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Apple’s increasingly tricky international trade-offs

Posted by | Advertising Tech, Android, Apple, apple inc, Asia, Baidu, Bing, China, DuckDuckGo, Europe, France, Google, iOS, iPhone, Mobile, privacy, Qwant, safari, search engine, search engines, siri, smartphone, smartphones, TC, Tim Cook, United States, Yahoo | No Comments

Far from Apple’s troubles in emerging markets and China, the company is attracting the ire of what should really be a core supporter demographic naturally aligned with the pro-privacy stance CEO Tim Cook has made into his public soapbox in recent years — but which is instead crying foul over perceived hypocrisy.

The problem for this subset of otherwise loyal European iPhone users is that Apple isn’t offering enough privacy.

These users want more choice over key elements such as the search engine that can be set as the default in Safari on iOS (Apple currently offers four choices: Google, Yahoo, Bing and DuckDuckGo, all U.S. search engines; and with ad tech giant Google set as the default).

It is also being called out over other default settings that undermine its claims to follow a privacy by design philosophy. Such as the iOS location services setting which, once enabled, non-transparently flip an associated sub-menu of settings — including location-based Apple ads. Yet bundled consent is never the same as informed consent…

6/ and @Apple also defaults to ON, approx 13 location settings the moment a user enables location settings 🤔 that includes using YOUR location to support APPLE’s advertising business interests & $$$. By ‘enabling location based services’ you give your consent to this 🤔@tim_cook pic.twitter.com/scYSg94QgY

— Privacy Matters (@PrivacyMatters) October 19, 2018

As the saying goes you can’t please all of the people all of the time. But the new normal of a saturated smartphone market is imposing new pressures that will require a reconfiguration of approach.

Certainly the challenges of revenue growth and user retention are only going to step up from here on in. So keeping an otherwise loyal base of users happy and — crucially — feeling listened to and well served is going to be more and more important for the tech giant as the back and forth business of services becomes, well, essential to its fortunes going forward.

(At least barring some miracle new piece of Apple hardware — yet to be unboxed but which somehow rekindles smartphone-level demand afresh. That’s highly unlikely in any medium term timeframe given how versatile and capable the smartphone remains; ergo Apple’s greatest success is now Apple’s biggest challenge.)

With smartphone hardware replacement cycles slowing, the pressure on Cook to accelerate services revenue naturally steps up — which could in turn increase pressure on the core principles Cupertino likes to flash around.

Yet without principles there can be no brand premium for Apple to command. So that way ruin absolutely lies.

Control shift

It’s true that controlling the iOS experience by applying certain limits to deliver mainstream consumer friendly hardware served Apple well for years. But it’s also true iOS has grown in complexity over time having dropped some of its control freakery.

Elements that were previously locked down have been opened up — like the keyboard, for instance, allowing for third party keyboard apps to be installed by users that wish to rethink how they type.

This shift means the imposed limit on which search engines users can choose to set as an iOS default looks increasingly hard for Apple to justify from a user experience point of view.

Though of course from a business PoV Apple benefits by being able to charge Google a large sum of money to remain in the plum search default spot. (Reportedly a very large sum, though claims that the 2018 figure was $9BN have not been confirmed. Unsurprisingly neither party wants to talk about the terms of the transaction.)

The problem for Apple is that indirectly benefiting from Google eroding the user privacy it claims to champion — by letting the ad tech giant pay it to suck up iOS users’ search queries by default — is hardly consistent messaging.

Not when privacy is increasingly central to the premium the Apple brand commands.

Cook has also made a point of strongly and publicly attacking the ‘data industrial complex‘. Yet without mentioning the inconvenient side-note that Apple also engages in trading user data for profit in some instances, albeit indirectly.

In 2017 Apple switched from using Bing to Google for Siri web search results. So even as it has stepped up its rhetoric around user privacy it has deepened its business relationship with one of the Western Internet’s primary data suckers.

All of which makes for a very easy charge of hypocrisy.

Of course Apple offers iOS users a non-tracking search engine choice, DuckDuckGo, as an alternative choice — and has done so since 2014’s iOS 8.

