebook has more than 5X more (duplicated) Stories users across its apps than its nearest competitor Snapchat. The social giant sees libraries full of Stories created each day waiting to be monetized.

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Gaming leans into diversity at E3, but not hard

Posted by | Diversity, e3 2018, Gaming, Opinion, TC | No Comments

To say the gaming community is not known for its friendliness to women and minority groups is something of an understatement. But we’re starting to see developers abandon the usual excuses of tradition, demographics and, the most absurd of all, “realism,” in favor of making gaming more inclusive. Kind of.

This has been an ongoing theme for years, of course. But it feels like this year it was a little less self-congratulatory and a little more self-motivated.

The fun started early, well ahead of E3, with the apparently devastatingly diverse front lines in Battlefield V, which takes place during World War II. The predictable objections as to “historical accuracy” appeared — unironic, despite the utter lack of historical accuracy in pretty much any of these games. The way the war was fought, the locations and situations, the weapons and vehicles have all been liberally massaged to turn the worst thing in history into a fun multiplayer game.

But it was EA’s chief creative officer, Patrick Soderlund, who made the headlines with a searing riposte in an interview with Gamasutra. Citing the historical record of women and people of color in the war, he called out the peanut gallery as both incorrect and irrelevant.

What’s the most unrealistic part about Battlefield V? It ain’t her.

“These are people who are uneducated,” he said. “They don’t understand that this is a plausible scenario, and listen: this is a game.”

A game, he added, intended to surface stories that have been hitherto relatively seldom told, including the roles of those groups.

“This is something that the development team pushed. And we don’t take any flak. We stand up for the cause, because I think those people who don’t understand it, well, you have two choices: either accept it or don’t buy the game. I’m fine with either or. It’s just not OK.”

Then E3 got started. As a pleasant early surprise, Gears of War 5 has you playing a female protagonist in what has long been a mainstay of grizzled space-marine mandom, and your companion is a black guy. Of course you have the new Tomb Raider, a solid franchise with an increasingly strong, well-written female lead.

In Assassin’s Creed Odyssey, Ubisoft went so far as to twist the lore of the series to accommodate the player’s choice of character: Alexios or Kassandra, between whom there are no real differences — including romance options, a quietly provocative decision.

The Last of Us Part Two has a badass young woman as its protagonist, defending herself with shocking brutality in a post-apocalyptic hellscape. (Yet you can be sure it’s the kiss shared with a girl on the dance floor that will generate more controversy.)

Nintendo offered a variety of customization in the new Smash Bros. for Switch, with male and female options for all kinds of characters, including Pikachu. Even Cuphead has a playable lady in it now.

Elsewhere we saw diversity on display in something as simple as having men and women of all races represented as pirate captains, commanders of futuristic forces, medieval knights (a nice Joan of Arc feel from For Honor’s trailer) and futuristic jet pilots. (My favorite outfit was in Control, by the way.)

What it felt like to me, though, was not that these companies were fulfilling some kind of diversity quota — that bogeyman so often invoked by critics — but rather the simple acknowledgement that the world of games should resemble the world of gamers.

Of course, when you pull back a little bit, it becomes extremely clear that the majority of games are still very much dominated by the garden variety grizzled white male protagonist. But that’s fine. We have a similar problem in film, TV and other fiction as well, right? Moving on from outdated ideas of race and gender in the world of media is an ongoing concern and it won’t happen all at once.

But at least at this E3 we’re seeing indications that developers and publishers are moving in the right direction.

As for the people playing — well, that’s a different story. Whatever the flexibility of your choices in the latest crop of AAA games, female gamers and people of color will still be ruthlessly harassed, abused and otherwise targeted. Developers can’t change the bigoted minds of toxic players — but they can ban them. Here’s hoping that side of things is getting equal attention.

