Google: Changes Coming and Steadily
February 4, 2020
Google’s financial results suggest that the company’s advertising business is facing some headwinds. “Google Lifts Veil on YouTube, Cloud Units” states:
Meanwhile, the company reported disappointing results in its core online advertising operations.
The “meanwhile” is a “nice” way of suggesting that Google’s good news about YouTube and its baby cloud endeavors were supposed to distract from that ominous line:
disappointing results in its core online advertising operations.
And the word “operations.” That is a pregnant choice. The problem perhaps is deeper than softness in companies’ ad spending, more problematic than Amazon’s and Facebook’s expanding advertising initiatives, and more troublesome than the withdrawal of the Silicon Valley sultans, Messrs. Brin and Page.
What is caused the spangled juggernaut to wobble in its “core business”?
DarkCyber’s early morning thoughts include:
- Google’s rush to mobile created an ad inventory gap; that is, more ads for a small space. The fixes have not been satisfying to users or to consumers.
- Trading off relevance for broader results so more ads can be shown in relation to content which is not germane to what the user wanted information about. Even the most jaded consumer of Neverthink content, sort of wants ads relevant to their interests when using Google.
- Overhead is tough to control. Yep, that means productivity from human resources and efficiency in use of capital have to take precedent over moon shots, solving death, and dealing with litigation related to interesting staff issues.
- The Steve Ballmer “one trick pony” assessment of Google is proving accurate. Billions spent and the Google sells ads.
Net net: Worth monitoring the company’s performance and actions whether one has shares, works there, or is just mildly interested in what has defined “search” for billions of people.
Can these people find relevant information online? Nope. That’s probably part of the problem. Can cleverness address the issue? Sure but at what cost. Can Jeff Dean save the overdone cookies? Maybe.
Stephen E Arnold, February 4, 2020
Ivy Covered Irony: MIT Reports about Harvard
January 30, 2020
DarkCyber has mentioned MIT’s enthusiastic but mostly covert embrace of the late Mr. Epstein’s donations. One of the research team noted this article in the MIT Technology Review: “A Harvard Super Chemist Has Been Arrested Over Lying about Secret China Payments.” The main point of the Epstein-supported MIT Technology Review struck the DarkCyber team as:
According to a charging document written by an FBI agent, Lieber received more than $15 million in US grant funding from the National Institutes of Health and the Department of Defense, among other sources. Researchers are supposed to disclose if they also have foreign funding. But Lieber didn’t do so and then, when confronted, gave “false, fictitious, and fraudulent statements” to the DOD and to the NIH as recently as this month.
Yep, the Epstein-interacting institution is reporting that Harvard engaged in illegal activities.
Several observations:
- The write up may have more to do with making sure readers of MIT Technology Review know that Harvard University has a bad actor on the payroll
- Another prestigious institution struggles to provide a reasonable example of ethical behavior
- An interesting philosophical question can be discussed in a law school class at Suffolk University: “Which is more desirable — Taking money from an accursed human trafficker or selling information to a foreign power?”
DarkCyber is disappointed that two institutions of higher education are teaching by example, just not positive example.
Stephen E Arnold, January 30, 2020
China Software Numbers: Suggestive If Accurate
January 28, 2020
DarkCyber spotted “China’s Leading Software Companies Report Rising Income.” The write up included some interesting, but difficult to verify, numbers:
- The companies in the sample generated US$118.5 billion of revenue from software business in 2018, 6.5 percent up from that of the top 100 companies a year ago.
- More than 30 companies saw revenue surging by more than 20 percent
- 14 of the companies in the sample had revenues above US$1.4 billion
- Aliyun, Alibaba’s cloud computing subsidiary, was number three on the list of 100 companies
- In the same period, these companies invested about US$25 billion in research and development, 12.6 percent higher than that of the top 100 companies in 2018.
And the killer number was, “Their average R&D intensity, the proportion of R&D expenditure to main business revenue, reached 10.1 percent, 2.2 percentage points higher than the average level of the software industry, the ministry’s data showed.”
Stephen E Arnold, January 28, 2020
Amazon: Eero Subscriptions Mean Another Revenue Stream for Amazon
January 24, 2020
Earlier this year, Amazon acquired router maker Eero, which makes networked systems that distribute WiFi across an entire home. Now, CNBC reports, “Amazon Just Announced a New Way to Make Money from its Home Wi-Fi Business: Subscriptions.” Writer Todd Haselton explains:
“The new features include Eero Secure and Eero Secure+, the latter of which used to be called simply ‘Eero Plus.’ Eero secure tracks your browsing and can warn you if you’re visiting potentially malicious sites that might be infected with malware or have been known to phish for private information. It also comes with parental controls. Eero Secure+ offers the same features as Eero Secure but adds in a VPN provided by Encrypt.me, which hides the data crossing your network, a 1Password subscription that gives you one place to manage all of your passwords and Malwarebytes anti-virus software.”