Its support for a growing but still very niche product in what are mainstream consumer devices is an example of Apple being true to its word and actively championing privacy.

The presence of the DDG startup alongside three data-mining tech giants has allowed those ‘in the know’ iOS users to flip the bird at Google for years, meaning Apple has kept privacy conscious consumers buying its products (if not fully on side with all its business choices).

But that sort of compromise position looks increasingly difficult for Apple to defend.

Not if it wants privacy to be the clear blue water that differentiates its brand in an era of increasingly cut-throat and cut-price Android -powered smartphone competition that’s serving up much the same features at a lower up-front price thanks to all the embedded data-suckers.

There is also the not-so-small matter of the inflating $1,000+ price-tags on Apple’s top-of-the-range iPhones. $1,000+ for a smartphone that isn’t selling your data by default might still sound very pricy but at least you’d be getting something more than just shiny glass for all those extra dollars. But the iPhone isn’t actually that phone. Not by default.

Apple may be taking a view that the most privacy sensitive iPhone users are effectively a captive market with little option but to buy iOS hardware, given the Google-flavored Android competition. Which is true but also wouldn’t bode well for the chances of Apple upselling more services to these people to drive replacement revenue in a saturated smartphone market.

Offending those consumers who otherwise could be your very best, most committed and bought in users seems short-sighted and short-termist to say the least.

Although removing Google as the default search provider in markets where it dominates would obviously go massively against the mainstream grain that Apple’s business exists to serve.

This logic says Google is in the default position because, for most Internet users, Google search remains their default.

Indeed, Cook rolled out this exact line late last year when asked to defend the arrangement in an interview with Axios on HBO — saying: “I think their search engine is the best.”

He also flagged various pro-privacy features Apple has baked into its software in recent years, such as private browsing mode and smart tracker prevention, which he said work against the data suckers.

Albeit, that’s a bit like saying you’ve scattered a few garlic cloves around the house after inviting the thirsty vampire inside. And Cook readily admitted the arrangement isn’t “perfect”.

Clearly it’s a trade off. But Apple benefitting financially is what makes this particular trade-off whiff.

It implies Apple does indeed have an eye on quarterly balance sheets, and the increasingly important services line item specifically, in continuing this imperfect but lucrative arrangement — rather than taking a longer term view as the company purports to, per Cook’s letter to shareholders this week; in which he wrote: “We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.”

If Google’s search product is the best and Apple wants to take the moral high ground over privacy by decrying the surveillance industrial complex it could maintain the default arrangement in service to its mainstream base but donate Google’s billions to consumer and digital rights groups that fight to uphold and strengthen the privacy laws that people-profiling ad tech giants are butting hard against.

Apple’s shareholders might not like that medicine, though.

More palatable for investors would be for Apple to offer a broader choice of alternative search engines, thereby widening the playing field and opening up to more pro-privacy Google alternatives.

It could also design this choice in a way that flags up the trade-off to its millions of users. Such as, during device set-up, proactively asking users whether they want to keep their Internet searches private by default or use Google?

When put like that rather more people than you imagine might choose not to opt for Google to be their search default.

Non-tracking search engine DDG has been growing steadily for years, for example, hitting 30M daily searches last fall — with year-on-year growth of ~50%.

Given the terms of the Apple-Google arrangement sit under an NDA (as indeed all these arrangements do; DDG told us it couldn’t share any details about its own arrangement with Apple, for e.g.) it’s not clear whether one of Google’s conditions requires there be a limit on how many other search engines iOS users can pick from.

But it’s at least a possibility that Google is paying Apple to limit how many rivals sit in the list of competitors iOS users can pick out an alternative default. (It has, after all, recently been spanked in Europe for anti-competitive contractual limits imposed on Android OEMs to limit their ability to use alternatives to Google products, including search. So you could say Google has history where search is concerned.)

Equally, should Google actually relaunch a search product in China — as it’s controversially been toying with doing — it’s likely the company would push Apple to give it the default slot there too.