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Why Snapchat’s re-redesign will fail and how to fix it

Posted by | Apps, Evan Spiegel, Mobile, Opinion, snap inc, Snapchat, Snapchat Redesign, Social, TC | No Comments

Snap screwed it all up jumbling messages and Stories, banishing creators to Discover and wrecking auto-advance. Prideful of his gut instincts, Snap CEO Evan Spiegel refused to listen to the awful user reviews and declining usage. Now a YouGov study shows a 73 percent drop in user sentiment toward Snapchat, the app’s user count shrank in March and its share price is way down.

Yet the re-redesign Snapchat is finally rolling out today in response won’t fix the problems. The company still fails to understand that people want a predictable app that’s convenient to lay back and watch, and social media stars are more similar to you and me than they are to news outlets producing mobile magazine-style Discover content.

There’s a much better path for Snapchat, but it will require an ego adjustment and a bigger reversal of the changes — philosophy be damned.

Snapchat’s impression amongst US users fell off a cliff when the redesign was rolled out early this year

Here’s what Snapchat was, is becoming and should be.

The old Snapchat

Snapchat’s best design was in September 2016. It lacked sensible Stories sorting, and got some questionable changes before the big January 2018 redesign, but the fundamentals were there:

  • Left: Messages in reverse chronological order
  • Right: Stories from everyone in reverse chronological order with a carousel of ranked preview tiles in a carousel above or below Stories
  • Auto-Advance: Automatic and instant

 

The broken Snapchat

Snapchat’s big January 2018 redesign did two smart things. It added more obvious navigation buttons to ease in new and adult users. And it made the Stories list algorithmically sorted so you’d see your best friends first rather than just who posts most often, as TechCrunch recommended last April.

But it introduced a bunch of other problems, like pulling creators out of the Stories list, turning the inbox into chaos with ad-laden Stories and breaking auto-advance so you have to watch an annoying interstitial between each friend. Spiegel stubbornly refused to listen to the poor feedback, saying in February, “Even the complaints we’re seeing reinforce the philosophy. Even the frustrations we’re seeing really validate those changes. It’ll take time for people to adjust.” That quickly proved short-sighted.

  • Left: Messages and Stories from friends mixed together, sorted algorithmically
  • Right: Discover, sorted algorithmically, with influencers and people who don’t follow you back mixed in
  • Auto-Advance: Interstitial preview screens

The re-redesigned Snapchat

Users hated the redesign, initial reviews were mostly negative and Snapchat’s growth fell to its lowest rate ever. After some tests, today Snapchat tells us it’s rolling out the re-redesign to the majority of iOS users that’s a little less confusing. Yet it doesn’t address the core problems, plus makes the Discover screen more overwhelming:

  • Left: Messages sorted reverse chronologically
  • Right: Friends’ Stories at the top sorted algorithmically [Correction: Not chronologically], then subscriptions to creators sorted algorithmically, then Discover channels sorted algorithmically
  • Auto-Advance: Interstitial preview screens in Stories but not Subscriptions or For You

The right Snapchat

While the re-redesign makes Snapchat’s messaging inbox work like it used to, it overloads the Discover screen and leaves auto-advance broken out of a misguided hope of ensuring you never watch a frenemy or ex’s Story by accident and show up in their view counts. But that’s not worth ruining the laid-back viewing experience we’ve grown to love on Instagram Stories, and could be better solved with a mute button or just getting people to unfriend those they can’t be seen watching.

That’s why I recommend Snapchat move to a hybrid of all its designs:

  • Left: Messages sorted reverse chronologically
  • Right: Stories from all friends and creators, displayed as preview tiles, sorted algorithmically to preference close friends
  • Further Right: Discover, with preview tile sections for subscriptions, publishers and Our Stories/Maps/Events [This whole screen could be crammed into the Stories page if Snap insisted on just one screen on the right]
  • Auto-Advance: Traditional instant auto-advance without interstitials, plus a mute button to hide people

This design would make the inbox natural and uncluttered, ensure you see all your closest friends’ Stories, keep influencers from being buried in Discover, give publishers and Snapchat’s own content recommendations, including new creators, room to breathe and let you easily relax and watch a ton of Stories in a row.