Yes, as many companies have found, subscriptions are a great way to make money. Users can access Eero Secure for $2.99 per month or $29.99 per year, while Eero Secure+ goes for $9.99 a month or $99.99 per year. If Eero really takes off, we may see these services added to the Amazon Prime subscription—giving them reason to hike the price across the board, of course. Again.
Cynthia Murrell, January 24, 2020
Crypto Currencies In Japan
January 22, 2020
As one of the most highly technological nations in the world, Japan is a prime market for crypto currencies. Japanese law enforcement officials want to keep crypto currencies on the straight and narrow, so it is no wonder that crypto analytics companies recently hired Japanese CEOs and attracted more Japanese investors. The companies in question are the top three crypto analytics companies: Elliptic, Bitfury, and Chainalysis. Medium delves into the details behind crypto currencies in Japan with the article, “Crypto Investigates Tools In Japan-A Marketplace Analysis.”
Contrary to how it used to be, Bitcoin transactions are traceable, especially with Elliptic, Bitfury, and Chainalysis. Chainalysis appointed Kenji Sugawara as head of the Japanese division. The company’s main product lines are investigating software Reactor that traces blockchains, KYT (Know Your Transaction)-automated crypto currency monitoring software, and Kryptos vets new opportunities and risks in crypto currencies.
Elliptic placed Ken Yagami as head of its Japanese outlet and the company raised $23 million in Series B funding. The funding series was to expand into the Asian market. Elliptic’s main product is Discovery, which helps banks identify and assess risks posed by crypto currencies.
Bitfury hired Katsuya Konno as head of its Japanese operations. The advertising firm Dentsu invested in a 2018 funding round. Unlike the other crypto analytics companies, Bitfury makes hardware and software. Its hardware is designed to keep blockchains secure and its software Exonum-a private blockchain framework, uses its Crystal Blockchain, an advanced analytics platform.
While these are the top three crypto analytics companies in Asia, Merkle Science from Singapore and Uppsala Security with its Threat intelligence Platform called Sentinel Protocol are trying to win part of the markets. Asia is hard to crack:
“While the company appears to focus initially on the South East Asian markets, a Japan market entry does not seem too far-fetched, but obviously the “Big Three” have set the bar quite high in terms of organizational structure, local leadership and Japanese investor base.”
Asia is a hotbed for crypto currency activity, especially China. Japan has one of the strongest Asian economies and as a country heavily invested in advanced technology it needs to be monitor the crypto currencies.
Whitney Grace, January 15, 2020
Technical Debt: Less Like Tetris, More Like Ignoring Rotting Foundations
January 21, 2020
Googlers were chattering about technical debt years ago. I can’t recall the specific service which triggered a discussion about investing, patching, ignoring, or shuttering a service due to “costs.” The online ad giant was not the first mover in MBA/bean counter thinking about the resources consumed maintaining, enhancing, and changing the oil in its massive online systems.
DarkCyber noted “Technical Debt Is like a Tetris Game.” The write up is interesting, and the comparison in some ways is apt. However, video games are set up so that “winning” is often elusive. Dealing with technical debt in an organization is a bit different. The erosion often takes time and may be caused by wrapping the core software in more code. How often are substantive changes made to Amazon, Facebook, Google, and Microsoft services. Amazon recommends books the DarkCyber team has already read. Why not look up recommendations in the user’s list of Kindle purchases? An expense for technical debt or managerial indifference? Facebook routinely purges false accounts, but DarkCyber’s mascot has a Facebook page and posts infrequently and then via a software script. The page is still alive and kicking. Why not match user activity to an account and dump the dogs? Pun intended. Technical rot, not technical debt and who wants to lose a “user”? Google delivers irrelevant search results for many queries. Why not fix up the clever PageRank thing? Technical debt or the lack of programmers who want to plunge their hands into the terracotta tiles of the Stanford Mycenaean’s? And Microsoft? Why not make numbering work in Word or document the known dependencies in the Pharonic Fast Search & Transfer code.
These are not game scenarios. These examples are conscious choices to avoid fiddling with software developed decades ago. The premise appears to be that “good enough” is indeed the path to riches. DarkCyber believes that a failure to invest in foundations means that the structure will sag over time. If the structure collapses, the problems are not the death of colorful digital creatures. The implosion will affect humans. Not a game.
There is not money, time, and skilled personnel to remediate what’s chugging along. Decades, not weeks or months. Decades.