Though Apple would have more reason to push back, given Google would likely remain a minnow in that market. (Apple currently defaults to local search giant Baidu for iOS users in China.)

So even the current picture around search on iOS is a little more fuzzy than Cook likes to make out.

Local flavor

China is an interesting case, because if you look at Apple’s growth challenges in that market you could come to a very different conclusion vis-a-vis the power of privacy as a brand premium.

In China it’s convenience, via the do-it-all ‘Swiss army knife’ WeChat platform, that’s apparently the driving consumer force — and now also a headwind for Apple’s business there.

At the same time, the idea of users in the market having any kind of privacy online — when Internet surveillance has been imposed and ‘normalized’ by the state — is essentially impossible to imagine.

Yet Apple continues doing business in China, netting it further charges of hypocrisy.

Its revised guidance this week merely spotlights how important China and emerging markets are to its business fortunes. A principled pull-out hardly looks to be on the cards.

All of which underscores growing emerging market pressures on Apple that might push harder against its stated principles. What price privacy indeed?

It’s clear that carving out growth in a saturated smartphone market is going to be an increasingly tricky business for all players, with the risk of fresh trade-offs and pitfalls looming especially for Apple.

Negotiating this terrain certainly demands a fresh approach, as Cook implies is on his mind, per the shareholder letter.

Arguably the new normal may also call for an increasingly localized approach as a way to differentiate in a saturated and samey smartphone market.

The old Apple ‘one-sized fits all’ philosophy is already very outdated for some users and risks being caught flat-footed on a growing number of fronts — be that if your measure is software ‘innovation’ or a principled position on privacy.

An arbitrary limit on the choice of search engine your users can pick seems a telling example. Why not offer iOS users a free choice?

Or are Google’s billions really standing in the way of that?

It’s certainly an odd situation that iPhone owners in France, say, can pick from a wide range of keyboard apps — from mainstream names to superficial bling-focused glitter and/or neon LED keyboard skins or indeed emoji and GIF-obsessed keyboards — but if they want to use locally developed pro-privacy search engine Qwant on their phone’s native browser they have to tediously surf to the company’s webpage every time they want to look something up.

Google search might be the best for a median average ‘global’ (excluding China) iOS user but in an age of increasingly self-focused and self-centred technology, with ever more demanding consumers, there’s really no argument against letting people who want to choose for themselves.

In Europe there’s also the updated data protection framework, GDPR, to consider. Which may yet rework some mainstream ad tech business models.

On this front Qwant questions how even non-tracking rival DDG can protect users’ searches from government surveillance given its use of AWS cloud hosting and the U.S. Cloud Act. (Though, responding to a discussion thread about the issue on Github two years ago, DDG’s founder noted it has servers around the world, writing: “If you are in Europe you will be connected to our European servers.” He also reiterated that DDG does not collect any personal data from users — thereby limiting what could be extracted from AWS via the Act.)

Asked what reception it’s had when asking about getting its search engine on the Safari iOS list, Qwant told us the line that’s been (indirectly) fed back to it is “we are too European according to Apple”. (Apple declined to comment on the search choices it offers iOS users.)

“I have to work a lot to be more American,” Qwant co-founder and CEO Eric Leandri told us, summing up the smoke signals coming out of Cupertino.

“I understand that Apple wants to give the same kind of experience to their customers… but I would say that if I was Apple now, based on the politics that I want to follow — about protecting the privacy of customers — I think it would be great to start thinking about Europe as a market where people have a different point of view on their data,” he continued.

“Apple has done a lot of work to, for example, not let applications give data to each by a very strict [anti-tracking policy]; Apple has done a lot of work to guarantee that cookies and tracking is super difficult on iOS; and now the last problem of Apple is Google search.”

“So I hope that Apple will look at our proposal in a different way — not just one-fits-all. Because we don’t think that one-fits-all today,” he added.

Qwant too, then, is hoping for a better Apple to emerge as a result of a little market adversity.