Snapchat could have slowly iterated its way to this conclusion. It could have done extensive beta testing of each change to ensure it didn’t misstep. And perhaps facing an existential crisis from the exceedingly viable alternatives Instagram and WhatsApp, it should never have attempted a sweeping overhaul of its app’s identity. Twitter’s conservative approach to product updates looks wiser in retrospect. Instead, Snap is in decline.

Facebook’s family of apps have survived over the years by changing so gradually that they never shocked users into rebellion, or executing major redesigns when users had no comparable app to switch to. Snapchat calls itself a camera company, but it’s really a “cool” company — powered by the perception of its trendiness with American kids. But as ephemeral content proliferates and Stories become a ubiquitous standard soon to surpass feeds as the preferred way to share, they’ve gone from hip to utility. So if its features aren’t cool any more and are offered in a slicker way to a larger audience elsewhere, what is Snapchat anymore?

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Facebook united

Posted by | Apps, Facebook, Mobile, Opinion, Personnel, Social | No Comments

Facebook was a mess. The independence it dangled to close acquisition deals with Instagram and WhatsApp turned the company into a tangle of overlapping products. Every app had its own messaging and Stories options. Economies of scale were squandered. Top innovators led mature products already bursting at the seams with features while new opportunities went unseized.

Facebook was effectively drowning in its own success because the different arms couldn’t coordinate to paddle in the same direction.

But today Facebook announced its biggest reorganization ever, which could cut the redundancy, apply talent to fresh problems and unite the company under a common banner.

Putting the family first

Chris Cox, Facebook’s chief product officer, will fly that flag. He now oversees the “Facebook Family of Apps,” including Facebook, Messenger, Instagram and WhatsApp. Messenger’s VP of Product Stan Chudnovsky will take over as head of Messenger, replacing David Marcus, who’s moving to lead a new blockchain group at Facebook (more on that later).

Facebook’s head of News Feed Adam Mosseri is taking the Instagram VP of Product role, taking over for Kevin Weil, who’s going to Marcus’ project. Mosseri is replaced by Facebook VP of Product Management John Hegeman. Meanwhile, Facebook’s head of Internet.org Chris Daniels will take the lead role at WhatsApp, recently vacated by Jan Koum as he departed the corporation altogether.

Image via Recode

These changes could reduce the autonomy of Instagram and WhatsApp, at least in philosophy if not in formal hierarchy. That might make them less appealing places to work, after WhatsApp veterans like Nikesh Arora were passed over in favor of an installed Facebook exec. It could spook future acquisition candidates, who might see the reorganization as Facebook reneging on its promise of independence. And it could hinder the apps’ role as hedges against harm to Facebook’s core brand. Many users don’t realize they’re owned by Facebook, and therefore didn’t extend to them the backlash about recent privacy scandals.

But Facebook will gain the ability to execute a more coherent strategy. Mosseri, a long-time member of Mark Zuckerberg’s inner circle, will bring to Instagram his experience turning News Feed into one of the world’s most popular inventions as Instagram is hoping to ramp up monetization now that it’s achieved utter dominance over Snapchat in photo sharing. Few know the Facebook playbook better than Mosseri, who could help Instagram get out ahead of problems he’d been in the thick of, like fake news and declines in original sharing.

Daniels’ days connecting the developing world fits well at WhatsApp, whose users across the globe often deal with slow mobile networks. This also leaves room for new blood at Internet.org. It’s now connected 200 million people to some form of the internet, but its Free Basics app has been banned in several countries over net neutrality concerns and partners have pulled out over sustainability concerns. WhatsApp, too, is ready to monetize, having recently launched its WhatsApp for Business product, and Daniels’ background in biz dev and partnerships at Facebook around the IPO could serve him well.