Stephen E Arnold, January 21, 2020
Answering This Question: What Does Country X Export? Now Easy
January 20, 2020
Economic complexity is not the bane of college fresh persons. Nope. Investors, New Age snake oil vendors, and quick-buck artists need to answer questions like “What does Peru export?” Answering the question requires work, including interacting with the wonderful resources of online government agencies and non governmental organizations. Now you can answer the Peru question as well as exports by any other country with a mouse click. Head over to the tree map visualization tool from the Observatory of Economic Complexity. You will find the Web system at this link. Data are not real time, but, for now, the reports are free. Hours of fun, just like those cram sessions at university for the Econ 101 mid term.
Stephen E Arnold, January 20, 2020
Education: Is the Future in the Hands of Google Type Companies
January 15, 2020
I spotted a news item which would not be fodder for either this blog or our DarkCyber video program. Then one of the research team emailed me a link to an apparently unrelated article. Then it struck me: The future of education is probably going to be ceded to big companies and sources of revenue which may have interesting avocations.
Let me explain.
The first news item reports that “US Colleges Struggling with Low Enrollment Are Closing at Increasing Rate.” The article, from a source with which I am not familiar, asserts:
For 185 years this college campus in Vermont was teeming with students. Now it sits empty. In January, the school announced it would be closing. ‘I’ve had a very long professional career. It’s the hardest thing I’ve ever had to do – to stand in front – in our auditorium with 400 people and telling principally students, but faculty and staff, that we wouldn’t be opening this fall,” said Bob Allen, President at Green Mountain College.
Sure enough. The institution is a goner.
Then the article which I spotted but decided was not suitable for this blog. Its title? “UVM Gets $1 Million from Google for Open Source Research.” The write up from the delightfully named WCAX asserts:
The unrestricted gift is to support open-source research. Open source is a type of computer software, where source code is released under a license, and the copyright holder grants users the rights to study, change, and distribute the software to anyone and for any purpose.
We know that august institutions like the Massachusetts Institute of Technology will deal with individuals of questionable character when the cash pay off is big enough.
Let’s assume these items are accurate. Now let’s look into a future in which universities become increasingly desperate for money.
Who will provide the dough?
Answer: People who have the money and have a need.
Why? Let me suggest a few reasons:
- Access to lower cost talent
- Opportunity to recycle research into commercial products
- Force students to “like” big companies. See “‘Techlash’: Positive Perceptions of Facebook, Google Crumble on Campuses.“
So who owns what the grant money generates, particularly if the output is open source? What happens if Amazon uses Google funded open source as part of its platform? Who determines how the money is used or, in the case of MIT, how its origin is obfuscated? Is academic R&D a more efficient way to generate innovation?
Net net: The financial situation is likely to lead to the equivalent of corporate naming rights to NFL football stadia. And if you don’t like, don’t attend.
Stephen E Arnold, January 15, 2020
Qatalyst Autonomy Presentation 2
January 14, 2020
DarkCyber spotted a link to a second presentation apparently prepared by Qatalyst Partners prior to Hewlett Packard’s purchase of Autonomy in 2011. This second slide deck covers:
- Historical trading performance and related financial data
- Shareholder ownership
- Comparative financial data; for example, Google, Oracle, HP, and other firms.
If you want to check out the first Qatalyst Autonomy presentation, you can find that document at this link. You may be able to locate other Autonomy documents via some scouting around on the Vdocuments.mx site.
These documents are almost a decade old, but they provide useful information for anyone considering an investment in or purchase of an organization engaged in enterprise search and text analysis software.
Documents like these provide some of the factual foundation we use in our reports and analyses. It is far easier to talk about the revenue potential of search and text processing. It is far more difficult to generate sustainable revenue and growing profits.
Why?
The reasons include:
- Ignoring the highly particularized nature of search and text analysis; that is, one size fits all doesn’t, so expensive, one off tailoring is required
- Making a search or text analysis sale is time consuming. The reasons range from “we have been burned before” to “this got the previous information people fired.”
- Keeping the search and text analysis system up and running is expensive.
- Staying competitive is very expensive. Innovation is easy to talk about but difficult to deliver.
- Growth requires acquisitions, and these just add to the cost of dealing with the technical debt the acquirer has to generate money to pay.
Net net: Documents like these are useful and often difficult to obtain.
Stephen E Arnold, January 14, 2020
Spain Wants to Tax Google
December 12, 2019
International agreements about taxing corporations are complex. Spain, like France, is not kicking back and letting the status quo prevail. El Pais (paywalled, gentle reader) reported that Spain is planning on going ahead with Google tax despite US tariff threats. You can access the story and the paywall block at this link.
The newspaper stated:
After US President Donald Trump threatened to impose tariffs of up to 100% on French products, on Monday the EU closed ranks, announcing that it would respond “united” to a measure of this kind.
How much would companies subject to the tax have to pay? Think in terms of three percent.
When will the tax become more than terrace talk? As soon as Spain formulates its new government. Or mañana.
Stephen E Arnold, December 12, 2019
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