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With trust destroyed, Facebook is haunted by old data deals

Posted by | Apps, BlackBerry, Facebook, facebook platform, Facebook Policy, facebook privacy, Mobile, Netflix, Social, Spotify, TC, Yahoo | No Comments

As Facebook colonized the rest of the web with its functionality in hopes of fueling user growth, it built aggressive integrations with partners that are coming under newfound scrutiny through a deeply reported New York Times investigationSome of what Facebook did was sloppy or unsettling, including forgetting to shut down APIs when it cancelled its Instant Personalization feature for other sites in 2014, and how it used contact syncing to power friend recommendations.

But other moves aren’t as bad as they sound. Facebook did provide Spotify and Netflix the ability to access users messages, but only so people could send friends songs or movies via Facebook messages without leaving those apps. And Facebook did let Yahoo and Blackberry access people’s News Feeds, but to let users browse those feeds within social hub features inside those apps. These partners could only access data when users logged in and connected their Facebook accounts, and were only approved to use this data to provide Facebook-related functionality. That means Spotify at least wasn’t supposed to be rifling through everyone’s messages to find out what bands they talk about so it could build better curation algorithms, and there’s no evidence yet that it did.

Thankfully Facebook has ditched most of these integrations, as the dominance of iOS and Android have allowed it to build fewer, more standardized, and better safeguarded access points to its data. And it’s battened down the hatches in some ways, forcing users to shortcut from Spotify into the real Facebook Messenger rather than giving third-parties any special access to offer Facebook Messaging themselves.

The most glaring allegation Facebook hasn’t adequately responded to yet is that it used data from Amazon, Yahoo, and Huawei to improve friend suggestions through People You May Know — perhaps its creepiest feature. The company needs to accept the loss of growth hacking trade secrets and become much more transparent about how it makes so uncannily accurate recommendations of who to friend request — as Gizmodo’s Kashmir Hill has documented.

In some cases, Facebook has admitted to missteps, with its Director of Developer Platforms and Programs Konstantinos Papamiltiadis writing “we shouldn’t have left the APIs in place after we shut down instant personalization.”

In others, we’ll have decide where to draw the line between what was actually dangerous and what gives us the chills at first glance. You don’t ask permission from friends to read an email from them on a certain browser or device, so should you worry if they saw your Facebook status update on a Blackberry social hub feature instead of the traditional Facebook app? Well that depends on how the access is monitored and meted out.

The underlying question is whether we trust that Facebook and these other big tech companies actually abided by rules to oversee and not to overuse data. Facebook has done plenty wrong, and after repeatedly failing to be transparent or live up to its apologies, it doesn’t deserve the benefit of the doubt. For that reason, I don’t want it giving any developer — even ones I normally trust like Spotify — access to sensitive data protected merely by their promise of good behavior despite financial incentives for misuse.

Facebook’s former chief security officer Alex Stamos tweeted that “allowing for 3rd party clients is the kind of pro-competition move we want to see from dominant platforms. For ex, making Gmail only accessible to Android and the Gmail app would be horrible. For the NY Times to try to scandalize this kind of integration is wrong.” But countered that by noting that “integrations that are sneaky or send secret data to servers controlled by others really is wrong.”

Even if Spotify and Netflix didn’t abuse the access Facebook provided, there’s always eventually a Cambridge Analytica. Tech companies have proven their word can’t necessarily be trusted. The best way to protect users is to properly lock down the platforms with ample vetting, limits, and oversight so there won’t be gray areas that require us to put our faith in the kindness of businesses.

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Blockchain gaming gets a boost with Mythical Games’ $16M Series A

Posted by | blockchain, funding, Gaming, niantic, Seismic Games, Startups, Venture Capital, Yahoo | No Comments

Fortnite, the free multi-player survival game, has earned an astonishing $1 billion from in-game virtual purchases alone. Now, others in the gaming industry are experimenting with how they too can capitalize on new trends in gaming.

Mythical Games, a startup out of stealth today with $16 million in Series A funding, is embracing a future in gaming where user-generated content and intimate ties between players, content creators, brands and developers is the norm. Mythical is using its infusion of venture capital to develop a line of PC, mobile and console games on the EOSIO blockchain, which will also be open to developers to build games with “player-owned economies.”