Mark Zuckerberg discusses the Facebook family of apps at F8 2015

But more important than their siloed efforts is what a more unified family under Cox could accomplish. Over 2016 and 2017, all four apps launched isolated Stories products. While Instagram’s and WhatsApp’s took off, Facebook’s and Messenger’s felt absurdly redundant and underpopulated. It took until late 2017 for Facebook to realize it should synchronize Stories across Instagram, Facebook and Messenger so users could post once to their audiences everywhere.

The reorg could prevent Facebook from haphazardly tripping over itself in an attempt to seize on emerging trends. As visual communication becomes the new Facebook mandate, the company could similarly align its efforts in augmented reality, ephemeral and encrypted messaging and e-commence tools. Mosseri and Daniels can implement the Facebook strategy and shield their apps from the same old pitfalls. Instagram and WhatsApp have instituted themselves in their respective markets, and now have the leaders to make them well-oiled cogs in the Facebook machine.

Move fast and shake things up

Few hires have had the impact at Facebook of Marcus and Weil. The former president of PayPal, Marcus has brought Messenger from 200 million monthly users in 2014 to more than 1.3 billion now. He successfully managed the forced migration of users off Facebook’s chat feature to Messenger, laid the foundation for advertising and business tools and turned the app into a platform for games and useful utilities (beyond the initially half-baked bots).

Weil, formerly SVP of Product at Twitter, where changes came at molasses pace, turned Instagram into a rapid-fire launcher of new features. Most significantly, he implemented Zuckerberg and Instagram CEO Kevin Systrom’s plan to copy Snapchat’s Stories. Instagram was growing stale, showing just the occasional highlights of users’ lives. Instagram Stories solved that, and Weil grew it to more than 300 million daily users — much bigger than Snapchat’s whole 191 million user audience. Meanwhile, using Stories to spark conversation, Instagram Direct grew into one of the most popular messaging apps.

But today, Messenger and Instagram have begun to feel bloated. Marcus had to announce a plan to simplify the chat app at the start of 2018 after its version of Stories, called Messenger Day, steamrolled the rest of the product’s design. The camera, games and bots got as much space in the navigation bar as the core chat product. Last week Messenger revealed a redesign that refocuses on… messaging, giving the app a sensible roadmap. Instagram, now having effectively won the Stories war with Snapchat and having acclimated users to an algorithmic feed, left Weil without as many urgent changes to make.

If Facebook wasn’t careful, it could have lost these leaders to the CEO or COO role of a growing startup, or seen them leave to launch something of their own. Marcus had already taken a board seat at crypto giant Coinbase, while Weil took one at exercise community Strava.

Kevin Weil (Instagram) at TechCrunch Disrupt NY 2017

That’s why it was so wise to give Marcus the latitude to build a new team of fewer than a dozen, including Weil, focused on finding how Facebook could take advantage of the blockchain. It’s a massive, open new problem space in which to operate. One that needs visionaries in both product and business.

It’s unclear what they’ll build together, but there are plenty of opportunities.

They could explore payments facilitated by the blockchain’s lack of transaction fees. Messenger and Instagram both added native payment systems recently. Cutting out the credit card companies could be a lucrative shot for Facebook. And micropayments could open new ways to tip creators or compensate news outlets. Cloud storage based on blockchains could help Facebook cut its massive server bills. And the decentralized nature of the blockchain might unlock new paradigms for social networking with increased autonomy that might threaten Facebook if invented elsewhere.

Perhaps they’ll conclude Facebook doesn’t need the blockchain. That’s fine. The risk would be leaving the space unmined and ripe for someone else’s taking.

Facebook has lasted this long by identifying new threats of disruption, and thwarting them with its build, buy or copy strategy. Streams like FriendFeed and Twitter? Facebook built News Feed. Photos and chat? Facebook bought Instagram and WhatsApp. Ephemeral content? Facebook copied Snapchat.