The company says an announcement regarding its initial lineup of games is on the way.

Mythical is led by a group of gaming industry veterans. Its chief executive officer is John Linden, a former studio head at Activision and president of the Niantic-acquired Seismic Games. The rest of its C-suite includes chief compliance officer Jamie Jackson, another former studio head at Activision; chief product officer Stephan Cunningham, a former director of product management at Yahoo; and head of blockchain Rudy Kock, a former senior producer at Blizzard — the Activision subsidiary known for World of Warcraft. Together, the team has worked on games including Call of Duty, Guitar Hero, Marvel Strike Force and Skylanders.

Galaxy Digital’s EOS VC Fund has led the round for Mythical. The $325 million fund, launched earlier this year, is focused on expanding the EOSIO ecosystem via strategic investments in startups building on EOSIO blockchain software. Javelin Venture Partners, Divergence Digital Currency, cryptocurrency exchange OKCoin and others also participated in the round.

It’s no surprise investors are getting excited about the booming gaming business given the success of Epic Games, Twitch, Discord and others in the space.

Epic Games raised a $1.25 billion round late last month thanks to the cultural phenomenon that its game, Fortnite, has become. KKR, Iconiq Capital, Smash Ventures,Vulcan Capital, Kleiner Perkins, Lightspeed Venture Partners and others participated in that round. Discord, a chat application for gamers, raised a $50 million financing in April at a $1.65 billion valuation from Benchmark Capital, Greylock Partners, IVP, Spark Capital and Tencent. And Dapper Labs, best known for the blockchain-based game CryptoKitties, even raised a VC round this year — a $15 million financing led by Venrock, with participation from GV and Samsung NEXT.

In total, VCs have invested $1.8 billion in gaming startups this year, per PitchBook.

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Verizon declines to comment on WSJ report saying Tim Armstrong is in talks to leave Oath

Posted by | Advertising Tech, AOL, Mobile, Oath, tim armstrong, Verizon, Verizon Communications, Yahoo | No Comments

The Wall Street Journal is reporting that Tim Armstrong is in talks to leave Verizon as soon as next month.

Armstrong heads up the carrier giant’s digital and advertising division, Oath (formerly AOL, prior to the Yahoo acquisition and the subsequent merger of the two units). Oath also happens to be TechCrunch’s parent, of course.

We reached out to our corporate overlords for a confirm or deny on the newspaper report. A Verizon spokesperson told us: “We don’t comment on speculation and have no announcements to make.”

The WSJ cites “people familiar with the matter” telling it Armstrong is in talks to leave, which would mean he’s set to step away from an ongoing process of combining the two business units into a digital content and ad tech giant.

Though he has presided over several rounds of job cuts already, as part of that process.

Verizon acquired Armstrong when it bought AOL in 2015. The Yahoo acquisition followed in 2017 — with the two merged to form the odd-sounding Oath, a b2b brand that Armstrong seemingly inadvertently outted.

Building an ad giant to challenge Google and Facebook is the underlying strategy. But as the WSJ points out there hasn’t been much evidence of Oath moving Verizon’s growth needle yet (which remains tied to its wireless infrastructure).

The newspaper cites eMarketer projections which have Google taking over a third of the online ad market by 2020; Facebook just under a fifth; and Oath a mere 2.7%.

Meanwhile, Verizon’s appointment of former Ericsson CEO, Hans Vestberg, as its new chief exec in June, taking over from Lowell McAdam (who stepped down after seven years), suggests pipes (not content) remain the core focus for the carrier — which has the expensive of 5G upgrades to worry about.

A cost reduction program, intending to use network virtualization to take $10BN in expenses out of the business over the next four years, has also been a recent corporate priority for Verizon.

Given that picture, it’s less clear how Oath’s media properties mesh with its plans.

The WSJ’s sources told the newspaper there were recent discussions about whether to spin off the Oath business entirely — but said Verizon has instead decided to integrate some of its operations more closely with the rest of the company (whatever ‘integrate’ means in that context).

(Since the story broke, Verizon CFO Matt Ellis has expanded slightly on the ‘no comment’. Speaking during an appearance at a Bank of America Merrill Lynch conference this morning, he said: “Our commitment is as strong today to Oath as it has ever been… There’s a lot of good work going on there. It’s really setting the foundation of what we expect to do with the business going forward, and we still feel very strongly there’s a great opportunity there… So we continue to be very committed to Oath. There’s a significant opportunity for us there.”)

There have been other executive changes at Oath earlier this year, too, with the head of its media properties, Simon Khalaf, departing in April — and not being replaced.

Instead Armstrong appointed a COO, K Guru Gowrappan, hired in from Alibaba, who he said Oath’s media bosses would now report to.

“Now is our time to turn the formation of Oath into the formation of one of the world’s best operating companies that paves a safe and exciting path forward for our billion consumers and the world’s most trusted brands,” Armstrong wrote in a staff memo on Gowrappan’s appointment obtained by Recode.

“Guru will run day to day operations of our member (consumer) and B2B businesses and will serve as a member of our global executive team helping to set company culture and strategy. Guru will also be an important part of the Verizon work that is helping both Oath and Verizon build out the future of global services and revenue,” he added, saying he would be spending more of his time “spread across strategic Oath opportunities and Verizon… leading our global strategy, global executive team, and corporate operations”.

At the start of the year Oath also named a new CFO, Vanessa Wittman, after the existing officer, Holly Hess, moved to Verizon to head up the aforementioned cost-saving program.

Reaction to the rumour of Armstrong’s imminent departure has sparked fresh speculation about jobs cuts on the anonymous workplace app Blind — with Oath/AOL/Yahoo employees suggesting additional rounds of company-wide layouts could be coming in October.

Or, well, that could always just be trolling.

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Our digital future will be shaped by increasingly mobile technologies coming from China

Posted by | alibaba, alibaba group, Amazon, america, america online, Android, Apple, AWS, China, Column, eCommerce, Expedia, Facebook, Getty-Images, Google, Michael Moritz, Mobile, operating systems, Priceline, shanghai, smartphone, TC, United States, WeChat, world wide web, Yahoo | No Comments

Since the dawn of the internet, the titans of this industry have fought to win the “starting point” — the place that users start their online experiences. In other words, the place where they begin “browsing.” The advent of the dial-up era had America Online mailing a CD to every home in America, which passed the baton to Yahoo’s categorical listings, which was swallowed by Google’s indexing of the world’s information — winning the “starting point” was everything.

As the mobile revolution continues to explode across the world, the battle for the starting point has intensified. For a period of time, people believed it would be the hardware, then it became clear that the software mattered most. Then conversation shifted to a debate between operating systems (Android or iOS) and moved on to social properties and messaging apps, where people were spending most of their time. Today, my belief is we’re hovering somewhere between apps and operating systems. That being said, the interface layer will always be evolving.

The starting point, just like a rocket’s launchpad, is only important because of what comes after. The battle to win that coveted position, although often disguised as many other things, is really a battle to become the starting point of commerce.  

Google’s philosophy includes a commitment to get users “off their page” as quickly as possible…to get that user to form a habit and come back to their starting point. The real (yet somewhat veiled) goal, in my opinion, is to get users to search and find the things they want to buy.

Of course, Google “does no evil” while aggregating the world’s information, but they pay their bills by sending purchases to Priceline, Expedia, Amazon and the rest of the digital economy.  

Facebook, on the other hand, has become a starting point through its monopolization of users’ time, attention and data. Through this effort, it’s developed an advertising business that shatters records quarter after quarter.

Google and Facebook, this famed duopoly, represent 89 percent of new advertising spending in 2017. Their dominance is unrivaled… for now.