The reorganization recognizes how Facebook had become a danger to itself — disruption through internal redundancy and wasted chances. It saw the discombobulated wings of Google lead it to massive failure in messaging, with a half-dozen chat apps all competing while confusing users. And it saw how internet giants like Microsoft and Apple ignored social because it was outside their wheelhouse, only to end up sharing the titan’s table with Facebook.

Zuckerberg loves to say the journey is 1 percent finished. Today Facebook proved it’s always looking for a new finish line.

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The real threat to Facebook is the Kool-Aid turning sour

Posted by | Apps, Cambridge Analytica, Drama, Facebook, Government, Mark Zuckerberg, Mobile, Opinion, Policy, Social, Talent, TC | No Comments

These kinds of leaks didn’t happen when I started reporting on Facebook eight years ago. It was a tight-knit cult convinced of its mission to connect everyone, but with the discipline of a military unit where everyone knew loose lips sink ships. Motivational posters with bold corporate slogans dotted its offices, rallying the troops. Employees were happy to be evangelists.

But then came the fake news, News Feed addiction, violence on Facebook Live, cyberbullying, abusive ad targeting, election interference and, most recently, the Cambridge Analytica app data privacy scandals. All the while, Facebook either willfully believed the worst case scenarios could never come true, was naive to their existence or calculated the benefits and growth outweighed the risks. And when finally confronted, Facebook often dragged its feet before admitting the extent of the issues.

Inside the social network’s offices, the bonds began to fray. An ethics problem metastisized into a morale problem. Slogans took on sinister second meanings. The Kool-Aid tasted different.

Some hoped they could right the ship but couldn’t. Some craved the influence and intellectual thrill of running one of humanity’s most popular inventions, but now question if that influence and their work is positive. Others surely just wanted to collect salaries, stock and resumé highlights, but lost the stomach for it.

Now the convergence of scandals has come to a head in the form of constant leaks.

The trouble tipping point

The more benign leaks merely cost Facebook a bit of competitive advantage. We’ve learned it’s building a smart speaker, a standalone VR headset and a Houseparty split-screen video chat clone.

Yet policy-focused leaks have exacerbated the backlash against Facebook, putting more pressure on the conscience of employees. As blame fell to Facebook for Trump’s election, word of Facebook prototyping a censorship tool for operating in China escaped, triggering questions about its respect for human rights and free speech. Facebook’s content rulebook got out alongside disturbing tales of the filth the company’s contracted moderators have to sift through. Its ad targeting was revealed to be able to pinpoint emotionally vulnerable teens.

In recent weeks, the leaks have accelerated to a maddening pace in the wake of Facebook’s soggy apologies regarding the Cambridge Analytica debacle. Its weak policy enforcement left the door open to exploitation of data users gave third-party apps, deepening the perception that Facebook doesn’t care about privacy.

And it all culminated with BuzzFeed publishing a leaked “growth at all costs” internal post from Facebook VP Andrew “Boz” Bosworth that substantiated people’s worst fears about the company’s disregard for user safety in pursuit of world domination. Even the ensuing internal discussion about the damage caused by leaks and how to prevent them…leaked.

But the leaks are not the disease, just the symptom. Sunken morale is the cause, and it’s dragging down the company. Former Facebook employee and Wired writer Antonio Garcia Martinez sums it up, saying this kind of vindictive, intentionally destructive leak fills Facebook’s leadership with “horror”:

The fact that some Facebooker would place their personal grudge and views above the interests of the company fills anyone on the home team with horror (in the same way that the current administration colluding with foreigners to secure a domestic victory does Americans).

— Antonio García Martínez (@antoniogm) March 30, 2018

And that sentiment was confirmed by Facebook’s VP of News Feed Adam Mosseri, who tweeted that leaks “create strong incentives to be less transparent internally and they certainly slow us down,” and will make it tougher to deal with the big problems.

I’m really worried about this. I worry it’ll make it much more difficult to step up to the challenges we face.