Change is urgently being demanded by market forces — shifts in consumer habits, intolerable rising costs to advertisers and through a nearly universal dissatisfaction with the advertising models that have dominated (plagued) the U.S. digital economy.  All of which is being accelerated by mobile. Terrible experiences for users still persist in our online experiences, deliver low efficacy for advertisers and fraud is rampant. The march away from the glut of advertising excess may be most symbolically seen in the explosion of ad blockers. Further evidence of the “need for a correction of this broken industry” is Oracle’s willingness to pay $850 million for a company that polices ads (probably the best entrepreneurs I know ran this company, so no surprise).

As an entrepreneur, my job is to predict the future. When reflecting on what I’ve learned thus far in my journey, it’s become clear that two truths can guide us in making smarter decisions about our digital future:

Every day, retailers, advertisers, brands and marketers get smarter. This means that every day, they will push the platforms, their partners and the places they rely on for users to be more “performance driven.” More transactional.

Paying for views, bots (Russian or otherwise) or anything other than “dollars” will become less and less popular over time. It’s no secret that Amazon, the world’s most powerful company (imho), relies so heavily on its Associates Program (its home-built partnership and affiliate platform). This channel is the highest performing form of paid acquisition that retailers have, and in fact, it’s rumored that the success of Amazon’s affiliate program led to the development of AWS due to large spikes in partner traffic.

Chinese flag overlooking The Bund, Shanghai, China (Photo: Rolf Bruderer/Getty Images)

When thinking about our digital future, look down and look east. Look down and admire your phone — this will serve as your portal to the digital world for the next decade, and our dependence will only continue to grow. The explosive adoption of this form factor is continuing to outpace any technological trend in history.

Now, look east and recognize that what happens in China will happen here, in the West, eventually. The Chinese market skipped the PC-driven digital revolution — and adopted the digital era via the smartphone. Some really smart investors have built strategies around this thesis and have quietly been reaping rewards due to their clairvoyance.  

China has historically been categorized as a market full of knock-offs and copycats — but times have changed. Some of the world’s largest and most innovative companies have come out of China over the past decade. The entrepreneurial work ethic in China (as praised recently by arguably the world’s greatest investor, Michael Moritz), the speed of innovation and the ability to quickly scale and reach meaningful populations have caused Chinese companies to leapfrog the market cap of many of their U.S. counterparts.  

The most interesting component of the Chinese digital economy’s growth is that it is fundamentally more “pure” than the U.S. market’s. I say this because the Chinese market is inherently “transactional.” As Andreessen Horowitz writes, WeChat, China’s  most valuable company, has become the “starting point” and hub for all user actions. Their revenue diversity is much more “Amazon” than “Google” or “Facebook” — it’s much more pure. They make money off the transactions driven from their platform, and advertising is far less important in their strategy.

The obsession with replicating WeChat took the tech industry by storm two years ago — and for some misplaced reason, everyone thought we needed to build messaging bots to compete.  

What shouldn’t be lost is our obsession with the purity and power of the business models being created in China. The fabric that binds the Chinese digital economy and has fostered its seemingly boundless growth is the magic combination of commerce and mobile. Singles Day, the Chinese version of Black Friday, drove $25 billion in sales on Alibaba — 90 percent of which were on mobile.

The lesson we’ve learned thus far in both the U.S. and in China is that “consumers spending money” creates the most durable consumer businesses. Google, putting aside all its moonshots and heroic mission statements, is a “starting point” powered by a shopping engine. If you disagree, look at where their revenue comes from…

Google’s recent announcement of Shopping Actions and their movement to a “pay per transaction model” signals a turning point that could forever change the landscape of the digital economy.  

Google’s multi-front battle against Apple, Facebook and Amazon is weighted. Amazon is the most threatening. It’s the most durable business of the four — and its model is unbounded on two fronts that almost everyone I know would bet their future on, 1) people buying more online, where Amazon makes a disproportionate amount of every dollar spent, and 2) companies needing more cloud computing power (more servers), where Amazon makes a disproportionate amount of every dollar spent.  

To add insult to injury, Amazon is threatening Google by becoming a starting point itself — 55 percent of product searches now originate at Amazon, up from 30 percent just a year ago.

Google, recognizing consumer behavior was changing in mobile (less searching) and the inferiority of their model when compared to the durability and growth prospects of Amazon, needed to respond. Google needed a model that supported boundless growth and one that created a “win-win” for its advertising partners — one that resembled Amazon’s relationship with its merchants — not one that continued to increase costs to retailers while capitalizing on their monopolization of search traffic.

Google knows that with its position as the starting point — with Google.com, Google Apps and Android — it has to become a part of the transaction to prevail in the long term. With users in mobile demanding fewer ads and more utility (demanding experiences that look and feel a lot more like what has prevailed in China), Google has every reason in the world to look down and to look east — to become a part of the transaction — to take its piece.  

A collision course for Google and the retailers it relies upon for revenue was on the horizon. Search activity per user was declining in mobile and user acquisition costs were growing quarter over quarter. Businesses are repeatedly failing to compete with Amazon, and unless Google could create an economically viable growth model for retailers, no one would stand a chance against the commerce juggernaut — not the retailers nor Google itself. 

As I’ve believed for a long time, becoming a part of the transaction is the most favorable business model for all parties; sources of traffic make money when retailers sell things, and, most importantly, this only happens when users find the things they want.  

Shopping Actions is Google’s first ambitious step to satisfy all three parties — businesses and business models all over the world will feel this impact.  

Good work, Sundar.

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Yahoo Finance launches social savings app Tanda, an alternative to credit cards

Posted by | android apps, Apps, Finance, fintech, iOS apps, Mobile, savings, Social, social apps, tanda, TC, Yahoo, Yahoo-Finance | No Comments

 Yahoo Finance today launched a new app called Tanda that allows small groups of either five or nine people to save money together for short-term goals. The app uses the concept of a “money pool” – that is, everyone participating in one Tanda’s collaborative savings circles will pay a fixed amount to the group’s savings pot every month. And every month, one member… Read More

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Verizon’s new opt-in rewards program requires users to share personal data for ad-targeting

Posted by | ad targeting, Advertising Tech, AOL, artificial intelligence, broadband, digital advertising, Mobile, privacy, TC, TechCrunch, Verizon, Verizon Up, Yahoo | No Comments

 U.S. carrier Verizon has launched a new rewards program as it pushes for more lucrative ways to eke money out of a subscriber base that’s not growing as easily as it once was. Read More

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With revenue of $29.8 billion, Verizon’s first quarter earnings fall short of analyst expectations

Posted by | Advertising Tech, AOL, Earnings, Media, Mobile, TC, Verizon, Yahoo | No Comments

 Verizon just released its first quarter earnings results, with adjusted earnings per share of 95 cents on revenue of $29.8 billion.
Revenue (minus divestitures and acquisitions) is down 4.5 percent from the first quarter of 2016. The numbers also fall short of what analysts had been predicting: EPS of 96 cents per share on revenue of $30.5 billion.
Verizon says there was a net decline… Read More

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Yahoo surprises no one by pushing back its Verizon acquisition close date

Posted by | Apps, Earnings, Finance, Mobile, Social, TC, Yahoo | No Comments

SUNNYVALE, CA - MAY 23:  A sign is posted in front of the Yahoo! headquarters on May 23, 2014 in Sunnyvale, California.  (Photo by Justin Sullivan/Getty Images) Yahoo reported its fourth quarter earnings to date, where as usual the financial metrics don’t really matter because the company is in the process of getting acquired by Verizon. There is, however, a very interesting footnote: the acquisition, expected to close in the first quarter, is getting pushed back to the second quarter this year. The company offered basically no explanation for… Read More

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Yahoo Answers makes its official mobile debut

Posted by | Apps, Mobile, Social, TC, Yahoo, Yahoo-Answers | No Comments

yahoo-answers-now Yahoo Answers has officially launched on mobile. As TechCrunch reported last month, Yahoo’s experimental app code-named Yahoo Hive had been rebranded as Yahoo Answers Now — a move that indicated Yahoo’s plans to bring its desktop Q&A site to the App Store. However, at the time, the app still required an invite in order to test it out — that restriction… Read More

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