— Adam Mosseri (@mosseri) March 30, 2018

Those thoughts weigh heavy on Facebook’s team. A source close to several Facebook executives tells us they feel “embarrassed to work there” and are increasingly open to other job opportunities. One current employee told us to assume anything certain execs tell the media is “100% false.”

If Facebook can’t internally discuss the problems it faces without being exposed, how can it solve them?

Implosion

The consequences of Facebook’s failures are typically pegged as external hazards.

You might assume the government will finally step in and regulate Facebook. But the Honest Ads Act and other rules about ads transparency and data privacy could end up protecting Facebook by being simply a paperwork speed bump for it while making it tough for competitors to build a rival database of personal info. In our corporation-loving society, it seems unlikely that the administration would go so far as to split up Facebook, Instagram and WhatsApp — one of the few feasible ways to limit the company’s power.

Users have watched Facebook make misstep after misstep over the years, but can’t help but stay glued to its feed. Even those who don’t scroll rely on it as a fundamental utility for messaging and login on other sites. Privacy and transparency are too abstract for most people to care about. Hence, first-time Facebook downloads held steady and its App Store rank actually rose in the week after the Cambridge Analytica fiasco broke. In regards to the #DeleteFacebook movement, Mark Zuckerberg himself said “I don’t think we’ve seen a meaningful number of people act on that.” And as long as they’re browsing, advertisers will keep paying Facebook to reach them.

That’s why the greatest threat of the scandal convergence comes from inside. The leaks are the canary in the noxious blue coal mine.

Can Facebook survive slowing down?

If employees wake up each day unsure whether Facebook’s mission is actually harming the world, they won’t stay. Facebook doesn’t have the same internal work culture problems as some giants like Uber. But there are plenty of other tech companies with less questionable impacts. Some are still private and offer the chance to win big on an IPO or acquisition. At the very least, those in the Bay could find somewhere to work without a spending hours a day on the traffic-snarled 101 freeway.

If they do stay, they won’t work as hard. It’s tough to build if you think you’re building a weapon. Especially if you thought you were going to be making helpful tools. The melancholy and malaise set in. People go into rest-and-vest mode, living out their days at Facebook as a sentence not an opportunity. The next killer product Facebook needs a year or two from now might never coalesce.

And if they do work hard, a culture of anxiety and paralysis will work against them. No one wants to code with their hands tied, and some would prefer a less scrutinized environment. Every decision will require endless philosophizing and risk-reduction. Product changes will be reduced to the lowest common denominator, designed not to offend or appear too tyrannical.

Source: Volkan Furuncu/Anadolu Agency + David Ramos/Getty Images

In fact, that’s partly how Facebook got into this whole mess. A leak by an anonymous former contractor led Gizmodo to report Facebook was suppressing conservative news in its Trending section. Terrified of appearing liberally biased, Facebook reportedly hesitated to take decisive action against fake news. That hands-off approach led to the post-election criticism that degraded morale and pushed the growing snowball of leaks down the mountain.

It’s still rolling.

How to stop morale’s downward momentum will be one of Facebook’s greatest tests of leadership. This isn’t a bug to be squashed. It can’t just roll back a feature update. And an apology won’t suffice. It will have to expel or reeducate the leakers and those disloyal without instilling a witch hunt’s sense of dread. Compensation may have to jump upwards to keep talent aboard like Twitter did when it was floundering. Its top brass will need to show candor and accountability without fueling more indiscretion. And it may need to make a shocking, landmark act of contrition to convince employees its capable of change.

When asked how Facebook could address the morale problem, Mosseri told me “it starts with owning our mistakes and being very clear about what we’re doing now” and noted that “it took a while to get into this place and I think it’ll take a while to work our way out . . . Trust is lost quickly, and takes a long time to rebuild.”

I think it starts with owning our mistakes and being very clear about what we’re doing now. For much of the company November 2016 was their first negative cycle, so it’s also good to share old stories. And then you have to deliver, you have to make real progress on the issues.

— Adam Mosseri (@mosseri) March 30, 2018

This isn’t about whether Facebook will disappear tomorrow, but whether it will remain unconquerable for the forseeable future.

Growth has been the driving mantra for Facebook since its inception. No matter how employees are evaluated, it’s still the underlying ethos. Facebook has poised itself as a mission-driven company. The implication was always that connecting people is good so connecting more people is better. The only question was how to grow faster.

Now Zuckerberg will have to figure out how to get Facebook to cautiously foresee the consequences of what it says and does while remaining an appealing place to work. “Move slow and think things through” just doesn’t have the same ring to it.

If you’re a Facebook employee or anyone else that has information to share with TechCrunch, you can contact us at Tips@techcrunch.com or this article’s author Josh Constine’s DMs are open on Twitter. Here are some of our feature stories on Facebook’s recent issues:

 

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Regulation could protect Facebook, not punish it

Posted by | Apps, Cambridge Analytica, Facebook, Government, instagram, Mark Zuckerberg, Mobile, Opinion, Policy, regulation, Social, TC, Uber, WhatsApp | No Comments

You know what tech startups hate? Complicated legal compliance. The problem is, Facebook isn’t a startup any more, but its competitors are.

There have been plenty of calls from congress and critics to regulate Facebook following the election interference scandal and now the Cambridge Analytica debacle. The government could require extensive ads transparency reporting or data privacy protections. That could cost Facebook a lot of money, slow down its operations, or inhibit its ability to build new products.

But the danger is that those same requirements could be much more onerous for a tiny upstart company to uphold. Without much cash or enough employees, and with product-market fit still to nail down, young startups might be anchored by the weight of regulation. It could prevent them from ever rising to become a true alternative to Facebook. Venture capitalists choosing whether to fund the next Facebook killer might look at the regulations as too high of a price of entry.

STANFORD, CA – JUNE 24: Facebook CEO Mark Zuckerberg (R) hugs U.S. President Barack Obama during the 2016 Global Entrepeneurship Summit at Stanford University on June 24, 2016 in Stanford, California. President Obama joined Silicon Valley leaders on the final day of the Global Entrepreneurship Summit. (Photo by Justin Sullivan/Getty Images)

The lack of viable alternatives has made the #DeleteFacebook movement toothless. Where are people going to go? Instagram? WhatsApp? The government already missed its chances to stop Facebook from acquiring these companies that are massive social networks in their own right.

The only social networks to carve out communities since Facebook’s rise did so largely by being completely different, like the ephemeral Snapchat that purposefully doesn’t serve as a web identity platform, and the mostly-public Twitter that caters to thought leaders and celebrities more than normal people sharing their personal lives. Blockchain-based decentralized social networks sound nice but may be impossible to spin up.

That’s left few places for Facebook haters to migrate. This might explain why despite having so many more users, #DeleteFacebook peaked last week at substantially fewer Twitter mentions than the big #DeleteUber campaign from last January, according to financial data dashboard Sentieo. Lyft’s existence makes #DeleteUber a tenable stance, because you don’t have to change your behavior pattern, just your brand of choice.

If the government actually wants to protect the public against Facebook abusing its power, it would need to go harder than the Honest Ads Act that would put political advertising on Internet platforms under the same scrutiny regarding disclosure of buyers as the rules for TV and radio advertising. That’s basically just extra paperwork for Facebook. We’ve seen regulatory expenses deter competition amongst broadband internet service providers and in other industries. Real change would necessitate regulation that either creates alternatives to Facebook or at least doesn’t inhibit their creation.

That could mean only requiring certain transparency and privacy protections from apps over a certain size, like 200 million daily users. This would put the cap a bit above Twitter and Snapchat’s size today, giving them time to prepare for compliance, while immediately regulating Facebook, Messenger, Instagram, WhatsApp, and Google’s social problem child YouTube.

Still, with Facebook earning billions in profit per quarter and a massive war chest built up, Mark Zuckerberg could effectively pay his way out of the problem. That’s why it makes perfect sense for him to have told CNN “I’m not sure we shouldn’t be regulated” and that “There are things like ad transparency regulation that I would love to see.” Particular regulatory hurdles amount to just tiny speed bumps for Facebook. Courting this level of regulation could bat down the question of whether it should be broken up or its News Feed algorithm needs to change.

Meanwhile, if the government instituted new rules for tech platforms collecting persona information going forward, it could effectively lock in Facebook’s lead in the data race. If it becomes more cumbersome to gather this kind of data, no competitor might ever amass an index of psychographic profiles and social graphs able to rival Facebook’s.

A much more consequential approach would be to break up Facebook, Instagram, and WhatsApp. Facebook is trying to preempt these drastic measures with Zuckerberg’s recent apology tour and its purchase of full-page ads in nine newspapers today claiming it understands its responsibility.

Establishing them as truly independent companies that compete would create meaningful alternatives to Facebook. Instagram and WhatsApp would have to concern themselves with actually becoming sustainable businesses. They’d all lose some economies of data scale, forfeiting the ability to share engineering, anti-spam, localization, ad sales, and other resources that a source close to Instagram told me it gained by being acquired in 2012, and that Facebook later applied to WhatsApp too.

Both permanent photo sharing and messaging would become two-horse races again. That could lead to the consumer-benefiting competition and innovation the government hopes for from regulation.

Yet with strong regulation like dismantling Facebook seeming beyond the resolve of congress, and weak regulation potentially protecting Facebook, perhaps it’s losing the moral high ground that will be Facebook’s real punishment.

Facebook chief legal officer Colin Stretch testifies before congress regarding Russian election interference

We’ve already seen that first-time download rates aren’t plummeting for Facebook, its App Store ranking has actually increased since the Cambridge Analytica scandal broke, and blue chip advertisers aren’t bailing, according to BuzzFeed. But Facebook relies on the perception of its benevolent mission to recruit top talent in Silicon Valley and beyond.

Techies take the job because they wake up each day believing that they’re having a massive positive influence by connecting the world. These people could have founded or worked at a new startup where they’d have discernible input on the direction of the product, and a chance to earn huge return multiples on their stock. Many have historically worked at Facebook because its ads say it’s the “Best place to build and make an impact”.

But if workers start to see that impact as negative, they might not enlist. This is what could achieve that which surface-level regulation can’t. It’s perhaps the most important repercussion of all the backlash about fake news, election interference, well-being, and data privacy: that losing talent could lead to a slow-down of innovation at Facebook that might  leave the door open for a new challenger.

For more on Facebook’s Cambridge Analytica scandal, read our feature pieces:

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Snapchat is stuck in the uncanny valley of AR glasses

Posted by | Apps, ar glasses, Evan Spiegel, Gadgets, Google Glass, hardware, Mobile, Opinion, snap inc, Snapchat, snapchat spectacles, Social, TC, uncanny valley | No Comments

 “Timing”, Snapchat CEO Evan Spiegel said cryptically when asked what the greatest threat was for Snap Inc. “I think the big risks are always the really big product ideas that we’re investing in that are just hard to get right” he told the Goldman Sachs conference two weeks ago. The statements got lost amongst flashier quotes. He defended the Snapchat redesign… Read More

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Going public pits Spotify’s suggestions against everyone

Posted by | apple music, Apps, Entertainment, Fundings & Exits, Media, Mobile, music streaming, Opinion, Spotify, Spotify IPO, Startups, TC | No Comments

 The secret to Spotify’s public market debut is actually an acquisition it made in 2014. The Echo Nest was powering music recommendations for Beats Music, Rdio, Vevo and iHeartRadio before Spotify pulled it out from under them by buying it for a reported $100 million — 90 percent in Spotify equity. That deal paid off big time. Read More

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